Sales momentum continues into Q125
The key takeaways from the Q125 results, in our view, are the strengthened order book
for TPOXX as well as the sustained momentum in international sales, a key focus area
for SIGA. Notably, in March 2025, the Biomedical Advanced Research and Development
Authority (BARDA) exercised its last outstanding option for IV TPOXX, worth $26m,
which the company expects to deliver in 2026. SIGA recorded total revenues of $7.0m
in Q125, including $5.8m related to oral TPOXX sales to an undisclosed international
jurisdiction, which we believe may have been the CDND. In April 2020, SIGA was awarded
a contract by the CDND for delivery of $14m worth of oral TPOXX. As of 31 December
2024, $6.7m of this remained outstanding, and we believe the product revenues recognized
in Q125 are likely related to these deliveries. Management has indicated that it expects
substantial sales over the next few months although it is unclear for now if these
refer to additional deliveries to the CDND, or other international jurisdictions or
overall sales. In comparison, SIGA has booked $23.9m in product revenues in Q124,
comprising $14.7m in oral TPOXX stockpile deliveries to the BARDA, $1.1m to the US
Department of Defense, $7m of orders to seven European countries under the Health
Emergency Preparedness and Response (HERA) deal and a further $0.7m to the CDND. Note
that the nature of SIGA’s business model (driven by government orders and deliveries)
makes period-on-period evaluations challenging and not strictly comparable. This was
evidenced by the sales momentum picking up in Q225, with the delivery of $62m of TPOXX
to the US SNS in April (including $53m of oral and $9m of IV TPOXX), substantially
fulfilling the $70m order book outstanding at end-FY24. The company expects to deliver
the remaining $8m of IV TPOXX by the end of Q325.
SIGA also recorded another $1.2m in revenues from R&D activities under the 19C BARDA
contract ($1.6m in Q124) with the decline attributed to a decrease in billable activities
under the contract. Encouragingly, the company noted that in April, the existing 19C
contract with BARDA was modified to include an additional $14m in funding over the
next two to three years to support manufacturing activities related to IV TPOXX. Management
expects the funding to aid the company in completing the technology transfer for IV
TPOXX manufacturing to a new third-party contract manufacturer. SIGA currently has
agreements with the following contract manufacturing organizations for IV TPOXX: Roquette
America, Patheon Manufacturing Services and PCI.
Gross margins for the period were 97.3%, materially higher than the historical c 85%
for oral TPOXX. We understand that this difference was due to the recovery for inventory,
which was previously written off and is therefore one-off in nature. As such, we expect
the margins to normalize in the coming quarters. R&D expenses increased by 13.4% y-oy
to $3.5m, with the increase attributed to higher compensation and consulting-related
expenses as well as investments in IT enhancements. SG&A expenses declined to $5.7m
(down 27.9% from $7.9m in Q124), driven by lower promotional fees paid to Meridian
in Q125 following the amended agreement (zero vs $1.5m in Q124) as well as lower compensation
expense (the Q124 figure included one-time payments and equity grants to new hires).
Overall, SIGA recorded an operating and net loss of $2.3m and $0.4m respectively in
Q125, versus an operating and net profit of $11.3m and $10.3m in Q124.
Despite registering an operating loss in the quarter, the company reported an operating
cash inflow of $7.1m in Q125, driven by an improved working capital position (primarily
lower accounts receivables following the receipt of c $20m for oral TPOXX sales from
the US government and international orders in the quarter). This supported the cash
position growing to $162.3m at end-Q125 ($155.4m at end-FY24). These cash reserves
will be partially utilized to pay c $43m in dividends in May 2025 ($0.6/share; a payout
ratio of 72% of the FY24 net income). Note that this payment marks the fourth consecutive
year of dividend payout by the company ($0.6/share in 2024 and $0.45/share in 2023
and 2022, respectively), which is reflective of a strong business model and is particularly
encouraging given the uncertain macroeconomic environment.
Estimates revision
Given that our forecast model already reflected deliveries to the CDND in 2025 and
the $26m IV TPOXX option in 2026, and pending further clarity on future international
sales, our product revenue estimates for FY25 and FY26 are unchanged at $116.0m and
$231.3m, respectively. For further granularity on our revenue estimates, please see
our March update note. We also maintain our operating expense estimates and continue to project an operating
profit of $54.8m and $149.8m in FY25 and FY26, respectively.
