Key Q326 takeaways
US RFP active, but timing likely shifts to 2027
Smallpox preparedness remains a durable US government requirement, but the central
question is increasingly focused on the timing of the contractual conversion. During
the Q326 earnings call, management acknowledged slower-than-anticipated progress on
the RFP, but remained confident that a successor TPOXX contract will be awarded following
continued engagement with government stakeholders. Management also does not expect
the recent US midterm elections to materially alter biodefense funding priorities
or the trajectory of the procurement process, citing historically bipartisan support
for biodefense. We now expect the RFP process to extend into 2027, versus our previous
H226 assumption. While this does not change our view on the underlying replenishment
requirement, it increases timing risk around the associated revenues and cash flows.
Several recent developments continue to support the strategic rationale for stockpiling.
BARDA has provided $27m of additional funding for TPOXX manufacturing and pediatric
development, supplemented by a further $2.1m in August 2026 for regulatory activities.
Notably, Emergent BioSolutions reported Tembexa tablet deliveries under a March 2026 contract modification, while BARDA’s $97m exercise of Bavarian Nordic’s JYNNEOS vaccine
options in May 2026 supports 2027 stockpile supply. We view vaccines and antivirals as complementary
components of preparedness. We also note the different mechanisms of action of TPOXX
and Tembexa as well as TPOXX’s superior safety profile (Tembexa comes with a boxed
mortality warning), an important distinction in its clinical positioning and supportive
of a diversified antiviral stockpile.
While the protracted RFP process makes timing increasingly important for our forecasts,
we retain our 2027 oral SNS delivery assumptions for now, supported by ongoing stockpile
replenishment needs. Our current FY27 estimates include $113.9m of US oral deliveries,
equivalent to c 70% of group revenue, making contract timing increasingly important.
A 2027 RFP could still support deliveries within the year, although the expected six-
to 12-month period between contract award and delivery means that the execution window
is narrowing. Further slippage would require us to revisit the phasing of revenues
between FY27 and FY28.
International traction offers a partial offset
FY26 is emerging as a strong year for SIGA’s international business, with $13.0m of
TPOXX deliveries across Asia-Pacific and Europe in 9M26, representing c 31% of product
revenue and more than double the $5.8m recorded in 9M25. We view this as an important
validation that procurement demand is broadening beyond the US, although the revenue
base remains comparatively small. This momentum was reinforced by the new CDND contract
in October 2026, for up to $15m of oral TPOXX through March 2031, comprising $9m of
firm commitments over the first three fiscal years and a further $6m of optional purchases.
Management expects an equal number of courses to be delivered in each of FY27–29,
commencing in 2027. Given Canada’s April–March fiscal year, calendar-year deliveries
could be uneven; for now, we model $3m annually in CY27–29. The award also demonstrates
repeat demand from an established customer, following completion in 2025 of CDND’s
previous $14m contract awarded in 2020. Management also identified another international
contract in advanced negotiations, although the timelines for such announcement and
subsequent deliveries are undisclosed as of now and we therefore include no contribution
in our forecasts.
The broader European opportunity remains less mature but strategically relevant. Bavarian Nordic’s new four-year UK smallpox vaccine contract provides further evidence of government
willingness to fund preparedness, although European stockpiling has historically been
vaccine-led. SIGA is therefore working with authorities to establish the case for
antivirals as a complementary component of national stockpiles. Management acknowledged
that removal of the mpox indication from TPOXX’s European label has added complexity
to some discussions and could lengthen procurement timelines, but does not believe
it alters the longer-term smallpox opportunity, for which European and UK authorizations
remain intact. The Hikma agreement provides a separate route into the Middle East
and North Africa, although we currently assume no contribution from the region.
Overall, we increasingly view international procurement as a credible second growth
pillar for SIGA, improving customer diversification and providing revenue visibility
between larger US procurement cycles. However, at the current scale, it remains a
partial rather than full offset to any meaningful slippage in US SNS replenishment.
PEP delay shifts launch expectations
While PEP remains an important lifecycle-management and commercial opportunity for
SIGA, progression towards the market has been slower than expected, primarily due
to delays in the initiation of the sample analysis at the US Centers for Disease Control
and Prevention. On the Q326 call, management disclosed that, following a recent FDA
meeting, SIGA has been asked to complete additional assay validation and related laboratory
work before progressing the sample analysis.. Management is therefore now targeting
a supplemental New Drug Application filing in 2028, versus H127 previously.
For now, we view this as a timing setback rather than a change in the underlying PEP
opportunity, and defer our launch assumption by six months to H228. We retain our
50% probability of success, although the additional regulatory work introduces greater
execution uncertainty and any further delays would warrant reassessment of both our
launch timing and risk assumptions.
Pediatric readout offers nearer-term catalyst
Phase I results for the pediatric liquid formulation remain targeted for year-end
2026. Backed by $13.2m of BARDA development funding, the program could extend TPOXX
coverage to children weighing less than 13kg and improve the completeness of the US
medical-countermeasure stockpile. The next regulatory steps remain dependent on the
readout. Its strategic value is clear, but we regard it as incremental franchise protection
rather than a substantial commercial prospect. We continue to model a 2028 market
launch.
