SIGA Technologies — Product and international expansion on track

SIGA Technologies (NASDAQ: SIGA)

Currency in USD

Last close As at 06/12/2023

USD5.62

0.01 (0.18%)

Market capitalisation

USD400m

More on this equity

Research: Healthcare

SIGA Technologies — Product and international expansion on track

SIGA has reported Q122 revenues of $10.5m, up 119% y-o-y, driven by the first IV TPOXX deliveries to the US government. It also achieved key milestones in its product and international expansion strategies, including EMA approval for oral TPOXX, the first TPOXX contract in the Asia-Pacific (APAC) region, and a Canadian contract increased by $5m. The PEP trials are making progress, with the active phase planned to complete in Q322, and the DOD announced its intent for a single-source contract for TPOXX. We raise our valuation to $9.17 per share, up from our previous $8.80.

Analyst avatar placeholder

Written by

Healthcare

SIGA Technologies

Product and international expansion on track

Q122 results

Pharma & biotech

9 May 2022

Price

$7.17

Market cap

$520m

Net cash ($m) at 31 March 2022

153.3

Shares in issue (diluted)

72.6m

Free float

56%

Code

SIGA

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

6.1

18.3

2.2

Rel (local)

15.3

29.1

4.1

52-week high/low

$9.26

$5.71

Business description

SIGA Technologies is a commercial-stage health security company focused on the treatment of smallpox and other orthopoxviruses. It has contracts with both the US and Canadian governments for TPOXX, its treatment for smallpox, and is looking to expand internationally.

Next events

IV TPOXX FDA approval

Q222

Analysts

Ken Mestemacher, CFA

+44 (0)20 3077 5700

Soo Romanoff

+44 (0)20 3077 5700

SIGA Technologies is a research client of Edison Investment Research Limited

SIGA has reported Q122 revenues of $10.5m, up 119% y-o-y, driven by the first IV TPOXX deliveries to the US government. It also achieved key milestones in its product and international expansion strategies, including EMA approval for oral TPOXX, the first TPOXX contract in the Asia-Pacific (APAC) region, and a Canadian contract increased by $5m. The PEP trials are making progress, with the active phase planned to complete in Q322, and the DOD announced its intent for a single-source contract for TPOXX. We raise our valuation to $9.17 per share, up from our previous $8.80.

Year end

Revenue
(US$m)

EBITDA*
(US$m)

PBT*
(US$m)

EPS*
(c)

P/E
(x)

Net cash**
(US$m)

12/20

125.0

88.6

81.5

80.97

0.1

117.9

12/21

133.7

89.7

89.1

90.61

0.1

103.1

12/22e

125.0

63.5

63.0

65.86

0.1

71.9

12/23e

121.3

60.5

60.0

66.16

0.1

94.9

Note: *EBITDA, PBT and EPS (diluted) are normalized, excluding exceptional items and other revenue and expenses. **Adjusted for special dividend in Q222e.

Q122: First IV TPOXX deliveries and special dividend

Boosted by the IV TPOXX deliveries ($7m), SIGA reported Q122 revenues of $10.5m, up 119% y-o-y. Notably, the TPOXX deliveries were the first sales of IV TPOXX under the 19c BARDA contract, indicating the progress of SIGA’s product expansion beyond oral TPOXX. SIGA also announced a special dividend of $0.45 per share payable on 2 June 2022.

Celebrating key milestones in international expansion

As we previously discussed, international expansion is a key part of SIGA’s growth strategy. Management achieved several key milestones this quarter demonstrating significant progress on that front: EMA approval for its oral TPOXX, the c $3m contract for oral TPOXX in the APAC (the first for any country in that region) and an increase of $5m in the oral TPOXX contract with the Public Health Agency of Canada to $38m, with c $13m planned for delivery in FY22.

PEP trial update and DOD single-source award

SIGA’s PEP product expansion is making progress and management is targeting patient active-phase treatments to be complete for both trials by Q322. In September 2021, the US DOD disclosed that it intends to negotiate and award a fixed-price sole-source contract to SIGA for the procurement of TPOXX. Notably, the DOD highlighted PEP’s tolerability and adverse event profile and that TPOXX was the only product that met its procurement requirements.

Valuation: $666m (ex-dividend), or $9.17 per share

We revise our SIGA valuation (ex-dividend) to $666m or $9.17 per basic share, up from $648m ($8.80 per basic share) previously. Our adjustment reflects the planned dividend, a higher cash balance and lower share count. Due to uncertain timing, our forecast uses a straight-line approach across FY22–24e for the $300m in remaining options for the BARDA contract, and assumes $103m delivered per year. We will continue to monitor the appropriations process of the government.

Exhibit 1: Financial summary

$000s

2020

2021

2022e

2023e

2024e

Year end 31 December

US GAAP

US GAAP

US GAAP

US GAAP

US GAAP

PROFIT & LOSS

 

 

Revenue

 

 

124,959

133,670

125,034

121,337

122,422

Cost of Sales

(14,797)

(16,602)

(30,635)

(30,146)

(30,196)

Gross Profit

110,162

117,069

94,399

91,191

92,226

Research & Development

(10,939)

(9,942)

(10,042)

(10,142)

(10,243)

General & Administrative

(14,722)

(18,034)

(21,404)

(21,081)

(21,731)

EBITDA

 

 

88,579

89,716

63,475

60,490

60,774

Operating Profit (before amort. and excepts.)

 

 

84,501

89,093

62,953

59,968

60,251

Intangible Amortisation

-

-

-

-

-

Other

532

101

-

-

-

Exceptionals

(8,507)

118

-

-

-

Operating Profit

 

 

75,993

89,211

62,953

59,968

60,251

Net Interest

(3,017)

-

-

-

-

Other

-

-

-

-

-

Profit Before Tax (norm)

 

 

81,484

89,093

62,953

59,968

60,251

Profit Before Tax (reported)

 

 

72,977

89,211

62,953

59,968

60,251

Tax

(17,167)

(19,861)

(15,109)

(14,392)

(14,460)

Deferred tax

-

-

-

-

-

Profit After Tax (norm)

64,317

69,232

47,844

45,575

45,791

Profit After Tax (reported)

55,810

69,350

47,844

45,575

45,791

Average Number of Shares Outstanding (m)

79

75

72

68

64

EPS - normalized ($), basic

 

 

0.81

0.92

0.67

0.67

0.72

EPS - normalised fully diluted (c)

 

 

80.97

90.61

65.86

66.16

70.30

EPS - reported ($)

 

 

0.70

0.92

0.67

0.67

0.72

Dividend per share ($)

-

-

0.45

-

-

 

 

Gross Margin (%)

88

88

75

75

75

EBITDA Margin (%)

71

67

51

50

50

Operating Margin (before GW and except.) (%)

68

67

50

49

49

 

 

BALANCE SHEET

 

 

Fixed Assets

 

 

6,223

5,973

7,615

7,666

7,717

Intangible Assets

898

898

898

898

898

Tangible Assets

2,104

2,366

2,417

2,467

2,518

Other

3,221

2,709

4,301

4,301

4,301

Current Assets

 

 

143,608

208,753

181,055

201,559

223,087

Stocks

-

19,510

30,000

30,000

30,000

Debtors

3,340

83,650

76,955

74,459

75,119

Cash

117,890

103,139

71,867

94,866

115,735

Other

22,378

2,453

2,233

2,233

2,233

Current Liabilities

 

 

(10,484)

(30,488)

(7,241)

(6,432)

(6,432)

Creditors

(1,278)

(2,028)

(1,778)

(1,778)

(1,778)

Short term borrowings

-

-

-

-

-

Other

(9,205)

(28,460)

(5,462)

(4,653)

(4,653)

Long Term Liabilities

 

 

(9,555)

(9,924)

(9,569)

(9,569)

(9,569)

Long term borrowings

-

-

-

-

-

Other long term liabilities

(9,555)

(9,924)

(9,569)

(9,569)

(9,569)

Net Assets

 

 

129,793

174,314

171,860

193,224

214,803

Minority Interests

-

-

-

-

-

Shareholder equity

 

 

129,793

174,314

171,860

193,224

214,803

 

 

CASH FLOW

 

 

Operating Cash Flow

 

 

71,519

11,495

27,660

49,050

46,919

Net Interest

-

-

-

-

-

Tax

-

-

-

-

-

Capex

(16)

(51)

(51)

(51)

(51)

Acquisitions/disposals

-

-

-

-

-

Financing

-

-

-

-

-

Dividends

-

-

(32,882)

-

-

Other (including share buybacks)

(114,600)

(26,195)

(26,000)

(26,000)

(26,000)

Net Cash Flow

(43,097)

(14,751)

(31,272)

23,000

20,869

Opening net debt/(cash)

 

 

(80,942)

(117,890)

(103,139)

(71,867)

(94,866)

HP finance leases initiated

-

-

-

-

-

Exchange rate movements

-

-

-

-

-

Other

80,045

0

(0)

0

-

Closing net debt/(cash)

 

 

(117,890)

(103,139)

(71,867)

(94,866)

(115,735)

Source: SIGA Technology accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by SIGA Technologies and prepared and issued by Edison, in consideration of a fee payable by SIGA Technologies. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by SIGA Technologies and prepared and issued by Edison, in consideration of a fee payable by SIGA Technologies. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

More on SIGA Technologies

View All

Latest from the Healthcare sector

View All Healthcare content

Research: Healthcare

Cantargia — Useful insights from CANOPY-1 data

Novartis presented full results from its CANOPY-1 trial with canakinumab (anti-IL1beta; Cantargia’s CAN04 is an anti-IL1RAP with complete inhibition of IL-1) at the American Association for Cancer Research (AACR) Annual Meeting in April 2022. In our view one of the key findings was that patients with non-squamous non-small cell lung cancer (NSCLC) did better than those with squamous cancer types. This is beneficial for Cantargia, which already has a trial in non-squamous NSCLC underway. With regards to pancreatic cancer, the second lead indication, the company has now presented a plan for a registrational study. Multiple other catalysts are still due in the near term. Our valuation is SEK6.02bn or SEK60.1/share (from SEK68.9/share).

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free