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(Mark One)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒
☐
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2022
Or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________ to ___________
Commission File No. 0-23047
SIGA Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
31 East 62nd Street
New York, NY
(Address of principal executive offices)
13-3864870
(IRS Employer Identification. No.)
10065
(zip code)
Securities registered pursuant to Section 12(b) of the Act:
Registrant’s telephone number, including area code: (212) 672-9100
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
common stock, $.0001 par value
Securities registered pursuant to Section 12(g) of the Act:
SIGA
None
The Nasdaq Global Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth
company" in Rule 12b-2 of the Exchange Act: Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company
☐ Emerging growth company ☐.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☒
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If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒.
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant, based upon the closing sale price of the
common stock on June 30, 2022 as reported on The Nasdaq Global Market was approximately $549,866,712.
As of February 15, 2023, the registrant had outstanding 72,201,169 shares of common stock.
DOCUMENTS INCORPORATED BY REFERENCE
The following document is incorporated herein by reference:
Document
Proxy Statement for the Company’s 2023 Annual
Meeting of Stockholders
Parts Into Which Incorporated
Part III
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PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
SIGNATURES
SIGA TECHNOLOGIES, INC.
FORM 10-K
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Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Exhibits, Financial Statement Schedules
Form 10-K Summary
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Forward-Looking Statements
Part I
Certain statements in this Annual Report on Form 10-K, including certain statements contained in “Business” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” constitute “forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including
statements relating to the progress of SIGA’s development programs and timelines for bringing products to market, delivering products to the U.S. Strategic
National Stockpile ("Strategic Stockpile"), the enforceability of our procurement contracts, such as the 19C BARDA Contract (the "BARDA Contract"),
with the U.S. Biomedical Advanced Research and Development Authority ("BARDA"), and responding to the global outbreak of monkeypox ("mpox").
The words or phrases “can be,” “expects,” “may affect,” “may depend,” “believes,” “estimate,” “project” and similar words and phrases are intended to
identify such forward-looking statements. Such forward-looking statements are subject to various known and unknown risks and uncertainties, and SIGA
cautions you that any forward-looking information provided by or on behalf of SIGA is not a guarantee of future performance. SIGA’s actual results could
differ materially from those anticipated by such forward-looking statements due to a number of factors, some of which are beyond SIGA’s control,
including, but not limited to, (i) the risk that BARDA elects, in its sole discretion as permitted under the BARDA Contract, not to exercise all, or any, of the
remaining unexercised options under those contracts, (ii) the risk that SIGA may not complete performance under the BARDA Contract on schedule or in
accordance with contractual terms, (iii) the risk that the BARDA Contract, DoD Contract #2 (defined below) or PEP Label Expansion R&D Contract
(defined below) are modified or canceled at the request or requirement of the U.S. Government, (iv) the risk that the nascent international biodefense
market does not develop to a degree that allows SIGA to continue to successfully market TPOXX® internationally, (v) the risk that potential products,
including potential alternative uses or formulations of TPOXX® that appear promising to SIGA or its collaborators, cannot be shown to be efficacious or
safe in subsequent pre-clinical or clinical trials, (vi) the risk that SIGA or its collaborators will not obtain appropriate or necessary governmental approvals
to market these or other potential products or uses, (vii) the risk that SIGA may not be able to secure or enforce sufficient legal rights in its products,
including intellectual property protection, (viii) the risk that any challenge to SIGA’s patent and other property rights, if adversely determined, could affect
SIGA’s business and, even if determined favorably, could be costly, (ix) the risk that regulatory requirements applicable to SIGA’s products may result in
the need for further or additional testing or documentation that will delay or prevent SIGA from seeking or obtaining needed approvals to market these
products, (x) the risk that the volatile and competitive nature of the biotechnology industry may hamper SIGA’s efforts to develop or market its products,
(xi) the risk that changes in domestic or foreign economic and market conditions may affect SIGA’s ability to advance its research or may affect its
products adversely, (xii) the effect of federal, state, and foreign regulation, including drug regulation and international trade regulation, on SIGA’s
businesses, (xiii) the risk of disruptions to SIGA’s supply chain for the manufacture of TPOXX®, causing delays in SIGA’s research and development
activities, causing delays or the re-allocation of funding in connection with SIGA’s government contracts, or diverting the attention of government staff
overseeing SIGA’s government contracts, (xiv) the risk that the U.S. or foreign governments' responses (including inaction) to national or global economic
conditions or infectious diseases, such as COVID-19, are ineffective and may adversely affect SIGA’s business, and (xv) risks associated with responding
to the current mpox outbreak, as well as the risks and uncertainties included in Item 1A “Risk Factors” of this Form 10-K. All such forward-looking
statements are current only as of the date on which such statements were made. SIGA does not undertake any obligation to update publicly any forward-
looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.
The information contained on any website referenced in this Form 10-K is not incorporated by reference into this filing.
Item 1. Business
Overview
SIGA Technologies, Inc. is referred to throughout this report as “SIGA,” “the Company,” “we” or “us.”
We are a commercial-stage pharmaceutical company. The Company sells its lead product, TPOXX® (“oral TPOXX®,” also known as
"tecovirimat" in certain international markets), to the U.S. government and international governments (including government affiliated entities).
Additionally, the Company sells the intravenous formulation of TPOXX® ("IV TPOXX®") to the U.S. Government.
TPOXX® is an oral formulation antiviral drug for the treatment of human smallpox disease caused by variola virus. On July 13, 2018, the United
States Food & Drug Administration (“FDA”) approved oral TPOXX® for the treatment of smallpox. The Company has been delivering oral TPOXX® to
the U.S. Strategic National Stockpile ("Strategic Stockpile") since 2013.
In connection with IV TPOXX®, SIGA announced on May 19, 2022 that the FDA approved this formulation for the treatment of smallpox.
In addition to being approved by the FDA, oral TPOXX® (tecovirimat) has regulatory approval with the European Medicines Agency ("EMA"),
Health Canada and the Medicines and Healthcare Products Regulatory Agency ("MHRA") of the United Kingdom. The EMA and MHRA approved label
indication covers the treatment of smallpox, monkeypox ("mpox"), cowpox, and vaccinia complications following vaccination against smallpox. The
Health Canada approved label indication covers the treatment of smallpox.
With respect to the regulatory approvals by the EMA, MHRA and Health Canada, oral tecovirimat represents the same formulation that was
approved by the FDA in July 2018 under the brand name TPOXX®.
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In connection with a potential FDA label expansion of oral TPOXX® for an indication covering smallpox post-exposure prophylaxis (“PEP”), the
Company has recently completed enrollment of an immunogenicity trial and is planning to meet target enrollment for an expanded safety trial in March of
2023. Provided unblinded results from these trials are supportive of a regulatory submission, the Company expects to commence in 2023 the preparation of
a supplemental New Drug Application (“Supplemental NDA”) for a smallpox PEP indication for oral TPOXX®, targeting early 2024 for its submission to
the FDA.
In connection with the global response to an mpox outbreak, a series of observational and randomized, placebo-controlled clinical trials were
initiated, starting in the third quarter of 2022, to assess the safety and efficacy of TPOXX® in participants with mpox. The first three randomized, placebo-
controlled clinical trials to be launched were in the United States, United Kingdom and the Democratic Republic of Congo ("DRC"). These randomized
clinical trials are now enrolling patients to collect data on the potential benefits of using TPOXX® as an antiviral treatment for active mpox disease.
Study of Tecovirimat for Human Monkeypox Virus (STOMP; A5418) is a U.S.-based clinical trial sponsored by the National Institute of Allergy
and Infectious Diseases ("NIAID"), part of the National Institutes of Health. The NIAID-funded AIDS Clinical Trials Group is leading the study, which
may later expand to international sites. Study investigators aim to enroll more than 500 participants, including children and those who are pregnant or
breastfeeding, at clinical research sites. The trial will also include an open label arm that will include children, pregnant/breastfeeding individuals and those
who are immunocompromised or have severe mpox disease.
PLATINUM is a U.K.-based clinical trial commissioned and funded by the National Institute for Health Care and Research. The trial is led by
researchers at Oxford University and aims to recruit at least 500 participants, including children weighing ≥13 kg, across the U.K.
PALM 007 is a DRC-based clinical trial sponsored by NIAID and Institute National de Recherche Biomédicale. Study investigators aim to enroll
more than 450 participants, including children weighing ≥3 kg and women who are pregnant or breastfeeding, at clinical sites in the DRC.
The Company may be able to use data from the trials noted above to potentially pursue an FDA label expansion of oral TPOXX® for an
indication covering the treatment of mpox. The viability, and timing, of a potential FDA submission for an mpox indication will be impacted by a series of
factors, including the magnitude and severity of future mpox cases, the location of future cases, enrollment in clinical trials, and results of randomized,
placebo-controlled and observational clinical trials.
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Procurement Contracts with the U.S. Government
19C BARDA Contract
On September 10, 2018, the Company entered into a contract with BARDA pursuant to which SIGA agreed to deliver up to 1,488,000 courses of
oral TPOXX® to the Strategic Stockpile, and to manufacture and deliver to the Strategic Stockpile, or store as vendor-managed inventory, up to 212,000
courses of IV TPOXX®. Additionally, the contract includes funding from BARDA for a range of activities, including: advanced development of IV
TPOXX®, post-marketing activities for oral and IV TPOXX®, and procurement activities. As of December 31, 2022, the contract with BARDA (as
amended, modified, or supplemented from time to time, the "19C BARDA Contract") contemplates up to approximately $602.5 million of payments, of
which approximately $51.7 million of payments are included within the base period of performance of five years, approximately $268.9 million of
payments are related to exercised options and up to approximately $281.9 million of payments are currently specified as unexercised options. BARDA may
choose in its sole discretion when, or whether, to exercise any of the unexercised options. The period of performance for options is up to ten years from the
date of entry into the 19C BARDA Contract and such options could be exercised at any time during the contract term, including during the base period of
performance.
The base period of performance specifies potential payments of approximately $51.7 million for the following activities: payments of
approximately $11.1 million for the delivery of approximately 35,700 courses of oral TPOXX® to the Strategic Stockpile; payments of $8.0 million for the
manufacture of 20,000 courses of final drug product of IV TPOXX® ("IV FDP"), of which $3.2 million of payments are related to the manufacture of bulk
drug substance ("IV BDS") to be used in the manufacture of IV FDP; payments of approximately $32.0 million to fund reimbursed activities; and payments
of approximately $0.6 million for supportive procurement activities. As of December 31, 2022, the Company had received $11.1 million for the delivery of
approximately 35,700 courses of oral TPOXX® to the Strategic Stockpile, $3.2 million for the manufacture of IV BDS, $4.3 million for the delivery of IV
FDP to the Strategic Stockpile, and $18.8 million for other base period activities. IV BDS has been used for the manufacture of courses of IV FDP.
The options that have been exercised to date provide for payments up to approximately $268.9 million. There are exercised options for the
following activities: payments up to $11.2 million for the procurement of raw materials used in the 2020 manufacture of certain courses of oral
TPOXX®; payments up to $213.9 million for the delivery of up to 726,140 courses of oral TPOXX®; payments up to $25.6 million for the manufacture of
courses of IV FDP, of which $10.2 million of payments relate to the manufacture of IV BDS to be used in the manufacture of IV FDP; payments of up to
approximately $3.6 million to fund post-marketing activities for IV TPOXX®; and payments of up to $14.6 million for funding of post-marketing activities
for oral TPOXX®. As of December 31, 2022, the Company had received $225.1 million for the delivery (and related procurement of raw materials) of oral
TPOXX® to the Strategic Stockpile; $10.2 million for the completed manufacture of IV BDS; and $7.3 million in connection with post-marketing
activities for oral and IV TPOXX®.
Unexercised options specify potential payments up to approximately $281.9 million in total (if all such options are exercised). There are options
for the following activities: payments of up to $225.1 million for the delivery of oral TPOXX® to the Strategic Stockpile; payments of up to $51.2 million
for the manufacture of courses of IV FDP, of which up to $20.5 million of payments would be paid upon the manufacture of IV BDS to be used in the
manufacture of IV FDP; and payments of up to approximately $5.6 million for supportive procurement activities.
The options related to IV TPOXX® are divided into two primary manufacturing steps. There are options related to the manufacture of bulk drug
substance (“IV BDS Options”), and there are corresponding options (for the same number of IV courses) for the manufacture of final drug product (“IV
FDP Options”). BARDA may choose to exercise any, all, or none of these options in its sole discretion. The 19C BARDA Contract includes: three separate
IV BDS Options, each providing for the bulk drug substance equivalent of 64,000 courses of IV TPOXX®; and three separate IV FDP Options, each
providing for 64,000 courses of final drug product of IV TPOXX®. BARDA has the sole discretion as to whether to simultaneously exercise IV BDS
Options and IV FDP Options, or whether to exercise options at different points in time (or alternatively, to only exercise the IV BDS Option but not the IV
FDP Option). To date, BARDA has exercised one of the three IV BDS options and one of the three IV FDP options, both of which were exercised
simultaneously in 2022. If BARDA decides to only exercise the remaining IV BDS Options, then the Company would receive payments up to $20.5
million; alternatively, if BARDA decides to exercise all the remaining IV BDS Options and IV FDP Options, then the Company would receive payments
up to $51.2 million. For each set of options relating to a specific group of courses (for instance, the IV BDS and IV FDP options that reference the same
64,000 courses), BARDA has the option to independently purchase IV BDS or IV FDP. The Company estimates that sales of the IV formulation under this
contract (under current terms), assuming the IV FDP Options were exercised, would have a gross margin (sales less cost of sales, as a percentage of sales)
that is less than 40%.
Under the terms of this contract, exercise of procurement options is at the sole discretion of BARDA. The request for proposal that preceded the
award of the 19C BARDA Contract indicated that the expected purpose of the contract was to maintain the level of smallpox antiviral preparedness in the
Strategic Stockpile. Based on prior product delivery activity, and current FDA-approved shelf life of oral TPOXX®, the Company estimates that
approximately 920,000 courses of smallpox antiviral treatment would need to be delivered to the Strategic Stockpile in 2023 and 2024 in order to maintain
historical stockpile levels of unexpired TPOXX® treatment in the Strategic Stockpile.
U.S. Department of Defense Procurement Contracts
On May 12, 2022, the Company announced a contract with the U.S. Department of Defense ("DoD") for the procurement of oral TPOXX® ("DoD
Contract #1"). The DoD Contract #1 included a firm commitment for the DoD to procure approximately $3.6 million of oral TPOXX®, and an option,
exercisable at the sole discretion of the DoD, for the procurement of approximately $3.8 million of oral TPOXX®. In the second quarter of 2022, the
Company delivered and recognized revenue of $3.6 million for the delivery of oral TPOXX® to the DoD, fulfilling the firm commitment in DoD Contract
#1. In the third quarter of 2022, the DoD exercised the option for $3.8 million of oral TPOXX® and the Company satisfied its obligation by
delivering product and recognized the related revenue in September 2022.
On September 28, 2022, the Company and the DoD signed a new procurement contract ("DoD Contract #2"). The DoD Contract #2 includes a
firm commitment for the DoD to procure approximately $5.2 million of oral TPOXX®, and an option, exercisable at the sole discretion of the DoD for the
procurement of approximately $5.5 million of oral TPOXX®.
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International Procurement Contracts
In 2022, the Company received firm commitment orders from 13 international customers (including Canada) for the delivery of approximately
$77 million of oral TPOXX®, of which approximately $39 million is for Canada and approximately $38 million is for jurisdictions in Europe, Asia-Pacific,
and the Middle East. Additionally, the contract with the Canadian Department of National Defence ("CDND") has an option until March 31, 2024,
exercisable at the sole discretion of CDND, for the purchase of up to an additional $6 million of oral TPOXX®. With respect to the $77 million of firm
commitment orders that were received this year, approximately $71 million of oral TPOXX® was delivered and recorded as revenue in 2022, and the
remaining order is expected to be fulfilled by July 31, 2023. Through an International Promotion Agreement (defined and discussed below), Meridian
Medical Technologies, Inc. (“Meridian”) is the counterparty to international contracts under which orders are placed for the purchase of oral TPOXX®.
The Public Health Agency of Canada (“PHAC”) and the CDND are among the contracting parties for the purchase of oral TPOXX® (see below for a
summary description of these contracts).
On January 13, 2021, PHAC awarded a contract to Meridian (the “PHAC Contract”) for the purchase of up to approximately $33 million of oral
TPOXX® (tecovirimat) within five years. In March 2022 and July 2022, PHAC executed amendments in which total procurement of oral TPOXX® under
the PHAC Contract was increased to an amount of approximately $45 million. Prior to 2022, approximately $10 million of oral TPOXX® had been
ordered and delivered to PHAC. During 2022, all remaining amounts under the PHAC Contract of approximately $35 million of oral TPOXX®
were delivered to PHAC and recognized as revenue.
On April 3, 2020, the Company announced that the CDND awarded a contract (the "Canadian Military Contract") to Meridian, pursuant to which
the CDND would purchase up to approximately $14 million of oral TPOXX® over four years in an option-based contract. Prior to 2022, approximately
$4 million of oral TPOXX® had been ordered and delivered to the CDND. In 2022, approximately $4 million of oral TPOXX® was delivered and
recognized as revenue under this contract, leaving approximately $6 million of unexercised options, exercisable at the sole discretion of CDND, remaining
under this contract.
The above-listed contract awards were coordinated between SIGA and Meridian under the international promotion agreement (as amended, the
"International Promotion Agreement") that has an effective date of May 31, 2019. Under the International Promotion Agreement, Meridian is the
counterparty in connection with international contracts for oral TPOXX® and SIGA is responsible for manufacture and delivery of any oral TPOXX®
purchased thereunder.
International Promotion Agreement
Under the terms of the International Promotion Agreement, which has an effective date of May 31, 2019 and an initial term that expires on May
31, 2024, Meridian was granted exclusive rights to market, advertise, promote, offer for sale, or sell oral TPOXX® in a field of use specified in the
International Promotion Agreement in all geographic regions except for the United States (the “Territory”), and Meridian has agreed not to commercialize
any competing product, as defined in the International Promotion Agreement, in the specified field of use in the Territory. SIGA retains ownership,
intellectual property, distribution and supply rights and regulatory responsibilities in connection with TPOXX®, and, in the United States market, also
retains sales and marketing rights with respect to oral TPOXX®. SIGA’s consent is required for the entry into any sales arrangement pursuant to the
International Promotion Agreement.
Sales to international customers pursuant to the International Promotion Agreement are invoiced and collected by Meridian, and such collections
are remitted, less Meridian's fees, to the Company under a quarterly process specified in the International Promotion Agreement. The fee Meridian retains
pursuant to the International Promotion Agreement is a specified percentage of the collected proceeds of sales of oral TPOXX®, net of certain expenses,
for calendar years in which customer collected amounts net of such expenses are less than or equal to a specified threshold, and a higher specified
percentage of such collected net proceeds for calendar years in which such net collected amounts exceed the specified threshold. Taking into account
Meridian’s fee and manufacturing costs of oral TPOXX®, it is currently estimated by the Company that international sales of oral TPOXX® each year will
have a contribution margin (as expressed as a percentage of product sales, and before any consideration of expenses not directly related to manufacturing or
Meridian activities) of between approximately 65% and 80%, depending on the international sales levels each year. For purposes of this disclosure,
contribution margin (in amount) represents international product sales less applicable cost of sales and the Meridian fee (which is included within selling,
general and administrative expenses within the income statement).
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Research Agreements and Grants
In July 2019, the Company was awarded a multi-year research contract valued at a total of $ 19.5 million, with an initial award of $ 12.4 million,
from the DoD to support work in pursuit of a potential label expansion for oral TPOXX® that would include post-exposure prophylaxis ("PEP") of
smallpox (such work known as the "PEP Label Expansion Program" and the contract referred to as the "PEP Label Expansion R&D Contract"). In
subsequent modifications, the DoD increased the scope and the available funding under the PEP Label Expansion R&D Contract to approximately
$27 million. The period of performance for this contract, as modified, terminates on January 31, 2025.
Contracts and grants include, among other things, options that may or may not be exercised at the U.S. Government’s discretion. Moreover,
contracts and grants contain customary terms and conditions including the U.S. Government’s right to terminate or restructure a contract or grant for
convenience at any time. As such, the Company may not be eligible to receive all available funds.
Manufacturing
SIGA does not have a manufacturing infrastructure and does not intend to develop one for the manufacture of TPOXX®. SIGA relies on and uses
third parties known as Contract Manufacturing Organizations (“CMOs”) to procure commercial raw materials and supplies, and to manufacture TPOXX®.
SIGA's CMOs apply methods and controls in facilities that are used for manufacturing, processing, packaging, testing, analyzing and holding
pharmaceuticals which conform to current good manufacturing practices (“cGMP”), the standard set by the FDA for manufacture and storage of
pharmaceuticals intended for human use.
Oral TPOXX®:
For the manufacture of oral TPOXX®, the Company uses the following CMOs: W.R. Grace and Company (“Grace”), who acquired the assets of
Albemarle's Fine Chemistry Services Business in 2021; Microsize, formerly known as Powdersize, LLC and renamed following a change of control
transaction; Catalent Pharma Solutions LLC (“Catalent”); and Packaging Coordinators, LLC ("PCI").
SIGA has had manufacturing agreements with Grace and a predecessor owner (Albemarle) since 2011. Pursuant to the current agreement with
Grace, which was put in place in 2018 when Albemarle was the owner of the operations that provide services to SIGA, Grace manufactures, tests and
supplies active pharmaceutical ingredient (“API”) for use in TPOXX®. The agreement provides that, during the term of the current agreement, SIGA was
required to purchase 100% of its internal and external API requirements for TPOXX® from Grace until the later of (i) September 30, 2021 and (ii) such
time as SIGA has purchased 12 metric tons of API from Grace under the agreement. As of December 31, 2022, SIGA has purchased more than 12 metric
tons of API; as such, SIGA will purchase at least 70% of its internal and external API requirements for TPOXX® from Grace until the end of the term of
the agreement (as described below), unless the Company receives an offer to purchase API at a price that Grace is unable to match, in which event SIGA
will purchase at least 30% of its internal and external API requirements for TPOXX® from Grace until September 30, 2023. There is no minimum amount
of kilograms of API that must be used or acquired by SIGA. The following events are excluded from the “100% API” requirement: (i) if a contract entered
into by SIGA for the sale of final drug product (“FDP”) requires that the product used as the API for such FDP be manufactured outside the U.S. and Grace
is unwilling or unable to subcontract such manufacture to a party or parties that meet the terms of the agreement; (ii) if a contract entered into by SIGA for
the sale of FDP in an intravenous formulation requires different specifications than those provided for under the agreement and the parties are not able to
reach agreement on the necessary changes to the specifications or on pricing; or (iii) if Grace fails to perform any of its obligations under the agreement and
does not cure such failure within 30 days of written notice from SIGA. SIGA is required to pay Grace within 45 days of its invoice date. Pricing for API is
at a fixed price per kilogram, subject to adjustment for increases in raw material costs and/or general manufacturing costs. Grace is required to deliver API
that conforms to specifications outlined in the agreement; the Company is not required to pay for API that does not meet specifications. The Company has
120 days to reject any shipments that do not meet such specifications or are damaged. In addition to receiving payments for API deliveries, Grace is also
paid for related services, such as stability testing. The Company’s agreement with Grace is currently scheduled to expire upon the earlier of: (i) September
30, 2023, or (ii) the fulfillment of delivery obligations under the 19C BARDA Contract. As such, since the delivery obligations under the 19C BARDA
Contract have not been fulfilled yet, the contract term continues. At the end of the above-mentioned contract term, the agreement will renew for successive
one-year renewal terms until either the Company or Grace provides notice of non-renewal at least 90 days prior to the expiration date of a term.
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Microsize micronizes and tests API for use in oral TPOXX®. The Company’s agreement with Microsize's predecessor was amended on January
11, 2019. The amended term ends on the tenth anniversary of the amendment date.
Catalent granulates, encapsulates, and tests oral TPOXX®. In addition, Catalent provides services related to commercial stability testing of drug
product and preparation for tabulated stability and trend analysis for each time point. The Company’s agreement with Catalent had an initial term that
ended on June 28, 2021. Thereafter, this agreement became subject to automatic renewal for three years unless either party provided six months' notice of
its desire to terminate the agreement prior to the expiration of the term. The Company did not provide notice nor receive notice of termination. As such,
until June 28, 2024, SIGA will purchase all of its requirements for bulk product under the 19C BARDA Contract from Catalent.
PCI provides packaging services in connection with oral TPOXX®. Additionally, PCI has contracted with the Company to provide packaging
services in connection with the intravenous formulation of TPOXX®. The Company’s agreement with PCI had an initial term that ended on March 1, 2022.
Thereafter, this agreement automatically renews for successive one-year periods unless either party provides 120 days' notice of its desire to terminate the
agreement prior to the expiration of the term. Notice has not been provided by either party and, as such, the agreement has been automatically extended to
March 1, 2024. The agreement can be terminated earlier than March 1, 2024 under certain conditions.
Intravenous (IV) formulation of TPOXX®:
For the manufacture of IV TPOXX® under the BARDA Contract, the Company has agreed to use the following CMOs: Roquette America, Inc.
(“Roquette”); Patheon Manufacturing Services LLC (“Patheon”); and PCI.
Roquette provides an excipient used in the manufacturing of IV TPOXX®. The Company's agreement with Roquette has no minimum amount of
manufacturing services that must be used. The Company’s agreement with Roquette has an initial term that ends on December 31, 2023. Thereafter, this
agreement automatically renews on a year-by-year basis unless either party provides four months’ notice of its desire to terminate the agreement prior to
the expiration of the term.
Patheon manufactures, tests and packages IV TPOXX®. SIGA agreed that Patheon will be entitled to manufacture at least 80% of IV TPOXX®
offered for sale by SIGA during the first three years of the agreement, provided Patheon adheres to reasonable manufacturing standards. Thereafter, the
manufacturing percentage will be as mutually agreed upon by the parties. The Company’s agreement with Patheon has an initial term that ends on the later
of: December 31, 2022 or, such date as all government contracts related to IV TPOXX® are terminated. As such, since the Company continues to have
active government contracts related to IV TPOXX®, the contract term continues. At the end of the above mentioned contract term, this agreement
automatically renews for two-year increments unless either party provides twelve months’ notice of its desire to terminate the agreement prior to the
expiration of the term.
As noted above, PCI provides packaging services for IV TPOXX®. Grace provides the API used in manufacturing of the intravenous formulation.
Corporate Responsibility and Sustainability
SIGA focuses on the health security market and seeks to advance global health while promoting a sustainable environment.
SIGA seeks to advance global public health through its development and commercial activities, which include (i) delivering medical
countermeasures to governments and/or non-governmental organizations ("NGOs") so that governments and/or NGOs can cost-effectively stockpile
treatments for potential public health emergencies and (ii) donating therapies to NGOs to treat patients with serious infectious diseases in developing
countries or those who are being treated on a compassionate basis and/or within clinical trials.
SIGA seeks to promote a sustainable environment by tracking the involvement of its manufacturing supply chain in initiatives and organizations
that prioritize a sustainable environment. Almost all manufacturers within SIGA’s supply chain, including Grace, Catalent, PCI, Patheon and Roquette,
maintain corporate social responsibility and/or sustainability programs and publicly report on those programs.
SIGA also pursues such policies within its own corporate environment, although SIGA's corporate scale is relatively too small to report separately
their impact.
7
Table of Contents
Market for Medical Countermeasures for Biological Threats
The market for medical countermeasures reflects continued awareness of the risks and threats of biological outbreaks, including such outbreaks
related to global terror and biowarfare activity. The U.S. Government is the largest source of development and procurement funding for academic
institutions and biopharmaceutical companies conducting medical countermeasure research or developing vaccines, anti-infectives and immunotherapies
directed at potential agents of bioterror or biowarfare. For the U.S. Government's fiscal year ended September 30, 2022, the budget for annual spending by
the U.S. Department of Health and Human Services ("HHS") for activities related to advanced development and procurement of medical countermeasures
for biodefense-related biological threats to civilian populations was more than $2 billion.
We believe that potential markets for the sale of medical countermeasures include:
•
•
•
•
•
The U.S. government, including both public health and defense agencies;
foreign governments, including both public health and defense agencies;
NGOs and multinational companies;
healthcare providers, including hospitals and clinics; and
state and local governments, which may be interested in procuring these products to protect, among others, emergency responders, such as
police, fire and emergency medical personnel.
8
Table of Contents
General
With respect to U.S. government contracts, we receive cash payments on a monthly basis, as services are performed or goods are purchased.
Amounts under contract and grant agreements are not guaranteed and can be canceled at any time for reasons such as non-performance or convenience of
the U.S. Government and, if canceled, we will not receive funds for additional work under the agreements. With respect to international government
contracts, we receive cash payments based on the terms contained within the International Promotion Agreement with Meridian, under which Meridian
collects payments from foreign governments.
Competition
The biotechnology and pharmaceutical industries are characterized by rapidly evolving technology and intense competition. Our current and
potential competitors include many major pharmaceutical companies, many of which have significant financial, technical and marketing resources.
Biotechnology and other pharmaceutical competitors in the medical countermeasure sector include, but are not limited to, Emergent BioSolutions Inc.
and Bavarian Nordic A/S. Academic institutions, governmental agencies and other public and private research organizations are also conducting research
activities and seeking patent protection and may commercialize products on their own or through joint ventures.
TPOXX® faces significant competition for government funding for both development and procurement of medical countermeasures for
biological, chemical, radiological and nuclear threats, diagnostic testing systems, and other emergency preparedness countermeasures.
Our commercial opportunities could be reduced or eliminated if our competitors develop and commercialize products that are safer, more
effective, have fewer side effects, are more convenient or are less expensive than products that we may develop. In addition, we may not be able to compete
effectively if our product candidates do not satisfy governmental procurement requirements, particularly requirements of the U.S. Government with respect
to medical countermeasure products.
Human Capital Resources and Research Facilities
As of February 15, 2023, we had 39 full-time employees. None of our employees are covered by a collective bargaining agreement, and we
consider our employee relations to be satisfactory. Our human capital resources objectives include, as applicable, identifying, recruiting, retaining,
incentivizing and integrating our existing and new employees, advisors and consultants with the overall goal of having an employee base that embraces
teamwork and shares a focus for using each person’s individual skills, experience and expertise in order to develop and maximize the value of corporate
assets, and achieve long-term revenue and earnings growth.
Our research and development facilities are located in Corvallis, Oregon, where we lease approximately 10,276 square feet under a lease
agreement that commenced on January 1, 2018 and which expires in December 2024.
Intellectual Property and Proprietary Rights
An important element of SIGA’s business development activities involves the Company's ability to obtain and maintain patent and other
intellectual property protection in the U.S. and the rest of the world for its proprietary technologies, drug targets, and potential products and to preserve its
trade secrets. Because of the substantial length of time and expense associated with bringing potential products through the development and regulatory
clearance processes to reach the marketplace, the pharmaceutical industry places considerable importance on obtaining patent and trade secret protection.
The patent positions of pharmaceutical and biotechnology companies can be highly uncertain and involve complex legal and factual questions. No
consistent policy regarding the breadth of claims allowed in biotechnology patents across various jurisdictions has emerged to date. Accordingly, SIGA
cannot predict the type and extent of claims that will be allowed in pending patent applications.
SIGA also relies upon trade secret protection for its confidential and proprietary information. No assurance can be given that other companies will
not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to SIGA’s trade secrets or that SIGA
can meaningfully protect its trade secrets.
SIGA exclusively owns its key patent portfolios, which relate to its leading drug product, TPOXX® (also known as ST-246, tecovirimat). As of
January 10, 2023, the TPOXX® patent portfolio has seven patent families consisting of 29 U.S. utility patents, 101 issued foreign patents, two U.S. utility
patent applications, and 23 foreign patent applications.
The principal and material issued patents covering TPOXX® are described in the table below.
Patent Number
US 7737168
US 8039504
US 7687641
Country
United States
United States
United States
US 8124643
United States
US 7956197
United States
US 8530509
United States
Protection Conferred
Method of treating orthopoxvirus infection with ST-246
Pharmaceutical compositions and unit dosage forms containing ST-246
Method of manufacturing ST-246
Composition of matter for the ST-246 compound and Pharmaceutical
compositions containing ST-246
Method of manufacturing ST-246
Pharmaceutical compositions containing a mixture of compounds
including ST-246
Issue Date
June 15, 2010
October 18, 2011
March 30, 2010
Expiration Date
September 4, 2031
July 23, 2027
September 27, 2024
February 28, 2012 June 18, 2024
June 7, 2011
June 18, 2024
September 10, 2013June 18, 2024
9
Table of Contents
US 8802714
United States
US 9045418
US 9233097
United States
United States
US 9339466
United States
US 9546137
US 9744154
US 9862683
US 9670158
US 9889119
US 9907859
US 10029985
US 10045963
United States
United States
United States
United States
United States
United States
United States
United States
US 10045964
United States
US 10124071
US 10155723
United States
United States
US 10406137
United States
US 10406103
US 10576165
US 10864282
US 10662155
US 10716759
United States
United States
United States
United States
United States
US 10933050
United States
US 11433051
United States
SG 184201
Singapore
SG 10201506031U Singapore
RU 2578606
Russian Federation
OA 16109
OAPI /Africa
NZ 602578
New Zealand
MX 326231
Mexico
MX 348481
MX 347795
MX 361428
MX 363189
MX 368106
KR 101868117
JP 4884216
JP 5657489
JP 5898196
JP 6018041
JP 6188802
JP 6444460
JP 6564514
Mexico
Mexico
Mexico
Mexico
Mexico
Korea
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Method of treating orthopoxvirus infection with a mixture of compounds
including ST-246
Method of manufacturing ST-246
Liquid Pharmaceutical formulations containing ST-246
Certain polymorph of ST-246, method of preparation of the polymorph
and pharmaceutical compositions containing the polymorph
Methods of preparing ST-246
Polymorphic forms of ST-246 and methods of preparation
Methods of preparing Tecovirimat
Amorphous Tecovirimat preparation
Amorphous Tecovirimat preparation
ST-246 liquid formulations and methods
Methods of preparing Tecovirimat
Amorphous Tecovirimat preparation
Certain polymorphs of ST-246, method of preparation of the polymorphs
and pharmaceutical compositions containing the polymorphs
ST-246 liquid formulations and methods
Methods of preparing Tecovirimat
Certain polymorphs of ST-246 and pharmaceutical compositions
containing the polymorphs
Rehydration of micronized Tecovirimat monohydrate
Liquid Pharmaceutical formulations containing ST-246
Methods of preparing liquid formulations containing ST-246
Methods of preparing Tecovirimat
Rehydration of micronized Tecovirimat monohydrate
Certain polymorphs of ST-246 and pharmaceutical compositions
containing the polymorphs
ST-246 suspension formulations
Certain polymorphs of ST-246, method of preparation of the polymorphs
and pharmaceutical compositions containing the polymorphs
ST-246 liquid formulations and methods
Certain polymorphs of ST-246, method of preparation of the polymorphs
and their use in treating orthopoxvirus
Certain polymorphs of ST-246, method of preparation of the polymorphs
and their use in treating orthopoxvirus
Certain polymorphs of ST-246, method of preparation of the polymorphs
and their use in treating orthopoxvirus
Pharmaceutical compositions containing ST-246 and one or more
additional ingredients and dosage unit forms containing ST-246
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
ST-246 liquid formulations and methods
Polymorphic forms of ST-246 and methods of preparation
Use of pharmaceutical compositions containing ST-246
ST-246 liquid formulations and methods
ST-246 liquid formulations and methods
Therapeutic agent for treating orthopoxvirus including ST-246,
pharmaceutical composition of matter for the ST-246 compound and
method of manufacturing ST-246
Method of manufacturing ST-246
Liquid Pharmaceutical formulations containing ST-246
Certain polymorphs of ST-246, method of preparation of the polymorphs
and pharmaceutical compositions containing the polymorphs
Methods of preparing Tecovirimat
Methods of preparing Tecovirimat
Methods of preparing Tecovirimat
August 12, 2014
June 18, 2024
June 2, 2015
January 12, 2016 August 2, 2031
June 18, 2024
May 17, 2016
March 23, 2031
January 17, 2017 August 14, 2033
August 29, 2017 March 23, 2031
January 9, 2018
August 14, 2033
July 11, 2034
June 6, 2017
February 13, 2018 July 11, 2034
March 6, 2018
July 24, 2018
August 14, 2018
August 2, 2031
August 14, 2033
July 11, 2034
August 14, 2018 March 23, 2031
November 13, 2018 August 2, 2031
December 18, 2018 August 14, 2033
September 10, 2019March 23, 2031
September 10, 2019November 14, 2034
March 3, 2020
August 2, 2031
December 15, 2020 August 2, 2031
August 14, 2033
May 26, 2020
November 14, 2034
July 21, 2020
March 2, 2021
March 23, 2031
September 6, 2022 November 27, 2039
June 22, 2015
March 23, 2031
June 11, 2021
August 2, 2031
March 27, 2016 March 23, 2031
October 31, 2013 March 23, 2031
December 2, 2014 March 23, 2031
December 11, 2014 April 23, 2027
June 15, 2017
April 23, 2027
May 15, 2017
August 2, 2031
December 6, 2018 March 23, 2031
March 14, 2019
April 23, 2027
September 19, 2019August 2, 2031
August 2, 2031
June 8, 2018
December 16, 2011 June 18, 2024
December 5, 2014 June 18, 2024
March 11, 2016
August 2, 2031
October 7, 2016 March 23, 2031
August 14, 2033
August 10, 2017
December 7, 2018 August 14, 2033
August 14, 2033
August 2, 2019
10
Table of Contents
JP 6594303
JP 6843616
JP 7074677
BR 112012023743-
8
BR 112013002646-
4
Japan
Japan
Japan
Brazil
Brazil
CN 2011800245893China
CN 2013800429237China
CN 2017103075357China
CN 2014800653387China
CA 2529761
Canada
CA 2685153
Canada
CA 2866037
CA 2807528
CA 2966466
CA 2882506
CA 2793533
CA 2917199
CA 2930461
Canada
Canada
Canada
Canada
Canada
Canada
Canada
AU 2004249250
Australia
AU 2007351866
Australia
AU 2011232551
Australia
AU 2011285871
AU 2013302764
Australia
Australia
AU 2012268859
Australia
Australia
AU 2014290333
Australia
AU 2014353235
Australia
AU 2018201499
AU 2019208252
Australia
AU 20172211295 Australia
Australia
AU 2020202894
AP 3221
ARIPO*/Africa
ZA 2012/07141
South Africa
ZA 2013/00930
South Africa
IL 201736
IL 236944
IL 242665
IL 224430
IL 242666
IL 221991
IL 269370
IL 242331
IL 244731
Israel
Israel
Israel
Israel
Israel
Israel
Israel
Israel
Israel
Rehydration of micronized Tecovirimat monohydrate
Amorphous Tecovirimat preparation
ST-246 suspension formulations
Certain polymorphs of ST-246, method of preparation of the polymorphs
and pharmaceutical compositions containing the polymorphs
October 4, 2019
February 29, 2021 July 11, 2034
May 24, 2022
February 15, 2037
November 14, 2034
February 18, 2020 March 23, 2031
Liquid Pharmaceutical formulations containing ST-246
January 4, 2022
August 2, 2031
Certain polymorphs of ST-246, method of preparation of the polymorphs
and pharmaceutical compositions containing the polymorphs
Methods of preparing Tecovirimat
Methods of preparing Tecovirimat
Rehydration of micronized Tecovirimat monohydrate
Use of ST-246 to treat orthopoxvirus infection, pharmaceutical
compositions containing ST-246 and composition of matter for the ST-246
compound
Pharmaceutical compositions containing ST-246 and one or more
additional ingredients and dosage unit forms containing ST-246
Chemicals, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Liquid Pharmaceutical formulations containing ST-246
Use of ST-246 to treat orthopoxvirus infections
Methods of preparing Tecovirimat
Certain polymorphs of ST-246, method of preparation of the polymorphs
and pharmaceutical compositions containing the polymorphs
Amorphous Tecovirimat preparation
Rehydration of micronized Tecovirimat monohydrate
Method of treating orthopoxvirus infection, pharmaceutical composition
containing ST-246 and composition of matter for the ST-246 compound
Pharmaceutical compositions containing ST-246 and one or more
additional ingredients and dosage unit forms containing ST-246
Certain polymorphs of ST-246, method of preparation of the polymorphs
and their use in treating orthopoxvirus
Liquid Pharmaceutical formulations containing ST-246
Methods of preparing Tecovirimat
Pharmaceutical compositions containing ST-246 and one or more
additional ingredients and dosage unit forms containing ST-246
Amorphous Tecovirimat preparation
Rehydration of micronized Tecovirimat monohydrate
Methods of preparing Tecovirimat
Rehydration of micronized Tecovirimat monohydrate
ST-246 suspension formulations
Methods of preparing Tecovirimat
Certain polymorphs of ST-246, method of preparation of the polymorphs
and their use in treating orthopoxvirus
Certain polymorphs of ST-246, method of preparation of the polymorphs
and pharmaceutical compositions containing the polymorphs
Liquid Pharmaceutical formulations containing ST-246
Pharmaceutical compositions containing ST-246 and one or more
additional ingredients and dosage unit forms containing ST-246
Methods of preparing Tecovirimat
Methods of preparing intermediate in the preparation of Tecovirimat
Liquid Pharmaceutical formulations containing ST-246
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Certain polymorphs of ST-246, method of preparation of the polymorphs
and pharmaceutical compositions containing the polymorphs
Compositions and methods for treatment and prevention of orthopoxvirus
infections and associated diseases
Amorphous Tecovirimat preparation
Rehydration of micronized Tecovirimat monohydrate
August 26, 2015 March 23, 2031
June 20, 2017
March 6, 2020
February 7, 2020 November 14, 2034
August 14, 2033
August 14, 2033
August 13, 2013
June 18, 2024
December 16, 2014 April 23, 2027
May 16, 2017
April 23, 2027
September 25, 2018August 2, 2031
August 25, 2020
April 23, 2027
October 20, 2020 August 14, 2033
February 26, 2019 March 23, 2031
August 31, 2021
August 16, 2022
July 11, 2034
November 14, 2034
March 29, 2012
June 18, 2024
January 10, 2013
June 18, 2024
February 26, 2015 March 23, 2031
August 6, 2015
April 5, 2018
August 2, 2031
August 14, 2033
August 18, 2016
June 18, 2024
February 21, 2019 July 11, 2034
August 22, 2019
May 21, 2020
July 2, 2020
May 2, 2022
July 7, 2022
November 14, 2034
August 14, 2033
November 14, 2034
February 15, 2037
August 14, 2033
April 3, 2015
March 23, 2031
June 29, 2016
March 23, 2031
November 25, 2015 August 2, 2031
October 1, 2016
April 23, 2027
February 1, 2017 August 14, 2033
February 1, 2020 April 23, 2027
December 27, 2019 August 2, 2031
December 1, 2018 April 23, 2027
October 1, 2019 March 23, 2031
December 1, 2020 April 23, 2027
March 1, 2021
September 1, 2021 November 14, 2034
July 11, 2034
11
Table of Contents
AT 1638938
Austria
BE 1638938
BE 2549871
BE 2600715
Belgium
Belgium
Belgium
CH 1638938
Switzerland
CH 2549871
CH 2600715
Switzerland
Switzerland
DE 1638938
Germany
DE 2549871
DE 2887938
DE 2600715
DE 3321253
DE 3021836
DE 3043793
Germany
Germany
Germany
Germany
Germany
Germany
DK 1638938
Denmark
DK 2549871
DK 2600715
Denmark
Denmark
ES 1638938
Spain
FI 1638938
Finland
FR 1638938
FR 2887938
FR 2549871
FR 2600715
FR 3321253
FR 3021836
FR 3043793
France
France
France
France
France
France
France
GB 1638938
United Kingdom
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Polymorphic forms of ST-246
Liquid Pharmaceutical formulations containing ST-246
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Polymorphic forms of ST-246
Liquid Pharmaceutical formulations containing ST-246
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Polymorphic forms of ST-246
Methods of preparing Tecovirimat
Liquid Pharmaceutical formulations containing ST-246
Methods of preparing Tecovirimat
Amorphous Tecovirimat preparation
Rehydration of micronized Tecovirimat monohydrate
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Polymorphic forms of ST-246
Liquid Pharmaceutical formulations containing ST-246
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Methods of preparing Tecovirimat
Polymorphic forms of ST-246
Liquid Pharmaceutical formulations containing ST-246
Methods of preparing Tecovirimat
Amorphous Tecovirimat preparation
Rehydration of micronized Tecovirimat monohydrate
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
GB 2887938
GB 2549871
GB 2600715
United Kingdom Methods of preparing Tecovirimat
United Kingdom Polymorphic forms of ST-246
United Kingdom Liquid Pharmaceutical formulations containing ST-246
12
April 12, 2017
June 18, 2024
April 12, 2017
June 18, 2024
August 22, 2018 March 23, 2031
December 11, 2019 August 2, 2031
April 12, 2017
June 18, 2024
August 22, 2018 March 23, 2031
December 11, 2019 August 2, 2031
April 12, 2017
June 18, 2024
August 22, 2018 March 23, 2031
January 10, 2018 August 14, 2033
December 11, 2019 August 2, 2031
February 12, 2020 August 14, 2033
August 27, 2020
January 6, 2021
July 11, 2034
November 14, 2034
April 12, 2017
June 18, 2024
August 22, 2018 March 23, 2031
December 11, 2019 August 2, 2031
April 12, 2017
June 18, 2024
April 12, 2017
June 18, 2024
April 12, 2017
June 18, 2024
January 10, 2018 August 14, 2033
August 22, 2018 March 23, 2031
December 11, 2019 August 2, 2031
February 12, 2020 August 14, 2033
August 27, 2020
January 6, 2021
July 11, 2034
November 14, 2034
April 12, 2017
June 18, 2024
January 10, 2018 August 14, 2033
August 22, 2018 March 23, 2031
December 11, 2019 August 2, 2031
Table of Contents
GB 3321253
GB 3021836
GB 3043793
United Kingdom Methods of preparing Tecovirimat
United Kingdom Amorphous Tecovirimat preparation
United Kingdom Rehydration of micronized Tecovirimat monohydrate
HK 1179824
Hong Kong
HK 1184639
Hong Kong
IE 1638938
Ireland
IT
502017000078377
Italy
NL 1638938
Netherlands
PL 1638938
Poland
SE 1638938
Sweden
Certain polymorphs of ST-246, method of preparation of the polymorphs
and pharmaceutical compositions containing the polymorphs
Liquid Pharmaceutical formulations containing ST-246
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
Compounds, compositions and methods for treatment and prevention of
orthopoxvirus infections and associated diseases
February 12, 2020 August 14, 2033
August 27, 2020
January 6, 2021
July 11, 2034
November 14, 2034
June 21, 2019
March 23, 2031
November 12, 2021 October 28, 2033
April 12, 2017
June 18, 2024
April 12, 2017
June 18, 2029
April 12, 2017
June 17, 2029
April 12, 2017
June 18, 2024
April 12, 2017
June 18, 2029
*African Regional Intellectual Property Organization ("ARIPO") designated contracting states are as follows: Botswana, Gambia, Ghana, Kenya,
Lesotho, Liberia, Malawi, Mozambique, Namibia, Sierra Leone, Sudan, Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe.
Organisation Africaine de la Propriété Intellectuelle ("OAPI") designated contracting states are as follows: Benin, Burkina Faso, Cameroon, the
Central African Republic, Chad, DRC, Côte d’Ivoire, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Mali, Mauritania, the Niger, Senegal, and Togo.
In addition to the patents listed in the above chart, the principal and material patent applications covering TPOXX® include patent filings in
multiple jurisdictions, including the United States, Europe, Asia, Australia, and other commercially significant markets. We hold 25 patent applications
currently pending with respect to various compositions of TPOXX®, methods of manufacturing, and methods of treatment. Expiration dates for pending
patent applications, if granted, will fall between 2031 and 2037.
FDA regulations require that patented drugs be sold under brand names that comply with various regulations. SIGA must develop and make
efforts to protect these brand names for each of its products in order to avoid product piracy and to secure exclusive rights to these brand names. SIGA may
expend substantial funds in developing and securing rights to adequate brand names for our products. SIGA currently has proprietary trademark rights in
SIGA®, TPOXX® and other brands used by us in the United States and certain foreign countries, but we may have to develop additional trademark rights
in order to comply with regulatory requirements. SIGA may need to pursue different names and trademarks outside of the U.S. in light of native language
and other jurisdictional considerations. SIGA considers securing adequate trademark rights to be important to its business.
Government Regulation
Regulatory Approval Process
Regulation by governmental authorities in the United States and other countries is a significant factor in the manufacture and marketing of any
biopharmaceutical product that we may develop. The nature and the extent to which such regulations apply to us vary depending on the nature of each
product. In particular, human therapeutic products are subject to rigorous pre-clinical and clinical testing and other approval procedures by the FDA and
similar health authorities in foreign countries. Various federal statutes and regulations also govern or regulate the manufacturing, safety, labeling, storage,
recordkeeping and marketing of such products. The process of obtaining these approvals and the subsequent compliance with appropriate federal and
foreign statutes and regulations are complex and require expertise and the expenditure of substantial resources.
In order to test clinically, and to manufacture and market products for diagnostic or therapeutic use, a company must comply with mandatory
procedures and safety standards established by the FDA and comparable agencies in foreign countries. Before beginning human clinical testing of a
potential new drug in the United States, a company must file an Investigational New Drug ("IND") application and receive clearance from the FDA. An
IND application is a summary of the pre-clinical studies that were conducted to characterize the drug, including toxicity and safety studies, information on
the drug’s composition and the manufacturing and quality control procedures used to produce the drug, as well as a discussion of the human clinical studies
that are being proposed to evaluate the safety and efficacy of the product.
13
Table of Contents
The pre-marketing clinical program required for approval by the FDA for a new drug typically involves a time-consuming and costly three-phase
process. In Phase I, trials are conducted with a small number of healthy subjects to determine the early safety profile, the pattern of drug distribution,
metabolism and elimination. In Phase II, trials are conducted with small groups of patients afflicted with a target disease in order to determine preliminary
efficacy, optimal dosages and expanded evidence of safety. In Phase III, large scale, multi-center comparative trials, which may include both controlled and
uncontrolled studies, are conducted with patients afflicted with a target disease in order to provide enough data for statistical proof of efficacy and safety
required by the FDA and other authorities. Additional trials may be required to evaluate how a new drug interacts with other drugs as well as if the drug has
any impact on cardio-vascular or other potential risks.
The FDA closely monitors the progress of each of the three phases of clinical testing and may, in its discretion, reevaluate, alter, suspend or
terminate the testing based on the data that have been accumulated to that point and its assessment of the risk/benefit ratio to the patients involved in the
testing. Estimates of the total time typically required for carrying out such clinical testing vary between two and 10 years. Upon completion of such clinical
testing, a company typically submits an NDA to the FDA that summarizes the results and observations of the drug during the clinical testing. Based on its
review of the NDA, the FDA will decide whether to approve the drug and whether to impose any marketing restrictions or require additional post-approval
clinical studies. This review process can be quite lengthy, and approval for the production and marketing of a new pharmaceutical product can require a
number of years and substantial funding. There can be no assurance that any approval will be granted on a timely basis, if at all. In some circumstances, a
new formulation of an approved product may be reviewed through a supplemental NDA process which relies in part on the prior approval of the initial
formulation.
The FDA amended its regulations, effective June 30, 2002, to include the “Animal Rule” in circumstances that would permit the typical clinical
testing regime to approve certain new drug and biological products used to reduce or prevent the toxicity of chemical, biological, radiological, or nuclear
agents not otherwise naturally present for use in humans based on evidence of safety in healthy subjects and evidence of effectiveness derived only from
appropriate animal studies and any additional supporting data. The FDA has indicated that approval for therapeutic use of TPOXX® for smallpox was
determined under the “Animal Rule.”
Once the product is approved for sale, FDA regulations govern the manufacturing and marketing activities, and a post-marketing testing and
surveillance program may be required to monitor a product’s usage and effects. Product approvals may be withdrawn if compliance with regulatory
standards is not maintained. Many other countries in which products developed by us may be marketed impose similar regulatory processes.
FDA regulations also make available an alternative regulatory mechanism that may lead to use of the product under limited circumstances. The
Emergency Use Authorization (“EUA”) authority allows the FDA Commissioner to strengthen the public health protections against biological, chemical,
radiological and nuclear agents that may be used to attack the American people or the U.S. armed forces. Under this authority, the FDA Commissioner may
allow medical countermeasures to be used in an emergency to diagnose, treat or prevent serious or life-threatening diseases or conditions caused by such
agents when appropriate findings are made concerning the nature of the emergency, the availability of adequate and approved alternatives, and the quality
of available data concerning the drug candidate under consideration for emergency use.
In addition to regulations in the United States, we are subject to a variety of foreign regulations governing clinical trials and commercial sales and
distribution of our products. Whether or not we obtain FDA approval for a product, we must obtain approval by the comparable regulatory authorities of
foreign countries or economic areas, such as the European Union (“EU”) and the United Kingdom (UK), before we may commence clinical trials or market
products in those countries or areas. The approval process and requirements governing the conduct of clinical trials, product authorization, pricing and
reimbursement vary greatly from place to place, and the time may be longer or shorter than that required for FDA approval.
Under EU regulatory systems, a company may submit marketing authorization applications either under a centralized or decentralized procedure.
The centralized procedure is compulsory for medicinal products produced by biotechnology or those medicinal products containing new active substances
for specific indications such as the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, viral diseases and designated orphan medicines, and
optional for other medicines which are highly innovative. Under the centralized procedure, a marketing application is submitted to the European Medicines
Agency (EMA) where it will be evaluated by the Committee for Medicinal Products for Human Use and a favorable opinion typically results in the grant
by the European Commission of a single marketing authorization that is valid for all EU Member States within 67 days of receipt of the opinion. The initial
marketing authorization is valid for five years, but once renewed is usually valid for an unlimited period. The decentralized procedure provides for approval
by one or more “concerned” member states based on an assessment of an application performed by one member state, known as the “reference” member
state. Under the decentralized approval procedure, an applicant submits an application, or dossier, and related materials to the reference member state and
concerned member states. The reference member state prepares a draft assessment and drafts of the related materials within 120 days after receipt of a valid
application. Within 90 days of receiving the reference member state’s assessment report, each concerned member state must decide whether to approve the
assessment report and related materials. If a member state does not recognize the marketing authorization, the disputed points are eventually referred to the
European Commission, whose decision is binding on all member states. On January 10, 2022, the EMA approved SIGA’s Marketing Authorisation
Application (MAA) for oral tecovirimat, the same formulation that was approved by the FDA in July 2018 under the brand name TPOXX®. The EMA
approval includes labeling for oral tecovirimat indicating its use for the treatment of smallpox, mpox, cowpox, and vaccinia complications following
vaccination against smallpox. The MAA was filed under the centralized application process, which, upon approval, enables sales, including procurement
for stockpiling, of oral tecovirimat in all European Union (EU) member states, as well as Norway, Iceland, and Liechtenstein.
The United Kingdom left the European Union on January 31, 2020 (commonly referred to as “Brexit”), with a transitional period that expired on
December 31, 2020. The United Kingdom and the European Union entered into a trade agreement known as the Trade and Cooperation Agreement, which
went into effect on January 1, 2021. On July 8, 2022, the United Kingdom’s Medicines and Healthcare products Regulatory Agency (“MHRA”) approved
oral tecovirimat for the treatment of smallpox, mpox, cowpox, and vaccinia complications following vaccination against smallpox in adults and children
with a body weight of at least 13kg. Since the regulatory framework in the United Kingdom covering the quality, safety and efficacy of pharmaceutical
products, clinical trials, marketing authorization, commercial sales and distribution of medicinal products is derived from EU Directives and Regulations,
Brexit could materially impact the future regulatory regime which applies to products and the approval of other product candidates in the United Kingdom.
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Legislation and Regulation Related to Bioterrorism Counteragents and Pandemic Preparedness
Because our drug candidates are intended for the treatment of diseases that may result from acts of bioterrorism or biowarfare or for pandemic
preparedness, they may be subject to the specific legislation and regulation described below and elsewhere in this Annual Report on Form 10-K.
Project BioShield
Project BioShield and related 2006 federal legislation provide procedures for biodefense-related procurement and awarding of research grants,
making it easier for HHS to commit funds to countermeasure projects. Project BioShield provides alternative procedures under the Federal Acquisition
Regulation, the general rubric for acquisition of goods and services by the U.S. Government, for procuring property or services used in performing,
administering or supporting biomedical countermeasure research and development. In addition, if the Secretary of HHS deems that there is a pressing need,
Project BioShield authorizes the Secretary of HHS to use an expedited award process, rather than the normal peer review process, for grants, contracts and
cooperative agreements related to biomedical countermeasure research and development activity.
Under Project BioShield, the Secretary of HHS, with the concurrence of the Secretary of the U.S. Department of Homeland Security and upon the
approval of the President, can contract to purchase unapproved countermeasures for the Strategic Stockpile in specified circumstances. The U.S. Congress
is notified of a recommendation for a Strategic Stockpile purchase after Presidential approval. Project BioShield specifies that a company supplying the
countermeasure to the Strategic Stockpile is paid on delivery of a substantial portion of the countermeasure. To be eligible for purchase under these
provisions, the Secretary of HHS must determine that there are sufficient and satisfactory clinical results or research data, including data, if available, from
pre-clinical and clinical trials, to support a reasonable conclusion that the countermeasure will qualify for approval or licensing within eight years. Project
BioShield also allows the Secretary of HHS to authorize the emergency use of medical products that have not yet been approved by the FDA. To exercise
this authority, the Secretary of HHS must conclude that:
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the agent for which the countermeasure is designed can cause serious or life-threatening disease;
the product may reasonably be believed to be effective in detecting, diagnosing, treating or preventing the disease;
the known and potential benefits of the product outweigh its known and potential risks; and
there is no adequate alternative to a product that is approved and available.
Although this provision permits the Secretary of HHS to circumvent FDA approval (entirely, or in part) for procurement and use, its use in this
manner would likely be limited to rare circumstances.
Public Readiness and Emergency Preparedness Act
The Public Readiness and Emergency Preparedness Act (the "PREP Act") provides immunity for manufacturers from claims under state or federal
law for “loss” arising out of the administration or use of a “covered countermeasure” in the United States. However, injured persons may still bring a suit
for “willful misconduct” against the manufacturer under some circumstances. “Covered countermeasures” include security countermeasures and “qualified
pandemic or epidemic products,” including products intended to diagnose or treat pandemic or epidemic disease, as well as treatments intended to address
conditions caused by such products. For these immunities to apply, the Secretary of HHS must issue a declaration in cases of public health emergency or
“credible risk” of a future public health emergency. Since 2007, the Secretary of HHS has issued nine declarations under the PREP Act to protect from
liability countermeasures that are necessary to prepare the nation for potential pandemics or epidemics, including a declaration on October 10, 2008 that
provides immunity from tort liability as it relates to smallpox. The PREP Act Declaration for smallpox countermeasures was amended by the Secretary of
HHS in 2022 to emphasize that it covers mpox virus, add qualified persons to administer vaccines and therapeutics to address the current public health
emergency caused by the 2022 outbreak of mpox cases and the risk of future public health threats arising from orthopoxviruses, and to extend protection
from December 31, 2022 to December 31, 2032.
Foreign Regulation
As noted above, in addition to regulations in the United States, we might be subject to a variety of foreign regulations governing clinical trials and
commercial sales and distribution of our drug candidates. Regardless of any FDA approval of a product, we may have to obtain approval of that product by
the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The actual
time required to obtain clearance to market a product in a particular foreign jurisdiction varies substantially, based upon the type, complexity and novelty of
the pharmaceutical drug candidate, the specific requirements of that jurisdiction, and in some countries whether the FDA has previously approved the drug
for marketing. The requirements governing the conduct of clinical trials, marketing authorization, pricing and reimbursement vary from country to country.
Certain foreign jurisdictions, including the European Union and Canada, have adopted certain biodefense-specific regulations akin to those available in the
United States such as a procedure similar to the “Animal Rule” promulgated by the FDA for review and potential approval of biodefense products.
Regulations Regarding Government Contracting
The status of an organization as a government contractor in the United States and elsewhere means that the organization is also subject to various
statutes and regulations, including the Federal Acquisition Regulation, which governs the procurement of goods and services by agencies of the United
States. These governing statutes and regulations can impose stricter penalties than those normally applicable to commercial contracts, such as criminal and
civil damages liability and suspension and debarment from future government contracting. In addition, pursuant to various statutes and regulations,
government contracts can be subject to unilateral termination or modification by the government for convenience in the United States and elsewhere,
detailed auditing requirements, statutorily controlled pricing, sourcing and subcontracting restrictions and statutorily mandated processes for adjudicating
contract disputes.
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Availability of Reports and Other Information
We file annual, quarterly, and current reports, proxy statements, and other documents with the U.S. Securities and Exchange Commission ("SEC")
under the Exchange Act. The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding
issuers, including us, that file electronically with the SEC. The public can obtain any document that we file with or furnish to the SEC at www.sec.gov.
In addition, our website can be found on the internet at www.siga.com. The website contains information about us and our operations. Copies of
each of our filings with the SEC on Form 10-K, Form 10-Q, and Form 8-K, and all amendments to those reports, can be viewed and downloaded free of
charge as soon as reasonably practicable after the reports and amendments are electronically filed with or furnished to the SEC. To view the reports, access
www.siga.com, click on “Investors” and “Financial Information.” The information contained on the websites referenced in this Form 10-K is not
incorporated by reference into this filing.
The following corporate governance related documents are also available on our website:
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Audit Committee Charter;
Compensation Committee Charter;
Nominating and Corporate Governance Committee Charter;
Code of Ethics and Business Conduct;
To review these documents, access www.siga.com and click on “Investors” and “Corporate Governance.”
Any of the above documents can also be obtained in print by any shareholder upon request to the Secretary, SIGA Technologies, Inc., 31 E 62nd Street, 5th
floor, New York, New York 10065.
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Item 1A. Risk Factors
This report contains forward-looking statements and other prospective information relating to future events. These forward-looking statements and other
information are subject to risks and uncertainties that could cause our actual results to differ materially from our historical results or currently anticipated
results, including the following:
Risks Related to Our Dependence on Government Contracts
Government contracts require ongoing funding decisions by governments. A substantial percentage of our potential revenues come from government
contracts. The majority of potential revenue under the 19C BARDA Contract, the Company's largest procurement contract, is tied to options which
may or may not be exercised at the sole discretion of BARDA. Reduced or discontinued BARDA funding, or the non-exercise of contract options under
the 19C BARDA Contract, could cause our business, financial condition, results of operations and prospects to suffer materially.
Government-funded contracts often consist of a base period of performance and options for the performance of certain future activities. The value
of goods and services subject to options may constitute the majority of the total value of the underlying contract, as in the case of the 19C BARDA
Contract.
The funding of government programs, which fund BARDA’s purchases under the 19C BARDA Contract, is subject to Congressional
appropriations, generally made on a fiscal year basis even though a program may continue for several years. Our government customers are subject to
political considerations and budgetary constraints, which result in uncertainties as to continued funding of their ongoing programs, including SIGA’s
contracts.
As of December 31, 2022, more than 85% of remaining contract value of the 19C BARDA Contract is tied to options exercisable in the sole
discretion of BARDA. There is no guarantee that any of the remaining options will be exercised, or if they are exercised when such exercise of options will
occur. If some of these options are not exercised, because levels of government expenditures and authorizations for biodefense decrease or shift to other
programs, or for any other reason, our business, financial condition, results of operations and prospects may suffer materially.
Government procurement contracts are mostly set at fixed prices determined at inception of the contract based on estimates of the time, resources and
expenses required to perform these contracts. If our estimates are not accurate, we may not be able to earn an adequate return or may incur a loss
under these arrangements.
Remaining unexercised options under current government procurement contracts, including the 19C BARDA Contract, are predominately fixed-
price. We expect that our future contracts with the U.S. Government and foreign governments for TPOXX®, as well as contracts for other biodefense
product candidates, would also be fixed-price arrangements. Under a fixed-price contract, we are required to deliver our products at a fixed price
determined at the inception of the contract regardless of the actual costs we incur, and to absorb any costs incurred in satisfaction of our obligations. Our
failure to anticipate significant technical problems, estimate costs accurately or control costs during performance of a fixed-price contract could reduce the
profitability of such contract, or if severe, cause a loss, which could in turn negatively affect our operating results.
We expect a substantial percentage of our future operating revenues to come from contracts with BARDA for the provision and maintenance of the
U.S. Government’s stockpile of TPOXX®. If BARDA does not enter into additional contracts after the 19C BARDA Contract to maintain or expand the
stockpile of TPOXX®, our long-term business, financial condition and operating results could be materially harmed.
The success of our business and our operating results for the foreseeable future will be substantially dependent on the U.S. Government’s
commitment to maintaining or expanding its stockpile of TPOXX®. Failure to secure and perform additional contracts after the 19C BARDA Contract to
substantially maintain or expand the stockpile of TPOXX® could have a material adverse effect on our long-term business, financial condition, results of
operations and prospects. Additionally, the 19C BARDA Contract does not necessarily increase the likelihood that we will secure future comparable
contracts with the U.S. Government.
Laws and regulations affecting government contracts and grants might make it more costly and difficult for us to successfully conduct our business.
Our business with the U.S. Government, international governments, and any future business with state and local governmental agencies
are subject to specific procurement regulations and a variety of other legal and compliance obligations. These laws and rules include those related to
procurement integrity, rates and pricing of services and goods to be reimbursed by the U.S. Government, export control, government security regulations,
employment practices, protection of the environment, accuracy of records and the recording and reporting of costs, and foreign corrupt practices. Among
the most significant government contracting regulations that affect our business are:
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the Federal Acquisition Regulation and other agency-specific regulations supplemental to the Federal Acquisition Regulation, which
comprehensively regulate the procurement, formation, administration and performance of U.S. government contracts;
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the business ethics and public integrity obligations, which govern conflicts of interest and the hiring of former government employees, restrict the
granting of gratuities and funding of lobbying activities and incorporate other requirements such as the Anti-Kickback Act and the Foreign
Corrupt Practices Act ("FCPA"); and
export and import control laws and regulations, including laws, regulations and executive orders restricting the use and dissemination of
information classified for national security purposes and the exportation of certain products and technical data.
Compliance with these obligations increases our performance and compliance costs. Failure to comply with these regulations and requirements
could lead to suspension or debarment, for cause, from government contracting or subcontracting for a period of time and could result in significant civil or
criminal penalties. The termination of a government contract as a result of our failure to satisfy any of these obligations would have a material negative
impact on our operations and harm our reputation and ability to procure other government contracts or grants in the future.
Unfavorable provisions in government contracts and grants, some of which may be customary, may harm our future business, financial condition and
potential operating results.
Government contracts and grants customarily contain provisions that give the government substantial rights and remedies, many of which are not
typically found in commercial contracts, including (but not limited to) provisions that allow the government to:
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terminate existing contracts or grants, in whole or in part, for any reason or no reason;
unilaterally reduce or modify grants, contracts or subcontracts, including through the use of equitable price adjustments;
cancel multi-year contracts or grants and related orders if funds for performance for any subsequent year become unavailable;
decline to exercise an option to renew, or to exercise the maximum amount specified in, a contract or grant;
claim rights to products or assets, including intellectual property, developed under a contract or grant;
take actions that result in a longer development timeline or higher costs than expected;
suspend or debar a contractor from doing business with the government or a specific government agency due to regulatory or compliance failures;
pursue criminal or civil remedies under the False Claims Act and the False Statements Accountability Act; and
control or prohibit the export of products.
Generally, government contracts contain provisions permitting unilateral termination or modification, in whole or in part, at the government’s
convenience. Under general principles of government contracting law, if the government terminates a contract or grant for convenience, the terminated
company may recover only its incurred or committed costs, settlement expenses and profit on work completed prior to the termination. If the government
terminates a contract or grant for default, the defaulting company is entitled to recover costs incurred and associated profits on accepted items only and may
be liable for excess costs incurred by the government in procuring undelivered items from another source. Our government contracts and grants could be
terminated under these circumstances.
A U.S. Government shutdown could negatively impact our business and liquidity.
Each year, the U.S. Congress must pass all spending bills in the federal budget. If any such spending bill is not timely passed, a government
shutdown may close many federally run operations, and halt work for federal employees unless they are considered essential or such work is separately
funded by a continuing resolution or by industry. If a government shutdown were to occur, we could experience a delay in contract funding decisions by the
government. Additionally, we could be materially harmed by any prolonged government shutdown.
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Our business could be adversely affected by a negative audit by the U.S. Government.
U.S. Government agencies, such as the Defense Contract Audit Agency (the “DCAA”), routinely audit and investigate government contractors.
These agencies review a contractor’s performance under its contracts and grants, cost structure, and compliance with applicable laws, regulations and
standards.
The DCAA also reviews the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s
purchasing, property, estimating, compensation and management information systems. Any cost found to be improperly allocated to a specific contract will
not be reimbursed, and such costs already reimbursed must be refunded. If an audit uncovers improper or illegal activities, a contractor may be subject to
civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and
suspension, debarment or prohibition from doing business with the U.S. Government. Such actions would also negatively affect our reputation.
Risks Related to Regulatory Approvals
If we are not able to obtain regulatory approvals for certain additional indications of TPOXX® from the FDA, we may not be able to realize the full
benefits of any BARDA contracts or may not be able to commercialize such indications other than through existing sales to BARDA, and our ability to
generate future revenue could be materially impaired.
The development and full commercialization of additional indications of TPOXX® in the U.S., such as the indication of use for post-exposure
prophylaxis or treatment of mpox, including the testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion,
sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable authorities
in other countries and jurisdictions. We could fail to achieve FDA or other regulatory approval of certain indications of TPOXX®, or there could be delays
in such approval of TPOXX®, or the approved labeling for such indications of TPOXX® may differ from expectations. Failure to obtain regulatory
approval of certain indications for TPOXX® may prevent us from fully commercializing TPOXX® in the United States for the mpox indication or may
prevent us from getting procurement orders from the U.S. Government for the post-exposure prophylaxis indication and may impact other regulatory
authorities' future review of other indications of TPOXX®, which in turn, could adversely impact commercializing TPOXX® in other countries, and such
delays or required alterations to regulatory applications could also have a material adverse effect on future revenue opportunities for the Company.
Failure to obtain future regulatory approval in additional international jurisdictions could prevent us from marketing our products in certain
jurisdictions abroad.
To market our products in certain additional foreign jurisdictions, we may need to obtain separate regulatory approvals and comply with numerous
and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing and differing manufacturing or
labeling requirements. Complying with such requirements may take additional time prior to approval and delay commercial activities in those jurisdictions.
The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval for expanded indications or new
formulations of TPOXX®. We may not obtain additional foreign regulatory approvals on a timely basis, if at all. Regulatory approval by the FDA, which
we obtained for oral TPOXX®, or by a foreign regulatory authority such as Health Canada and the European Medicines Agency, which we obtained for
oral TPOXX®, does not ensure approval by future additional regulatory authorities in other foreign countries or jurisdictions or by the FDA for expanded
indications or new formulations. In addition, failure to obtain approval in one jurisdiction may impact our ability to obtain approvals elsewhere. We may
not be able to file for or receive necessary regulatory approvals to commercialize our products in additional new markets, in which case, our target market
may be reduced and our ability to realize the full market potential of our product candidates may be harmed and our business, financial condition, results of
operations and prospects may be adversely affected.
Risks Related to Commercial Activities
We cannot predict whether or when we will be permitted to commercialize TPOXX® in the U.S. other than the oral and intravenous formulations for
smallpox treatment.
We have received FDA approval for the oral and intravenous formulations of TPOXX® in the U.S., not the liquid suspension/pediatric
formulation, or any other indication beyond treatment for smallpox, for TPOXX®. Because pharmaceutical manufacturers are only permitted to
commercialize indications and formulations that have received FDA approval (or in other jurisdictions according to their applicable regulatory and legal
frameworks), any regulatory or legal setbacks as described above could have an adverse impact on the Company’s ability to sell other formulations or for
other uses of TPOXX® pending such approvals.
Changing political or social factors and opposition, such as protests and potential related litigation, may delay or impair our ability to market TPOXX®
and any other biodefense product candidates and may require us to spend time and money to address these issues.
Products developed to treat diseases caused by or to combat the threat of bioterrorism or biowarfare are subject to changing political and social
environments. The political and social responses to bioterrorism and biowarfare have been unpredictable and much debated. Changes in the perception of
the risk that military personnel or civilians could be exposed to biological agents as weapons of bioterrorism or biowarfare may delay or cause resistance to
bringing investigational products to market or limit pricing or purchases of approved products, any of which could materially harm our business.
Lawsuits, protests or other negative publicity may adversely affect the degree of market acceptance of, and thereby limit the demand for,
TPOXX® and our biodefense product candidates. In such event, our ability to market and sell such products may be hindered, the commercial success of
TPOXX® and other products we develop may be harmed and we may need to expend time, attention and resources addressing such legal or publicity
issues, thereby reducing our revenues and having a material adverse impact on us.
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Our ability to grow our business may depend in part on our ability to achieve recurring sales of TPOXX® to customers other than the U.S.
Government, which may expose us to risks associated with conducting business in international markets.
An element of our business strategy is to sell TPOXX® internationally to foreign governments on a recurring basis. These non-U.S. Government
customers include foreign governments, as well as state and local governments, non-governmental organizations focused on global health like the World
Health Organization, health care institutions like hospitals (domestic and foreign) and certain large business organizations interested in protecting their
employees against global threats and protecting first responders in cases of emergencies.
If we fail to obtain recurring sales of TPOXX® to customers other than the U.S. Government, our business and opportunities for growth could be
limited.
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In addition, the expansion of our international presence may increase certain risks, which include:
foreign governments imposing withholding or other taxes on remittances and other payments to us or the amount of any such taxes may increase;
potential difficulties enforcing agreements, collecting receivables and protecting our intellectual property and other assets;
regional safety and security considerations;
increased costs and risks relating to exportation, shipping and transportation of the Company’s products; and
increased management and infrastructure costs.
See the risk factor below titled “The Company is subject to complex and changing laws and regulations worldwide, which exposes the Company to
potential liability, increased cost, and other adverse effects on the Company’s business” for more discussion of this risk. We cannot predict the impact such
events might have on the Company’s business, financial condition and results of operations.
Our current international revenues depend heavily on the success of the efforts of Meridian pursuant to an International Promotion Agreement.
Pursuant to the International Promotion Agreement described under “Business,” we granted a third party, Meridian Medical Technologies
("Meridian") exclusive rights to market, advertise, promote, offer for sale, or sell oral TPOXX® in all geographic regions except for the United States (the
“Territory”), and Meridian agreed not to commercialize any competing product, as defined in the International Promotion Agreement, in the specified field
of use in the Territory. Our future international revenues will likely depend heavily on the success of the efforts of Meridian pursuant to the International
Promotion Agreement, which may not be successful.
The Company is reliant on Meridian to collect payments from international customers, and to remit the Company’s share of such payment to the
Company.
Under the terms of the International Promotion Agreement, Meridian is responsible for collecting payments from customers and remitting such
payments to us on a quarterly basis. As a result, we are subject to Meridian’s ability to collect and remit payment to us in a timely manner. Meridian could
fail to perform such obligations adequately, cease operations abruptly or become insolvent, or our relationships with Meridian may otherwise change
adversely. If the foregoing were to occur, there could be an adverse impact on our business, financial condition and operating results as a result.
If we are unable to expand our internal sales and marketing capabilities or enter into agreements with third parties with expertise in sales and
marketing, we may be unable to expand our sales of TPOXX® or other product candidates in the U.S., including to U.S. customers other than the U.S.
Government.
In the United States market, we have retained all sales and marketing rights with respect to oral TPOXX®. In this market, we currently employ a
small, targeted group to support development and business activities related to TPOXX®. We plan to continue our current approach for sales to the U.S.
Government of any other biodefense product candidates that we may successfully develop. This approach may prove insufficient to adequately support our
development and business activities in the United States.
In order to expand our sales of TPOXX® or other product candidates in the U.S., including to U.S. customers other than the U.S. Government, we
may need to enhance our own sales and marketing capabilities, and/or enter into collaborations with third parties able to perform these services or
outsource these functions to third parties. There is no assurance that we will be able to do so successfully, and even if we are able to do so that it will have
a significant impact on our growth or profitability.
Although TPOXX® is currently stockpiled by certain governments and not sold commercially, in the future we may be required to perform additional
clinical trials or change the labeling of TPOXX® if we or others identify side effects after we are on the market, which could harm future sales of such
product.
If we or others identify side effects of any approved product, or if manufacturing problems occur:
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regulatory approval may be withdrawn;
reformulation of our products, additional clinical trials or other testing or changes in labeling of our products may be required;
changes to or re-approvals of manufacturing facilities used by SIGA may be required;
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sales of the affected products may drop significantly;
our reputation in the marketplace may suffer; and
lawsuits, including class action suits, may be brought against us.
Any of the above occurrences could harm or prevent future sales of the affected product or could increase the costs and expenses of
commercializing and marketing these products.
If we sell TPOXX® to non-government customers and are able to charge such customers higher prices than we charge to the U.S. Government,
healthcare reform and controls on healthcare spending in the U.S. may nonetheless limit the prices we charge for our products and the amounts that
we can sell.
There have been a number of legislative and regulatory proposals in the United States to change the health care system in ways that could affect
our pricing of TPOXX® to non-government customers. One significant example of recent legislative action is the Inflation Reduction Act of 2022 (the
“IRA”), which was signed into law on August 16, 2022. While the IRA is still subject to rulemaking (with more information to come via guidance
documents from the responsible federal agencies), the IRA, as written, will, among other changes, give HHS the ability and authority to directly negotiate
with manufacturers the price that Medicare will pay for certain high-priced drugs. The IRA will also require manufacturers of certain Part B and Part D
drugs to issue to HHS rebates based on certain calculations and triggers (i.e., when drug prices increase and outpace the rate of inflation). At this time, we
cannot predict the implications the IRA provisions will have on our business. In addition, the Patient Protection and Affordable Care Act, as amended by
the Health Care and Education Reconciliation Act of 2010 (collectively, the “Healthcare Reform Act”), substantially changed the way healthcare is
financed by both governmental and private insurers and had a substantial effect on the pharmaceutical industry. The Healthcare Reform Act contains a
number of provisions, including those governing enrollment in federal healthcare programs like Medicare, reimbursement changes and rules protecting
against fraud and abuse, that affect existing healthcare programs. If we are able to charge higher prices to non-government customers than we charge to the
U.S. Government, healthcare reform and controls on healthcare spending in the U.S. may nonetheless limit the price we charge for our products and the
amounts that we can sell. For example, some of our revenue may be derived from governmental healthcare programs, including Medicare. Furthermore,
beginning in 2011, the Healthcare Reform Act imposed a non-deductible excise tax on pharmaceutical manufacturers or importers who sell “branded
prescription drugs,” which includes innovator drugs and biologics (excluding orphan drugs or generics) to U.S. Government programs. The Healthcare
Reform Act and other healthcare reform measures that may be adopted in the future could have an adverse effect on our industry generally, as well as
potential future sales and profitability of our current or future products.
The Company is subject to complex and changing laws and regulations worldwide, which exposes the Company to potential liability, increased cost,
and other adverse effects on the Company’s business.
Some laws and regulations governing our business, including the U.S. Foreign Corrupt Practices Act (FCPA) and many other global anti-
corruption laws, may hold the Company liable for the actions of our third-party partners. Although the Company has implemented policies and procedures
designed to ensure compliance with applicable laws and regulations, there can be no assurance the Company’s employees, contractors, third parties or
agents will not violate such laws and regulations or the Company’s policies and procedures.
Failure to comply with such laws and regulations could adversely affect the Company’s business, reputation, financial condition, or ability to
procure government contracts. Indeed, violations of the FCPA can result in significant civil and criminal penalties that can be levied on the Company and
its executives. Indictment alone under the FCPA can lead to suspension of the right to do business with the U.S. Government until the pending claims are
resolved and conviction under the FCPA can result in long-term disqualification as a government contractor. The SEC may also suspend or bar issues from
trading securities on United States exchanges for violations of the FCPA’s accounting provisions.
We could incur net losses in the future if options are not exercised under the 19C BARDA Contract.
While we believe our current cash position is strong, our ability to continue to fund future operations will be substantially impacted by cash flows
from the 19C BARDA Contract, which may not be sufficient if BARDA elects, in its sole discretion, not to exercise or to significantly delay exercise of
some or all of the remaining options under the 19C BARDA Contract. If cash flows from the 19C BARDA Contract are significantly different from
expectations, or if operating expenses or other expenses meaningfully exceed our expectations or cannot be adjusted accordingly, then our business,
financial condition, results of operations and prospects could be materially adversely affected.
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Risks Related to Manufacturing, Storage and Our Dependence on Third Parties
If third parties on whom we rely for manufacturing and raw materials of TPOXX®, and managing our inventory, do not perform as contractually
required or as we expect, we may not be able to successfully satisfy our obligations under any contracts, including the 19C BARDA Contract, and our
business would suffer.
We currently rely on third-party manufacturers and service providers to provide raw materials and manufacture, package, test and ship TPOXX®.
Under the 19C BARDA Contract, we are responsible for the performance of these third-party contractors, and our contracts with these third parties give us
certain supervisory and quality control rights, but we do not exercise day-to-day control over their activities.
Additionally, we may rely on a third-party provider, or multiple providers, to store or transport a portion of the stockpile of IV TPOXX® under the
19C BARDA Contract, entrusting such vendor or vendors with the care and handling of a substantial portion of IV TPOXX® inventory.
If a third-party provider fails to comply with applicable laws and regulations, fails to meet expected deadlines, fails to conduct trials in accordance
with regulatory requirements or our stated protocols, experiences shortages or delays, or otherwise does not carry out its contractual duties to us, or
encounters physical damage or natural disaster or disruptions at its facilities, for example as a result of the COVID-19 pandemic, our ability to meet our
obligations under any contract including the 19C BARDA Contract or to develop, obtain approval of and commercialization of other indications
of TPOXX® or other drug candidates, could be significantly impaired or delayed. We do not currently have the internal capacity to perform these important
functions, and we may not be able to maintain commercial arrangements for these services on reasonable terms.
If third parties do not manufacture our drug candidates or products in sufficient quantities and at an acceptable cost or in compliance with regulatory
or contractual requirements and specifications, the fulfillment of contractual requirements under the 19C BARDA Contract, or any other procurement
contract, or the development of our drug candidates could be delayed, prevented or impaired.
If our contract manufacturers are unable to generate enough materials to meet commercial obligations or satisfy clinical needs, for example as a
result of disruption resulting from the COVID-19 pandemic, the success of drug products may be jeopardized. Our current and anticipated future
dependence upon others for the manufacture of our drug candidates may adversely affect our ability to develop drug candidates and perform on commercial
contracts on a timely and competitive basis. If our third-party manufacturers’ production processes malfunction or contaminate our drug supplies during
manufacturing, we may incur significant inventory loss that may not be covered by our contractual provisions or insurance policies.
We currently rely on third parties to demonstrate regulatory compliance, for regulatory and science support and for quality assurance with respect
to the drug candidates manufactured for us. We intend to continue to rely on these third parties for these purposes with respect to production of commercial
supplies of drugs that we successfully develop. Manufacturers are subject to ongoing, periodic, unannounced inspection by the FDA and corresponding
state and foreign agencies or their designees to ensure strict compliance with applicable laws and regulations.
We cannot be certain that our present or future manufacturers will be able to comply with these regulations and other FDA regulatory
requirements or similar regulatory requirements outside the U.S. Our government contracts and grants call for compliance with all applicable legal and
regulatory requirements, however, we do not control third-party manufacturers and their methods for ensuring adherence to regulatory and legal standards.
If we or these third parties fail to comply with applicable regulations, sanctions could be imposed on us which could significantly delay and adversely
affect supplies of our drug candidates.
Problems related to large-scale commercial manufacturing could cause an increase in costs or shortages of products or a delay in product launches.
Manufacturing API and finished drug products, especially in large quantities, is complex. Our products require several manufacturing steps at
multiple facilities, and may involve complex techniques to assure quality and sufficient quantity, especially as the manufacturing scale increases. Our
products must be made consistently and in compliance with a clearly defined manufacturing process. Accordingly, it is essential to be able to validate and
control the manufacturing process to assure that it is reproducible. Slight deviations anywhere in the manufacturing process, including obtaining materials,
filling, labeling, packaging, storage, shipping, quality control and testing, some of which all pharmaceutical companies, including SIGA, experience from
time to time, may result in lot failures, delay in the release of lots, product recalls or spoilage. Success rates can vary dramatically at different stages of the
manufacturing process, which can lower yields and increase costs. We may experience deviations in the manufacturing process that may take significant
time and resources to resolve and, if unresolved, may affect manufacturing output and/or cause us to fail to satisfy contractual commitments, lead to delays
in our clinical trials or result in litigation or regulatory action. Such actions would hinder our ability to meet contractual obligations and could cause
material adverse consequences for our business.
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Risks Related to Product Development
Growth of our business may be impacted significantly by our success in completing development and commercialization of drug candidates, new
formulations or additional indications for TPOXX®. If we are unable to commercialize new drug candidates, new formulations, or additional
indications, or experience significant delays in doing so, our business may be materially harmed.
We have invested a substantial amount of our efforts and financial resources in the development of our drug candidates. Our ability to generate
near-term cash flows is primarily dependent on the success of our smallpox antiviral drug TPOXX®, which has been approved by the FDA in oral and
intravenous forms and by select international regulatory agencies in the oral form. The commercial success of our current and future drug candidates,
new formulations or additional indications for TPOXX®, will depend on many factors, including:
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successful development, formulation and cGMP scale-up of drug manufacturing that meets FDA requirements;
successful development of animal models;
successful completion of non-clinical development, including studies in approved animal models;
our ability to pay the expense of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights;
successful completion of clinical trials;
receipt of marketing approvals, including the impact of marketing restrictions or required post-approval clinical studies, from the FDA for liquid
suspension/pediatric formulations of TPOXX® and similar foreign regulatory authorities;
establishing arrangements on reasonable terms with suppliers and contract manufacturers;
• manufacturing stable commercial supplies of drug candidates, including availability of raw materials;
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launching commercial sales of the product, whether alone or in collaboration with others; and
acceptance of the product by potential government customers, public health experts, physicians, patients, healthcare payors and others in the
medical community.
We may rely on FDA regulations known as the “Animal Rule” to obtain approval for most of our biodefense drug candidates. The Animal Rule
permits the use of animal efficacy studies together with human clinical safety trials to support an application for marketing approval. These regulations are
relied upon only occasionally. It is possible that results from these animal efficacy studies may not be predictive of the actual efficacy of our drug
candidates in humans. If we are not successful in completing the development and commercialization of our drug candidates, whether due to our efforts or
due to concerns raised by our governmental regulators or customers, our business could be materially adversely affected.
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We may not be able to fully commercialize the liquid suspension/pediatric formulation of TPOXX®, or other additional indications for TPOXX®, if our
clinical trials do not demonstrate adequate safety or our animal studies do not demonstrate adequate efficacy.
Before obtaining regulatory approval for the sale of our drug candidates, extensive development is required. The goal of development is to use
clinical studies to demonstrate the safety of our drug candidates and animal trials to demonstrate the efficacy of our drug candidates. Clinical trials and
animal studies, and related work, are resource-intensive, difficult to design and implement, can take many years to complete and are uncertain as to
outcome. Success in pre-clinical testing and early clinical trials does not ensure that later clinical trials or animal efficacy studies will be successful, and
interim results of a clinical trial or animal efficacy study do not necessarily predict final results.
A failure of one or more of our clinical trials or animal efficacy studies can occur at any stage of development. We may experience numerous
unforeseen events during, or as a result of, pre-clinical testing and the clinical trial or animal efficacy study process that could delay or prevent our ability
to receive regulatory approval or commercialize our drug candidates, including:
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regulators or institutional review boards may not authorize us to commence a clinical trial or conduct a clinical trial at a prospective trial site;
we may decide, or regulators may require us, to conduct additional pre-clinical testing or clinical trials, or we may abandon projects that we expect
to be promising, if our pre-clinical tests, clinical trials or animal efficacy studies produce negative or inconclusive results;
we might have to suspend or terminate our clinical trials if the participants are being exposed to unacceptable health risks;
regulators or institutional review boards may require that we hold, suspend or terminate clinical development for various reasons, including
noncompliance with regulatory requirements;
the resources required to manage and oversee our clinical trials could escalate and become cost prohibitive;
our governmental regulators may impose requirements on clinical trials, pre-clinical trials or animal efficacy studies that we cannot meet or that
may prohibit or limit our ability to perform or complete the necessary testing in order to obtain regulatory approval;
any regulatory approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the product not
commercially viable;
we may not be successful in recruiting a sufficient number of qualifying subjects for our clinical trials;
the effects of our drug candidates may not be the desired effects or may include undesirable side effects or the drug candidates may have other
unexpected characteristics; or
the required resources, regulations, or challenges associated with animal studies may increase and make our studies more difficult.
Liquid Suspension/Pediatric TPOXX® formulations are currently in product development and there can be no assurance of successful development or
ultimate commercialization.
The fact that the FDA has approved the oral and IV formulations of TPOXX® does not guarantee that our approach to drug development will be
effective or will result in the successful commercialization of the liquid suspension/pediatric formulation of TPOXX®, any new indication such as post-
exposure prophylaxis, of TPOXX® or any other drug. We cannot predict with certainty whether any other drug candidate or expanded indication resulting
from our research and development efforts will be approved by the FDA.
All of our potential drug candidates are prone to the risks of failure inherent in pharmaceutical product development, including the possibility that
our drug candidates will not or cannot:
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be shown to be safe, non-toxic and effective;
otherwise meet applicable regulatory standards;
receive the necessary regulatory approvals;
develop into commercially viable drugs;
be manufactured or produced economically and on a large scale;
be successfully marketed;
be paid for by governmental procurers or be reimbursed by governmental or private insurers; or
achieve customer acceptance.
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In addition, third parties may seek to preclude us from marketing our drugs through enforcement of their proprietary or intellectual property rights that we
are not aware of, or third parties may succeed in marketing equivalent or superior drug products that do not infringe our intellectual property. Our failure to
develop safe, commercially viable future drug candidates or obtain approval for expanded indications and formulations of TPOXX® could have a material
adverse effect on our ability to grow our business, and impair our financial condition and operations.
Risks Related to Our Intellectual Property
Our ability to compete may decrease if we do not adequately protect our intellectual property rights.
Our commercial success will depend in part on our ability to obtain and maintain regulatory exclusivity, patent and other intellectual property
protection for our proprietary technologies, drug targets and potential products and to preserve our trade secrets and trademark rights. Because of the
substantial length of time and expense associated with bringing potential products through the development and regulatory clearance processes to reach the
marketplace, the pharmaceutical industry places considerable importance on obtaining regulatory, patent and trade secret protection. The patent positions of
pharmaceutical and biotechnology companies can be highly uncertain and involve complex legal and factual questions. No consistent policy regarding the
breadth of claims allowed in biotechnology patents worldwide has emerged to date. Accordingly, we cannot definitively predict the type and breadth of
claims allowed in patents covering our products.
SIGA exclusively owns its key patent portfolios, which relate to its leading drug product, TPOXX® (also known as ST-246, tecovirimat). As of
January 10, 2023, the TPOXX® patent portfolio has seven patent families consisting of 29 U.S. utility patents, 101 issued foreign patents, two U.S. utility
patent applications, and 23 foreign patent applications. With FDA regulatory approval of oral TPOXX® in July 2018, we were awarded seven years of
regulatory exclusivity by the U.S. Patent and Trademark Office based on orphan drug designation for the product. Such protection is separate from, and in
addition to, our patent and other intellectual property rights and provides for exclusivity to July 2025
We also rely on trade secrets, know-how, continuing technological innovation and licensing opportunities. In an effort to maintain the
confidentiality and ownership of trade secrets and proprietary information, we require our employees, consultants and some collaborators to execute
confidentiality and invention assignment agreements upon commencement of a relationship with us. These agreements may not provide meaningful
protection for our trade secrets, confidential information or inventions in the event of unauthorized use or disclosure of such information, and adequate
remedies may not exist in the event of such unauthorized use or disclosure.
If our technologies are alleged or found to infringe the patents or proprietary rights of others, we may be sued, we may have to pay damages or be
barred from pursuing a technology, or we may have to license those rights from and pay royalties to others on unfavorable terms. If we are sued, even
if we prevail, such litigation may be costly.
Our commercial success will depend significantly on our ability to operate without infringing the patents or proprietary rights of third parties. Our
technologies, or the technologies of third parties on which we may depend, may infringe the patents or proprietary rights of others. If there is an adverse
outcome in any dispute concerning rights to these technologies, then we could be subject to significant liability, required to license disputed rights from or
to other parties and/or required to cease using a technology necessary to carry out our research, development and commercialization activities. We do not
currently license any patent rights from third parties relative to TPOXX®.
If our patents are challenged and found to be invalid or unenforceable, the value of our products could be harmed, and we could be subject to
competition earlier than we anticipated.
The costs to establish or defend against claims of infringement or interference with patents or other proprietary rights can be expensive, distracting
and time-consuming, even if the outcome is favorable. An outcome of any patent or proprietary rights administrative proceeding or litigation that is
unfavorable to us may cause us to incur significant costs, and have a material adverse effect on us. Additionally, we may not prevail in any such action and
such litigation often takes years to resolve creating business uncertainty if we are not able to resolve it quickly.
Furthermore, like many biopharmaceutical companies, we may from time to time hire scientific personnel formerly employed by other companies
involved in one or more areas similar to the activities conducted by us. It is possible that we and/or these individuals may be subject to allegations of trade
secret misappropriation or other similar claims as a result of their prior affiliations.
Risks Related to Our Common Stock
Concentration of ownership of our capital stock could delay or prevent a change of control.
Our directors, executive officers and beneficial owners of more than 5% of our common stock ("principal stockholders") beneficially own a
significant percentage of our common stock. As a result, these stockholders, if acting together, have the ability to influence the outcome of corporate
actions requiring stockholder approval. Additionally, this concentration of ownership may have the effect of delaying or preventing a change of control of
SIGA. As of February 15, 2023, directors, executive officers and principal stockholders (excluding institutional investors) beneficially owned
approximately 35% of our outstanding common stock. In addition to owning common stock of the Company, directors and certain executive officers have
the right to acquire additional stock through the exercise or conversion of certain securities.
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Our stock repurchase program could affect the price of our common stock and increase volatility and may be suspended or terminated at any time,
which may result in a decrease in the trading price of our common stock.
On August 2, 2021, our Board of Directors authorized a new share repurchase program for up to $50 million of our common stock through
December 31, 2023. This stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of our common
stock and may be suspended or discontinued at any time, which could cause the market price of our common stock to decline. Repurchases pursuant to our
stock repurchase program could affect the price of our common stock and increase its volatility. Important factors that could cause us to limit, suspend or
delay the Company’s stock repurchases, without prior notice, and that could in any event impact management’s exercise of its discretion as to the amount
and timing of such repurchases, include the timing of exercise of procurement options under government contracts, alternative opportunities for strategic
uses of cash, the stock price of the Company’s common stock, market conditions, and other corporate liquidity requirements and priorities. The existence of
our stock repurchase program could cause the price of our common stock to be higher than it would be in the absence of such a program and could
potentially reduce the market liquidity for our common stock. Additionally, repurchases under our stock repurchase program would diminish our cash
reserves, which could impact our ability to pursue other opportunities, further develop our technology or adversely affect our operating results. There can
be no assurance that any stock repurchases would enhance stockholder value because the market price of our common stock may decline below the levels
at which we repurchased such shares. Any failure to repurchase shares could negatively impact our reputation, investor confidence in us and our stock
price.
A future issuance of preferred stock may adversely affect the rights of the holders of our common stock.
Our certificate of incorporation allows our Board of Directors to issue up to 20,000,000 shares of preferred stock and to fix the voting powers,
designations, preferences, rights and qualifications, limitations or restrictions of these shares without any further vote or action by the stockholders. The
rights of the holders of common stock will be subject to, and could be adversely affected by, the rights of the holders of any preferred stock that we may
issue in the future. The issuance of preferred stock could have the effect of making it more difficult for a third party to acquire a majority of our outstanding
voting stock, thereby delaying, deferring or preventing a change of control.
General Risk Factors
Global infectious disease outbreaks, such as the COVID-19 pandemic, or climate-related matters could negatively impact the global economy on a
broad scale and our business in particular.
The COVID-19 pandemic has caused significant societal and economic disruption. The continuing direct and indirect impacts of the pandemic are
significant and broad-based, including supply chain disruptions and labor shortages that started during the pandemic and continue to represent business and
financial risks. As such, the Company is continually coordinating with service providers and vendors, in particular Contract Manufacturing
Organizations that constitute our supply chain, with respect to risks and mitigating actions.
As of the filing date of this report, the Company has not identified or been notified by government customers of impediments to the continued full
performance of their government contracts. With regard to day-to-day operations, the COVID-19 pandemic, and the secondary effects of the
pandemic, have at times slowed the pace of execution of government contracts as well as new contract generation. Additionally, the COVID-19 pandemic,
and the secondary effects of the pandemic have increased the risk of delays in connection with a broad range of operational activities, including: supply
chain procurement of raw materials and manufacturing; and certain research and development activities, such as those that involve clinical trials.
Furthermore, the pandemic and related secondary effects could result in a slower pace of future product deliveries if there are shortages or delays in the
receipt by the supply chain of raw materials or supplies, or if labor shortages become more acute. While the Company does not currently expect such
delays to have a material adverse impact on the financial condition of the Company or its long-term operating performance, and while the COVID-19
pandemic has not adversely affected the liquidity position of the Company, the Company cannot give assurances as to the full extent of the impact at this
time.
Future acquisitions, strategic investments, partnerships or alliances could be difficult to identify and integrate, divert the attention of management,
disrupt our business, dilute stockholder value, materially change the risk profile of the Company and/or adversely affect our operating results and
financial condition.
We may in the future seek to acquire or invest in businesses, products or technologies that we believe could complement or expand our services,
enhance our technical capabilities or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management and
cause us to incur various expenses in identifying, investigating and pursuing businesses. In addition, we may not be able to find and identify desirable
acquisition targets or be successful in entering into an agreement with any particular target or consummating any such agreement. Even if we do
consummate an acquisition, in connection therewith we may be required to issue equity (thereby diluting our current stockholders) or debt, we may not be
able to integrate successfully the acquired personnel, operations and technologies, or effectively manage the combined business following the acquisition,
or the acquired business could otherwise fail to meet our expectations, which, in each case, could have a material adverse effect on our business
projections, financial condition, results of operations and prospects.
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The health security markets in which we compete and will compete are highly competitive.
The health security industry is characterized by rapid and significant technological change. Our success will depend on our ability to develop and
apply our technologies in the design and development of our product candidates and to establish and maintain a market for our product candidates. In
addition, there are many companies, both public and private, including major pharmaceutical and chemical companies, specialized biotechnology firms,
universities and other research institutions engaged in developing pharmaceutical, health security and biotechnology products. Many of these companies
have substantially greater financial, technical, research and development resources, and human resources than us. Competitors may develop products or
other technologies that are more effective than any that are being developed by us or may obtain FDA approval for products more rapidly than us. If we
commence commercial sales of products, we still must compete in the manufacturing and marketing of such products, areas in which it is very difficult to
succeed and in which we have limited experience and in which we are partially dependent on third parties. Many potential competitors have manufacturing
facilities and established marketing capabilities that may enable such companies to market competing products through existing channels of distribution
which could provide a substantial advantage.
Product liability lawsuits could cause us to incur liabilities, which could be substantial, and require us to limit commercialization of any products that
we may develop.
Like all pharmaceutical companies, we face an inherent business risk related to the sale of TPOXX® and any other products that we successfully
develop and the testing of our product candidates in clinical trials. TPOXX® is currently identified as a covered countermeasure under the PREP Act
declaration issued in October 2008, as amended, which provides us with substantial immunity with respect to the manufacture, administration or use of
TPOXX®. Under our BARDA Contract, the U.S. Government should indemnify us against claims by third parties for death, personal injury and other
damages related to TPOXX®, including reasonable litigation and settlement costs, to the extent that the claim or loss results from specified risks not
covered by insurance or caused by our grossly negligent or criminal behavior. The collection process under the PREP Act can be lengthy and complicated,
and there is no guarantee that we would be able to recover these amounts from the U.S. Government.
If we cannot successfully defend ourselves against future claims that our product or product candidates caused injuries and we are not entitled to
or able to obtain indemnity by the U.S. Government with respect to such claims, or if the U.S. Government does not honor its indemnification obligations,
we may incur liabilities, which could be substantial. Regardless of merit or eventual outcome, product liability claims may result in decreased demand for
any product candidate or product that we may develop; withdrawal of a product from the market; costs and management time and focus to defend the
related litigation; substantial monetary awards to trial participants or patients; loss of revenue; harm to our reputation; the inability to commercialize any
products that we may develop. Additionally, a successful product liability claim or series of claims brought against us could cause our stock price to fall,
could decrease our financial resources and materially exhaust our existing insurance or limit our ability to obtain insurance going forward, all of which
would materially adversely affect our business and financial position.
We currently have product liability insurance with coverage up to a $10 million annual aggregate limit and a $10 million per occurrence limit.
Product liability insurance is difficult to obtain and increasingly expensive. Should we face claims, we may not be able to maintain insurance coverage at a
reasonable cost and we may not be able to maintain or obtain insurance coverage that will be adequate to satisfy any liability that may arise.
Our activities may involve hazardous materials, use of which may subject us to environmental regulatory liabilities.
Our biopharmaceutical research and development sometimes may involve the use of hazardous and radioactive materials and generation of
biological waste. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of these
materials and certain waste products, and may have to incur significant costs to comply with current or future environmental laws and regulations.
Although we believe that our CMOs’ safety procedures for handling and disposing of these materials comply with legally prescribed standards, the risk of
accidental contamination or injury from these materials cannot be completely eliminated. In the event of an accident, we could be held liable for damages,
and this liability could exceed our resources. We use through third parties, for example, small amounts of radioactive isotopes commonly used in
pharmaceutical research, which are stored, used and disposed of in accordance with Nuclear Regulatory Commission regulations. Our general liability
policy provides coverage up to annual aggregate limits of $2 million and coverage of $1 million per occurrence.
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The loss of key personnel or our ability to recruit or retain qualified personnel could adversely affect our results of operations.
We rely upon the ability, expertise, judgment, discretion, integrity and good faith of our senior management team, including our Chief Executive
Officer, Chief Scientific Officer and other key executives. Our success is dependent upon our personnel and our ability to recruit, retain and train high
quality employees. We must continue to recruit, retain and motivate management and other employees sufficient to maintain our current business and
support our projected growth. The loss of services of any members of our key management team could have a material adverse effect on our business. The
ongoing COVID-19 pandemic has increased employment changes in many industries, including ours. We cannot predict with certainty how, if at all, this
may impact SIGA.
On January 17, 2023, we announced that Phillip Gomez had provided notice of his intention to retire as our Chief Executive Officer and a member
of our Board in 2023. The Board has initiated a search for Dr. Gomez’s successor, and Dr. Gomez is expected to remain in his current role as Chief
Executive Officer until his successor commences service as Chief Executive Officer of the Company. The search for and transition to a new Chief
Executive Officer may result in disruptions to our business and uncertainty among our customers, employees and investors, which could adversely impact
our business and results of operations.
Our business and operations would suffer in the event of a significant computer system failure, cyber-attack or deficiency in our cyber-security.
Despite the implementation of security measures, our internal computer systems, and those of third parties on which we rely, are vulnerable to
damage from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over
the Internet, attachments to emails, persons inside our organization or persons with access to systems inside our organization. The risk of a security breach
or disruption, particularly through cyber-attacks or cyber-intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally
increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased and been targeted at
pharmaceutical companies in particular. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of
our drug development programs. For example, the loss of clinical trial data from completed or ongoing or planned clinical trials could result in delays in
our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
Also, our processing of sensitive information may subject us to data privacy and security obligations, and confidential patient and other personal
or sensitive information may be compromised in a cyber-attack or cyber-intrusion. In the United States, federal, state, and local governments have enacted
numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws and other similar
laws (e.g., wiretapping laws). For example, the Health Insurance Portability and Accountability Act of 1996 imposes specific requirements relating to the
privacy, security and transmission of individually identifiable health information. If we or the third parties on which we rely fail, or are perceived to have
failed, to address or comply with data privacy and security obligations, we could face significant consequences. These consequences may include, but are
not limited to, government enforcement actions, litigation, additional reporting requirements and/or oversight, bans on processing personal data, orders to
destroy or not use personal data and imprisonment of Company officials.
To the extent that any disruption or security breach was to result in a loss of or damage to our data or applications, or inappropriate disclosure of
confidential or proprietary information, we could incur material legal claims and liability, damage to our reputation, and the further development of our
drug candidates could be delayed.
We may need additional funding, which may not be available to us, and which may force us to delay, reduce or limit proposed acquisitions or strategic
investments or any of our non-government funded product development programs or commercial efforts.
Although we believe our current cash position is strong, we may require additional financing and, while we have raised funds through credit
facilities and the issuance of new equity or the exercise of options or warrants in the past, there is no guarantee that we will continue to be successful in
raising such funds should we need to seek to do so. If we are unable to raise additional funds, we could be forced to discontinue, cease or limit certain
strategic transactions or operations and equity investors could experience significant or total losses of their investments. Our cash flows may fall short of
our projections or be delayed, or our expenses may increase, which could result in our capital being consumed significantly faster than anticipated. If we
are able to obtain additional financing through the sale of equity or convertible debt securities, such sales may contain terms, such as liquidation and other
preferences that are not favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties,
it may be necessary to relinquish valuable rights to our technologies or product candidates or grant licenses on terms that may not be favorable to us. Debt
financing arrangements, if available, may require us to pledge certain assets or enter into covenants that could restrict our business activities or our ability
to incur further indebtedness and may be at interest rates and contain other terms that are not favorable to our stockholders.
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Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our headquarters are located in New York, NY, and our research and development facilities are located in Corvallis, Oregon. In May 2017, we
entered into a new 10-year lease with a related party to let 3,200 square feet in New York, NY to serve as our corporate headquarters.
In Corvallis, we lease approximately 10,276 square feet. Until its expiration on December 31, 2017, this facility was leased under an amended
lease agreement signed in January 2007, and most recently changed through an addendum in April 2015. On November 3, 2017 we entered into a new lease
for the same space which was scheduled to expire in December 2019. In the second quarter of 2019, we exercised the first renewal option which was
scheduled to expire in December 2021. In the second quarter of 2021, we exercised the second renewal option, which extended the lease expiration date to
December 31, 2024.
Item 3. Legal Proceedings
From time to time, we may be involved in a variety of claims, suits, investigations and proceedings arising from the ordinary course of our
business, collections claims, breach of contract claims, labor and employment claims, tax and other matters. Although such claims, suits, investigations and
proceedings are inherently uncertain and their results cannot be predicted with certainty, we believe that the resolution of such current pending matters, if
any, will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flow. Regardless of the outcome,
litigation can have an adverse impact on us because of legal costs, diversion of management resources and other factors.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The Company's common stock trades on The Nasdaq Global Market under the symbol "SIGA."
There were 28 holders of record as of February 15, 2023. We believe that the number of beneficial owners of our common stock is substantially
greater than the number of record holders, because a large portion of common stock is held in broker “street names.”
Issuer Purchases of Equity Securities
Period
October 1, 2022 to October 31, 2022
November 1, 2022 to November 30, 2022
December 1, 2022 to December 31, 2022
Total
Total Number
of Shares
Purchased
Average Price
Paid per Share
- $
88,705
260,252
348,957 $
-
9.22
7.83
8.19
Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Programs
- $
88,705
260,252
348,957
Dollar Value
of Shares That
May Yet Be
Purchased
Under the
Programs
35,325,830
34,507,731
32,469,204
On March 5, 2020, the Company announced that the Board of Directors authorized a share repurchase program under which the Company may
repurchase, from time to time, up to an aggregate of $50 million of the Company’s common stock through December 31, 2021. This program has been
fulfilled with the maximum amount being used to repurchase shares.
On August 5, 2021, the Company announced that the Board of Directors authorized an additional share repurchase program under which the
Company may repurchase up to $50 million of the Company's common stock through December 31, 2023. The Company started repurchasing shares under
this program in the fourth quarter of 2021. The timing and actual number of shares repurchased will depend on a variety of factors, including: the timing
of exercise of procurement options under government contracts; alternative opportunities for strategic uses of cash; the stock price of the Company’s
common stock; market conditions; and other corporate liquidity requirements and priorities.
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Performance Graph
The following line graph compares the cumulative total stockholder return through December 31, 2022, assuming reinvestment of dividends, by
an investor who invested $100 on December 31, 2017 in each of (i) our common stock; (ii) the Nasdaq Composite; and (iii) the Nasdaq Biotech Composite.
SIGA Technologies, Inc.
NASDAQ Composite Index
NASDAQ Biotech Composite Index
$
$
$
100 $
100 $
100 $
163 $
96 $
91 $
98 $
130 $
113 $
150 $
187 $
142 $
155 $
227 $
141 $
152
152
126
2017
2018
2019
2020
2021
2022
Securities Authorized for Issuance Under Equity Compensation Plans
The information required by this item concerning securities authorized for issuance under equity compensation plans is set forth in Item 12,
“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”
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Item 6. [Reserved]
Not applicable.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this
report. Refer to Part II, Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (filed with the SEC on March 3, 2022) for
additional discussion of our financial condition and results of operations for the year ended December 31, 2021, as well as our financial condition and
results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020. In addition to historical information, the
following discussion and other parts of this Annual Report contain forward-looking information that involves risks and uncertainties.
Overview
SIGA Technologies, Inc. (“SIGA” or the “Company”) is a commercial-stage pharmaceutical company. The Company sells its lead product,
TPOXX® (“oral TPOXX®,” also known as "tecovirimat" in certain international markets), to the U.S. government and international governments
(including government affiliated entities). Additionally, the Company sells the intravenous formulation of TPOXX® ("IV TPOXX®") to the U.S.
Government.
TPOXX® is an oral formulation antiviral drug for the treatment of human smallpox disease caused by variola virus. On July 13, 2018, the United
States Food & Drug Administration (“FDA”) approved oral TPOXX® for the treatment of smallpox. The Company has been delivering oral TPOXX® to
the U.S. Strategic National Stockpile ("Strategic Stockpile") since 2013.
In connection with IV TPOXX®, SIGA announced on May 19, 2022 that the FDA approved this formulation for the treatment of smallpox.
In addition to being approved by the FDA, oral TPOXX® (tecovirimat) has regulatory approval with the European Medicines Agency ("EMA"),
Health Canada and the Medicines and Healthcare Products Regulatory Agency ("MHRA") of the United Kingdom. The EMA and MHRA approved label
indication covers the treatment of smallpox, monkeypox ("mpox"), cowpox, and vaccinia complications following vaccination against smallpox. The
Health Canada approved label indication covers the treatment of smallpox.
With respect to the regulatory approvals by the EMA, MHRA and Health Canada, oral tecovirimat represents the same formulation that was
approved by the FDA in July 2018 under the brand name TPOXX®.
In connection with a potential FDA label expansion of oral TPOXX® for an indication covering smallpox post-exposure prophylaxis (“PEP”), the
Company has recently completed enrollment of an immunogenicity trial and is planning to meet target enrollment for an expanded safety trial in March of
2023. Provided unblinded results from these trials are supportive of a regulatory submission, the Company expects to commence in 2023 the preparation of
a supplemental New Drug Application (“Supplemental NDA”) for a smallpox PEP indication for oral TPOXX®, targeting early 2024 for its submission to
the FDA.
In connection with the global response to an mpox outbreak, a series of observational and randomized, placebo-controlled clinical trials were
initiated, starting in the third quarter of 2022, to assess the safety and efficacy of TPOXX® in participants with mpox. The first three randomized, placebo-
controlled clinical trials to be launched were in the United States, United Kingdom and the Democratic Republic of Congo ("DRC"). These randomized
clinical trials are now enrolling patients to collect data on the potential benefits of using TPOXX® as an antiviral treatment for active mpox disease.
Study of Tecovirimat for Human Monkeypox Virus (STOMP; A5418) is a U.S.-based clinical trial sponsored by the National Institute of Allergy
and Infectious Diseases ("NIAID"), part of the National Institutes of Health. The NIAID-funded AIDS Clinical Trials Group is leading the study, which
may later expand to international sites. Study investigators aim to enroll more than 500 participants, including children and those who are pregnant or
breastfeeding, at clinical research sites. The trial will also include an open label arm that will include children, pregnant/breastfeeding individuals and those
who are immunocompromised or have severe mpox disease.
PLATINUM is a U.K.-based clinical trial commissioned and funded by the National Institute for Health Care and Research. The trial is led by
researchers at Oxford University and aims to recruit at least 500 participants, including children weighing ≥13 kg, across the U.K.
PALM 007 is a DRC-based clinical trial sponsored by NIAID and Institute National de Recherche Biomédicale. Study investigators aim to enroll
more than 450 participants, including children weighing ≥3 kg and women who are pregnant or breastfeeding, at clinical sites in the DRC.
The Company may be able to use data from the trials noted above to potentially pursue an FDA label expansion of oral TPOXX® for an
indication covering the treatment of mpox. The viability, and timing, of a potential FDA submission for an mpox indication will be impacted by a series of
factors, including the magnitude and severity of future mpox cases, the location of future cases, enrollment in clinical trials, and results of randomized,
placebo-controlled and observational clinical trials.
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Impact of COVID-19 Pandemic
The COVID-19 pandemic has caused significant societal and economic disruption. The continuing direct and indirect impacts of the pandemic are
significant and broad-based, including supply chain disruptions and labor shortages that started during the pandemic and continue to represent business and
financial risks. As such, the Company is continually coordinating with service providers and vendors, in particular Contract Manufacturing Organizations
("CMOs") that constitute our supply chain, with respect to risks and mitigating actions.
As of the filing date of this report, the Company has not identified or been notified by government customers of impediments to the continued full
performance of their government contracts. With regard to day-to-day operations, the COVID-19 pandemic, and the secondary effects of the
pandemic, have at times slowed the pace of execution of government contracts as well as new contract generation. Additionally, the COVID-19 pandemic,
and the secondary effects of the pandemic have increased the risk of delays in connection with a broad range of operational activities, including: supply
chain procurement of raw materials and manufacturing; and certain research and development activities, such as those that involve clinical trials.
Furthermore, the pandemic and related secondary effects could result in a slower pace of future product deliveries if there are shortages or delays in the
receipt by the supply chain of raw materials or supplies, or if labor shortages become more acute. While the Company does not currently expect such
delays to have a material adverse impact on the financial condition of the Company or its long-term operating performance, and while the COVID-19
pandemic has not adversely affected the liquidity position of the Company, the Company cannot give assurances as to the full extent of the impact at this
time.
Procurement Contracts with the U.S. Government
19C BARDA Contract
On September 10, 2018, the Company entered into a contract with the U.S. Biomedical Advanced Research and Development Authority
("BARDA") pursuant to which SIGA agreed to deliver up to 1,488,000 courses of oral TPOXX® to the Strategic Stockpile, and to manufacture and deliver
to the Strategic Stockpile, or store as vendor-managed inventory, up to 212,000 courses of IV TPOXX®. Additionally, the contract includes funding from
BARDA for a range of activities, including: advanced development of IV TPOXX®, post-marketing activities for oral and IV TPOXX®, and procurement
activities. As of December 31, 2022, the contract with BARDA (as amended, modified, or supplemented from time to time, the "19C BARDA Contract")
contemplates up to approximately $602.5 million of payments, of which approximately $51.7 million of payments are included within the base period of
performance of five years, approximately $268.9 million of payments are related to exercised options and up to approximately $281.9 million of payments
are currently specified as unexercised options. BARDA may choose in its sole discretion when, or whether, to exercise any of the unexercised options. The
period of performance for options is up to ten years from the date of entry into the 19C BARDA Contract and such options could be exercised at any time
during the contract term, including during the base period of performance.
The base period of performance specifies potential payments of approximately $51.7 million for the following activities: payments of
approximately $11.1 million for the delivery of approximately 35,700 courses of oral TPOXX® to the Strategic Stockpile; payments of $8.0 million for the
manufacture of 20,000 courses of final drug product of IV TPOXX® ("IV FDP"), of which $3.2 million of payments are related to the manufacture of bulk
drug substance ("IV BDS") to be used in the manufacture of IV FDP; payments of approximately $32.0 million to fund reimbursed activities; and payments
of approximately $0.6 million for supportive procurement activities. As of December 31, 2022, the Company had received $11.1 million for the delivery of
approximately 35,700 courses of oral TPOXX® to the Strategic Stockpile, $3.2 million for the manufacture of IV BDS, $4.3 million for the delivery of IV
FDP to the Strategic Stockpile and $18.8 million for other base period activities. IV BDS has been used for the manufacture of courses of IV FDP. The $3.2
million received for the completed manufacture of IV BDS had been recorded as deferred revenue as of December 31, 2021, but with the delivery of IV
FDP to the Strategic Stockpile during 2022, $2.9 million was recognized as revenue. The remaining $0.3 million of deferred revenue will be recognized as
IV FDP containing such IV BDS is delivered to and accepted by the Strategic Stockpile.
The options that have been exercised to date provide for payments up to approximately $268.9 million. There are exercised options for the
following activities: payments up to $11.2 million for the procurement of raw materials used in the 2020 manufacture of certain courses of oral
TPOXX®; payments up to $213.9 million for the delivery of up to 726,140 courses of oral TPOXX®; payments up to $25.6 million for the manufacture of
courses of IV FDP, of which $10.2 million of payments relate to the manufacture of IV BDS to be used in the manufacture of IV FDP; payments of up to
approximately $3.6 million to fund post-marketing activities for IV TPOXX®; and payments of up to $14.6 million for funding of post-marketing activities
for oral TPOXX®. As of December 31, 2022, the Company had received $225.1 million for the delivery (and related procurement of raw materials) of oral
TPOXX® to the Strategic Stockpile; $10.2 million for the completed manufacture of IV BDS, which has been recorded as deferred revenue as
of December 31, 2022; and $7.3 million in connection with post-marketing activities for oral and IV TPOXX®.
Unexercised options specify potential payments up to approximately $281.9 million in total (if all such options are exercised). There are options
for the following activities: payments of up to $225.1 million for the delivery of oral TPOXX® to the Strategic Stockpile; payments of up to $51.2 million
for the manufacture of courses of IV FDP, of which up to $20.5 million of payments would be paid upon the manufacture of IV BDS to be used in the
manufacture of IV FDP; and payments of up to approximately $5.6 million for supportive procurement activities.
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The options related to IV TPOXX® are divided into two primary manufacturing steps. There are options related to the manufacture of bulk drug
substance (“IV BDS Options”), and there are corresponding options (for the same number of IV courses) for the manufacture of final drug product (“IV
FDP Options”). BARDA may choose to exercise any, all, or none of these options in its sole discretion. The 19C BARDA Contract includes: three separate
IV BDS Options, each providing for the bulk drug substance equivalent of 64,000 courses of IV TPOXX®; and three separate IV FDP Options, each
providing for 64,000 courses of final drug product of IV TPOXX®. BARDA has the sole discretion as to whether to simultaneously exercise IV BDS
Options and IV FDP Options, or whether to exercise options at different points in time (or alternatively, to only exercise the IV BDS Option but not the IV
FDP Option). To date, BARDA has exercised one of the three IV BDS options and one of the three IV FDP options, both of which were exercised
simultaneously in 2022. If BARDA decides to only exercise the remaining IV BDS Options, then the Company would receive payments up to $20.5
million; alternatively, if BARDA decides to exercise all the remaining IV BDS Options and IV FDP Options, then the Company would receive payments
up to $51.2 million. For each set of options relating to a specific group of courses (for instance, the IV BDS and IV FDP options that reference the
same 64,000 courses), BARDA has the option to independently purchase IV BDS or IV FDP. The Company estimates that sales of the IV
formulation under this contract (under current terms), assuming the IV FDP Options were exercised, would have a gross margin (sales less cost of sales, as
a percentage of sales) that is less than 40%.
Under the terms of this contract, exercise of procurement options is at the sole discretion of BARDA. The request for proposal that preceded the
award of the 19C BARDA Contract indicated that the expected purpose of the contract was to maintain the level of smallpox antiviral preparedness in the
Strategic Stockpile. Based on prior product delivery activity, and current FDA-approved shelf life of oral TPOXX®, the Company estimates that
approximately 920,000 courses of smallpox antiviral treatment would need to be delivered to the Strategic Stockpile in 2023 and 2024 in order to maintain
historical stockpile levels of unexpired TPOXX® treatment in the Strategic Stockpile.
U.S. Department of Defense Procurement Contracts
On May 12, 2022, the Company announced a contract with the U.S. Department of Defense ("DoD") for the procurement of oral TPOXX® ("DoD
Contract #1"). The DoD Contract #1 included a firm commitment for the DoD to procure approximately $3.6 million of oral TPOXX®, and an option,
exercisable at the sole discretion of the DoD, for the procurement of approximately $3.8 million of oral TPOXX®. In the second quarter of 2022, the
Company delivered and recognized revenue of $3.6 million for the delivery of oral TPOXX® to the DoD, fulfilling the firm commitment in DoD Contract
#1. In the third quarter of 2022, the DoD exercised the option for $3.8 million of oral TPOXX® and the Company satisfied its obligation by
delivering product and recognized the related revenue in September 2022.
On September 28, 2022, the Company and the DoD signed a new procurement contract ("DoD Contract #2"). The DoD Contract #2 includes a
firm commitment for the DoD to procure approximately $5.2 million of oral TPOXX®, and an option, exercisable at the sole discretion of the DoD for the
procurement of approximately $5.5 million of oral TPOXX®.
International Procurement Contracts
In 2022, the Company received firm commitment orders from 13 international customers (including Canada) for the delivery of approximately
$77 million of oral TPOXX®, of which approximately $39 million is for Canada and approximately $38 million is for jurisdictions in Europe, Asia-Pacific,
and the Middle East. Additionally, the contract with the Canadian Department of National Defence ("CDND") has an option until March 31, 2024,
exercisable at its sole discretion, for the purchase of up to an additional $6 million of oral TPOXX®. With respect to the $77 million of firm commitment
orders that were received this year, approximately $71 million of oral TPOXX® was delivered and recorded as revenue in 2022, and the remaining
order is expected to be fulfilled by July 31, 2023. Through an International Promotion Agreement (defined and discussed below), Meridian Medical
Technologies, Inc. (“Meridian”) is the counterparty to international contracts under which orders are placed for the purchase of oral TPOXX®. The Public
Health Agency of Canada (“PHAC”) and the CDND are among the contracting parties for the purchase of oral TPOXX® (see below for a summary
description of these contracts).
On January 13, 2021, PHAC awarded a contract to Meridian (the “PHAC Contract”) for the purchase of up to approximately $33 million of oral
TPOXX® (tecovirimat) within five years. In March 2022 and July 2022, PHAC executed amendments in which total procurement of oral TPOXX® under
the PHAC Contract was increased to an amount of approximately $45 million. Prior to 2022, approximately $10 million of oral TPOXX® had been
ordered and delivered to PHAC. During 2022, all remaining amounts under the PHAC Contract of approximately $35 million of oral TPOXX®
were delivered to PHAC and recognized as revenue.
On April 3, 2020, the Company announced that the CDND awarded a contract (the "Canadian Military Contract") to Meridian, pursuant to which
the CDND would purchase up to approximately $14 million of oral TPOXX® over four years in an option-based contract. Prior to 2022, approximately
$4 million of oral TPOXX® had been ordered and delivered to the CDND. In 2022, approximately $4 million of oral TPOXX® was delivered and
recognized as revenue under this contract, leaving approximately $6 million of unexercised options, exercisable at the sole discretion of CDND, remaining
under this contract.
The above-listed contract awards were coordinated between SIGA and Meridian under the international promotion agreement (as amended, the
"International Promotion Agreement") that has an effective date of May 31, 2019. Under the International Promotion Agreement, Meridian is the
counterparty in connection with international contracts for oral TPOXX® and SIGA is responsible for manufacture and delivery of any oral TPOXX®
purchased thereunder.
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International Promotion Agreement
Under the terms of the International Promotion Agreement, which has an effective date of May 31, 2019 and an initial term that expires on May
31, 2024, Meridian was granted exclusive rights to market, advertise, promote, offer for sale, or sell oral TPOXX® in a field of use specified in the
International Promotion Agreement in all geographic regions except for the United States (the “Territory”), and Meridian has agreed not to commercialize
any competing product, as defined in the International Promotion Agreement, in the specified field of use in the Territory. SIGA retains ownership,
intellectual property, distribution and supply rights and regulatory responsibilities in connection with TPOXX®, and, in the United States market, also
retains sales and marketing rights with respect to oral TPOXX®. SIGA’s consent is required for the entry into any sales arrangement pursuant to the
International Promotion Agreement.
Sales to international customers pursuant to the International Promotion Agreement are invoiced and collected by Meridian, and such collections
are remitted, less Meridian's fees, to the Company under a quarterly process specified in the International Promotion Agreement. The fee Meridian retains
pursuant to the International Promotion Agreement is a specified percentage of the collected proceeds of sales of oral TPOXX® net of certain expenses, for
calendar years in which customer collected amounts net of such expenses are less than or equal to a specified threshold, and a higher specified percentage
of such collected net proceeds for calendar years in which such net collected amounts exceed the specified threshold. We exceeded the specified threshold
in 2022 and therefore recorded the higher specified percentage for all International Promotion Agreement sales in 2022. Taking into account Meridian’s fee
and manufacturing costs of oral TPOXX®, it is currently estimated by the Company that international sales of oral TPOXX® each year will have a
contribution margin (as expressed as a percentage of product sales, and before any consideration of expenses not directly related to manufacturing or
Meridian activities) of between approximately 65% and 80%, depending on the international sales levels each year. For purposes of this disclosure,
contribution margin (in amount) represents international product sales less applicable cost of sales and the Meridian fee (which is included within selling,
general and administrative expenses within the income statement).
Research Agreements and Grants
In July 2019, the Company was awarded a multi-year research contract valued at a total of $19.5 million, with an initial award of $12.4 million,
from the DoD to support work in pursuit of a potential label expansion for oral TPOXX® that would include post-exposure prophylaxis ("PEP") of
smallpox (such work known as the "PEP Label Expansion Program" and the contract referred to as the "PEP Label Expansion R&D Contract"). In
subsequent modifications, the DoD increased the scope and the available funding under the PEP Label Expansion R&D Contract to approximately
$27 million. The period of performance for this contract, as modified, terminates on January 31, 2025. As of December 31, 2022, remaining revenue to be
recognized in the future under the PEP Label Expansion R&D Contract is up to $6.4 million. Revenue from the performance obligation under the PEP
Label Expansion R&D Contract is recognized over time using an input method using costs incurred to date relative to total estimated costs at completion.
Contracts and grants include, among other things, options that may or may not be exercised at the U.S. Government’s discretion. Moreover,
contracts and grants contain customary terms and conditions including the U.S. Government’s right to terminate or restructure a contract or grant for
convenience at any time. As such, the Company may not be eligible to receive all available funds.
Critical Accounting Estimates
The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the results we report in our
consolidated financial statements, which we discuss under the heading “Results of Operations” following this section of our Management’s Discussion and
Analysis of Financial Condition and Results of Operations. Some of our accounting policies require us to make difficult and subjective judgments, often as
a result of the need to make estimates of matters that are inherently uncertain. Our most critical accounting estimates include revenue recognition over time,
and income taxes (including realization of deferred tax assets).
Revenue Recognition
We account for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The unit of account in ASC
606 is a performance obligation. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as,
the performance obligation is satisfied. Our performance obligations are satisfied over time as work progresses or at a point in time. Revenue connected
with performance obligations related to product delivery and supportive services are recognized at a point in time. Revenue connected with performance
obligations related to research and development are recognized over time.
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Due to the nature of the work required to be performed on many of our performance obligations for which revenue is recognized over time, the
estimation of total revenue and costs to satisfy the obligations is complex, subject to many variables and requires significant judgment. The consideration
associated with these types of performance obligations is considered variable. We estimate variable consideration as the most likely amount to which we
expect to be entitled. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue
recognized will not occur and when any uncertainty associated with variable consideration is resolved. Our estimates of variable consideration and
determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our historical and anticipated
performance, external factors, trends and all other information (historical, current and forecasted) that is reasonably available to us.
Contracts are often modified to account for additional services to be performed. We consider contract modifications to exist when the modification
either creates new enforceable rights and obligations, or changes existing enforceable rights and obligations. If the effect of a contract modification on the
transaction price changes our measure of progress for the performance obligation to which it relates, the impact will be recognized in the period of
modification as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.
We have a process in which management reviews the progress and execution of our performance obligations. As part of this process, management
reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule,
identified risks and opportunities and the related changes in estimates of revenues and costs. The risks and opportunities include management’s judgment
about the ability and cost to achieve the schedule, technical requirements and other contract requirements. Management must make assumptions and
estimates regarding labor productivity, the complexity of the work to be performed, customer behavior and execution by our subcontractors, among other
variables.
Based on this analysis, any quarterly adjustments to revenues, research and development expenses and cost of sales and supportive services are
recognized as necessary in the period they become known. Changes in estimates of revenues, research and development expenses and cost of sales and
supportive services are recognized quarterly on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on
current and prior periods based on a performance obligation’s percentage of completion. A significant change in one or more of these estimates could affect
the profitability of one or more of our performance obligations.
Income Taxes
Our income tax expense and deferred tax assets and liabilities reflect management’s best estimate of current and future taxes to be paid. We are
subject to U.S. federal income tax and state income tax in numerous jurisdictions. Significant judgments and estimates are required in the determination of
our income tax expense.
Deferred income taxes arise from temporary differences between the tax basis of assets and their reported amounts in the financial statements,
which will result in taxable or deductible amounts in the future. Each reporting period, we assess the realizability of our deferred tax assets to determine if
the deductible temporary differences will be utilized on a more-likely-than-not basis. In making this determination, we assess all available positive and
negative evidence to determine if our existing deferred tax assets are realizable on a more-likely-than-not basis. Significant weight is given to positive and
negative evidence that is objectively verifiable. We consider the reversal of existing taxable temporary differences, projected future taxable income, tax
planning strategies and recent financial operating results.
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The amount of deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income change and/or if
significant objective negative evidence is no longer present or if significant negative evidence becomes available. Such changes could lead to a change in
judgment related to the realization of the net deferred tax asset. Future changes in the estimated amount of deferred taxes expected to be realized will be
reflected in our financial statements in the period the estimate is changed with a corresponding adjustment to operating results.
Income tax benefits are recognized for a tax position when, in management’s judgment, it is more likely than not that the position will be sustained
upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, the tax benefit is measured as the
largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. We have recorded a
liability for unrecognized tax benefits resulting from tax positions taken, or expected to be taken, in an income tax return. It is the Company’s policy to
recognize interest and penalties related to uncertain tax positions as a component of income tax expense. Uncertain tax positions are evaluated and adjusted
as appropriate, while taking into account the progress of audits of various taxing jurisdictions.
In August 2022, the Inflation Reduction Act (“IRA”) and CHIPS and Science Act (“CHIPS Act”) were both enacted. This new legislation includes
the implementation of a new corporate alternative minimum tax, an excise tax on stock buybacks, and tax incentives for energy and climate initiatives,
among other provisions. The IRA and CHIPS Act did not have a material impact on our consolidated financial statements for the year ended December 31,
2022.
Recently Issued Accounting Pronouncements
For discussion regarding the impact of accounting standards that were recently issued but are not yet effective, on our consolidated financial
statements, see Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements.
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Results of Operations for the Years ended December 31, 2022 and 2021
Revenues from product sales and supportive services for the years ended December 31, 2022 and 2021 were $86.7 million and $126.8 million,
respectively. Such revenues for the year ended December 31, 2022 include $71.0 million related to international sales of oral TPOXX®; $7.5 million of
oral TPOXX® sales to the DoD; and approximately $7.2 million of sales of IV TPOXX® to the U.S. Government under the 19C BARDA Contract. Such
revenues for the year ended December 31, 2021 include $112.5 million of sales of oral TPOXX® to the U.S. Government under the 19C BARDA Contract
and $12.7 million of international sales of oral TPOXX®.
Revenues from research and development contracts and grants for the years ended December 31, 2022 and 2021, were $24.1 million and $6.9
million, respectively. Most of the increase of $17.2 million relates to an increase in clinical trial activity under the PEP Label Expansion R&D Contract in
connection with the PEP development program, and the remainder relates to an increase in R&D activity under the BARDA Contract.
Cost of sales and supportive services for the years ended December 31, 2022 and 2021 were $10.4 million and $16.6 million, respectively. Such
costs in 2022 were primarily associated with the manufacture and delivery of oral TPOXX® courses to various international countries and approximately
$4.4 million of costs for the manufacture and delivery of IV TPOXX®. Such costs in 2021 were primarily associated with the manufacture and delivery of
oral TPOXX® courses to the U.S. Government under the 19C BARDA Contract.
Selling, general and administrative expenses for the years ended December 31, 2022 and 2021 were $35.1 million and $18.0 million, respectively.
The increase of $17.1 million mostly reflects promotion fees to Meridian incurred in connection with international sales that substantially increased from
the comparable period in 2021.
Research and development expenses were $22.5 million for the year ended December 31, 2022, an increase of approximately $12.6 million from
the $9.9 million incurred during the year ended December 31, 2021. The increase is mostly attributable to an increase in direct vendor-related expenses
incurred in connection with an increase in activities under the PEP Label Expansion R&D Contract and the BARDA Contract.
Changes in the fair value of the liability classified warrant to acquire common stock were recorded within the income statement. The warrant was
fully exercised during the year ended December 31, 2022. For the years ended December 31, 2022 and December 31, 2021, we recorded a gain of
approximately $0.4 million and $0.1 million, respectively, reflecting a decrease in the fair value of the liability-classified warrant primarily due to the
decrease in our stock price.
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Table of Contents
Other income, net for the years ended December 31, 2022 and 2021 was $1.0 million and $0.1 million, respectively. Other income
primarily reflects interest income on the Company's cash and cash equivalent balance. The increase of approximately $0.9 million is driven by higher
interest rates for 2022 when compared to 2021.
For the year ended December 31, 2022, we recognized a tax provision of $10.2 million on pre-tax income of $44.1 million. Our effective tax rate
for the year ended December 31, 2022 was 23.2% and differs from the statutory rate of 21% primarily as a result of non-deductible executive compensation
under IRC Section 162(m), and state and local taxes.
For the year ended December 31, 2021, we recognized a tax provision of $19.9 million on pre-tax income of $89.3 million. Our effective tax rate
for the year ended December 31, 2021 was 22.2% and differs from the statutory rate of 21% primarily as a result of non-deductible executive compensation
under IRC Section 162(m), and state and local taxes.
Liquidity and Capital Resources
As of December 31, 2022, we had $98.8 million in cash and cash equivalents, compared with $103.1 million at December 31, 2021.
Operating Activities
We prepare our consolidated statement of cash flows using the indirect method. Under this method, we reconcile net income to cash flows from
operating activities by adjusting net income for those items that impact net income but may not result in actual cash receipts or payments during the period.
These reconciling items include but are not limited to stock-based compensation, deferred income taxes and changes in the fair value of our warrant
liability; gains and losses from various transactions and changes in the consolidated balance sheet for working capital from the beginning to the end of the
period.
Net cash provided by operations for the years ended December 31, 2022 and 2021 was $41.6 million and $11.5 million, respectively. For the year
ended December 31, 2022, the receipt of approximately $80 million for the product delivery and acceptance of oral TPOXX® courses delivered to the
Strategic Stockpile in December 2021, as well as the receipt of approximately $27 million in connection with 2022 product deliveries and advance
payments were partially offset by the payment of $31 million of federal and state income taxes; an increase in inventory investment in connection with
broadening of the customer base for TPOXX® and mitigation of increasing general supply chain risks; and costs in relation to customary operating
activities. For the year ended December 31, 2021, the receipt of approximately $43.7 million in connection with U.S. Government and international sales of
oral TPOXX® was partially offset by net cash usage primarily related to manufacturing of inventory and customary operating activities.
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On December 31, 2022 and 2021, our accounts receivable balance was approximately $45.4 million (which includes approximately $40.9 million
of unbilled receivables) and $83.7 million, respectively. Our accounts receivable balance as of December 31, 2022 primarily reflects sales of oral TPOXX®
to various international countries, of which approximately $35 million was received by the Company in February 2023. The remaining amounts of the
receivable balance are expected to be collected during the first or second quarter of 2023. Our accounts receivable balance as of December 31,
2021 primarily reflects deliveries of approximately $79.7 million of oral TPOXX® to the U.S. Government in December 2021, for which we received full
payment in January 2022.
Investing Activities
There were no cash-related investing activities for the year ended December 31, 2022. For the year ended December 31, 2021, we used
$50,620 for capital expenditures.
Financing Activities
Cash used in financing activities for the years ended December 31, 2022 and 2021 was $46.0 million and $26.2 million, respectively. For the year
ended December 31, 2022, we paid a special dividend of approximately $32.9 million. In addition, we purchased approximately 1.8 million shares of
common stock for approximately $13.0 million. For the year ended December 31, 2021, $26.0 million of cash usage was associated with our repurchase of
approximately 3.8 million shares of common stock.
Future Cash Requirements
As of December 31, 2022, we have outstanding purchase orders associated with manufacturing obligations in the aggregate amount of
approximately $33.8 million.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Our investment portfolio includes cash and cash equivalents. Our main investment objective is the preservation of investment capital. We believe
that our investment policy is conservative, both in the duration of our investments and the credit quality of the investments we hold. We do not utilize
derivative financial instruments, derivative commodity instruments or other market risk sensitive instruments, positions or transactions to manage exposure
to interest rate changes. As such, we believe that the securities we hold are subject to market risk, changes in the financial standing of the issuer of such
securities and our interest income is sensitive to changes in the general level of U.S. interest rates.
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Item 8. Financial Statements and Supplementary Data
Index to the Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Income
Consolidated Statements of Changes in Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
43
44
46
47
48
49
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of SIGA Technologies, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of SIGA Technologies, Inc. and its subsidiaries (the “Company”) as of December 31, 2022
and 2021, and the related consolidated statements of operations and comprehensive income, of changes in stockholders' equity and of cash flows for each
of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).
We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of
December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in
conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial
Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's
internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective
internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated
financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
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Revenue Recognition – Estimated Costs to Complete the Research and Development Services (“R&D”) Performance Obligations for the 19C BARDA and
PEP Label Expansion R&D Contracts
As discussed in Notes 2 and 3 to the consolidated financial statements, a portion of the Company’s revenue for the year ended December 31, 2022 was
derived from long-term contracts. For these contracts, all revenue associated with current research and development performance obligations for the 19C
BARDA and PEP Label Expansion R&D Contracts, which totaled approximately $6.2 million and $17.9 million, respectively, is recognized over time,
because the customer simultaneously receives and consumes the benefits provided by the services as the Company performs these services. The Company
recognizes revenue related to these services based on the progress toward complete satisfaction of the performance obligation and measures this progress
under an input method, which is based on the Company’s costs incurred relative to total estimated costs. Under this method, progress is measured based on
the cost of resources consumed compared to the total estimated costs to completely satisfy the performance obligation. As disclosed by management, due to
the nature of the work required to be performed on many of the performance obligations, management’s estimation of total revenue and costs to satisfy the
obligations is complex, subject to many variables, and requires significant judgment. The incurred and estimated costs used in the measure of progress
include third-party services performed, direct labor hours, and material consumed.
The principal considerations for our determination that performing procedures relating to revenue recognition – estimated costs to complete the R&D
performance obligations for the 19C BARDA and PEP Label Expansion R&D Contracts is a critical audit matter are the significant judgments by
management when determining the estimated costs to completely satisfy the performance obligations. This in turn led to significant auditor judgment,
subjectivity and effort in performing procedures and in evaluating the estimates of the costs to complete related to management’s estimates of total
forecasted costs.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included, among others, evaluating and testing management’s process for determining the estimated costs to
completely satisfy each performance obligation for the 19C BARDA and PEP Label Expansion R&D Contracts, which included evaluating the
reasonableness of management’s estimates of total forecasted costs. Evaluating the reasonableness of management’s estimates of total forecasted costs
involved assessing management’s ability to reasonably estimate costs to complete the performance obligation by (i) comparing, on a test basis, the
underlying cost estimates to approved contracts or modifications; (ii) comparing, on a test basis, the underlying transaction price to original contracts or
modifications; and (iii) testing actual costs incurred and their eligibility for billing under the research and development performance obligations.
/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
March 2, 2023
We have served as the Company’s auditor since 1997.
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SIGA TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
As of
ASSETS
Current assets
Cash and cash equivalents
Accounts receivable
Inventory
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net
Deferred tax asset, net
Goodwill
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
Accrued expenses and other current liabilities
Income tax payable
Total current liabilities
Warrant liability
Other liabilities
Total liabilities
Commitments and contingencies (Note 14)
Stockholders' equity
Common stock ($.0001 par value, 600,000,000 shares authorized, 72,675,190 and 73,543,602 issued
and outstanding at December 31, 2022 and December 31, 2021, respectively)
Additional paid-in capital
Accumulated deficit
Total stockholders' equity
Total liabilities and stockholders' equity
December 31, 2022
December 31,
2021
$
$
$
$
98,790,622 $
45,406,960
39,273,090
2,315,672
185,786,344
1,848,314
6,250,385
898,334
252,546
195,035,923 $
3,355,268 $
16,852,781
1,309,672
21,517,721
—
3,358,160
24,875,881
103,138,819
83,650,450
19,510,379
2,453,444
208,753,092
2,365,957
2,422,607
898,334
286,585
214,726,575
2,028,004
9,252,812
19,207,042
30,487,858
6,521,441
3,402,869
40,412,168
7,268
233,957,767
(63,804,993)
170,160,042
195,035,923 $
7,354
226,070,308
(51,763,255)
174,314,407
214,726,575
The accompanying notes are an integral part of these financial statements.
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Table of Contents
SIGA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the Years Ended December 31
Revenues
Product sales and supportive services
Research and development
Total revenues
Operating expenses
Cost of sales and supportive services
Selling, general and administrative
Research and development
Total operating expenses
Operating income
Gain (loss) from change in fair value of warrant liability
Loss on extinguishment of Term Loan
Interest expense
Other income, net
Income before income taxes
Provision for income taxes
Net and comprehensive income
Basic earnings per share
Diluted earnings per share
Weighted average shares outstanding: basic
Weighted average shares outstanding: diluted
2022
2021
2020
$
86,661,583 $
24,114,027
110,775,610
126,802,536 $
6,867,918
133,670,454
115,471,071
9,488,233
124,959,304
10,432,561
35,117,241
22,525,642
68,075,444
42,700,166
400,663
—
—
1,031,903
44,132,732
(10,227,926)
33,904,806 $
0.46 $
0.46 $
72,929,550
73,546,501
16,601,880
18,033,581
9,942,194
44,577,655
89,092,799
117,770
—
—
101,172
89,311,741
(19,860,975)
69,450,766 $
0.92 $
0.91 $
75,322,194
76,402,716
14,797,419
14,722,325
10,938,930
40,458,674
84,500,630
(3,525,846)
(4,981,461)
(3,016,817)
532,085
73,508,591
(17,166,581)
56,342,010
0.71
0.71
79,259,000
79,437,306
$
$
$
The accompanying notes are an integral part of these financial statements.
47
Table of Contents
SIGA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Years Ended December 31, 2022, 2021 and 2020
Common Stock
Shares
Amount
81,269,868 $
(4,628,473)
Additional
Paid-In
Capital
Accumulated Comprehensive Stockholders’
Income (Loss)
Equity
Deficit
Accumulated
Other
Total
8,127 $ 220,808,037 $ (123,032,408) $
56,342,010
(28,502,483)
(463)
— $ 97,783,756
56,342,010
(28,502,946)
Balances, December 31, 2019
Net income
Repurchase of common stock
Issuance of common stock upon exercise of stock
options
Issuance of common stock upon vesting of RSUs
Issuance of common stock upon exercise of
warrants
Payment of common stock tendered for employee
stock-based compensation tax obligations
Stock-based compensation
Balances, December 31, 2020
Net income
Repurchase of common stock
Issuance of common stock upon vesting of RSUs
Payment of common stock tendered for employee
stock-based compensation tax obligations
Stock-based compensation
Balances, December 31, 2021
Net income
Repurchase of common stock
Issuance of common stock upon vesting of RSUs
Issuance of common stock upon exercise of
warrants
Payment of common stock tendered for employee
stock-based compensation tax obligations
Cash dividend ($0.45 per share)
Stock-based compensation
Balances, December 31, 2022
11,822
177,876
1
18
(1)
(18)
393,646
40
3,003,477
(29,035)
(3)
(184,013)
1,350,948
77,195,704 $
7,720 $ 224,978,430 $ (95,192,881) $
69,450,766
(26,021,140)
(3,787,683)
162,876
(379)
16
(27,295)
(3)
(16)
(173,915)
1,265,809
73,543,602 $
7,354 $ 226,070,308 $ (51,763,255) $
33,904,806
(13,006,149)
(1,823,738)
132,396
(182)
13
(13)
824,903
83
6,120,695
(1,973)
72,675,190 $
(12,533)
1,779,310
(32,940,395)
7,268 $ 233,957,767 $ (63,804,993) $
The accompanying notes are an integral part of these financial statements.
48
—
—
3,003,517
(184,016)
1,350,948
— $ 129,793,269
69,450,766
(26,021,519)
—
(173,918)
1,265,809
— $ 174,314,407
33,904,806
(13,006,331)
—
6,120,778
(12,533)
(32,940,395)
1,779,310
— $ 170,160,042
Table of Contents
SIGA TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31
Cash flows from operating activities:
Net income
$
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and other amortization
(Gain) loss on change in fair value of warrant liability
Stock-based compensation
Write down of inventory, net
Deferred income taxes (benefit) provision
Loss on extinguishment of Term Loan
Non-cash interest expense
Changes in assets and liabilities:
Accounts receivable
Inventory
Prepaid expenses and other assets
Accounts payable, accrued expenses and other liabilities
Income tax payable
Deferred revenue
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Cash used in investing activities
Cash flows from financing activities:
Payment of employee tax obligations for common stock tendered
Repurchase of common stock
Repayment of Term Loan
Payment of dividend
Cash used in financing activities
Net decrease in cash and cash equivalents
Cash, cash equivalents and restricted cash at the beginning of period
Cash and cash equivalents at end of period
Supplemental disclosure of cash flows information:
Non-cash lease right-of-use asset and associated liability
Conversion of warrant to common stock
Issuance of common stock upon cashless exercise
Cash income taxes paid, net
2022
2021
2020
33,904,806 $
69,450,766 $
56,342,010
517,643
(400,663)
1,779,310
201,472
(3,827,778)
—
—
38,243,490
(19,964,183)
171,811
2,066,074
(17,897,370)
6,816,450
41,611,062
522,368
(117,770)
1,265,809
618,771
121,446
—
—
(80,310,187)
136,369
48,963
986,865
18,287,487
483,749
11,494,636
—
—
(50,620)
(50,620)
529,814
3,525,846
1,350,948
—
11,606,949
4,981,461
887,132
827,733
(8,009,992)
699,102
(3,116,843)
912,462
982,606
71,519,228
(15,501)
(15,501)
(12,533)
(13,006,331)
—
(32,940,395)
(45,959,259)
(4,348,197)
103,138,819
98,790,622 $
(173,918)
(26,021,519)
—
—
(26,195,437)
(14,751,421)
117,890,240
103,138,819 $
(184,016)
(28,502,946)
(85,913,459)
—
(114,600,421)
(43,096,694)
160,986,934
117,890,240
— $
6,120,778 $
— $
31,372,881 $
733,715 $
— $
— $
1,063,744 $
—
3,003,517
97,250
3,718,581
$
$
$
$
$
The accompanying notes are an integral part of these financial statements
49
Table of Contents
SIGA TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Basis of Presentation
Description of Business
SIGA Technologies, Inc. (“SIGA” or the “Company”) is a commercial-stage pharmaceutical company. The Company sells its lead product,
TPOXX® (“oral TPOXX®,” also known as "tecovirimat" in certain international markets), to the U.S. government and international governments
(including government affiliated entities). Additionally, the Company sells the intravenous formulation of TPOXX® ("IV TPOXX®") to the U.S.
government.
TPOXX® is an oral formulation antiviral drug for the treatment of human smallpox disease caused by variola virus. On July 13, 2018, the United States
Food & Drug Administration (“FDA”) approved oral TPOXX® for the treatment of smallpox. The Company has been delivering oral TPOXX® to the U.S.
Strategic National Stockpile ("Strategic Stockpile") since 2013.
In connection with IV TPOXX®, SIGA announced on May 19, 2022 that the FDA approved this formulation for the treatment of smallpox.
In addition to being approved by the FDA, oral TPOXX® (tecovirimat) has regulatory approval with the European Medicines Agency ("EMA"), Health
Canada and the Medicines and Healthcare Products Regulatory Agency ("MHRA") of the United Kingdom. The EMA and MHRA approved label
indication covers the treatment of smallpox, monkeypox ("mpox"), cowpox, and vaccinia complications following vaccination against smallpox. The
Health Canada approved label indication covers the treatment of smallpox.
With respect to the regulatory approvals by the EMA, MHRA and Health Canada, oral tecovirimat represents the same formulation that was approved by
the FDA in July 2018 under the brand name TPOXX®.
2. Summary of Significant Accounting Policies
Use of Estimates
Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and revenues and expenses during the periods reported. The most significant estimates include the variables
used in the calculation of reported amounts of revenue recognized over time, and the valuation of deferred tax assets. Estimates and assumptions are
reviewed periodically and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. Actual results
could differ from these estimates.
Basis of Presentation and Consolidation
The accompanying consolidated financial statements include the accounts of SIGA Technologies, Inc. and its wholly owned subsidiaries. All inter-
company accounts and transactions have been eliminated in consolidation. The consolidated financial statements and related disclosures are presented in
accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and reflect the consolidated financial position,
results of operations and cash flows for all periods presented.
Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.
Restricted Cash and Cash Equivalents
Cash and cash equivalents held in restricted accounts were available to pay interest, fees and principal related to the Term Loan (see Note 7 for additional
information). As this Term Loan was repaid on March 13, 2020, the restricted accounts were closed in the second quarter of 2020. There was no restricted
cash or cash equivalents as of December 31, 2022 or 2021.
The following table reconciles cash, cash equivalents and restricted cash per the consolidated statements of cash flows to the consolidated balance sheet for
each respective period:
Cash and cash equivalents
Restricted cash - short-term
Restricted cash - long-term
Cash, cash equivalents and restricted cash
As of
December
31,
2019
$ 65,249,072
95,737,862
—
$160,986,934
Concentration of Credit Risk
The Company has cash in bank accounts that exceeds the Federal Deposit Insurance Corporation insured limits. The Company has not experienced any
losses on its cash accounts and no allowance has been provided for potential credit losses because management believes the potential for losses is remote.
Collection of all receivables from international government sales is coordinated through the International Promotion Agreement with Meridian (see Note
3), under which Meridian invoices and collects payments from international customers and remits such collections, less Meridian's fees, to the Company
under a quarterly process specified in the International Promotion Agreement.
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Accounts Receivable
Accounts receivable are recorded net of provisions for doubtful accounts. At December 31, 2022 and 2021, 16% and 98%, respectively, of accounts
receivable represent receivables from the U.S. Government. At December 31, 2022, 84% of accounts receivable represent receivables from international
sales, of which 65% of accounts receivable are from sales to the Canadian government and 20% of accounts receivable are from sales to a European
government affiliated entity. Collection of receivables from international government sales is coordinated through the International Promotion Agreement
with Meridian (see Note 3), under which Meridian invoices and collects payments from international customers and remits such collections, less Meridian's
fees, to the Company under a quarterly process specified in the International Promotion Agreement. An allowance for doubtful accounts is based on
specific analysis of the receivables. At December 31, 2022 and 2021, the Company had no allowance for doubtful accounts.
Inventory
Inventory is stated at the lower of cost or net realizable value. The cost is determined using the first-in, first-out (FIFO) method. The Company capitalizes
inventory costs associated with the Company’s products when, based on management’s judgment, future commercialization is considered probable and the
future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. Inventory is evaluated for impairment
periodically to identify inventory that may expire prior to expected sale or has a cost basis in excess of its net realizable value. If certain batches or units of
product do not meet quality specifications or become obsolete due to expiration, the Company records a charge to write down such unmarketable inventory
to its net realizable value.
Property, Plant and Equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation and amortization are provided on a straight-line method
over the estimated useful lives of the various asset classes. The estimated useful lives are as follows: five years for laboratory equipment; three years for
computer equipment; and seven years for furniture and fixtures. Leasehold improvements are amortized over the shorter of the estimated useful lives of the
assets or the lease term. Maintenance, repairs and minor replacements are charged to expense as incurred.
Warrant Liability
The Company accounted for warrants in accordance with the authoritative guidance which requires that free-standing derivative financial instruments with
certain cash settlement features be classified as assets or liabilities at the time of the transaction, and recorded at their fair value. Fair value was estimated
using model-derived valuations. Any changes in the fair value of the derivative instruments were reported in earnings or loss as long as the derivative
contracts were classified as assets or liabilities.
Revenue Recognition
The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).
Performance Obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the
unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the
performance obligation is satisfied. As of December 31, 2022, the Company's active performance obligations, for the contracts outlined in Note 3, consist
of the following: six performance obligations relate to research and development services; and four relate to manufacture and delivery of product.
Contract modifications may occur during the course of performance of our contracts. Contracts are often modified to account for changes in contract
specifications or requirements. In most instances, contract modifications are for services that are not distinct, and, therefore, are accounted for as part of the
existing contract.
The Company’s performance obligations are satisfied over time as work progresses or at a point in time. A portion of the Company’s revenue is derived
from long-term contracts that span multiple years. All of the Company’s revenue related to current research and development performance obligations is
recognized over time, because the customer simultaneously receives and consumes the benefits provided by the services as the Company performs these
services. The Company recognizes revenue related to these services based on the progress toward complete satisfaction of the performance obligation and
measures this progress under an input method, which is based on the Company’s cost incurred relative to total estimated costs. Under this method, progress
is measured based on the cost of resources consumed (i.e., cost of third-party services performed, cost of direct labor hours incurred, and cost of materials
consumed) compared to the total estimated costs to completely satisfy the performance obligation. Incurred costs represent work performed, which
corresponds with, and thereby best depicts, the transfer of control to the customer. The incurred and estimated costs used in the measure of progress include
third-party services performed, direct labor hours, and material consumed. The Company accounts for shipping and handling activities as fulfillment costs
rather than as an additional promised service.
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Contract Estimates. Accounting for long-term contracts and grants involves the use of various techniques to estimate total contract revenue and
costs.
Contract estimates are based on various assumptions to project the outcome of future events that often span multiple years. These assumptions include:
labor productivity; the complexity of the work to be performed; external factors such as customer behavior and potential regulatory outcomes; and the
performance of subcontractors, among other variables.
The nature of the work required to be performed on many of the Company’s performance obligations and the estimation of total revenue and cost at
completion are complex, subject to many variables and require significant judgment. The consideration associated with research and development services
is variable as the total amount of services to be performed has not been finalized. The Company estimates variable consideration as the most likely amount
to which it expects to be entitled. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of
cumulative revenue recognized will not occur and when any uncertainty associated with variable consideration is resolved. The Company’s estimates of
variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our
historical and anticipated performance, external factors, trends and all other information (historical, current and forecasted) that is reasonably available to
us.
A significant change in one or more of these estimates could affect the profitability of the Company’s contracts. As such, the Company reviews and updates
its contract-related estimates regularly. The Company recognizes adjustments in estimated revenues, research and development expenses and cost of sales
and supportive services under the cumulative catch-up method. Under this method, the impact of the adjustment on revenues, research and development
expenses and cost of sales and supportive services recorded to date on a contract is recognized in the period the adjustment is identified.
Contract Balances. The timing of revenue recognition, billings and cash collections may result in billed accounts receivable, unbilled receivables
(contract assets) and customer advances and deposits (contract liabilities) in the consolidated balance sheets. Generally, amounts are billed as work
progresses in accordance with agreed-upon contractual terms either at periodic intervals (monthly) or upon achievement of contractual milestones; as of
December 31, 2022, the accounts receivable balance in the balance sheet includes approximately $40.9 million of unbilled receivables. This amount
primarily relates to international sales that are billed under the terms specified in the International Promotion Agreement with Meridian. Under typical
payment terms of fixed price arrangements, the customer pays the Company either performance-based payments or progress payments. For the Company’s
cost-type arrangements, the customer generally pays the Company for its actual costs incurred, as well as its allocated overhead and G&A costs. Such
payments occur within a short period of time from billing. When the Company receives consideration, or such consideration is unconditionally due, prior to
transferring goods or services to the customer under the terms of a sales contract, the Company records deferred revenue, which represents a contract
liability. During the year ended December 31, 2022, the Company recognized revenue of $2.9 million that was included in deferred revenue at the
beginning of the period.
Remaining Performance Obligations. Remaining performance obligations represent the transaction price for which work has not been
performed and excludes unexercised contract options. As of December 31, 2022, the aggregate amount of transaction price allocated to remaining
performance obligations was $66.4 million. The Company expects to recognize this amount as revenue within the next three years as the specific timing for
satisfying the performance obligations is subjective and is often outside the Company’s control.
Leases
The Company accounts for leases in accordance with ASC 842, Leases (“ASC 842”).
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The Company determines if an arrangement is a lease at inception. Leases with an initial term less than one year are not recorded on the balance sheet and
the lease costs are recorded as an expense on a straight-line basis over the lease term. Operating leases with terms greater than one year result in a lease
liability recorded in other liabilities with a corresponding right-of-use ("ROU") asset recorded in property, plant and equipment.
Operating lease liabilities are recognized at the commencement date based on the present value of future minimum lease payments over the lease term.
ROU assets are recognized based on the corresponding lease liabilities adjusted for qualifying initial direct costs, prepaid or accrued lease payments and
unamortized lease incentives. The Company has lease agreements with lease and non-lease components, which are accounted for as a single lease. Lease
terms may include options to extend or terminate the lease which are incorporated into the Company's measurement when it is reasonably certain that the
Company will exercise the option.
Research and Development
Research and development expenses include costs directly and indirectly attributable to the conduct of research and development programs, and
performance pursuant to certain customer contracts, including employee related costs, materials, supplies, depreciation and maintenance of equipment, the
cost of services provided by outside contractors, including services related to the Company’s clinical trials and facility costs, such as rent, utilities, and
general support services. All costs associated with research and development are expensed as incurred. Costs related to the acquisition of technology rights,
for which development work is still in process, and that have no alternative future uses, are expensed as incurred.
Goodwill
The Company evaluates goodwill for impairment at least annually or as circumstances warrant. The impairment review process compares the fair value of
the reporting unit in which goodwill resides to its carrying value. The Company operates as one business and one reporting unit. Therefore, the goodwill
impairment analysis is performed on the basis of the Company as a whole, using the market capitalization of the Company as an estimate of its fair value.
Share-based Compensation
Stock-based compensation expense for all share-based payment awards made to employees and directors is determined on the grant date; for option awards,
fair value was estimated using the Black-Scholes model. These compensation costs are recognized net of an estimated forfeiture rate over the requisite
service periods of the awards. Forfeitures are estimated on the date of the respective grant and revised if actual or expected forfeiture activity differs from
original estimates.
The fair value of cash-settled restricted stock unit ("RSU") awards is determined by the value of our common stock and is recognized based on the portion
of the requisite service period satisfied as of each valuation date. The fair valuation of the cash-settled awards changes based on changes in our common
stock price. The portion of cash-settled RSUs that is recognized based on service period is reflected in accrued expenses and other current liabilities in our
consolidated balance sheet. Increases (or decreases) in accrued expenses result in adjustments to earnings for the associated valuation updates.
Income Taxes
The Company recognizes income taxes utilizing the asset and liability method of accounting for income taxes. Under this method, deferred income taxes
are recorded for temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities at enacted tax rates expected
to be in effect for the years in which the differences are expected to reverse. A valuation allowance is established if it is more likely than not that some or
the entire deferred tax asset will not be realized. The recognition of a valuation allowance for deferred taxes requires management to make estimates and
judgments about the Company’s future profitability which are inherently uncertain. The Company may recognize tax benefits from an uncertain tax
position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the
position. The tax benefits recognized in the financial statements from such position should be measured based on the largest benefit that has a greater than
fifty percent likelihood of being realized upon ultimate settlement. The Company re-evaluates uncertain tax positions and considers factors, including, but
not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken on tax returns, and changes in circumstances related to a
tax position. The Company recognizes interest and penalties related to income tax matters in income tax expense.
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Repurchase of shares
When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs, is recognized as a
deduction from equity. The excess of the purchase price above par value of repurchased shares that are retired is presented as an increase to accumulated
deficit (or a reduction of retained earnings, if any).
Earnings (Loss) per Share
Basic earnings per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period.
Diluted earnings per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period,
assuming potentially dilutive common shares from option exercises, RSUs, warrants and other incentives had been issued and any proceeds received in
respect thereof were used to repurchase common stock at the average market price during the period. The assumed proceeds used to repurchase common
stock is the sum of the amount to be paid to the Company upon exercise of options and warrants and the amount of compensation cost attributed to future
services not yet recognized.
Fair Value of Financial Instruments
The carrying value of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and
other current liabilities approximates fair value due to the relatively short maturity of these instruments. Common stock warrants which are classified as
liabilities are recorded at their fair market value as of each reporting period.
The measurement of fair value requires the use of techniques based on observable and unobservable inputs. Observable inputs reflect market data obtained
from independent sources, while unobservable inputs reflect our market assumptions. The inputs create the following fair value hierarchy:
•
•
•
Level 1 – Quoted prices for identical instruments in active markets.
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active;
and model-derived valuations where inputs are observable or where significant value drivers are observable.
Level 3 – Instruments where significant value drivers are unobservable to third parties.
The Company uses model-derived valuations where certain inputs are unobservable to third parties to determine the fair value of common stock warrants
on a recurring basis and classifies the liability-classified warrant as Level 3.
There were no transfers between levels of the fair value hierarchy during 2022 or 2021. As of December 31, 2022 and December 31, 2021, the Company
had less than $0.1 million and approximately $0.1 million, respectively, of cash and cash equivalents classified as Level 1 financial instruments. As of
December 31, 2022, the Company had approximately $40.5 million of cash equivalents classified as Level 2 financial instruments. There were no Level 2
financial instruments as of December 31, 2021.
The following table presents changes in the liability-classified warrant measured at fair value using Level 3 inputs:
Warrant liability at December 31, 2021
Decrease in fair value of warrant liability
Exercise of warrants
Warrant liability at December 31, 2022
Fair Value Measurements of Level 3
liability-classified warrant
$
$
6,521,441
(400,663)
(6,120,778)
-
Loss Contingencies
The Company is subject to certain contingencies arising in the ordinary course of business. The Company records accruals for these contingencies to the
extent that a loss is both probable and reasonably estimable. If some amount within a range of loss appears to be a better estimate than any other amount
within the range, that amount is accrued. Alternatively, when no amount within a range of loss appears to be a better estimate than any other amount, the
lowest amount in the range is accrued. The Company expenses legal costs associated with loss contingencies as incurred. We record anticipated recoveries
under existing insurance contracts when recovery is assured.
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Segment Information
The Company is managed and operated as one business. The entire business is managed by a single management team that reports to the chief executive
officer, who is the Chief Operating Decision Maker. The Company does not operate separate lines of business or separate business entities with respect to
any of its product candidates. Accordingly, the Company does not prepare discrete financial information with respect to separate product areas or by
location and has only one reportable segment.
Recent Accounting Pronouncements
There have been no new accounting pronouncements not yet effective that have significance, or potential significance, to our Consolidated Financial
Statements.
3. Procurement Contracts and Research Agreements
19C BARDA Contract
On September 10, 2018, the Company entered into a contract with the U.S. Biomedical Advanced Research and Development Authority ("BARDA")
pursuant to which SIGA agreed to deliver up to 1,488,000 courses of oral TPOXX® to the Strategic Stockpile, and to manufacture and deliver to the
Strategic Stockpile, or store as vendor-managed inventory, up to 212,000 courses of IV TPOXX®. Additionally, the contract includes funding from
BARDA for a range of activities, including: advanced development of IV TPOXX®, post-marketing activities for oral and IV TPOXX®, and procurement
activities. As of December 31, 2022, the contract with BARDA (as amended, modified, or supplemented from time to time, the "19C BARDA Contract")
contemplates up to approximately $602.5 million of payments, of which approximately $51.7 million of payments are included within the base period of
performance of five years, approximately $268.9 million of payments are related to exercised options and up to approximately $281.9 million of payments
are currently specified as unexercised options. BARDA may choose in its sole discretion when, or whether, to exercise any of the unexercised options. The
period of performance for options is up to ten years from the date of entry into the 19C BARDA Contract and such options could be exercised at any time
during the contract term, including during the base period of performance.
The base period of performance specifies potential payments of approximately $51.7 million for the following activities: payments of approximately $11.1
million for the delivery of approximately 35,700 courses of oral TPOXX® to the Strategic Stockpile; payments of $8.0 million for the manufacture
of 20,000 courses of final drug product of IV TPOXX® ("IV FDP"), of which $3.2 million of payments are related to the manufacture of bulk drug
substance ("IV BDS") to be used in the manufacture of IV FDP; payments of approximately $32.0 million to fund reimbursed activities; and payments of
approximately $0.6 million for supportive procurement activities. As of December 31, 2022, the Company had received $11.1 million for the delivery of
approximately 35,700 courses of oral TPOXX® to the Strategic Stockpile, $3.2 million for the manufacture of IV BDS, $4.3 million for the delivery of IV
FDP to the Strategic Stockpile and $18.8 million for other base period activities. IV BDS has been used for the manufacture of courses of IV FDP. The $3.2
million received for the completed manufacture of IV BDS had been recorded as deferred revenue as of December 31, 2021, but with the delivery of IV
FDP to the Strategic Stockpile during 2022, $2.9 million was recognized as revenue. The remaining $0.3 million of deferred revenue will be recognized as
IV FDP containing such IV BDS is delivered to and accepted by the Strategic Stockpile.
The options that have been exercised to date provide for payments up to approximately $268.9 million. There are exercised options for the following
activities: payments up to $11.2 million for the procurement of raw materials used in the 2020 manufacture of certain courses of oral TPOXX®; payments
up to $213.9 million for the delivery of up to 726,140 courses of oral TPOXX®; payments up to $25.6 million for the manufacture of courses of IV FDP, of
which $10.2 million of payments relate to the manufacture of IV BDS to be used in the manufacture of IV FDP; payments of up to approximately $3.6
million to fund post-marketing activities for IV TPOXX®; and payments of up to $14.6 million for funding of post-marketing activities for oral TPOXX®.
As of December 31, 2022, the Company had received $225.1 million for the delivery (and related procurement of raw materials) of oral TPOXX® to the
Strategic Stockpile; $10.2 million for the completed manufacture of IV BDS, which has been recorded as deferred revenue as of December 31, 2022;
and $7.3 million in connection with post-marketing activities for oral and IV TPOXX®.
Unexercised options specify potential payments up to approximately $281.9 million in total (if all such options are exercised). There are options for the
following activities: payments of up to $225.1 million for the delivery of oral TPOXX® to the Strategic Stockpile; payments of up to $51.2 million for the
manufacture of courses of IV FDP, of which up to $20.5 million of payments would be paid upon the manufacture of IV BDS to be used in the manufacture
of IV FDP; and payments of up to approximately $5.6 million for supportive procurement activities.
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The options related to IV TPOXX® are divided into two primary manufacturing steps. There are options related to the manufacture of bulk drug substance
(“IV BDS Options”), and there are corresponding options (for the same number of IV courses) for the manufacture of final drug product (“IV FDP
Options”). BARDA may choose to exercise any, all, or none of these options in its sole discretion. The 19C BARDA Contract includes: three separate IV
BDS Options, each providing for the bulk drug substance equivalent of 64,000 courses of IV TPOXX®; and three separate IV FDP Options, each
providing for 64,000 courses of final drug product of IV TPOXX®. BARDA has the sole discretion as to whether to simultaneously exercise IV BDS
Options and IV FDP Options, or whether to exercise options at different points in time (or alternatively, to only exercise the IV BDS Option but not the IV
FDP Option). To date, BARDA has exercised one of the three IV BDS options and one of the three IV FDP options, both of which were exercised
simultaneously in 2022. If BARDA decides to only exercise the remaining IV BDS Options, then the Company would receive payments up to
$20.5 million; alternatively, if BARDA decides to exercise all the remaining IV BDS Options and IV FDP Options, then the Company would receive
payments up to $51.2 million. For each set of options relating to a specific group of courses (for instance, the IV BDS and IV FDP options that reference
the same 64,000 courses), BARDA has the option to independently purchase IV BDS or IV FDP.
Revenues in connection with the 19C BARDA Contract are recognized either over time or at a point in time. Performance obligations related to product
delivery generate revenue at a point in time. Revenue from other performance obligations under the 19C BARDA Contract are recognized over time using
an input method using costs incurred to date relative to total estimated costs at completion. For the years ended December 31, 2022 and 2021, the Company
recognized revenues of $6.2 million and $4.8 million, respectively, on an over time basis. In contrast, revenue recognized for product delivery and therefore
at a point in time for the years ended December 31, 2022 and 2021, was $7.2 million and $112.5 million, respectively.
U.S. Department of Defense Procurement Contracts
On May 12, 2022, the Company announced a contract with the U.S. Department of Defense ("DoD") for the procurement of oral TPOXX® ("DoD
Contract #1"). The DoD Contract #1 included a firm commitment for the DoD to procure approximately $3.6 million of oral TPOXX®, and an option,
exercisable at the sole discretion of the DoD, for the procurement of approximately $3.8 million of oral TPOXX®. In the second quarter of 2022, the
Company delivered and recognized revenue of $3.6 million for the delivery of oral TPOXX® to the DoD, fulfilling the firm commitment in DoD Contract
#1. In the third quarter of 2022, the DoD exercised the option for $3.8 million of oral TPOXX® and the Company satisfied its obligation by
delivering product and recognized the related revenue in September 2022.
On September 28, 2022, the Company and the DoD signed a new procurement contract ("DoD Contract #2"). The DoD Contract #2 includes a firm
commitment for the DoD to procure approximately $5.2 million of oral TPOXX®, and an option, exercisable at the sole discretion of the DoD for the
procurement of approximately $5.5 million of oral TPOXX®.
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International Procurement Contracts
In 2022, the Company received firm commitment orders from 13 international customers (including Canada) for the delivery of approximately
$77 million of oral TPOXX®, of which approximately $39 million is for Canada and approximately $38 million is for jurisdictions in Europe, Asia-Pacific,
and the Middle East. Additionally, the contract with the Canadian Department of National Defence ("CDND") has an option until March 31, 2024,
exercisable at its sole discretion, for the purchase of up to an additional $6 million of oral TPOXX®. With respect to the $77 million of firm commitment
orders that were received this year, approximately $71 million of oral TPOXX® was delivered and recorded as revenue in 2022. Through an International
Promotion Agreement (defined and discussed below), Meridian Medical Technologies, Inc. (“Meridian”) is the counterparty to international contracts
under which orders are placed for the purchase of oral TPOXX®. The Public Health Agency of Canada (“PHAC”) and the CDND are among the
contracting parties for the purchase of oral TPOXX® (see below for a summary description of these contracts).
On January 13, 2021, PHAC awarded a contract to Meridian (the “PHAC Contract”) for the purchase of up to approximately $33 million of oral
TPOXX® (tecovirimat) within five years. In March 2022 and July 2022, PHAC executed amendments in which total procurement of oral TPOXX® under
the PHAC Contract was increased to an amount of approximately $45 million. Prior to 2022, approximately $10 million of oral TPOXX® had been
ordered and delivered to PHAC. During 2022, all remaining amounts under the PHAC Contract of approximately $35 million of oral TPOXX®
were delivered to PHAC and recognized as revenue.
On April 3, 2020, the Company announced that the CDND awarded a contract (the "Canadian Military Contract") to Meridian, pursuant to which the
CDND would purchase up to approximately $14 million of oral TPOXX® over four years in an option-based contract. Prior to 2022, approximately
$4 million of oral TPOXX® had been ordered and delivered to the CDND. In 2022, approximately $4 million of oral TPOXX® was delivered and
recognized as revenue under this contract, leaving approximately $6 million of unexercised options, exercisable at the sole discretion of CDND, remaining
under this contract.
The above-listed contract awards were coordinated between SIGA and Meridian under the international promotion agreement (as amended, the
"International Promotion Agreement"). Under the International Promotion Agreement, Meridian is the counterparty in connection with international
contracts for oral TPOXX® and SIGA is responsible for manufacture and delivery of any oral TPOXX® purchased thereunder.
Under the terms of the International Promotion Agreement, which has an effective date of May 31, 2019 and an initial term that expires on May 31, 2024,
Meridian was granted exclusive rights to market, advertise, promote, offer for sale, or sell oral TPOXX® in a field of use specified in the International
Promotion Agreement in all geographic regions except for the United States (the “Territory”), and Meridian has agreed not to commercialize any
competing product, as defined in the International Promotion Agreement, in the specified field of use in the Territory. SIGA retains ownership, intellectual
property, distribution and supply rights and regulatory responsibilities in connection with TPOXX®, and, in the United States market, also retains sales and
marketing rights with respect to oral TPOXX®. SIGA’s consent is required for the entry into any sales arrangement pursuant to the International Promotion
Agreement.
Sales to international customers pursuant to the International Promotion Agreement are invoiced and collected by Meridian, and such collections are
remitted, less Meridian's fees, to the Company under a quarterly process specified in the International Promotion Agreement. The fee Meridian retains
pursuant to the International Promotion Agreement is a specified percentage of the collected proceeds of sales of oral TPOXX® net of certain expenses, for
calendar years in which customer collected amounts net of such expenses are less than or equal to a specified threshold, and a higher specified percentage
of such collected net proceeds for calendar years in which such net collected amounts exceed the specified threshold. We exceeded the specified threshold
in 2022 and therefore recorded the higher specified percentage for all International Promotion Agreement sales in 2022.
Revenue in connection with international procurement contracts for the delivery of product are recognized at a point in time on a gross basis, as the
Company acts as the principal in the transaction. During the year ended December 31, 2022, the Company recognized $71.0 million in connection with
international orders. During the year ended December 31, 2021, the Company recognized $12.7 million of revenue on international orders, which
comprised deliveries to PHAC and CDND.
Research Agreements and Grants
In July 2019, the Company was awarded a multi-year research contract valued at a total of $19.5 million, with an initial award of $12.4 million, from the
DoD to support work in pursuit of a potential label expansion for oral TPOXX® that would include post-exposure prophylaxis ("PEP") of smallpox (such
work known as the "PEP Label Expansion Program" and the contract referred to as the "PEP Label Expansion R&D Contract"). In subsequent
modifications, the DoD increased the scope and the available funding under the PEP Label Expansion R&D Contract to approximately $27 million. The
period of performance for this contract, as modified, terminates on January 31, 2025. As of December 31, 2022, remaining revenue to be recognized in the
future under the PEP Label Expansion R&D Contract is up to $6.4 million. Revenue from the performance obligation under the PEP Label Expansion
R&D Contract is recognized over time using an input method using costs incurred to date relative to total estimated costs at completion. For the years
ended December 31, 2022 and 2021, the Company, under the PEP Label Expansion R&D Contract, recognized revenue of $17.9 million and $2.5 million,
respectively, on an over time basis.
Contracts and grants include, among other things, options that may or may not be exercised at the U.S. Government’s discretion. Moreover, contracts and
grants contain customary terms and conditions including the U.S. Government’s right to terminate or restructure a contract or grant for convenience at any
time. As such, the Company may not be eligible to receive all available funds.
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4. Inventory
Inventory consisted of the following:
Raw materials
Work in-process
Finished goods
Inventory
5. Property, Plant and Equipment
Property, plant and equipment consisted of the following:
Leasehold improvements
Computer equipment
Furniture and fixtures
Operating lease right-of-use asset
Less-accumulated depreciation
Property, plant and equipment, net
As of
December 31, 2022
$
6,370,581 $
27,038,845
5,863,664
39,273,090 $
$
As of
December 31, 2022
$
2,420,028 $
449,143
347,045
3,678,647
6,894,863
(5,046,549)
1,848,314 $
$
December 31,
2021
22,047
17,453,358
2,034,974
19,510,379
December 31,
2021
2,420,028
511,062
377,859
3,678,647
6,987,596
(4,621,639)
2,365,957
Depreciation and amortization expense on property, plant, and equipment was $0.5 million for each of the years ended December 31, 2022, 2021, and
2020.
6. Accrued Expenses
Accrued expenses and other current liabilities consisted of the following:
As of
Deferred revenue
Compensation
Research and development vendor costs
Other
Professional fees
Lease liability, current portion
Accrued expenses and other current liabilities
$
58
December 31, 2022
$
December 31,
2021
3,764,696
2,811,700
256,397
1,426,163
527,026
466,830
9,252,812
10,581,146 $
2,378,035
1,551,920
1,276,513
536,997
528,170
16,852,781 $
Table of Contents
7. Debt
On March 13, 2020, the Company voluntarily prepaid the Loan Agreement (as defined below) in an approximate aggregate amount of $87.2 million. The
prepayment was made from restricted cash, including $80.0 million in respect of outstanding principal of the Term Loan, $4.0 million that was payable
upon the repayment of the Loan Agreement, approximately $1.2 million of accrued interest, and a prepayment premium amount of approximately $1.9
million. The prepayment was made upon the Company and the Lender agreeing to and entering into customary mutual releases reflecting that, subject to
such prepayment in accordance with the terms of the Loan Agreement, all of the obligations under the Loan Agreement were released, discharged and
satisfied in full. Upon such prepayment and release, the Loan Agreement was terminated. For the year ended December 31, 2020, the Company recognized
approximately $5.0 million of a loss on the extinguishment of the Term Loan related to the remaining unamortized discount and the prepayment premium.
On September 2, 2016, the Company entered into a loan and security agreement (as amended from time to time, the “Loan Agreement”) with OCM
Strategic Credit SIGTEC Holdings, LLC (“Lender”), pursuant to which the Company received $80.0 million (the "Term Loan") (less fees and other items)
on November 16, 2016 having satisfied certain pre-conditions.
The Term Loan had a maturity date on the earliest to occur of (i) the four-year anniversary of the Escrow Release Date, and (ii) the acceleration of certain
obligations pursuant to the Loan Agreement.
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8. Per Share Data
The Company computes, presents and discloses earnings per share in accordance with the authoritative guidance which specifies the computation,
presentation and disclosure requirements for earnings per share of entities with publicly held common stock or potential common stock. The objective of
basic EPS is to measure the performance of an entity over the reporting period by dividing income (loss) by the weighted average shares outstanding. The
objective of diluted EPS is consistent with that of basic EPS, except that it also gives effect to all potentially dilutive common shares outstanding during the
period.
The following is a reconciliation of the basic and diluted earnings (loss) per share computation:
Net income for basic earnings per share
Less: Change in fair value of warrants
Net income, adjusted for change in fair value of warrants for diluted
earnings per share
Weighted-average shares
Effect of potential common shares
Weighted-average shares: diluted
Earnings per share: basic
Earnings per share: diluted
$
$
$
$
2022
Year Ended December 31,
2021
2020
33,904,806 $
400,663
33,504,143 $
72,929,550
616,951
73,546,501
0.46 $
0.46 $
69,450,766 $
117,770
69,332,996 $
75,322,194
1,080,522
76,402,716
0.92 $
0.91 $
56,342,010
—
56,342,010
79,259,000
178,306
79,437,306
0.71
0.71
For the years ended December 31, 2022 and December 31, 2021, the diluted earnings per share calculation reflects the effect of the exercise or assumed
exercise of outstanding warrants and any corresponding elimination of the impact included in operating results from the change in fair value of the
warrants. Weighted-average diluted shares include the dilutive effect of in-the-money options, stock-settled RSUs and warrants. The dilutive effect of
warrants, stock-settled RSUs and options is calculated based on the average share price for each fiscal period using the treasury stock method. Under the
treasury stock method, the amount the employee must pay for exercising stock options, the average amount of compensation cost for future service that the
Company has not yet recognized, and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible,
are collectively assumed to be used to repurchase shares. Cash-settled RSUs were presumed to be cash-settled and therefore excluded from the diluted
earnings per share calculations for the years ended December 31, 2022 and December 31, 2021 because the net effect of their inclusion, including the
elimination of the impact in the operating results of the change in fair value of these RSUs, would have been anti-dilutive. For the year ended December 31,
2022 and December 31, 2021, the weighted average number of shares under the cash-settled RSUs excluded from the calculation of diluted earnings per
share was 17,388, and 29,873, respectively.
For the year ended December 31, 2020, diluted shares outstanding include the dilutive effect of in-the-money options, unvested restricted stock and
unreleased RSUs. The dilutive effect of options is calculated based on the average share price for each fiscal period using the treasury stock method. Under
the treasury stock method, the amount the employee must pay for exercising stock options, the average amount of compensation cost for future service that
the Company has not yet recognized, and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes
deductible, are collectively assumed to be used to repurchase shares. Warrants were presumed to be cash-settled and therefore excluded from the diluted
earnings per share calculations for the year ended December 31, 2020 because the net effect of their inclusion, including the elimination of the impact in
the operating results of the change in fair value of the warrants, would have been anti-dilutive. For the year ended December 31, 2020, the weighted
average number of shares under the warrant excluded from the calculation of diluted earnings per share was 1,124,585.
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9. Financial Instruments
2016 Warrant
On September 2, 2016, in connection with the entry into the Loan Agreement (see Note 7 for additional information), the Company issued a warrant (the
“Warrant”) to the Lender to purchase a number of shares of the Company’s common stock equal to $4.0 million divided by the lower of (i) $2.29 per share
and (ii) the subscription price paid in connection with the Rights Offering completed on November 16, 2016. The per share subscription price paid was
$1.50 in connection with the Rights Offering; accordingly, the exercise price of the Warrant was set at $1.50 per share, and there were 2.7 million shares
underlying the Warrant. During the year ended December 31, 2020, 0.5 million shares on the warrant were exercised. Subsequent to partial exercises of the
Warrant, there were approximately 1.0 million shares underlying the Warrant as of December 31, 2021. During the year ended December 31, 2022, the
remainder of the warrant was fully exercised.
During 2022, the Warrant was fully exercised, and therefore there are no remaining underlying shares as of December 31, 2022. For the year ended
December 31, 2022, we recorded a gain of approximately $0.4 million, reflecting a decrease in the fair value of the liability-classified warrant primarily
due to the decrease in our stock price prior to the exercise of the Warrant.
As of December 31, 2021, there were approximately 1.0 million shares underlying the outstanding Warrant and the fair value of the Warrant was
$6.5 million. A Black Scholes model was applied to calculate the fair value of the Warrant using the following assumptions: risk free interest rate of 1.21%;
no dividend yield; an expected life of 4.7 years; and a volatility factor of 55%.
10. Stockholders’ Equity
On December 31, 2022, the Company’s authorized share capital consisted of 620,000,000 shares, of which 600,000,000 are designated common shares and
20,000,000 are designated preferred shares. The Company’s Board of Directors is authorized to issue preferred shares in series with rights, privileges and
qualifications of each series determined by the Board. As of December 31, 2022 and 2021, no preferred shares were outstanding or issued.
On August 2, 2021, the Company's Board of Directors authorized a share repurchase program ("New Repurchase Authorization") under which the
Company may repurchase up to $50 million of the Company's common stock through December 31, 2023. The Company started repurchasing shares under
this program in the fourth quarter of 2021. Repurchases under the New Repurchase Authorization may be made from time to time at the Company's
discretion in open market transactions, through block trades, in privately negotiated transactions and pursuant to any trading plan that may be adopted by
the Company's management in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise.
The timing and actual number of shares repurchased will depend on a variety of factors, including: timing of procurement orders under government
contracts; alternative opportunities for strategic uses of cash; the stock price of the Company’s common stock; market conditions; alternative capital
management uses of cash; and other corporate liquidity requirements and priorities. During the year ended December 31, 2022, the Company
repurchased 1.8 million shares of common stock under the New Repurchase Authorization for approximately $13.0 million.
Prior to the effective date of the New Repurchase Authorization, the Company repurchased shares under a program that was announced in March 2020.
Under this program, $50 million of the Company's common stock was repurchased.
On May 5, 2022, the Board of Directors declared a special dividend of $0.45 per share on the common stock of the Company, which resulted in an overall
dividend payment of $32.9 million. The special dividend was paid on June 2, 2022 to shareholders of record at the close of business on May 17, 2022.
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11. Stock Compensation Plans
The Company’s 2010 Stock Incentive Plan (the “2010 Plan”) was initially adopted in May 2010. The 2010 Plan provided for the issuance of stock options,
restricted stock and unrestricted stock with respect to an aggregate of 2,000,000 shares of the Company’s common stock to employees, consultants and
outside directors of the Company. On May 17, 2011, the 2010 Plan was amended to provide for the issuance of RSUs and on February 2, 2012, the 2010
Plan was amended to provide for the issuance of stock-settled stock appreciation rights ("SSARs"). Effective April 25, 2012 and May 23, 2017, the 2010
Plan was amended to increase the maximum number of shares of common stock available for issuance to an aggregate of 4,500,000 shares and 8,500,000
shares, respectively. The vesting period for awards granted under the 2010 Plan is determined by the Compensation Committee of the Board of Directors.
The Compensation Committee also determines the expiration date of each equity award; however, stock options may not be exercisable more than ten
years after the date of grant as the maximum term of equity awards issued under the 2010 Plan is ten years.
For the years ended December 31, 2022, 2021 and 2020, the Company recorded stock-based compensation expense, including stock options and RSUs, of
approximately $1.8 million, $1.3 million and $1.4 million, respectively.
Stock Options
Stock option awards provide holders the right to purchase shares of Common Stock at prices determined by the Compensation Committee, at the time of
grant, and must have an exercise price equal to or in excess of the fair market value of the Company’s common stock at the date of grant.
The fair value of options granted is estimated at the date of grant. Expected volatility has been estimated using a combination of the historical volatility of
the Company's common stock and the historical volatility of a group of comparable companies’ common stock, both using historical periods equivalent to
the options’ expected lives. The expected dividend yield assumption reflects that the Company does not have a recurring dividend program. The risk-free
interest rate assumption is based upon observed interest rates for securities with maturities approximating the options’ expected lives. The expected life was
estimated based on historical experience and expectation of employee exercise behavior in the future giving consideration to the contractual terms of the
award.
A summary of the Company’s stock option activity is as follows:
Weighted
Average
Number of
Options
Exercise
Price
Weighted
Average
Remaining
Life
(in years)
Aggregate
Intrinsic
Value
Outstanding at January 1, 2022 (1)
Granted
Exercised
Canceled/Expired
Outstanding at December 31, 2022
Vested at December 31, 2022
Exercisable at December 31, 2022
159,623 $
50,000
—
—
209,623 $
209,623 $
209,623 $
5.55
9.27
—
—
6.44
6.44
6.44
7.82 $
7.82 $
7.82 $
289,359
289,359
289,359
(1) Balances as of January 1, 2022 differ from those as of December 31, 2021 presented in the Company's 2021 Form 10-K due to the special dividend paid
during 2022. In connection with the dividend, the number of options and the weighted average exercise price were adjusted pursuant to the terms of the
Company's 2010 Plan.
As of December 31, 2022, there is no remaining unrecognized stock-based compensation cost related to stock options expected to be recognized. The total
fair value of stock options which vested during the years ended December 31, 2022 and 2021 was approximately $375,000 and $258,000, respectively.
There were no stock options exercised during the years ended December 31, 2022 and December 31, 2021. The total intrinsic value of stock options
exercised was approximately $87,000 for the year ended December 31, 2020. The intrinsic value represents the amount by which the market price of the
underlying stock exceeds the exercise price of an option.
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Restricted Stock Units
RSUs awarded to employees vest on schedules of between one year and three years, and RSUs awarded to directors of the Company vest over a one-year
period. A summary of the Company’s RSU activity is as follows:
Outstanding at January 1, 2022 (1)
Granted (2)
Vested and released
Canceled/Expired
Outstanding at December 31, 2022 (3)
(1) includes 54,792 awards which were settled in cash in June 2022.
(2) includes 35,088 awards which were expected to be settled in cash.
(3) includes 30,702 awards which are expected to be settled in cash.
Number of
RSUs
329,333 $
190,138
(187,188)
(36,578)
295,705 $
Weighted
Average
Grant-Date
Fair Value
6.95
9.40
6.58
8.57
8.56
As of December 31, 2022, $1.2 million of total remaining unrecognized stock-based compensation cost related to RSUs is expected to be recognized over
the weighted-average remaining requisite service period of 0.7 years. The weighted average fair value at the date of grant for restricted stock awards
granted during the years ended December 31, 2022, 2021 and 2020 was $9.40, $6.95 and $5.95 per share, respectively. Based on the grant date, the total
fair value of restricted stock and restricted stock units vested and released during the years ended December 31, 2022, 2021 and 2020 was approximately
$1.2 million, $0.9 million and $1.0 million, respectively.
12. Income Taxes
The Company's provision (benefit) for income taxes comprises the following:
Current:
Federal
State and local
Foreign
Total current provision
Deferred:
Federal
State and local
Foreign
Total deferred (benefit) provision
Total provision
For the year ended December 31,
2021
2022
2020
$
$
13,154,619 $
897,285
3,800
14,055,704
(3,818,283)
(9,495)
—
(3,827,778)
10,227,926 $
19,211,782 $
513,753
13,994
19,739,529
89,947
31,499
—
121,446
19,860,975 $
5,111,667
447,965
—
5,559,632
11,375,962
230,987
—
11,606,949
17,166,581
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The Company’s deferred tax assets and liabilities comprise the following:
Deferred income tax assets:
State net operating losses
Inventory
Reserves and accruals
Amortization of intangible assets
Share-based compensation
Deferred revenue
Capitalized R&D
Lease liability
Other
Deferred income tax assets
Less: valuation allowance
Deferred income tax assets, net of valuation allowance
Deferred income tax liabilities:
Amortization of goodwill
Property, plant and equipment
Other
Deferred income tax asset, net
As of December 31,
2022
2021
1,247,826 $
336,333
569,290
24,532
510,058
66,011
4,194,106
443,902
380,162
7,772,220
(985,783)
6,786,437 $
(192,083)
(59,727)
(284,242)
6,250,385 $
1,293,912
184,046
741,684
50,107
280,396
702,617
—
570,446
267,050
4,090,258
(1,022,191)
3,068,067
(197,245)
(156,289)
(291,926)
2,422,607
$
$
$
The recognition of a valuation allowance for deferred taxes requires management to make estimates and judgments about the Company’s future
profitability which is inherently uncertain. The Company assesses all available positive and negative evidence to determine if its existing deferred tax
assets are realizable on a more-likely-than-not basis. In making such assessment, the Company considered the reversal of existing taxable temporary
differences, projected future taxable income, tax planning strategies and recent financial operating results. The ultimate realization of a deferred tax asset
is ultimately dependent on the Company's generation of sufficient taxable income within the available net operating loss carryback and/or carryforward
periods to utilize the deductible temporary differences. As of December 31, 2022, the Company has a valuation allowance on certain state and local net
operating losses which the Company determined were not realizable on a more-likely-than-not basis. The Company's valuation allowance did not change
materially from prior years.
Effective beginning in fiscal 2022, the U.S. Tax Cuts and Job Act of 2017 ("TCJA") requires the Company to deduct U.S. and international research and
development expenditures for tax purposes over 5 to 15 years, instead of in the current fiscal year. The Company concurrently records a deferred tax
benefit for the future amortization of the research and development ("R&D") for tax purposes. The requirement to expense R&D as incurred is unchanged
for U.S. GAAP purposes and the impact to pre-tax R&D expense is not affected by this provision.
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The benefit for income taxes differs from the expected amount calculated by applying the Company's statutory rate to the income or loss before benefit for
income taxes as follows:
Statutory federal income tax rate
State and local taxes
Change in fair value of common stock warrant
Section 162(m) limitation
Other
Effective tax rate
2022
As of December 31,
2021
2020
21.0%
1.6%
(0.2)%
0.7%
0.1%
23.2%
21.0%
0.5%
—
0.5%
0.2%
22.2%
21.0%
0.7%
1.0%
0.5%
0.2%
23.4%
For the years ended December 31, 2022 and 2021, the Company’s effective tax rate differs from the statutory rate of 21% primarily as a result of certain
permanent differences including non-deductible executive compensation under IRC Section 162(m) and state and local taxes. For the year ended
December 31, 2020, the Company's effective tax rate differs from the statutory rate of 21% primarily as a result of non-deductible executive
compensation under IRC Section 162(m), a non-taxable adjustment for the fair market value of the Warrant, and state and local taxes.
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:
Balance at beginning of year
Tax positions related to the current and prior years:
Additions
Reductions
Settlements
Lapses in applicable statutes of limitation
Balance at the end of the year
For the year ended December 31,
2021
2022
2020
$
5,602,587 $
5,591,587 $
5,649,188
—
(68,792)
—
(430,247)
5,103,548 $
11,000
—
—
—
5,602,587 $
—
(57,601)
—
—
5,591,587
$
Included in the balance of unrecognized tax benefits as of December 31, 2022, are potential benefits of $5.1 million that, if recognized, would affect the
effective tax rate. The total amount accrued for interest and penalties as of December 31, 2022 and December 31, 2021, was $72,000 and $95,000,
respectively. For the years ended December 31, 2022 and December 31, 2021, the Company recorded an income tax benefit of $23,000 and an income
tax expense of $30,000, respectively, related to the accrual of interest and penalties. There are no uncertain tax positions for which it is reasonably
possible that the total amounts of unrecognized benefits will significantly increase or decrease within twelve months from December 31, 2022.
The Company files federal income tax returns and income tax returns in various state and local tax jurisdictions. The federal tax years open to
examination are 2019 to 2022. The Company's state and local tax years that are open to tax examination are generally 2018 to 2022.
13. Revenues by Geographic Region
Revenues by geographic region were as follows:
United States
$
2022
For the year ended December 31,
2021
120,656,294 $
39,803,888 $
International
Asia-Pacific
Canada
Europe, Middle East and Africa (EMEA)
Other
Total International
14,853,233
38,875,657
16,270,033
972,799
70,971,722
—
13,014,160
—
—
13,014,160
2020
122,416,481
—
2,542,823
—
—
2,542,823
Total revenues
$
110,775,610 $
133,670,454 $
124,959,304
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14. Commitments and Contingencies
Operating lease commitments
The Company leases its Corvallis, Oregon, facilities and office space under an operating lease which was signed on November 3, 2017 and commenced on
January 1, 2018. The initial term of this lease was to expire on December 31, 2019, after which the Company had two successive renewal options; one for
two years and the other for three years. In the second quarter of 2019, the Company exercised the first renewal option, which extended the lease expiration
date to December 31, 2021. In the second quarter of 2021, the Company exercised the second renewal option, which extended the lease expiration date to
December 31, 2024. In connection with the exercise of the second renewal option, the Company recorded an increase to operating lease right-of-use assets
and operating lease liabilities of approximately $0.7 million in the second quarter 2021. The Company had a lease for the same location prior to this lease.
On May 26, 2017 the Company and MacAndrews & Forbes Incorporated ("M&F") entered into a ten-year office lease agreement (the “New HQ Lease”),
pursuant to which the Company agreed to lease 3,200 square feet at 31 East 62nd Street, New York, New York. The Company is utilizing premises leased
under the New HQ Lease as its corporate headquarters. The Company has no leases that qualify as finance leases.
Operating lease costs totaled $0.6 million for each of the years ended December 31, 2022 and 2021. Cash paid for amounts included in the measurement of
lease liabilities from operating cash flows was $0.6 million for each of the years ended December 31, 2022 and 2021. As of December 31, 2022, the
weighted-average remaining lease term of the Company’s operating leases was 3.7 years while the weighted-average discount rate was 4.53%.
The following is a maturity analysis of the Company's lease liabilities as of December 31, 2022:
2023
2024
2025
2026
2027
Total undiscounted cash flows under operating leases
Less: Imputed interest
Present value of lease liabilities
$
$
613,878
678,627
406,994
409,971
165,916
2,275,386
(199,350)
2,076,036
As of December 31, 2022, approximately $1.5 million of the lease liability is included in Other liabilities on the consolidated balance sheet with the current
portion included in accrued expenses.
Legal Proceedings
From time to time, we may be involved in a variety of claims, suits, investigations and proceedings arising from the ordinary course of our business,
collections claims, breach of contract claims, labor and employment claims, tax and other matters. Although such claims, suits, investigations and
proceedings are inherently uncertain and their results cannot be predicted with certainty, we believe that the resolution of such current pending matters, if
any, will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flow. Regardless of the outcome,
litigation can have an adverse impact on us because of legal costs, diversion of management resources and other factors.
Purchase Commitments
In the course of our business, the Company regularly enters into agreements with third party organizations to provide contract manufacturing services and
research and development services. Under these agreements, the Company issues purchase orders which obligate the Company to pay a specified price
when agreed-upon services are performed. Commitments under the purchase orders do not exceed our planned commercial and research and development
needs. As of December 31, 2022, the Company has approximately $33.8 million of purchase commitments associated with manufacturing obligations.
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15. Related Party Transactions
Board of Directors and Outside Counsel
A former member of the Company’s Board of Directors who did not stand for re-election at the Company's 2021 annual meeting of stockholders is a
partner at a law firm previously used by the Company. The Company did not incur any expenses related to services provided by the outside counsel during
the year ended December 31, 2022. During the years ended December 31, 2021 and 2020, the Company incurred expenses of approximately $0.1 million
and $0.5 million, respectively, related to services provided by the outside counsel. The Company had no outstanding payables or accrued expenses related
to services performed by the outside counsel as of December 31, 2022.
Real Estate Leases
On May 26, 2017, the Company and M&F Incorporated entered into the New HQ Lease, pursuant to which the Company agreed to lease 3,200 square feet
at 31 East 62nd Street, New York, New York. The Company is utilizing premises leased under the New HQ Lease as its corporate headquarters. The
Company's rental obligations consist of a fixed rent of $25,333 per month in the first sixty-three months of the term, subject to a rent abatement for the first
six months of the term. From the first day of the sixty-fourth month of the term through the expiration or earlier termination of the lease, the Company's
rental obligations consist of a fixed rent of $29,333 per month. In addition to the fixed rent, the Company will pay a facility fee in consideration of the
landlord making available certain ancillary services, commencing on the first anniversary of entry into the lease. The facility fee was $3,333 per month for
the second year of the term and increases by five percent each year thereafter, to $4,925 per month in the final year of the term. During the year ended
December 31, 2022, the Company paid $0.4 million of expenses associated with this lease.
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Table of Contents
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure
controls and procedures as of December 31, 2022 in accordance with the framework on Internal Control-Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). The term “disclosure controls and procedures” is defined in Rules 13a-
15(e) and 15d-15(e) under the Exchange Act. Management recognizes that any disclosure controls and procedures no matter how well designed and
operated, can only provide reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-
benefit relationship of possible controls and procedures.
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures
were effective as of December 31, 2022 at a reasonable level of assurance.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2022 that materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule
13a-15(f) or Rule 15d-15(f) of the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. Our internal control over financial reporting includes those policies and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the Company’s
assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of
management and the directors of the Company; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022 using the
framework in Internal Control-Integrated Framework (2013) issued by the COSO. Based on this evaluation using the COSO criteria, management
concluded that the Company’s internal control over financial reporting was effective as of December 31, 2022.
Attestation Report of the Independent Registered Public Accounting Firm
The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, our
independent registered public accounting firm, as stated in their attestation report, which is included in Item 8, “Financial Statements and Supplementary
Data,” of this Annual Report on Form 10-K.
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Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
With the exception of the information incorporated by reference from our Proxy Statement for our 2022 Annual Meeting of Stockholders ("2022 Proxy
Statement") in Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K, our 2023 Proxy Statement is not to be deemed filed as a part of
this Form 10-K.
Item 10. Directors, Executive Officers, and Corporate Governance
The information concerning our directors required by this Item is incorporated by reference to the sub-section titled “Proposals to be Voted on at
the Meeting – Proposal 1: Election of Directors” in our 2023 Proxy Statement.
The information concerning our executive officers required by this Item is incorporated by reference to the sub-section titled "Management –
Executive Officers" in our 2023 Proxy Statement.
The information concerning the audit committee of our board of directors and the audit committee financial expert required by this Item is
incorporated by reference to the information included in the sub-section titled "Board of Directors – Committees of the Board of Directors" in our 2023
Proxy Statement.
The information concerning our Code of Ethics and Business Conduct for senior management required by this Item is incorporated by reference to
the sub-section titled "Board of Directors – Code of Ethics" in our 2023 Proxy Statement.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference to the sections titled "Compensation Committee Report" and "Compensation
Discussion and Analysis" in our 2023 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item concerning security ownership of certain beneficial owners and management is incorporated by reference to
the section titled "Security Ownership of Certain Beneficial Owners and Management" in our 2023 Proxy Statement.
Equity Compensation Plan Information
The following table sets forth certain compensation plan information with respect to compensation plans as of December 31, 2022:
Plan Category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Restricted
Stock Units (1)
Weighted-average
Exercise Price of
Outstanding Options,
Warrants and Restricted
Stock Units
505,328 $
—
505,328 $
7.68
—
7.68
Number of Securities
Available for Future
Issuance under Equity
Compensation Plans (2)
4,106,840
—
4,106,840
(1)
(2)
Consists of the 1996 Incentive and Non-Qualified Stock Option Plan and the 2010 Stock Incentive Plan.
Consists of the 2010 Stock Incentive Plan.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated by reference to the section titled "Transactions with Related Parties" in our 2023 Proxy
Statement.
The information required by this Item concerning director independence is incorporated by reference to the sub-section titled "Board of
Directors – Director Independence" in our 2023 Proxy Statement.
Item 14. Principal Accountant Fees and Services
The information required by this Item is incorporated by reference to the section titled "Fees Billed by PricewaterhouseCoopers, LLP" in our 2023
Proxy Statement.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) (1) and (2). Financial Statements.
See Index to Financial Statements under Item 8 in Part II hereof where these documents are listed. All schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and,
therefore, have been omitted.
(a) (3). Exhibits.
The following is a list of exhibits:
Exhibit
No.
Description
3(a)
3(b)
4(a)
4(b)
10(a)
10(b)
10(c)
10(d)
10(e)
10(f)
Amended and Restated Certificate of Incorporation of SIGA Technologies, Inc. (incorporated by reference to the Current
Report on Form 8-K of the Company filed on June 16, 2022).
Amended and Restated By-laws of SIGA Technologies, Inc. (incorporated by reference to the Current Report on Form 8-K
of the Company filed on December 15, 2021).
Form of Common Stock Certificate (incorporated by reference to the Form SB-2 Registration Statement of the Company
dated March 10, 1997 (No. 333-23037)).
Description of the Registrant's Securities Registered pursuant to Section 12 of the Securities Exchange Act of 1934
(incorporated by reference to the Annual Report on Form 10-K of the Company filed on March 5, 2020).
Securities Purchase Agreement, dated as of August 13, 2003, between the Company and MacAndrews & Forbes Holdings
Inc. (incorporated by reference to the Current Report on Form 8-K of the Company filed on August 18, 2003).
Letter Agreement, dated October 8, 2003, among the Company, MacAndrews & Forbes Holdings Inc. and TransTech
Pharma, Inc. (incorporated by reference to the Current Report on Form 8-K of the Company filed on October 9, 2003).
Contract, dated as of May 13, 2011, between SIGA and the Biomedical Advanced Research and Development Authority of
the United States Department of Health and Human Services (portions of this exhibit have been omitted and separately
filed with the Securities and Exchange Commission with a request for confidential treatment) (incorporated by reference to
the Current Report on Form 8-K of the Company filed on May 17, 2011).
Amendment of Solicitation/Modification of Contract, dated as of June 24, 2011, to Agreement dated as of May 13, 2011,
between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of
Health and Human Services (portions of this exhibit have been omitted and separately filed with the Securities and
Exchange Commission with a request for confidential treatment) (incorporated by reference to the Current Report on Form
8-K of the Company filed on June 28, 2011).
Director Compensation Program, effective April 8, 2021 (incorporated by reference to the Definitive Proxy Statement on
Form DEF 14A of the Company filed on April 27, 2021).*
Amendment of Solicitation/Modification of Contract, dated as of September 28, 2011, to Agreement dated as of May 13,
2011, between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department
of Health and Human Services (portions of this exhibit have been omitted and separately filed with the Securities and
Exchange Commission with a request for confidential treatment) (incorporated by reference to the Quarterly Report on
Form 10-Q of the Company filed on May 7, 2012).
71
Table of Contents
10(g)
10(h)
10(i)
10(j)
10(k)
10(l)
10(m)
10(n)
10(o)
10(p)
10(q)
10(r)
10(s)
Amendment of Solicitation/Modification of Contract, dated as of October 7, 2011, to Agreement dated as of May 13, 2011,
between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of
Health and Human Services (portions of this exhibit have been omitted and separately filed with the Securities and
Exchange Commission with a request for confidential treatment) (incorporated by reference to the Quarterly Report on
Form 10-Q of the Company filed on May 7, 2012).
Amendment of Solicitation/Modification of Contract, dated as of January 25, 2012, to Agreement, dated as of May 13,
2011, between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department
of Health and Human Services (portions of this exhibit have been omitted and separately filed with the Securities and
Exchange Commission with a request for confidential treatment) (incorporated by reference to the Quarterly Report on
Form 10-Q of the Company filed on May 7, 2012).
Amendment of Solicitation/Modification of Contract, dated as of February 7, 2012, to Agreement, dated as of May 13,
2011, between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department
of Health and Human Services (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on
May 7, 2012).
Amendment of Solicitation/Modification of Contract, dated as of December 19, 2012, to Agreement, dated as of May 13,
2011, between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department
of Health and Human Services (portions of this exhibit have been omitted and separately filed with the Securities and
Exchange Commission with a request for confidential treatment) (incorporated by reference to the Annual Report on Form
10-K of the Company filed on March 6, 2013).
Amendment of Solicitation/Modification of Contract, dated as of February 28, 2013, to Agreement, dated as of May 13,
2011, between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department
of Health and Human Services (incorporated by reference to the Annual Report on Form 10-K of the Company filed on
March 10, 2014).
Amendment of Solicitation/Modification of Contract, dated as of April 9, 2013, to Agreement, dated as of May 13, 2011,
between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of
Health and Human Services (incorporated by reference to the Annual Report on Form 10-K of the Company filed on
March 10, 2014).
Amendment of Solicitation/Modification of Contract 0009, dated April 29, 2015, to Agreement, dated May 13, 2011 by
and between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department
of Health and Human Services (portions of this exhibit have been omitted and separately filed with the Securities and
Exchange Commission with a request for confidential treatment) (incorporated by reference to the Quarterly Report on
Form 10-Q of the Company filed on May 6, 2015).
Amendment of Solicitation/Modification of Contract 0010, dated July 1, 2015, to Agreement, dated May 13, 2011 by and
between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of
Health and Human Services (portions of this exhibit have been omitted and separately filed with the Securities and
Exchange Commission with a request for confidential treatment) (incorporated by reference to the Annual Report on Form
10-K of the Company filed on March 4, 2016).
Amendment of Solicitation/Modification of Contract 0011, dated December 9, 2015, to Agreement, dated May 13, 2011
by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (portions of this exhibit have been omitted and separately filed with the
Securities and Exchange Commission with a request for confidential treatment) (incorporated by reference to the Annual
Report on Form 10-K of the Company filed on March 4, 2016).
Amended and Restated Employment Agreement, dated April 12, 2016, between SIGA Technologies, Inc. and Daniel J.
Luckshire (incorporated by reference to the Current Report on Form 8-K of the Company filed on April 14, 2016).*
Amended and Restated Employment Agreement, dated April 12, 2016, between SIGA Technologies, Inc. and Dennis E.
Hruby (incorporated by reference to the Current Report on Form 8-K of the Company filed on April 14, 2016).*
Amendment of Solicitation/Modification of Contract 0013, dated June 28, 2016, to Agreement, dated May 13, 2011,
between the Biomedical Advanced Research and Development Authority of the United States Department of Health and
Human Services and SIGA (portions of this exhibit have been omitted and separately filed with the Securities and
Exchange Commission with a request for confidential treatment) (incorporated by reference to the Current Report on Form
8-K of the Company filed on July 5, 2016).
Warrant, dated as of September 2, 2016, by the Company in favor of OCM Strategic Credit SIGTEC Holdings, LLC or its
registered assigns (incorporated by reference to the Current Report on Form 8-K of the Company filed on September 7,
2016).
72
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10(t)
10(u)
10(v)
10(w)
10(x)
10(y)
10(z)
10(aa)
10(bb)
10(cc)
10(dd)
10(ee)
10(ff)
10(gg)
Employment Agreement, dated as of October 13, 2016, between SIGA and Phillip Louis Gomez, III (incorporated by
reference to the Current Report on Form 8-K of the Company filed on October 13, 2016).*
Investment Agreement, dated October 13, 2016, by and among SIGA Technologies, Inc., ST Holdings One LLC,
Blackwell Partners LLC-Series A, Nantahala Capital Partners Limited Partnership, Nantahala Capital Partners II Limited
Partnership, Silver Creek CS SAV, L.L.C. and Nantahala Capital Partners SI, LP (incorporated by reference to the Current
Report on Form 8-K of the Company filed on October 19, 2016).
Amendment of Solicitation/Modification of Contract 0012, dated April 22, 2016, to Agreement, dated May 13, 2011,
between the Biomedical Advanced Research and Development Authority of the United States Department of Health and
Human Services and SIGA (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on May
4, 2017).
Amendment of Solicitation/Modification of Contract 0014, dated September 21, 2016, to Agreement, dated May 13, 2011,
between the Biomedical Advanced Research and Development Authority of the United States Department of Health and
Human Services and SIGA (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on May
4, 2017).
Office Lease, dated as of May 26, 2017, by and between SIGA Technologies, Inc. and MacAndrews & Forbes Incorporated
(portions of this exhibit have been omitted and separately filed with the Securities and Exchange Commission with a
request for confidential treatment) (incorporated by reference to the Current Report on Form 8-K of the Company filed on
May 30, 2017).
Commercial Lease Agreement for Corvallis, Oregon dated November 3, 2017 (incorporated by reference to the Quarterly
Report on Form 10-Q of the Company filed on November 7, 2017).
Amendment of Solicitation/Modification of Contract 0015, dated July 30, 2018, to Agreement, dated May 13, 2011,
between the Biomedical Advanced Research and Development Authority of the United States Department of Health and
Human Services and SIGA (incorporated by reference to the Current Report on Form 8-K of the Company filed on August
1, 2018).
Addendum, dated August 10, 2018, to Second Amended and Restated Employment Agreement, dated April 12, 2016,
between SIGA Technologies, Inc. and Dennis E. Hruby (incorporated by reference to the Current Report on Form 8-K of
the Company filed on August 10, 2018).*
Contract, dated as of September 10, 2018, between SIGA Technologies, Inc. and the Biomedical Advanced Research and
Development Authority of the United States Department of Health and Human Services (portions of this exhibit have been
omitted and separately filed with the Securities and Exchange Commission with a request for confidential treatment)
(incorporated by reference to the Current Report on Form 8-K of the Company filed on September 11, 2018).
Amendment of Solicitation/Modification of Contract 0016, dated September 21, 2018, to Agreement, dated May 13, 2011,
between the Biomedical Advanced Research and Development Authority of the United States Department of Health and
Human Services and SIGA (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on
November 6, 2018).
Amendment of Solicitation/Modification of Contract 0017, dated September 28, 2018, to Agreement, dated May 13, 2011,
between the Biomedical Advanced Research and Development Authority of the United States Department of Health and
Human Services and SIGA (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on
November 6, 2018).
Amendment of Solicitation/Modification of Contract 0018, dated September 28, 2018 to Agreement, dated June 1, 2011,
between the Biomedical Advanced Research and Development Authority of the United States Department of Health and
Human Services and SIGA (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on
November 6, 2018).
Commercial Manufacturing Agreement, dated October 1, 2018, by and between Albemarle Corporation and SIGA
(portions of this exhibit have been omitted and separately filed with the Securities and Exchange Commission with a
request for confidential treatment) (incorporated by reference to the Annual Report on Form 10-K of the Company filed on
March 6, 2019).
Amendment of Solicitation/Modification of Contract 0001, dated February 21, 2019, to Agreement, dated September 10,
2018, between the Biomedical Advanced Research and Development Authority of the United States Department of Health
and Human Services and SIGA (incorporated by reference to the Annual Report on Form 10-K of the Company filed on
March 6, 2019).
73
Table of Contents
10(hh)
10(ii)
10(jj)
10(kk)
10(ll)
10(mm)
10(nn)
10(oo)
10(pp)
10(qq)
10(rr)
10(ss)
Amendment of Solicitation/Modification of Contract 0002, dated May 17, 2019, to Agreement, dated September 10, 2018
by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)
of Regulation S-K) (incorporated by reference to the Current Report on Form 8-K of the Company filed on May 20, 2019).
Amendment of Solicitation/Modification of Contract 0019, dated May 22, 2019, to Agreement, dated June 1, 2011 by and
between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of
Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation
S-K) (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on August 6, 2019).
Promotion Agreement, dated May 31, 2019, by and between SIGA Technologies, Inc. and Meridian Medical Technologies,
Inc. (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K) (incorporated by
reference to the Current Report on Form 8-K of the Company filed on June 3, 2019).
Amendment of Solicitation/Modification of Contract 0003, dated September 9, 2019, to Agreement, dated September 10,
2018 by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)
of Regulation S-K) (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on November
5, 2019).
Amendment of Solicitation/Modification of Contract 0020, dated November 19, 2019, to Agreement, dated June 1, 2011
by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)
of Regulation S-K) (incorporated by reference to the Annual Report on Form 10-K of the Company filed on March 5,
2020).
Amendment of Solicitation/Modification of Contract 0018, dated November 19, 2019, to Agreement, dated May 13, 2011
by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)
of Regulation S-K) (incorporated by reference to the Annual Report on Form 10-K of the Company filed on March 5,
2020).
Amendment of Solicitation/Modification of Contract 0004, dated February 4, 2020, to Agreement, dated September 10,
2018 by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)
of Regulation S-K) (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on May 6,
2020).
Amendment of Solicitation/Modification of Contract 0005, dated April 29, 2020, to Agreement, dated September 10, 2018
by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)
of Regulation S-K) (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on August 6,
2020).
Amendment of Solicitation/Modification of Contract 00021, dated July 2, 2020, to Agreement, dated June 1, 2011 by and
between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department of
Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation
S-K) (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on November 5, 2020).
Amendment of Solicitation/Modification of Contract 00019, dated July 20, 2020, to Agreement, dated May 13, 2011 by
and between SIGA and the Biomedical Advanced Research and Development Authority of the United States Department
of Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of
Regulation S-K) (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on November 5,
2020).
Third Amended and Restated Employment Agreement, dated January 20, 2021, between SIGA Technologies, Inc. and
Robin E. Abrams (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of the Company filed on
January 22, 2021).*
Amendment of Solicitation/Modification of Contract 0007, dated September 8, 2021, to Agreement, dated September 10,
2018, by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (incorporated by reference to the Quarterly Report on Form 10-Q of the
Company filed on November 4, 2021).
74
Table of Contents
10(tt)
10(uu)
10(vv)
10(ww)
10(xx)
10(yy)
10(zz)
10(aaa)
10(bbb)
10(ccc)
10(ddd)
Amendment of Solicitation/Modification of Contract 00006, dated April 29, 2021, to Agreement, dated September 10,
2018, by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)
of Regulation S-K) (incorporated by reference to the Annual Report on Form 10-K of the Company filed on March 3,
2022).
Amendment of Solicitation/Modification of Contract 00008, dated December 9, 2021, to Agreement, dated September 10,
2018, by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (incorporated by reference to the Annual Report on Form 10-K of the Company
filed on March 3, 2022).
Amendment of Solicitation/Modification of Contract 00020, dated November 8, 2021, to Agreement, dated May 13, 2011,
by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (incorporated by reference to the Annual Report on Form 10-K of the Company
filed on March 3, 2022).
Amendment of Solicitation/Modification of Contract 00022, dated November 8, 2021, to Agreement, dated June 1, 2011,
by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (incorporated by reference to the Annual Report on Form 10-K of the Company
filed on March 3, 2022).
Amendment of Solicitation/Modification of Contract 000023, dated February 15, 2022, to Agreement, dated June 1, 2011,
by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)
of Regulation S-K) (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on May 5,
2022).
Amendment of Solicitation/Modification of Contract 00009, dated January 27, 2022, to Agreement, dated September 10,
2018, by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)
of Regulation S-K) (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on November
3, 2022).
Amendment of Solicitation/Modification of Contract 00010, dated March 29, 2022, to Agreement, dated September 10,
2018, by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (incorporated by reference to the Quarterly Report on Form 10-Q of the
Company filed on November 3, 2022).
Amendment of Solicitation/Modification of Contract 000011, dated July 26, 2022, to Agreement, dated September 10,
2018, by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (incorporated by reference to the Quarterly Report on Form 10-Q of the
Company filed on November 3, 2022).
Amendment of Solicitation/Modification of Contract 000012, dated August 5, 2022, to Agreement, dated September 10,
2018, by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)
of Regulation S-K) (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on November
3, 2022).
Amendment of Solicitation/Modification of Contract 000021, dated September 28, 2022, to Agreement, dated May 13,
2011, by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (certain portions of this exhibit have been omitted pursuant to Item 601(b)(10)
of Regulation S-K) (incorporated by reference to the Quarterly Report on Form 10-Q of the Company filed on November
3, 2022).
Amendment of Solicitation/Modification of Contract 000022, dated September 29, 2022, to Agreement, dated May 13,
2011, by and between SIGA and the Biomedical Advanced Research and Development Authority of the United States
Department of Health and Human Services (incorporated by reference to the Quarterly Report on Form 10-Q of the
Company filed on November 3, 2022).
75
Table of Contents
23.1
Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.
31.1
31.2
32.1
32.2
Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002-Chief Executive Officer.
Certification pursuant to Rules 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002-Chief Financial Officer.
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002-Chief Executive
Officer.
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002-Chief Financial
Officer.
101.INS
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded
within the Inline XBRL document)
101.SCH
Inline Taxonomy Extension Schema Document
101.CAL
Inline Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline Taxonomy Extension Definition Linkbase Document
101.LAB
Inline Taxonomy Extension Labels Linkbase Document
101.PRE
Inline Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
* management contract, compensatory plan or arrangement.
76
Table of Contents
Item 16. Form 10-K Summary
None.
77
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date: March 2, 2023
SIGA TECHNOLOGIES, INC.
(Registrant)
By:
/s/ Phillip L. Gomez, Ph.D.
Phillip L. Gomez, Ph.D.
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature
/s/ Phillip L. Gomez, Ph.D.
Phillip L. Gomez, Ph.D.
/s/ Daniel J. Luckshire
Daniel J. Luckshire
/s/ Jaymie Durnan
Jaymie Durnan
/s/ Harold E. Ford, Jr.
Harold E. Ford, Jr.
/s/ Julie M. Kane
Julie M. Kane
/s/ Joseph Marshall
Joseph Marshall
/s/ Gary J. Nabel
Gary J. Nabel
/s/ Julian Nemirovsky
Julian Nemirovsky
/s/ Holly L. Phillips
Holly L. Phillips
/s/ Michael Plansky
Michael Plansky
/s/ Jay K. Varma
Jay K. Varma
Title of Capacities
Chief Executive Officer and Director
(Principal Executive Officer)
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
78
Date
March 2, 2023
March 2, 2023
March 2, 2023
March 2, 2023
March 2, 2023
March 2, 2023
March 2, 2023
March 2, 2023
March 2, 2023
March 2, 2023
March 2, 2023
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-218507, 333-183101, and 333-167329) of SIGA
Technologies, Inc. of our report dated March 2, 2023 relating to the financial statements and the effectiveness of internal control over financial reporting,
which appears in this Form 10-K.
Exhibit 23.1
/s/ PRICEWATERHOUSECOOPERS LLP
Florham Park, New Jersey
March 2, 2023
Exhibit 31.1
I, Phillip L. Gomez, Ph.D., certify that:
Certification by Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I have reviewed this annual report on Form 10-K of SIGA Technologies, Inc.;
1.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
4.
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: March 2, 2023
/s/ Phillip L. Gomez, Ph.D.
Phillip L. Gomez, Ph.D.
Chief Executive Officer
Exhibit 31.2
I, Daniel J. Luckshire, certify that:
Certification by Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I have reviewed this annual report on Form 10-K of SIGA Technologies, Inc.;
1.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
4.
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: March 2, 2023
/s/ Daniel J. Luckshire
Daniel J. Luckshire
Executive Vice President and
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report of SIGA Technologies, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2022 as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Phillip L. Gomez, Ph. D., Chief Executive Officer of the
Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my
knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Phillip L. Gomez, Ph.D.
Phillip L. Gomez, Ph.D.
Chief Executive Officer
March 2, 2023
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report of SIGA Technologies, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2022 as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel J. Luckshire, Executive Vice President and Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to
the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Daniel J. Luckshire
Daniel J. Luckshire
Executive Vice President and Chief Financial Officer
March 2, 2023