SIGA Technologies — TPOXX chalks up another DoD contract win

SIGA Technologies (NASDAQ: SIGA)

Last close As at 23/08/2024

USD9.34

−0.48 (−4.89%)

Market capitalisation

USD667m

More on this equity

Research: Healthcare

SIGA Technologies — TPOXX chalks up another DoD contract win

SIGA Technologies announced another contract win with the US Department of Defense (DoD), which is for the procurement of c $9m in TPOXX. This is the third DoD contract win in roughly three years for a total of approximately $28m and adds to the already robust H224 orderbook of c $154m of outstanding TPOXX orders, following the July 2024 $112.5m option exercise from the Biomedical Advanced Research and Development Authority (BARDA) for oral TPOXX. While delivery timeline details are yet to be disclosed, we expect this new DoD order to at least start being partially serviced in FY25. The DoD has also provided $27m in R&D support to the post-exposure prophylaxis (PEP) development effort, for which the regulatory filing is planned within the next 12 months.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

SIGA Technologies

TPOXX chalks up another DoD contract win

Commercial update

Pharma and biotech

23 August 2024

Price

US$9.34

Market cap

US$701m

Net cash (US$m) at 30 June 2024

106.9

Shares in issue

71.4m

Free float

56%

Code

SIGA

Primary exchange

Nasdaq

Secondary exchange

N/A

Share price performance

Business description

SIGA Technologies is a commercial-stage pharmaceutical company focused on the treatment of smallpox and other infectious diseases. It has partnerships with governments and public health agencies in the US, Canada and Europe for TPOXX, its treatment for smallpox, and is expanding internationally.

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Jyoti Prakash, CFA

+44 (0)20 3077 5700

SIGA Technologies is a research client of Edison Investment Research Limited

SIGA Technologies announced another contract win with the US Department of Defense (DoD), which is for the procurement of c $9m in TPOXX. This is the third DoD contract win in roughly three years for a total of approximately $28m and adds to the already robust H224 orderbook of c $154m of outstanding TPOXX orders, following the July 2024 $112.5m option exercise from the Biomedical Advanced Research and Development Authority (BARDA) for oral TPOXX. While delivery timeline details are yet to be disclosed, we expect this new DoD order to at least start being partially serviced in FY25. The DoD has also provided $27m in R&D support to the post-exposure prophylaxis (PEP) development effort, for which the regulatory filing is planned within the next 12 months.

Year end

Revenue
(US$m)

EBITDA*
(US$m)

PBT*
(US$m)

EPS*
(US$)

P/E
(x)

Yield
(%)

12/22

110.8

43.2

43.7

0.46

20.3

4.8

12/23

139.9

84.2

87.8

0.95

9.8

6.4

12/24e

160.5

86.2

92.5

1.01

9.3

7.5

12/25e

186.9

109.8

115.4

1.25

7.4

8.0

Note: *EBITDA, PBT and EPS (basic) are normalized, excluding amortization of acquired intangibles, exceptional items and share-based payments.

SIGA continues to execute on its growth plans, and the recent BARDA and DoD contract wins materially increase the company’s orderbook. The company already has pending deliveries of IV TPOXX under the July 2023 ($25m) and August 2022 ($8.4m; noting that $17.8m of the $26m order was delivered in H124) orders, which comprise part of the c $155m of outstanding TPOXX (oral and IV) orders to date. We expect the remaining August 2022 IV TPOXX order, as well as 80% of the BARDA (oral TPOXX) order, will be delivered in H224. Given the backlog, we expect delivery delays for this newly announced DoD order but estimate partial deliveries in FY25. This DoD order may represent potential upside to our current estimates although we await more clarity on the anticipated delivery timelines.

Looking ahead, we expect SIGA to continue to focus on securing a longer-term recurring contract with the US government, and await SIGA’s response to an expected upcoming government request for proposal (refer to our prior update note for more details). We view the potential PEP label expansion as another growth lever, given its longer duration of treatment (28 days vs 14 days for TPOXX currently) and commensurate market opportunity. Management expects to file a supplementary new drug application (sNDA) within the next 12 months, which we view as a key upcoming catalyst. Note that the R&D efforts for the PEP label expansion have been backed substantially by the DoD ($27m) and in our view a positive regulatory decision would translate to a potentially sizeable order.

The recent data from PALM 007 (studying SIGA’s tecovirimat in mpox) has weighed on the share price, but we expect an improvement in investor sentiment with the recent DoD contract win. We maintain that mpox continues to be an opportunity for SIGA on the heels of the WHO declaration of a global health emergency and highlight the meaningful benefit for patients treated early and those with severe disease in the PALM 007 study. We expect takeaways from PALM 007 to support design improvements in the remaining studies, including the registrational STOMP trial in the US, for which an sNDA may be filed in 2025, if the data are supportive.

General disclaimer and copyright

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

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

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Australia

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

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United Kingdom

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

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

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

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

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

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

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

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

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

New Zealand

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

United Kingdom

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

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

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

United States

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

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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