UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ | |
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
For the Quarterly Period Ended June 30, | |
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 | 13-3864870 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification. No.) |
31 East 62nd Street | 10065 |
New York, NY | (zip code) |
(Address of principal executive offices) |
Registrant’s telephone number, including area code: (212) 672-9100
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
common stock, $.0001 par value | SIGA | The Nasdaq Global Market |
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
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes
As of July 26, 2019,30, 2020, the registrant had outstanding 81,046,52478,120,811 shares of common stock, par value $.0001, per share.
Table of Contents
Page No. | ||||
Item 1 - Condensed Consolidated Financial Statements
SIGA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, 2020 | December 31, 2019 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 53,065,833 | $ | 65,249,072 | ||||
Restricted cash and cash equivalents, short-term | - | 95,737,862 | ||||||
Accounts receivable | 36,611,661 | 4,167,996 | ||||||
Inventory | 14,006,986 | 9,652,855 | ||||||
Prepaid expenses and other current assets | 1,382,499 | 5,234,000 | ||||||
Total current assets | 105,066,979 | 180,041,785 | ||||||
Property, plant and equipment, net | 2,366,135 | 2,618,303 | ||||||
Deferred tax assets, net | 11,183,600 | 14,151,002 | ||||||
Goodwill | 898,334 | 898,334 | ||||||
Other assets | 901,906 | 856,766 | ||||||
Total assets | $ | 120,416,954 | $ | 198,566,190 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 630,165 | $ | 3,054,032 | ||||
Accrued expenses and other current liabilities | 14,931,370 | 8,636,911 | ||||||
| Total debt, current | - | 80,044,866 | ||||||
Total current liabilities | 15,561,535 | 91,735,809 | ||||||
Warrant liability | 7,752,534 | 6,116,882 | ||||||
Other liabilities | 2,969,867 | 2,929,743 | ||||||
Total liabilities | 26,283,936 | 100,782,434 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity | ||||||||
Common stock ($.0001 par value, 600,000,000 shares authorized, 78,618,743 and 81,269,868 issued and outstanding at June 30, 2020, and December 31, 2019, respectively) | 7,862 | 8,127 | ||||||
Additional paid-in capital | 221,380,828 | 220,808,037 | ||||||
Accumulated deficit | (127,255,672 | ) | (123,032,408 | ) | ||||
Total stockholders’ equity | 94,133,018 | 97,783,756 | ||||||
Total liabilities and stockholders’ equity | $ | 120,416,954 | $ | 198,566,190 | ||||
| June 30, 2019 | December 31, 2018 | ||||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 100,263,915 | $ | 100,652,809 | |||
| Restricted cash, short-term | 11,248,400 | 11,452,078 | |||||
| Accounts receivable | 4,128,216 | 1,959,133 | |||||
| Inventory | 2,390,487 | 2,908,210 | |||||
| Prepaid expenses and other current assets | 3,503,932 | 4,317,615 | |||||
| Total current assets | 121,534,950 | 121,289,845 | |||||
| Property, plant and equipment, net | 2,859,865 | 171,274 | |||||
| Restricted cash, long-term | 64,480,624 | 68,292,023 | |||||
| Deferred tax assets, net | 12,388,524 | 11,733,385 | |||||
| Goodwill | 898,334 | 898,334 | |||||
| Other assets | 929,963 | 1,058,880 | |||||
| Total assets | $ | 203,092,260 | $ | 203,443,741 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 1,070,926 | $ | 1,688,488 | |||
| Accrued expenses and other current liabilities | 10,052,283 | 9,648,917 | |||||
| Total current liabilities | 11,123,209 | 11,337,405 | |||||
| Warrant liability | 7,415,350 | 12,380,939 | |||||
| Other liabilities | 3,321,486 | 1,263,113 | |||||
| Long-term debt | 77,777,748 | 75,547,597 | |||||
| Total liabilities | 99,637,793 | 100,529,054 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity | |||||||
| Common stock ($.0001 par value, 600,000,000 shares authorized, 81,046,524 and 80,763,350 issued and outstanding at June 30, 2019, and December 31, 2018, respectively) | 8,105 | 8,076 | |||||
| Additional paid-in capital | 220,770,338 | 218,697,872 | |||||
| Accumulated deficit | (117,323,976 | ) | (115,791,261 | ) | |||
| Total stockholders’ equity | 103,454,467 | 102,914,687 | |||||
| Total liabilities and stockholders’ equity | $ | 203,092,260 | $ | 203,443,741 | |||
The accompanying notes are an integral part of these financial statements.
SIGA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenues | ||||||||||||||||
Product sales and supportive services | $ | 38,624,450 | $ | - | $ | 38,737,459 | $ | 7,142,400 | ||||||||
Research and development | 1,724,327 | 3,907,611 | 4,231,083 | 7,224,295 | ||||||||||||
Total revenues | 40,348,777 | 3,907,611 | 42,968,542 | 14,366,695 | ||||||||||||
Operating expenses | ||||||||||||||||
Cost of sales and supportive services | 4,796,768 | - | 4,905,863 | 915,367 | ||||||||||||
Selling, general and administrative | 3,870,927 | 3,392,228 | 7,046,952 | 6,558,794 | ||||||||||||
Research and development | 2,709,743 | 2,038,323 | 5,859,847 | 6,035,604 | ||||||||||||
Patent expenses | 174,203 | 182,310 | 356,800 | 370,226 | ||||||||||||
Total operating expenses | 11,551,641 | 5,612,861 | 18,169,462 | 13,879,991 | ||||||||||||
Operating income (loss) | 28,797,136 | (1,705,250 | ) | 24,799,080 | 486,704 | |||||||||||
(Loss) gain from change in fair value of warrant liability | (1,619,587 | ) | 656,523 | (1,635,652 | ) | 3,792,788 | ||||||||||
| Loss on extinguishment of Term Loan | - | - | (4,981,461 | ) | - | |||||||||||
Interest expense | - | (3,971,031 | ) | (3,016,817 | ) | (7,899,449 | ) | |||||||||
Other income, net | 31,931 | 737,577 | 444,295 | 1,473,706 | ||||||||||||
Income (loss) before income taxes | 27,209,480 | (4,282,181 | ) | 15,609,445 | (2,146,251 | ) | ||||||||||
(Provision) benefit for income taxes | (6,319,322 | ) | 1,119,689 | (3,616,816 | ) | 613,536 | ||||||||||
Net and comprehensive income (loss) | $ | 20,890,158 | $ | (3,162,492 | ) | $ | 11,992,629 | $ | (1,532,715 | ) | ||||||
Basic income (loss) per share | $ | 0.26 | $ | (0.04 | ) | $ | 0.15 | $ | (0.02 | ) | ||||||
Diluted income (loss) per share | $ | 0.26 | $ | (0.05 | ) | $ | 0.15 | $ | (0.06 | ) | ||||||
Weighted average shares outstanding: basic | 80,340,695 | 80,986,524 | 80,790,400 | 80,950,124 | ||||||||||||
Weighted average shares outstanding: diluted | 80,516,863 | 82,114,661 | 80,959,812 | 82,129,601 | ||||||||||||
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Revenues | |||||||||||||||
| Product sales and supportive services | $ | — | $ | — | $ | 7,142,400 | $ | — | |||||||
| Research and development | 3,907,611 | 2,661,216 | 7,224,295 | 4,409,150 | |||||||||||
| Total revenues | 3,907,611 | 2,661,216 | 14,366,695 | 4,409,150 | |||||||||||
| Operating expenses | |||||||||||||||
| Cost of sales and supportive services | — | — | 915,367 | — | |||||||||||
| Selling, general and administrative | 3,392,228 | 2,880,394 | 6,558,794 | 5,936,940 | |||||||||||
| Research and development | 2,038,323 | 3,312,181 | 6,035,604 | 6,320,007 | |||||||||||
| Patent expenses | 182,310 | 178,332 | 370,226 | 396,805 | |||||||||||
| Total operating expenses | 5,612,861 | 6,370,907 | 13,879,991 | 12,653,752 | |||||||||||
| Operating (loss) income | (1,705,250 | ) | (3,709,691 | ) | 486,704 | (8,244,602 | ) | ||||||||
| Gain (loss) from change in fair value of warrant liability | 656,523 | 360,285 | 3,792,788 | (2,942,829 | ) | ||||||||||
| Interest expense | (3,971,031 | ) | (3,843,161 | ) | (7,899,449 | ) | (7,591,979 | ) | |||||||
| Other income, net | 737,577 | 144,152 | 1,473,706 | 146,387 | |||||||||||
| Loss before income taxes | (4,282,181 | ) | (7,048,415 | ) | (2,146,251 | ) | (18,633,023 | ) | |||||||
| Benefit (provision) for income taxes | 1,119,689 | (2,849 | ) | 613,536 | (497 | ) | |||||||||
| Net and comprehensive loss | $ | (3,162,492 | ) | $ | (7,051,264 | ) | $ | (1,532,715 | ) | $ | (18,633,520 | ) | |||
| Basic loss per share | $ | (0.04 | ) | $ | (0.09 | ) | $ | (0.02 | ) | $ | (0.24 | ) | |||
| Diluted loss per share | $ | (0.05 | ) | $ | (0.09 | ) | $ | (0.06 | ) | $ | (0.24 | ) | |||
| Weighted average shares outstanding: basic | 80,986,524 | 79,094,320 | 80,950,124 | 79,066,768 | |||||||||||
| Weighted average shares outstanding: diluted | 82,114,661 | 81,163,386 | 82,129,601 | 79,066,768 | |||||||||||
The accompanying notes are an integral part of these financial statements.
SIGA TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Cash flows from operating activities: | ||||||||
Net income/(loss) | $ | 11,992,629 | $ | (1,532,715 | ) | |||
Adjustments to reconcile net income/(loss) to net cash used in operating activities: | ||||||||
Depreciation and other amortization | 267,669 | 265,289 | ||||||
Loss/(gain) on change in fair value of warrant liability | 1,635,652 | (3,792,788 | ) | |||||
Stock-based compensation | 582,549 | 956,284 | ||||||
Deferred income taxes, net | 2,967,402 | (655,139 | ) | |||||
| Loss on extinguishment of Term Loan | 4,981,461 | - | ||||||
Non-cash interest expense | 887,132 | 2,230,153 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (32,443,665 | ) | (2,169,083 | ) | ||||
Inventory | (1,751,459 | ) | 517,724 | |||||
Prepaid expenses and other assets | 1,203,690 | 942,599 | ||||||
Accounts payable, accrued expenses and other liabilities | (4,421,690 | ) | (2,304,892 | ) | ||||
Deferred revenue | 8,332,405 | 1,204,135 | ||||||
Net cash used in operating activities | (5,766,225 | ) | (4,338,433 | ) | ||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (15,501 | ) | (8,948 | ) | ||||
Net cash used in investing activities | (15,501 | ) | (8,948 | ) | ||||
Cash flows from financing activities: | ||||||||
Payment of employee tax obligations for common stock tendered | (9,746 | ) | (56,590 | ) | ||||
| Repurchase of common stock | (16,216,170 | ) | - | |||||
| Repayment of Term Loan | (85,913,459 | ) | - | |||||
Net cash used in financing activities | (102,139,375 | ) | (56,590 | ) | ||||
Net decrease in cash, cash equivalents and restricted cash | (107,921,101 | ) | (4,403,971 | ) | ||||
Cash, cash equivalents and restricted cash at the beginning of period | 160,986,934 | 180,396,910 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 53,065,833 | $ | 175,992,939 | ||||
Supplemental disclosure of non-cash activities: | ||||||||
Conversion of warrants to common stock | $ | - | $ | 1,172,801 | ||||
Issuance of common stock upon cashless exercise | $ | - | $ | 118,500 | ||||
| Six months ended June 30, | ||||||||
| 2019 | 2018 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (1,532,715 | ) | $ | (18,633,520 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and other amortization | 265,289 | 33,929 | ||||||
| (Decrease)/increase in fair value of warrant liability | (3,792,788 | ) | 2,942,829 | |||||
| Stock-based compensation | 956,284 | 689,721 | ||||||
| Deferred income taxes provision benefit | (655,139 | ) | (9,777 | ) | ||||
| Non-cash interest expense | 2,230,153 | 2,230,153 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (2,169,083 | ) | (219,547 | ) | ||||
| Inventory | 517,724 | — | ||||||
| Deferred costs | — | 54,776 | ||||||
| Prepaid expenses and other current assets | 813,682 | 705,066 | ||||||
| Other assets | 128,917 | — | ||||||
| Accounts payable, accrued expenses and other current liabilities | (1,848,074 | ) | (854,097 | ) | ||||
| Deferred revenue | 1,204,135 | (553,755 | ) | |||||
| Other liabilities | (456,818 | ) | (135,394 | ) | ||||
| Net cash used in operating activities | (4,338,433 | ) | (13,749,616 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (8,948 | ) | (27,863 | ) | ||||
| Net cash used in investing activities | (8,948 | ) | (27,863 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Payment of employee tax obligations for common stock tendered | (56,590 | ) | (12,328 | ) | ||||
| Net cash used in financing activities | (56,590 | ) | (12,328 | ) | ||||
| Net decrease in cash, cash equivalents and restricted cash | (4,403,971 | ) | (13,789,807 | ) | ||||
| Cash, cash equivalents and restricted cash at the beginning of period | 180,396,910 | 37,101,586 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 175,992,939 | $ | 23,311,779 | ||||
| Supplemental disclosure of non-cash activities: | ||||||||
| Conversion of warrants to common stock | $ | 1,172,801 | $ | — | ||||
| Issuance of common stock upon cashless exercise | $ | 118,500 | $ | 105,900 | ||||
The accompanying notes are an integral part of these financial statements
SIGA TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for quarterly reports on Form 10-Q10-Q and should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2018,2019, included in the 20182019 Annual Report on Form 10-K.10-K. All terms used but not defined elsewhere herein have the meaning ascribed to them in the Company’s 20182019 Annual Report on Form 10-K10-K filed on March 5, 2019. 2020. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair presentationstatement of the results of the interim periods have been included. The 20182019 year-end condensed consolidated balance sheet data were derived from the audited financial statements but do not include all disclosures required by U.S. GAAP. The results of operations for the three and six months ended June 30, 20192020 are not necessarily indicative of the results expected for the full year.
Revenue Recognition
All of the Company’s revenue is derived from long-term contracts that span multiple years. The Company accounts for revenue in accordance with ASC Topic 606,
Revenue from Contracts with Customers (“ASC 606”). In all transactions, the Company is the principal as it controls the specified good or service before it is transferred to the customer and therefore recognizes revenue on a gross basis. A contract’s transaction price is allocated to distinct performance obligations and recognized as revenue when, or as, a performance obligation is satisfied. As of June 30,Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the threecustomer, and six months ended June 30, 2019,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.
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. 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 recognized a cumulative catch-up adjustment toperforms these services. The Company recognizes revenue of approximately $3.3 million related to these services based on the conclusionprogress toward complete satisfaction of historical rate reconciliations in connectionthe 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 IV Formulation R&D Contract (defined in
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 condensed 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.milestones; as of June 30, 2020, the accounts receivable balance in the condensed balance sheet includes approximately $2.5 million of unbilled receivables. 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
Restricted Cash and Cash Equivalents
On March 13, 2020, the Company repaid its Term Loan and restrictions on certain cash accounts were removed. Prior to the repayment of the Term Loan, there were restrictions on certain cash accounts. Under the terms of the Loan Agreement (as defined below), net cash proceeds from the Company's Priority Review Voucher ("PRV") sale on October 31, 2018 arewere restricted and arewere held in a reserve account.account (as required under the Loan Agreement related to the Term Loan). Cashand cash equivalents held in the reserve account iswere available to pay interest, fees and principal related to the Term Loan. See Note 8 for additional information. Prior to the second quarter of 2019, there was also a reserve account for certain proceeds of the Loan Agreement.Term Loan. This account was also restricted. Amounts in this reserve account were primarily used to pay interest on the Loan Agreement. This reserve account was closed in the second quarter 2019.
The following tables reconcile cash, cash equivalents and restricted cash per the condensed consolidated statements of cash flows to the condensed consolidated balance sheet for each respective period:
As of | ||||||||
June 30, 2020 | December 31, 2019 | |||||||
Cash and cash equivalents | $ | 53,065,833 | $ | 65,249,072 | ||||
Restricted cash-short term | — | 95,737,862 | ||||||
| Cash, cash equivalents and restricted cash | $ | 53,065,833 | $ | 160,986,934 | ||||
June 30, 2019 | December 31, 2018 | |||||||
Cash and cash equivalents | $ | 100,263,915 | $ | 100,652,809 | ||||
Restricted cash-short term | 11,248,400 | 11,452,078 | ||||||
Restricted cash-long term | 64,480,624 | 68,292,023 | ||||||
Cash, cash equivalents and restricted cash | $ | 175,992,939 | $ | 180,396,910 | ||||
| As of | ||||||||
| June 30, 2019 | December 31, 2018 | |||||||
| Cash and cash equivalents | $ | 100,263,915 | $ | 100,652,809 | ||||
| Restricted cash-short term | 11,248,400 | 11,452,078 | ||||||
| Restricted cash-long term | 64,480,624 | 68,292,023 | ||||||
| Cash, cash equivalents and restricted cash | $ | 175,992,939 | $ | 180,396,910 | ||||
| June 30, 2018 | December 31, 2017 | |||||||
| Cash and cash equivalents | $ | 10,581,112 | $ | 19,857,833 | ||||
| Restricted cash-short term | 11,028,824 | 10,701,305 | ||||||
| Restricted cash-long term | 1,701,843 | 6,542,448 | ||||||
| Cash, cash equivalents and restricted cash | $ | 23,311,779 | $ | 37,101,586 | ||||
Repurchase of shares
When shares recognized as equity are repurchased, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The guidance removes Step 2amount of the goodwill impairment test,consideration paid, which requiresincludes directly attributable costs, is recognized as a hypotheticaldeduction from equity. The excess of the purchase price allocation. A goodwill impairment will now be the amount by whichabove par value of repurchased shares that are retired is presented as an increase to accumulated deficit (or a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amountreduction of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determineretained earnings, if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. The revised guidance will be applied prospectively, and is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company believes the adoption of ASU No. 2017-04 will not have a significant impact on its consolidated financial statements.any).
19C BARDA Contract
On September 10, 2018, the Company entered into a contract with the U.S. Biomedical Advanced Research and Development Authority (“BARDA”("BARDA") pursuant to which SIGA agreed to deliver up to 1,488,000 courses of oral TPOXX® to the U.S. Strategic National Stockpile ("Strategic Stockpile"), and to manufacture and deliver to the Strategic Stockpile, or store as vendor-managed inventory, up to 212,000 courses of the intravenous (IV) formulation of TPOXX® ("IV TPOXX®"). Additionally, the contract includes funding from BARDA for advanced development of IV TPOXX®, post-marketing activities for oral and IV TPOXX®, and supportive procurement activities. TheAs of June 30, 2020, the contract with BARDA (as amended, modified, or supplemented from time to time, the “2018"19C BARDA Contract”Contract") contemplates as of June 30, 2019, up to approximately $600.1$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 $23.4$127.1 million of payments are related to exercised options and up to approximately $525.0$423.7 million of payments are currently classifiedspecified as unexercised options. BARDA may choose in its sole discretion when, or whether, to exercise any of the unexercised options.
The base period of performance provides forspecifies 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 advanced development of IV TPOXX®; and payments of approximately $0.6 million for supportive procurement activities. As of June 30, 2019,2020, the Company had received $7.1$11.1 million for the first quarter 2019successful delivery of approximately 23,00035,700 courses of oral TPOXX® to the Strategic Stockpile, and $3.2 million for the manufacture of IV BDS.BDS and $4.7 million for other base period activities. IV BDS is expected to be used for the manufacture of 20,000 courses of IV FDP. The $3.2 million received in 2018 for the manufacture of IV BDS has been recorded as deferred revenue as of June 30, 2020 and December 31, 2018 and June 30, 2019.
The options that have been exercised to date provide for potential payments up to approximately $23.4$127.1 million. There are exercised options for the following activities: payments up to $11.2 million for the procurement of raw materials to be used in the manufacture of at least 363,070 courses of oral TPOXX®, payments up to $101.3 million for the delivery of up to 363,070 courses of oral TPOXX®; and, payments of up to $12.2$14.6 million for funding of post-marketing activities for oral TPOXX®.
Unexercised options provide forspecify potential payments up to approximately $525.0$423.7 million in total (if all such options are exercised). There are options for the following activities: payments of up to $439.0$337.7 million for the delivery of up to approximately 1,452,3001,089,000 courses of oral TPOXX® to the Strategic Stockpile; payments of up to $76.8 million for the manufacture of up to 192,000 courses of IV FDP, of which up to $30.7$30.7 million of payments would be paid upon the manufacture of IV BDS to be used in the manufacture of IV FDP; payments of up to approximately $3.6 millionmillion to fund post-marketing activities for IV TPOXX®; 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 201819C 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 onas to whether to simultaneously exercise IV BDS Options and IV FDP Options, or whether to make independent exercise decisions. If BARDA decides to only exercise IV BDS Options, then the Company would receive payments up to $30.7 million; alternatively, if BARDA decides to exercise both IV BDS Options and IV FDP Options, then the Company would receive payments up to $76.8 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 for 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 three months ended June 30, 2020 and 2019, the Company recognized revenues of $1.4 million and $0.4 million, respectively, on an over time basis. For the six months ended June 30, 2020 and 2019, the Company recognized revenues of $3.5 million and $1.7 million, respectively, on an over time basis. In contrast, revenue recognized for product delivery and therefore at a point in time for the three and six months ended June 30, 2020 was $36.2 million. For the six months ended June 30, 2019, the Company recognized $7.1 million of revenue at a point in time.
2011 BARDA Contract
On May 13, 2011, the Company signed a contract with BARDA pursuant to which BARDA agreed to buy from the Company 1.7 million courses of oral TPOXX®. Additionally, the Company agreed to contribute to BARDA 300,000 courses at no additional cost to BARDA.
The contract with BARDA (as amended, modified, or supplemented from time to time the “2011"2011 BARDA Contract”Contract") includes a base contract, as modified, (“("2011 Base Contract”Contract") as well as options. The 2011 Base Contract provides forspecifies approximately $508.7$508.4 million of payments (including exercised options), of which, as of June 30, 2019,2020, $459.8 million hadhas been received by the Company for the manufacture and delivery of 1.7 million courses of oral TPOXX® and $44.5$45.4 million hadhas been received for certain reimbursements in connection with development and supportive activities. Approximately $4.2$3.2 million remains eligible to be received in the future for reimbursements of development and supportive activities.
For courses of oral TPOXX® that werehave been physically delivered to the Strategic Stockpile under the 2011 BARDA Contract, there are product replacement obligations, including: (i) a product replacement obligation in the event that the final version of oral TPOXX® approved by the FDA was different from any courses of oral TPOXX® that had been delivered to the Strategic Stockpile (the “FDA Approval Replacement Obligation”); (ii) a product replacement obligation, at no cost to BARDA, in the event that oral TPOXX® is recalled or deemed to be recalled for any reason; and (iii) a product replacement obligation in the event that oral TPOXX® does not meet any specified label claims. On July 13, 2018, the FDA approved oral TPOXX® for the treatment of smallpox and there is no difference between the approved product and courses in the Strategic Stockpile. As such, the possibility of the FDA Approval Replacement Obligation resulting in any future replacements of product within the Strategic Stockpile is remote.
The 2011 BARDA Contract includes options. On July 30, 2018, the 2011 BARDA Contract was modified and BARDA exercised its option relating to FDA approval of 84-monththe aforementioned 84-month expiry for oral TPOXX® for which the Company was paid $50.0 million in August 2018. With the option exercise, the 2011 BARDA Contract was modified so that the 2011 Base Contract increased by $50.0 million. Remaining options, if all were exercised by BARDA, would result in aggregate payments to the Company of $72.7 million, including up to $58.3 million of funding for development and supportive activities such as work on a post-exposure prophylaxis ("PEP") indication for TPOXX® and/or $14.4 million of funding for production-related activities related to warm-basewarm base manufacturing. BARDA may choose, in its sole discretion not to exercise any or all of the unexercised options.
The 2011 BARDA Contract expires in September 2020.
Revenues in connection with the 2011 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. Remaining performance obligations under the 2011 BARDA Contract generate revenue over time, using an input method of costs incurred to date relative to the total estimated costs at completion. For the three months ended June 30, 2020 and 2019, the Company recognized revenue of approximately $0.1 million and $0.1 million, respectively, on an over time basis. For the six months ended June 30, 2020 and 2019, the Company recognized revenue of $0.1 million and $0.2 million, respectively on an over time basis. In contrast, there was 0 revenue recognized for product delivery and therefore at a point in time for the three and six months ended June 30, 2020 or 2019.
International Procurement Contracts
On April 3, 2020, the Company announced that the Canadian Department of National Defence (the “CDND”) awarded a contract (the "Canadian Contract") to Meridian Medical Technologies, Inc., a Pfizer Company ("Meridian"), pursuant to which the CDND will purchase up to 15,325 courses of oral TPOXX® over four years for total potential payments of $14.3 million. In the second quarter 2020, CDND purchased 2,500 courses for $2.3 million. The remaining purchases are at the option of the CDND, and are expected to occur after regulatory approval of oral TPOXX® in Canada. Meridian is the CDND's counterparty under the Canadian Contract, and SIGA is responsible for manufacture and delivery of any oral TPOXX® purchased thereunder. The contract award was coordinated between SIGA and Meridian under the international promotion agreement (the "International Promotion Agreement") that was entered into by the parties on June 3, 2019.
Under the terms of the International Promotion Agreement, 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 and South Korea (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 will retain ownership, intellectual property, distribution and supply rights and regulatory responsibilities in connection with TPOXX®, and, in the United States and South Korean markets, will also retain sales and marketing rights with respect to oral TPOXX®. SIGA’s consent shall be required for the entry into any sales arrangement pursuant to the International Promotion Agreement.
The fee Meridian retains pursuant to the International Promotion Agreement will be a specified percentage of the collected proceeds of sales of oral TPOXX® net of certain expenses, for years in which customer invoiced 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 years in which such net invoiced amounts exceed the specified threshold.
Revenue in connection with international procurement contracts for the delivery of product are recognized at a point in time. During the three and six months ended June 30, 2020, the Company recognized $2.3 million of revenue.
The Company has an R&D program for IV TPOXX®. This program is funded by the 201819C BARDA Contract and a development contract with BARDA (“IV Formulation R&D Contract”). The IV Formulation R&D Contract has a period of performance that terminates on December 30, 2020. in February 2024. As of June 30, 2019,2020, the IV Formulation R&D Contract provides for future aggregate research and development funding of approximately $4.4$2.2 million.
Revenues in connection with the IV Formulation R&D Contract are recognized over time, under an input method using costs incurred to date relative to the total estimated costs of completion. For the three months ended June 30, 2020 and 2019, the Company recognized revenue of $0.3 million and $3.4 million, respectively. For the six months ended June 30, 2020 and 2019, the Company recognized revenue of $0.7 million and $5.3 million, respectively, under this contract. During the three months ended June 30, 2019, the Company completed its negotiation with representatives of the U.S. government for a change in the application of certain reimbursement rates in the contract. The change in the application of those reimbursement rates increased the overall transaction price of the IV Formulation R&D Contract but did not change the estimate of costs to complete under the input method calculation. As a result, the Company accounted for this as a change in the transaction price and recognized a cumulative catch-up adjustment to revenue of approximately $3.3 million representing the impact of the change in the application of those reimbursement rates from January 2016 through March 2019.
In July 2019, the Company was awarded a multi-year research contract valued at a total of $19.5 million, with an initial awardavailable funding of $12.4 million, from the United States Department of Defense ("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"). The termIn May 2020, the DoD increased the scope and the contract value to a total of $26 million with current available funding of $23 million. As of June 30, 2020, the PEP Label Expansion R&D Contract provides for future aggregate research and development funding under the initial award is five years.
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, we may not be eligible to receive all available funds.
Inventory includes costs related to the manufacture of TPOXX®. Inventory consisted of the following:
As of | ||||||||
June 30, 2020 | December 31, 2019 | |||||||
| Raw materials | $ | 2,602,672 | $ | - | ||||
Work in-process | 11,315,916 | 8,693,457 | ||||||
Finished goods | 88,398 | 959,398 | ||||||
Inventory | $ | 14,006,986 | $ | 9,652,855 | ||||
| As of | |||||||
| June 30, 2019 | December 31, 2018 | ||||||
| Work in-process | $ | 2,322,266 | $ | 1,950,445 | |||
| Finished goods | 68,221 | 957,765 | |||||
| Inventory | $ | 2,390,487 | $ | 2,908,210 | |||
Property, plant and equipment consisted of the following:
| As of | |||||||
| June 30, 2019 | December 31, 2018 | ||||||
| Leasehold improvements | $ | 2,420,028 | $ | 2,420,028 | |||
| Computer equipment | 581,653 | 618,248 | |||||
| Furniture and fixtures | 377,859 | 377,859 | |||||
| Operating lease right-of-use assets | 2,944,932 | — | |||||
| 6,324,472 | 3,416,135 | ||||||
| Less - accumulated depreciation and amortization | (3,464,607 | ) | (3,244,861 | ) | |||
| Property, plant and equipment, net | $ | 2,859,865 | $ | 171,274 | |||
As of | ||||||||
June 30, 2020 | December 31, 2019 | |||||||
Leasehold improvements | $ | 2,420,028 | $ | 2,420,028 | ||||
Computer equipment | 617,298 | 601,797 | ||||||
Furniture and fixtures | 377,859 | 377,859 | ||||||
Operating lease right-of-use assets | 2,944,932 | 2,944,932 | ||||||
| 6,360,117 | 6,344,616 | |||||||
Less - accumulated depreciation and amortization | (3,993,982 | ) | (3,726,313 | ) | ||||
Property, plant and equipment, net | $ | 2,366,135 | $ | 2,618,303 | ||||
Depreciation and amortization expense on property, plant, and equipment was $127,566$267,669 and $4,139$265,289 for the threesix months ended June 30, 2019 2020 and 2018, respectively, and $265,289 and $33,929 for the six months ended June 30, 2019 and 2018,, respectively.
Accrued expenses and other current liabilities consisted of the following:
As of | ||||||||
June 30, 2020 | December 31, 2019 | |||||||
Compensation | $ | 1,747,880 | $ | 2,966,139 | ||||
Deferred revenue | 10,630,746 | 2,298,341 | ||||||
Interest payable | — | 977,724 | ||||||
Lease liability, current portion | 434,132 | 419,709 | ||||||
Research and development vendor costs | 298,626 | 707,685 | ||||||
Professional fees | 447,451 | 288,707 | ||||||
Vacation | 438,599 | 256,402 | ||||||
Other | 933,936 | 722,204 | ||||||
Accrued expenses and other current liabilities | $ | 14,931,370 | $ | 8,636,911 | ||||
| As of | |||||||
| June 30, 2019 | December 31, 2018 | ||||||
| Bonus | $ | 1,414,720 | $ | 2,600,839 | |||
| Deferred revenue | 5,364,080 | 4,159,946 | |||||
| Interest payable | 965,133 | 35,567 | |||||
| Lease liability, current portion | 405,244 | — | |||||
| Research and development vendor costs | 260,276 | 1,446,410 | |||||
| Professional fees | 535,944 | 242,043 | |||||
| Vacation | 354,206 | 294,794 | |||||
| Other | 752,680 | 869,318 | |||||
| Accrued expenses and other current liabilities | $ | 10,052,283 | $ | 9,648,917 | |||
2016 Warrant
On September 2, 2016, in connection with the entry into the Loan Agreement (see
Note 8 for additional information), the Company issued a warrant (theThe Company accountedaccounts for the Warrant in accordance with the authoritative guidance, which requires that free-standing derivative financial instruments with certain anti-dilution and cash settlement features be classified as assets or liabilities at the time of the transaction, and recorded at their fair value. Any changes in the fair value of the derivative instruments are reported in earnings or loss as long as the derivative contracts are classified as assets or liabilities. Accordingly, theThe Company classified the Warrant as a liability and reports the change in fair value in the statement of operations.
As of June 30, 2019,2020, the fair value of the Warrant was $7.4$7.8 million. The fair value of the liability-classified Warrant was calculated using the following assumptions: risk free interest rate of 1.88%0.41%; no dividend yield; an expected life of 7.176.17 years; and a volatility factor of 65%75%.
On March 13, 2020, the Company voluntarily prepaid the Loan Agreement 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 six months ended June 30, 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. Such $80.0 million had been placed in an escrow account on September 30, 2016 (the(the “Escrow Funding Date”). Prior to the Escrow Release Date (November( November 16, 2016), the Company did not have access to, or any ownership interest in, the escrow account. Until the Escrow Release Date occurred, the Company did not have an obligation to make any payments under the Loan Agreement, no security was granted under the Loan Agreement and no affirmative or negative covenants or events of default were effective under the Loan Agreement. Amounts were held in the escrow account until the satisfaction of certain conditions including the closing of the Rights Offering (see
The Term Loan matureshad a maturity date on the earliest to occur of (i) the four-yearfour-year anniversary of the Escrow Release Date, which will be November 16, 2020, and (ii) the acceleration of certain obligations pursuant to the Loan Agreement. At maturity, $80.0 million of principal will be repaid, and an additional $4.0 million will be paid (see below). Prior to maturity, there are no scheduled principal payments.
Through the three and one-halfone-half year anniversary ( May 17, 2020) of the Escrow Release Date, which will be May 16, 2020, any prepayment of the Term Loan iswas subject to a make-whole provision in which interest payments related to the prepaid amount arewere due (subject to a discount of treasury rate plus 0.50%).
In connection with the Term Loan, the Company has granted the Lender a lien on and security interest in allissuance of the Company’s right, title and interest in substantially all of the Company’s tangible and intangible assets, including all intellectual property.
The carrying value of cash equivalents, restricted cash, 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 a liability, 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 certain common stock warrants on a recurring basis and classifies such liability-classified warrants in Level 3. As described in
Note 7, the fair value of the liability classified warrant wasThere were no transfers between levels of the fair value hierarchy for the six months ended June 30, 2019. In addition, there2020. As of June 30, 2020 and December 31, 2019, the Company had approximately $41.9 million and $56.7 million, respectively, of cash equivalents classified as Level 1 financial instruments. There were no Level 1 or Level 2 financial instruments as of June 30, 2019 and 2020. As of December 31, 2018.
The following table presents changes in the liability-classified warrant measured at fair value using Level 3 inputs:
Fair Value Measurements of Level 3 liability-classified warrant | ||||
Warrant liability at December 31, 2019 | $ | 6,116,882 | ||
Increase in fair value of warrant liability | 1,635,652 | |||
Exercise of warrants | — | |||
Warrant liability at June 30, 2020 | $ | 7,752,534 | ||
| Fair Value Measurements of Level 3 liability-classified warrant | |||
| Warrant liability at December 31, 2018 | $ | 12,380,939 | |
| Decrease in fair value of warrant liability | (3,792,788 | ) | |
| Exercise of warrants | (1,172,801 | ) | |
| Warrant liability at June 30, 2019 | $ | 7,415,350 | |
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 loss per share computation:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| Net loss for basic earnings per share | $ | (3,162,492 | ) | $ | (7,051,264 | ) | $ | (1,532,715 | ) | $ | (18,633,520 | ) | |||
| Less: Change in fair value of warrants | 656,523 | 360,285 | 3,792,788 | — | |||||||||||
| Net loss, adjusted for change in fair value of warrants for diluted earnings per share | $ | (3,819,015 | ) | $ | (7,411,549 | ) | $ | (5,325,503 | ) | $ | (18,633,520 | ) | |||
| Weighted-average shares | 80,986,524 | 79,094,320 | 80,950,124 | 79,066,768 | |||||||||||
| Effect of potential common shares | 1,128,137 | 2,069,066 | 1,179,477 | — | |||||||||||
| Weighted-average shares: diluted | 82,114,661 | 81,163,386 | 82,129,601 | 79,066,768 | |||||||||||
| Loss per share: basic | $ | (0.04 | ) | $ | (0.09 | ) | $ | (0.02 | ) | $ | (0.24 | ) | |||
| Loss per share: diluted | $ | (0.05 | ) | $ | (0.09 | ) | $ | (0.06 | ) | $ | (0.24 | ) | |||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net income/(loss) for basic earnings per share | $ | 20,890,158 | $ | (3,162,492 | ) | $ | 11,992,629 | $ | (1,532,715 | ) | ||||||
Less: Change in fair value of warrants | — | 656,523 | — | 3,792,788 | ||||||||||||
Net income/(loss), adjusted for change in fair value of warrants for diluted earnings per share | $ | 20,890,158 | $ | (3,819,015 | ) | $ | 11,992,629 | $ | (5,325,503 | ) | ||||||
Weighted-average shares | 80,340,695 | 80,986,524 | 80,790,400 | 80,950,124 | ||||||||||||
Effect of potential common shares | 176,168 | 1,128,137 | 169,412 | 1,179,477 | ||||||||||||
Weighted-average shares: diluted | 80,516,863 | 82,114,661 | 80,959,812 | 82,129,601 | ||||||||||||
Income/(loss) per share: basic | $ | 0.26 | $ | (0.04 | ) | $ | 0.15 | $ | (0.02 | ) | ||||||
Income/(loss) per share: diluted | $ | 0.26 | $ | (0.05 | ) | $ | 0.15 | $ | (0.06 | ) | ||||||
For the three and six months ended June 30, 2019, the2020, diluted earnings per share calculation reflects the effect of the assumed exercise ofshares 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 warrants.in-the-money options, unvested restricted stock and unreleased restricted stock units. The dilutive effect of warrantsoptions is calculated based on the average share price for each fiscal period using the treasury stock method.
For the three and six months ended June 30, 2019, the Company incurred losses for the three and six months ended June 30, 2019 and 2018 and as a result, the equity instruments listed below were excluded from the calculation of diluted earnings (loss) per share as the effect of the exercise, conversion or vesting of such instruments would behave been anti-dilutive. The weighted average number of equity instruments excluded consistedconsists of:
| Three months ended June 30, | Six months ended June 30, | ||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||
| Stock Options | 352,015 | 1,038,071 | 364,444 | 1,050,202 | |||||||
| Stock-Settled Stock Appreciation Rights | — | 160,939 | 3,359 | 161,662 | |||||||
| Restricted Stock Units (1) | 527,082 | 1,473,155 | 518,295 | 1,472,581 | |||||||
| Warrant | — | — | — | 2,690,950 | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2019 | 2019 | |||||||
Stock options | 352,015 | 364,444 | ||||||
Stock-settled stock appreciation rights | — | 3,359 | ||||||
Restricted stock units | 527,082 | 518,295 | ||||||
The appreciation of each stock-settled stock appreciation right was capped at a determined maximum value. As a result, the weighted average number shown in the table above for stock-settled stock appreciation rights reflectsreflected the weighted average maximum number of shares that could be issued.
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
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.needs. As of June 30, 2020, the Company had approximately $21.3 million of purchase commitments.
Board of Directors and Outside Counsel
A member of the Company’s Board of Directors is a member ofpartner at the Company’s outside counsel. During the three months ended June 30, 2019 2020 and 2018,2019, the Company incurred expenses of $122,309$184,000 and $112,500,$122,000, respectively, related to services provided by the outside counsel. During the six months ended June 30, 2019 2020 and 2018,2019, the Company incurred expenses of $235,353 and $220,000, respectively,$303,000 and $235,000, respectively, related to services provided by the outside counsel. On June 30, 20192020 the Company’s outstanding payables and accrued expenses included an approximate $83,664$106,000 liability to the outside counsel.
Board of Directors-Consulting Agreement
On October 13, 2018, the Company, entered into a consulting agreement with Dr. Eric A. Rose, a member, and former Executive Chairman, of the Company’s Board of Directors. Under the agreement, the consulting services will include assisting the Company on expanded indications for TPOXX® and other business development opportunities as requested by the Company. The term of the agreement is for two years, with compensation for such services at an annual rate of $200,000. During the three months ended June 30, 2019,2020, the Company incurred $50,000 related to services under this agreement. During the six months ended June 30, 2019,2020, the Company incurred $100,000 related to services under this agreement. As of June 30, 2019,2020, the Company’s outstanding payables and accrued expenses included a $50,000 liability associated with this agreement.
Real Estate Leases
On May 26, 2017, the Company and MacAndrews & Forbes Incorporated (“M&F”) entered into a ten-yearten-year Office Lease agreement (the “New HQ Lease”), pursuant to which the Company agreed to lease 3,200 square feet at 31 East 62
On July 31, 2017, the Company and M&F entered into a Termination of Sublease Agreement (the “Old HQ Sublease Termination Agreement”), pursuant to which the Company and M&F agreed to terminate the sublease dated January 9, 2013 for 6,676 square feet of rental square footage located at 660 Madison Avenue, Suite 1700, New York, New York (such sublease being the “Old HQ Sublease” and the location being the “Old HQ”).
Effectiveness of the Old HQ Sublease Termination Agreement was conditioned upon the commencement of a sublease for the Old HQ between M&F and a new subtenant (the “Replacement M&F Sublease”), which occurred on August 2, 2017. The Old HQ Sublease Termination Agreement obligates the Company to pay, on a monthly basis, an amount equal to the discrepancy (the “Rent Discrepancy”) between the sum of certain operating expenses and taxes (“Additional Rent”) and fixed rent under the overlease between M&F and the landlord at 660 Madison Avenue and the sum of Additional Rent and fixed rent under the Replacement M&F Sublease. Under the Old HQ Sublease Termination Agreement, the Company and M&F release each other from any liability under the Old HQ Sublease.
Under the Old HQ Sublease, the Company was obligated to pay fixed rent of approximately $60,000 per month until August 2018 and approximately $63,400 per month thereafter until the Old HQ Sublease expiration date of August 31, 2020. Additionally, the Company was obligated to pay certain operating expenses and taxes ("Additional Rent"), such Additional Rent being specified in the overlease between M&F and the landlord at 660 Madison Avenue (the "Old HQ Overlease").
Under the Replacement M&F Sublease, the subtenant’s rental obligations were excused for the firsttwo (2) (2) months of the lease term (“Rent Concession Period”). Thereafter, the subtenant was obligated to pay fixed rent of $36,996 per month for the first
For the time period between August 2, 2017 and August 31, 2020 (the(the expiration date of the Old HQ Sublease), the Company estimates that it will pay a total of approximately $0.9 million combined in fixed rent and additional amounts payable under the New HQ Lease and a total of approximately $1.1 million in Rent Discrepancy under the Old HQ Sublease Termination Agreement, for a cumulative total of $2.0 million. In contrast, fixed rent and estimated Additional Rent under the Old HQ Sublease, for the aforementioned time period, would have been a total of approximately $2.4 million if each of the New HQ Lease, Replacement M&F Sublease and Old HQ Sublease Termination Agreement had not been entered into by each of the parties thereto. Because amounts such as operating expenses and taxes may vary, the foregoing totals can only be estimated at this time and are subject to change.
As a result of the above-mentioned transactions, the Company discontinued usage of Old HQ in the third quarter of 2017. As such, during the year ended December 31, 2017 the Company recorded a loss of approximately $1.1 million in accordance with Accounting Standards Codification (
| Lease Termination liability | |||
| Balance at December 31, 2018 | $ | 509,937 | |
| Charges (included in selling, general and administrative expenses) | 19,208 | ||
| Cash payments, net of sublease income | (175,749 | ) | |
| Balance at June 30, 2019 | $ | 353,396 | |
The Company’s provision for income taxes consists of federal and state taxes, as applicable, in amounts necessary to align the Company’s year-to-date tax provision with the effective rate that it expects to achieve for the full year. Each quarter the Company updates its estimate of the annual effective tax rate and records cumulative adjustments as necessary.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period which the new legislation is enacted. The CARES Act made various tax law changes including among other things (i) increased the limitation under IRC Section 163(j) for 2019 and 2020 to permit additional expensing of interest (ii) enacted a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k) and (iii) made modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018,2019, and 2020 to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes (iv) enhanced recoverability of AMT tax credit carryforwards. As a result of the CARES Act, the Company recorded a discrete income tax benefit of approximately $19,000 related to a reduction in 2019 state and local taxes as a result of increased deductions and recorded a balance sheet reclassification to reflect an income tax receivable of $0.7 million related to the accelerated recoverability of AMT credit carryforwards with a corresponding reduction to the Company’s deferred tax assets.
For the three months ended June 30, 2020 and 2019, we incurred a pre-tax income/(loss) of $27.2 million and ($4.3) million, respectively, and a corresponding income tax (provision)/benefit of ($6.3) million and $1.1 million, respectively.
For the six months ended June 30, 2020 and 2019, we incurred pre-tax income/(loss) of $15.6 million and ($2.1) million, respectively, and a corresponding income tax (provision)/benefit of ($3.6)million and $0.6 million, respectively.
The effective tax rate for the three months ended June 30, 2020 was 23.2% compared to 26.2% in the three months ended June 30, 2019 was 26.15% compared to (0.04)% in the comparable prior period.. The effective tax rate for the three months ended June 30, 2020 and 2019 differs from the U.S. statutory rate of 21% primarily as a result of non-deductible executive compensation under IRC Section 162(m)162(m) and a non-taxable adjustment for the fair market value of the Warrant.
The effective tax rate for the six months ended June 30, 20192020 was 28.59%23.2% compared to 0%28.6% in the comparable prior period. The effective tax rate for the six months ended June 30, 2020 and 2019 differs from the U.S. statutory rate of 21% primarily as a result of non-deductible executive compensation under IRC Section 162(m)162(m) and a non-taxable adjustment for the fair market value of the Warrant.
The tables below present changes in stockholder'sstockholders' equity for the three and six months ended June 30, 20192020 and 2018.
Common Stock | Additional Paid-in | Accumulated | Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
Shares | Amount | Capital | Deficit | Income | Equity | |||||||||||||||||||
Balances at March 31, 2020 | 81,047,424 | $ | 8,105 | $ | 221,057,307 | $ | (132,923,290 | ) | $ | — | $ | 88,142,122 | ||||||||||||
| Net income | — | — | 20,890,158 | — | 20,890,158 | |||||||||||||||||||
Repurchase of common stock | (2,548,681 | ) | (255 | ) | — | (15,222,540 | ) | — | (15,222,795 | ) | ||||||||||||||
Payment of common stock tendered for employee stock-based compensation tax obligations | — | — | — | — | — | — | ||||||||||||||||||
| Issuance of common stock upon vesting of RSUs | 120,000 | 12 | (12 | ) | — | — | — | |||||||||||||||||
Stock-based compensation | — | — | 323,533 | — | — | 323,533 | ||||||||||||||||||
Balances at June 30, 2020 | 78,618,743 | $ | 7,862 | $ | 221,380,828 | $ | (127,255,672 | ) | $ | — | $ | 94,133,018 | ||||||||||||
Common Stock | Additional Paid-in | Accumulated | Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
Shares | Amount | Capital | Deficit | Income | Equity | |||||||||||||||||||
Balances at December 31, 2019 | 81,269,868 | $ | 8,127 | $ | 220,808,037 | $ | (123,032,408 | ) | $ | — | $ | 97,783,756 | ||||||||||||
Net income | — | — | — | 11,992,629 | — | 11,992,629 | ||||||||||||||||||
Repurchase of common stock | (2,773,775 | ) | (277 | ) | — | (16,215,893 | ) | — | (16,216,170 | ) | ||||||||||||||
Payment of common stock tendered for employee stock-based compensation tax obligations | (1,892 | ) | — | (9,746 | ) | — | — | (9,746 | ) | |||||||||||||||
Issuance of common stock upon vesting of RSUs | 124,542 | 12 | (12 | ) | — | — | - | |||||||||||||||||
Stock-based compensation | — | — | 582,549 | — | — | 582,549 | ||||||||||||||||||
Balances at June 30, 2020 | 78,618,743 | $ | 7,862 | $ | 221,380,828 | $ | (127,255,672 | ) | $ | — | $ | 94,133,018 | ||||||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Other Comprehensive Income | Total Stockholders' Equity | ||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||
| Balances at March 31, 2019 | 80,941,524 | $ | 8,094 | $ | 220,222,959 | $ | (114,161,484 | ) | $ | — | $ | 106,069,569 | ||||||||||
| Net loss | — | — | — | (3,162,492 | ) | — | (3,162,492 | ) | ||||||||||||||
| Issuance of common stock upon vesting of RSUs | 105,000 | 11 | (11 | ) | — | — | — | |||||||||||||||
| Stock-based compensation | — | — | 547,390 | 547,390 | ||||||||||||||||||
| Balances at June 30, 2019 | 81,046,524 | $ | 8,105 | $ | 220,770,338 | $ | (117,323,976 | ) | $ | — | $ | 103,454,467 | ||||||||||
Common Stock | Additional Paid-in | Accumulated | Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
Shares | Amount | Capital | Deficit | Income | Equity | |||||||||||||||||||
Balances at March 31, 2019 | 80,941,524 | $ | 8,094 | $ | 220,222,959 | $ | (114,161,484 | ) | $ | — | $ | 106,069,569 | ||||||||||||
Net loss | — | — | — | (3,162,492 | ) | — | (3,162,492 | ) | ||||||||||||||||
Issuance of common stock upon vesting of RSUs | 105,000 | 11 | (11 | ) | — | — | — | |||||||||||||||||
Stock-based compensation | — | — | 547,390 | — | — | 547,390 | ||||||||||||||||||
Balances at June 30, 2019 | $ | 81,046,524 | $ | 8,105 | $ | 220,770,338 | $ | (117,323,976 | ) | $ | — | $ | 103,454,467 | |||||||||||
Common Stock | Additional Paid-in | Accumulated | Other Comprehensive | Total Stockholders' | ||||||||||||||||||||
Shares | Amount | Capital | Deficit | Income | Deficiency | |||||||||||||||||||
Balances at December 31, 2018 | 80,763,350 | $ | 8,076 | $ | 218,697,872 | $ | (115,791,261 | ) | $ | — | $ | 102,914,687 | ||||||||||||
Net loss | — | — | — | (1,532,715 | ) | — | (1,532,715 | ) | ||||||||||||||||
Issuance of common stock upon exercise of stock options | 9,769 | 1 | (1 | ) | — | — | — | |||||||||||||||||
Issuance of common stock upon vesting of RSUs and exercise of stock-settled appreciation rights | 121,771 | 13 | (13 | ) | — | — | — | |||||||||||||||||
Issuance of common stock upon exercise of warrants | 159,782 | 16 | 1,172,785 | — | — | 1,172,801 | ||||||||||||||||||
Payment of common stock tendered for employee stock-based compensation tax obligations | (8,148 | ) | (1 | ) | (56,589 | ) | — | — | (56,590 | ) | ||||||||||||||
Stock-based compensation | — | — | 956,284 | — | — | 956,284 | ||||||||||||||||||
Balances at June 30, 2019 | 81,046,524 | $ | 8,105 | $ | 220,770,338 | $ | (117,323,976 | ) | $ | — | $ | 103,454,467 | ||||||||||||
On March 5, 2020, the Company announced that the board of directors had 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. The timing and actual number of shares repurchased will depend on a variety of factors, including: 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. Repurchases under the program 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 of the Securities Exchange Act of 1934, as amended, or otherwise. During the three and six months ended June 30, 2020, the Company repurchased 2.5 million, and 2.8 million shares of common stock, respectively, for approximately $15.2 million, and $16.2 million, respectively.
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Other Comprehensive Income | Total Stockholders' Equity | ||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||
| Balances at December 31, 2018 | 80,763,350 | $ | 8,076 | $ | 218,697,872 | $ | (115,791,261 | ) | $ | — | $ | 102,914,687 | ||||||||||
| Net loss | — | — | — | (1,532,715 | ) | — | (1,532,715 | ) | ||||||||||||||
| Issuance of common stock upon exercise of stock options | 9,769 | 1 | (1 | ) | — | — | — | |||||||||||||||
| Issuance of common stock upon vesting of RSUs and exercise of stock-settled appreciation rights | 121,771 | 13 | (13 | ) | — | — | — | |||||||||||||||
| Issuance of common stock upon exercise of warrants | 159,782 | 16 | 1,172,785 | — | — | 1,172,801 | ||||||||||||||||
| Payment of common stock tendered for employee stock-based compensation tax obligations | (8,148 | ) | (1 | ) | (56,589 | ) | — | — | (56,590 | ) | ||||||||||||
| Stock-based compensation | — | — | 956,284 | — | — | 956,284 | ||||||||||||||||
| Balances at June 30, 2019 | 81,046,524 | $ | 8,105 | $ | 220,770,338 | $ | (117,323,976 | ) | $ | — | $ | 103,454,467 | ||||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Other Comprehensive Income | Total Stockholders' Deficiency | ||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||
| Balances at March 31, 2018 | 79,039,000 | $ | 7,904 | $ | 214,556,941 | $ | (549,181,345 | ) | $ | — | $ | (334,616,500 | ) | |||||||||
| Net loss | — | — | — | (7,051,264 | ) | — | (7,051,264 | ) | ||||||||||||||
| Issuance of common stock upon exercise of stock options | 13,037 | 1 | (1 | ) | — | — | — | |||||||||||||||
| Issuance of common stock upon vesting of RSUs and exercise of stock-settled appreciation rights | 109,795 | 11 | (11 | ) | — | — | — | |||||||||||||||
| Payment of common stock tendered for employee stock-based compensation tax obligations | (1,774 | ) | — | (12,328 | ) | — | — | (12,328 | ) | |||||||||||||
| Stock-based compensation | — | — | 362,361 | — | — | 362,361 | ||||||||||||||||
| Balances at June 30, 2018 | 79,160,058 | $ | 7,916 | $ | 214,906,962 | $ | (556,232,609 | ) | $ | — | $ | (341,317,731 | ) | |||||||||
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Other Comprehensive Income | Total Stockholders' Deficiency | ||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||
| Balances at December 31, 2017 | 79,039,000 | $ | 7,904 | $ | 214,229,581 | $ | (537,375,776 | ) | $ | — | $ | (323,138,291 | ) | |||||||||
| Net loss | — | — | — | (18,633,520 | ) | — | (18,633,520 | ) | ||||||||||||||
| Issuance of common stock upon exercise of stock options | 13,037 | 1 | (1 | ) | — | — | — | |||||||||||||||
| Issuance of common stock upon vesting of RSUs and exercise of stock-settled appreciation rights | 109,795 | 11 | (11 | ) | — | — | — | |||||||||||||||
| Payment of common stock tendered for employee stock-based compensation tax obligations | (1,774 | ) | — | (12,328 | ) | — | — | (12,328 | ) | |||||||||||||
| Cumulative effect of accounting change | — | — | — | (223,313 | ) | — | (223,313 | ) | ||||||||||||||
| Stock-based compensation | — | — | 689,721 | — | — | 689,721 | ||||||||||||||||
| Balances at June 30, 2018 | 79,160,058 | $ | 7,916 | $ | 214,906,962 | $ | (556,232,609 | ) | $ | — | $ | (341,317,731 | ) | |||||||||
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 has 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.
On May 26, 2017 the Company and M&F entered into a ten-yearten-year office lease agreement (the “New HQ Lease”), pursuant to which the Company agreed to lease 3,200 square feet in 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 $0.1 million and $0.1 million for the three months ended June 30, 2019 2020 and 2018, respectively, and2019, respectively. Operating lease costs totaled $0.3 million and $0.3 million for the six months ended June 30, 2019 2020 and 2018,2019, respectively. Cash paid for amounts included in the measurement of lease liabilities from operating cash flows werewas $0.1 million and $0.1 million for the three months ended June 30, 2019 2020 and 2018, respectively, and2019, respectively. Cash paid for amounts included in the measurement of lease liabilities from operating cash flows was $0.3 million and $0.3 million for the six months ended June 30, 2019 2020 and 2018,2019, respectively. As of June 30, 2019,2020, the weighted-average remaining lease term of the Company’s operating leases was 6.625.95 years while the weighted-average discount rate was 4.53%.
Future undiscounted cash flows under operating leases as of June 30, 20192020 are expected to be as follows:
| 2019 | $ | 292,613 | ||
| 2020 | 591,108 | |||
| 2021 | 600,362 | |||
| 2022 | 368,467 | |||
| 2023 | 402,078 | |||
| Thereafter | 1,387,139 | |||
| Total undiscounted cash flows under leases | 3,641,767 | |||
| Less: Imputed interest | (551,116 | ) | ||
| Present value of lease liabilities | $ | 3,090,651 | ||
2020 | $ | 247,288 | ||
2021 | 600,362 | |||
2022 | 368,467 | |||
2023 | 402,078 | |||
2024 | 404,258 | |||
Thereafter | 982,880 | |||
Total undiscounted cash flows under leases | 3,005,333 | |||
Less: Imputed interest | (418,153 | ) | ||
Present value of lease liabilities | $ | 2,587,180 |
As of June 30, 2019,2020, approximately
| 2019 | $ | 541,376 | ||
| 2020 | 304,000 | |||
| 2021 | 304,000 | |||
| 2022 | 320,774 | |||
| 2023 | 352,000 | |||
| Thereafter | 1,197,778 | |||
| Total | $ | 3,019,928 | ||
The following discussion should be read in conjunction with our condensed consolidated financial statements and notes to those statements and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, the following discussion and other parts of this Quarterly Report contain forward-looking information that involves risks and uncertainties
.Overview
We are a commercial-stage pharmaceutical company focused on the health security market. Health security comprises countermeasures for biological, chemical, radiological and nuclear attacks (biodefense market), vaccines and therapies for emerging infectious diseases, and health preparedness. Our lead product is an oral formulation of TPOXX® (“oral TPOXX®”), an antiviral drug for the treatment of human smallpox disease caused by variola virus.
COVID-19 Pandemic
The COVID-19 pandemic has caused significant societal and economic disruption. Such disruption, and the associated risks and costs, are expected to continue for an indeterminate period of time. Given the uncertain future course of the COVID-19 pandemic, and the uncertain scale and scope of its future impact, the Company is continually reviewing business and financial risks related to the pandemic and seeking coordination with its government partners with respect to the performance of current and future government contracts. Additionally, the Company is coordinating with service providers and vendors, in particular CMOs that constitute our supply chain, to review actions and risks caused by the COVID-19 pandemic.
As of the filing date of this document, the Company has not identified or been notified by government customers of impediments to the continued full performance of their government contracts. Additionally, the Company’s supply chain for the manufacture of TPOXX® has remained operational without material disruption to TPOXX®-related manufacture, and in the ordinary course of operations, the supply chain has secured sufficient raw materials to support the ultimate manufacture and product delivery of at least 363,000 courses of oral TPOXX® (number of courses specified in April 2020 option exercise under the 19C BARDA Contract). With regard to day-to-day operations, the COVID-19 pandemic has slowed the daily pace of execution of government contracts, as government staff overseeing SIGA contracts has been involved directly or indirectly in the federal government’s response to the pandemic, which has diverted government staff time normally directed toward contract matters involving SIGA. With respect to research and development activities, the Company does expect delays in connection with certain research and development activities, such as those that involve clinical trials. The Company does not currently expect any pandemic-related delays in research and development to have a material adverse impact on the financial condition or annual financial results of the Company, or its long-term performance, but cannot give assurances as to the extent of the impact at this time.
Overall, the COVID-19 pandemic has not adversely affected the liquidity position of the Company, nor is it currently expected to have a material adverse effect on the financial condition or financial results of the Company. The pandemic has resulted in almost all of our employees working from home; however, the shift in location for employees has not had a material adverse impact on the day-to-day operations of the Company. If the negative effect of the COVID-19 pandemic is prolonged, there could be risks to our business and cash flows.
BARDA Contracts-TPOXX®
19C BARDA Contract
Research Agreements and Grants
The Company has an R&D program for IV TPOXX®. This program is funded by the 201819C BARDA Contract and a separate development contract with BARDA (“("IV Formulation R&D Contract”Contract"). The IV Formulation R&D Contract has a period of performance that terminates on December 30, 2020.in February 2024. As of June 30, 2019,2020, the IV Formulation R&D Contract provides for future aggregate research and development funding of approximately $4.4$2.2 million.
In July 2019, the Company was awarded a multi-year research contract valued at a total of $19.5 million, with an initial awardavailable funding of $12.4 million, from the United States Department of Defense ("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 May 2020, the DoD increased the scope and the contract value to a total of $26 million with current available funding of $23 million. As of June 30, 2020, the PEP Label Expansion R&D Contract provides for future aggregate research and development funding under the award, as modified, of up to approximately $22.6 million. The termperiod of the initial award is five years.
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, we may not be eligible to receive all available funds.
International Promotion of Oral TPOXX®
On April 3, 2020, the Company announced that the Canadian Department of National Defence (the “CDND”) awarded a contract (the "Canadian Contract") to Meridian Medical Technologies, Inc., a Pfizer Company ("Meridian"), pursuant to which the CDND will purchase up to 15,325 courses of oral TPOXX® over four years for total potential payments of $14.3 million. In the second quarter 2020, CDND purchased 2,500 courses for $2.3 million. The remaining purchases are at the option of the CDND and are expected to occur after regulatory approval of oral TPOXX® in Canada. Meridian is the CDND's counterparty under the Canadian Contract, and SIGA is responsible for manufacture and delivery of any oral TPOXX® purchased thereunder. The contract award was coordinated between SIGA and Meridian under the international promotion agreement (the "International Promotion Agreement") that was entered into by the parties on June 3, 2019.
Under the terms of the International Promotion Agreement, 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 and South Korea (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 will retain ownership, intellectual property, distribution and supply rights and regulatory responsibilities in connection with TPOXX®, and, in the United States and South Korean markets, will also retain sales and marketing rights with respect to oral TPOXX®. SIGA’s consent shall be required for the entry into any sales arrangement pursuant to the International Promotion Agreement.
The fee Meridian retains pursuant to the International Promotion Agreement will be a specified percentage of the collected proceeds of sales of oral TPOXX® net of certain expenses, for years in which customer invoiced 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 years in which such net invoiced amounts exceed the specified threshold.
The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the results we report in our condensed 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. Information regarding our critical accounting policies and estimates appearappears in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 20182019 as filed on March 5, 2019.2020. Our most critical accounting estimates include revenue recognition, the valuation of stock-based awards including options and warrants granted or issued by the Company and income taxes.
Results of Operations
Three Months Ended June 30, 2020 and 2019 Compared to Three Months Ended June 30, 2018
For the three months ended June 30, 2019 and 2018, there were no recorded2020, revenues from product sales and supportive services.
Revenues from research and development activities for the three months ended June 30, 2020 and 2019, and 2018, were $3.9$1.7 million and $2.7$3.9 million, respectively. The increasedecrease in revenue of approximately $1.2$2.2 million, or 47%56%, primarily reflects the net effect of:impact of a cumulative catch-up adjustment recognized during the conclusionthree months ended June 30, 2019. During the three months ended June 30, 2019, the Company completed its negotiation with representatives of historical rate reconciliations under the IV Formulation R&D Contract; changes to the projected amount of contract funding expected to be availableU.S. government for future activities under the IV Formulation R&D Contract; and a decrease in activities performed in the quarter under the IV Formulation R&D Contract. The conclusion of historical rate reconciliations and changes to expectations for available funding, in combination, increased revenues approximately $3.3 million. This increase was partially offset by a decrease in research activities that led to a decline in revenues of approximately $1.9 million. The conclusion of historical rate reconciliations, and the change in the projected amountapplication of contract funding undercertain reimbursement rates in the contract. The change in the application of those reimbursement rates increased the overall transaction price of the IV Formulation R&D Contract impacts
Cost of sales and supportive services for the three months ended June 30, 2020 were $4.8 million and there were no such expenses for the three months ended June 30, 2019. Such costs in 2020 were associated with Customers
Selling, Generalgeneral and Administrativeadministrative (“SG&A”) expenses for the three months ended June 30, 2020 and 2019 were $3.9 million and 2018, were $3.4 million, and $2.9 million, respectively, reflecting anrespectively. The increase of approximately $0.5 million or 17.8%. The increase is14% primarily attributablereflects the commission expense associated with the sale of oral TPOXX® to an approximate $0.2 million increasethe CDND in compensation expense and an approximate $0.3 million increase in consulting costs.
Research and Developmentdevelopment (“R&D”) expenses for the three months ended June 30, 2020 and 2019 and 2018 were $2.0$2.7 million and $3.3$2.0 million, respectively, reflecting a decreasean increase of approximately $1.3$0.7 million, or 38%33%. The decreaseincrease is primarily attributable to a $1.6 million decreasean increase in direct vendor-related expenses supporting the development of oral TPOXX® and IV TPOXX®, partially offset by an increase in other R&D-related costs..
Patent expenses were $0.2 million in each case,and $0.2 million for the three months ended June 30, 2020 and 2019, and 2018.respectively. These expenses reflect our ongoing efforts to protect our lead drug candidates in various geographic territories.
Interest expense for the three months ended June 30, 2019 and 2018 was $4.0 million and $3.8 million, respectively.million. The $4.0 million of interest for the three months ended June 30, 2019 includes $1.1 million of accretion of unamortized costs and fees related to the Term Loan balance. The increase inThere was no interest expense is attributable to LIBOR rates being higher this quarter versus LIBOR rates inrecognized for the same period last year.
Changes in the fair value of the liability-classified warrant to acquire common stock were recorded within the income statement. For the three months ended June 30, 2020, we recorded a loss of approximately $1.6 million, reflecting an increase in the fair value of the liability-classified warrant primarily due to the increase in our stock price. For the three months ended June 30, 2019, and 2018, we recorded a gain of approximately $0.7 million and $0.4 million, respectively, reflecting a decrease in the fair value of the liability-classified warrant primarily due to the decrease in our stock price.
There was minimal other income for the three months ended June 30, 2020. Other income of $0.7 million for the three months ended June 30, 2019 reflects interest income on the Company's cash balanceand cash equivalent balances held in restricted and unrestricted accounts.
For the three months ended June 30, 20192020 and 2018,2019, we incurred pre-tax lossesincome/(loss) of $4.3$27.2 million and $7.0($4.3) million, respectively, and a corresponding income tax benefit/(expense)(provision) benefit of $1.1($6.3) million and $(2,849),$1.1 million, respectively. The effective tax rate during the three months ended June 30, 2020 and 2019 was 23.2% and 2018 was 26.15% and (0.04)%26.2%, respectively. Our effective tax rate for the periodperiods ended June 30, 2020 and 2019 differs from the statutory rate primarily as a result of non-deductible executive compensation under IRC Section 162(m) and a non-taxable adjustment for the fair market value of the Warrant. Our effective tax rate for the period ended June 30, 2018 differs from the statutory rate as no income tax benefit was recorded for operating losses due to the Company’s assessment regarding realizability of its deferred tax assets.
Six Months Ended June 30, 2020 and 2019 Compared to Six Months Ended
For the six months ended June 30, 2018
Revenues from research and development activities for the six months ended June 30, 2020 and 2019, and 2018, were $7.2$4.2 million and $4.4$7.2 million, respectively. The increasenet decrease in revenue of approximately $2.8$3.0 million, or 64%,41% primarily reflects the conclusionimpact of historical rate reconciliations undera cumulative catch-up adjustment recognized during the six months ended June 30, 2019. During the six months ended June 30, 2019, the Company completed its negotiation with representatives of the U.S. government for a change in the application of certain reimbursement rates in the contract. The change in the application of those reimbursement rates increased the overall transaction price of the IV Formulation R&D Contract andbut did not change the estimate of costs to complete under the input method calculation. As a result, the Company accounted for this as a change in the projected amount of contract funding expected to be available for future activities under the IV Formulation R&D Contract. Such events impacted the progress-towards-completion calculation as required under ASC 606,transaction price and resulted inrecognized a cumulative catch-up adjustment to revenue of approximately $3.3 million.
Cost of sales and supportive services for the six months ended June 30, 2020 and 2019, were $4.9 million and $0.9 million; in 2018, there were no recorded cost of sales and supportive services.million, respectively. Such costs in 2020 and 2019 arewere associated with the delivery and acceptance of approximately 119,000 and 23,000 courses of oral TPOXX® during the six months ended June 30, 2019.
Selling, Generalgeneral and Administrativeadministrative (“SG&A”) expenses for the six months ended June 30, 2020 and 2019, were $7.0 million and 2018, were $6.6 million, and $5.9 million, respectively, reflecting anrespectively. The increase of approximately $0.7$0.4 million or 10%. The increase is7% primarily attributablereflects the commission expense associated with the sale of oral TPOXX® to an approximate $0.2 million increasethe CDND in compensation expense and an approximate $0.5 million increase in consulting costs and professional service fees, partially offset by the non-recurrence of Nasdaq application fees that were incurred in the second quarter of 2018.
Research and Developmentdevelopment (“R&D”) expenses for the six months ended June 30, 2020 and 2019 and 2018 were $6.0$5.9 million and $6.3$6.0 million, respectively, reflecting a decrease of approximately $0.3$0.1 million, or 5%3%. The net decrease is primarily attributable to a $0.9 million decrease in direct vendor-related expenses supporting the development of IV and oral TPOXX® and partially offset by an increase in direct vendor-related expenses supporting the development of $0.4 million in compensation expense.oral TPOXX®.
Patent expenses were $0.4 million in each case,and $0.4 million, respectively, for the six months ended June 30, 20192020 and 2018.2019. These expenses reflect our ongoing efforts to protect our lead drug candidates in various geographic territories.
In connection with the voluntary repayment of the Term Loan on March 13, 2020, we recognized a loss on the extinguishment of the Term Loan of approximately $5.0 million for the six months ended June 30, 2020.
Interest expense for the six months ended June 30, 2020 and 2019 was $3.0 million and 2018 was $7.9 million, respectively. The $3.0 million of interest for the six months ended June 30, 2020 includes $0.9 million of accretion of unamortized costs and $7.6 million, respectively.fees (prior to repayment of the Term Loan). The $7.9 million of interest for the six months ended June 30, 2019 includes $2.2 million of accretion of unamortized costs and fees related to the Term Loan balance. The increase in interest expense for the six months ended June 30, 2019 is attributable to LIBOR rates being higher this period versus LIBOR rates in the same period last year.
Changes in the fair value of the liability-classified warrant to acquire common stock were recorded within the income statement. For the six months ended June 30, 2020, we recorded a loss of approximately $1.6 million, reflecting an increase in fair value of the liability-classified warrant primarily due to the increase in our stock price. For the six months ended June 30, 2019, we recorded a gain of approximately $3.8 million reflecting a decrease in the fair value of the liability-classified warrant primarily due to the decrease in our stock price. For the six months ended June 30, 2018, we recorded a loss of approximately $2.9 million reflecting an increase in fair value of the liability-classified warrant primarily due to the increase in our stock price.
Other income of $0.4 million and $1.5 million for the six months ended June 30, 2020 and 2019, respectively reflects interest income on the Company's cash balanceand cash equivalent balances held in restricted and unrestricted accounts.
For the six months ended June 30, 20192020 and 2018,2019, we incurred pre-tax lossesincome/(loss) of $2.1$15.6 million and $18.6($2.1) million, respectively, and a corresponding income tax benefit/(loss)(provision) benefit of $0.6($3.6) million and ($497),$0.6 million, respectively. The effective tax rate during the six months ended June 30, 2020 and 2019 was 23.2% and 2018 was 28.59% and 0%28.6%, respectively. Our effective tax rate for the periodperiods ended June 30, 2020 and 2019 differs from the statutory rate primarily as a result of non-deductible executive compensation under IRC Section 162(m) and a non-taxable adjustment for the fair market value of the Warrant. Our effective tax rate for the period ended June 30, 2018 differs from the statutory rate as no income tax benefit was recorded for operating losses due to the Company’s assessment regarding realizability of its deferred tax assets.
Liquidity and Capital Resources
As of June 30, 2019,2020, we had $100.3$53.1 million in cash and cash equivalents compared with $100.7$65.2 million at December 31, 2018.2019. Additionally, in comparison to $95.7 million of restricted cash at December 31, 2019, there was no restricted cash as of June 30, 2019, we had $75.7 million of restricted cash compared with $79.7 million at December 31, 2018.2020 given that the Term Loan was repaid in March 2020. The restricted cash iswas available to pay interest, fees and principal related to the Term Loan.
Operating Activities
We prepare our condensed consolidated statement of cash flows using the indirect method. Under this method, we reconcile net income (loss) to cash flows from operating activities by adjusting net (loss) income (loss) for those items that impact net income (loss) 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, loss on the extinguishment of the Term Loan, deferred income taxes, non-cash interest expense and changes in the fair value of our warrant liability;liability, gains and losses from various transactions and changes in the condensed consolidated balance sheet for working capital from the beginning to the end of the period.
Net cash used in operationsoperating activities for the six months ended June 30, 2020 and 2019 was $5.8 million and 2018 was $4.3 million, and $13.7 million, respectively. For the six months ended June 30, 2020, net cash usage was primarily related to customary operating activities. For the six months ended June 30, 2019, we incurred $5.7 million of cash interest expense on the Term Loan and used approximately $1.8 million in support of ordinary course working capital (accounts receivable, accounts payable, prepaids, among other items). Additionally, cash was used for customary operating activities. These cash uses were partially offset by the receipt of approximately $7.1 million from BARDA for product delivery.
Investing Activities
For the six months ended June 30, 2018, cash usage was primarily due to $7.3 million of cash operating expenses (net loss adjusted for non-cash items noted in the cash flow statement such as non-cash interest expense2020 and the change in the fair value of our warrant) and $5.4 million of cash interest expense on the Term Loan.
Financing Activities
Net cash used in financing activities for the six months ended June 30, 2020 was $102.1 million, which was attributable to our voluntary prepayment of the Term Loan, of which approximately $85.9 million is recorded as a financing activity, and our repurchase of 2.8 million shares of common stock for approximately $16.2 million. Net cash used by financing activities for the six months ended June 30, 2019 and 2018 was $56,590, and $12,328, respectively, which wasis attributable to the payment of tax obligations for employee common stock tendered.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
Recently Issued Accounting Standards
For discussion regarding the impact of accounting standards that were recently issued but not yet effective, on the Company's condensed consolidated financial statements, as well as those standards that were adopted, see
Note 2, Summary of Significant Accounting Policies, of Notes to Condensed Consolidated Financial Statements.Safe Harbor Statement
Certain statements in this Quarterly Report on Form 10-Q, 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, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to the progress of SIGA’s development programs and timelines for bringing products to market, delivering products to the U.SU.S. Strategic National Stockpile and the enforceability of the 2011 BARDA Contract and the 201819C BARDA Contract (each as defined previously, and collectively, the "BARDA Contracts") with the BARDA. 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 Contracts, 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 Contracts on schedule or in accordance with contractual terms, (iii) the risk that the BARDA Contracts 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 successfully market TPOXX® internationally, (v) the risk that potential products, including the IV formulation of TPOXX®, or 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 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, (xi)(xii) the effect of federal, state, and foreign regulation, including drug regulation and international trade regulation, on SIGA’s businesses, (xiii) the risk that the COVID-19 pandemic could impact SIGA’s operations by disrupting SIGA’s supply chain for the manufacture of TPOXX®, causing delays in SIGA’s research and (xii)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 and (xiv) the risk that the U.S. government’s responses (including inaction) to the national or global economic situation or infectious disease such as COVID-19 may affect SIGA’s business adversely, as well as the risks and uncertainties included in Item 1A “Risk Factors” on Form 10-K for the fiscal year ended December 31, 2018.2019. 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.
More detailed information about SIGA and risk factors that may affect the realization of forward-looking statements, including the forward-looking statements in the presentation, is set forth in SIGA's filings with the Securities and Exchange Commission, including this Quarterly Report on Form 10-Q and SIGA's Annual Report on Form 10-K for the fiscal year ended December 31, 2018,2019, and in other documents that SIGA has filed with the SEC. SIGA urges investors and security holders to read those documents free of charge at the SEC's Web site at
Our investment portfolio includes cash and cash equivalents. Our main investment objectives are 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. Additionally, we are also subject to the risk of rising LIBOR rates; whenever the minimum rates for one-month, two-month, three-month and six-month LIBOR rates (“minimum LIBOR rate”) are above 1%, then the interest rate charged on the Term Loan could increase materially depending on the magnitude of any increase in LIBOR rates. For every increase of 0.5% in the minimum LIBOR rate (e.g., an increase from a LIBOR rate of 2.50% to 3.00%), annual interest payments on the Term Loan would increase by approximately $0.4 million. Furthermore, we are
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 June 30, 2019.2020. The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. 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 June 30, 20192020 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 June 30, 20192020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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, condensed consolidated financial position, or 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.
Our results of operations and financial condition are subject to numerous risks and uncertainties described in our 20182019 Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
ISSUER PURCHASES OF EQUITY SECURITIES
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Dollar Value of Shares That May Yet Be Purchased Under the Program | ||||||||||||
April 1, 2020 to April 30, 2020 | - | $ | - | - | $ | - | ||||||||||
May 1, 2020 to May 31, 2020 | 892,100 | 5.88 | 892,100 | 43,759,603 | ||||||||||||
June 1, 2020 to June 30, 2020 | 1,656,581 | 6.02 | 1,656,581 | 33,783,829 | ||||||||||||
| 2,548,681 | $ | 5.97 | 2,548,681 | |||||||||||||
On March 5, 2020, the Company announced that the Board of Directors had 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. The timing and actual number of shares repurchased will depend on a variety of factors, including: 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. Prior to executing any repurchases under this program, the Company’s current term loan needed to be fully repaid or its terms needed to be amended to allow for share repurchases.
None.
No disclosure is required pursuant to this item.
No disclosure is required pursuant to this item.
Exhibit No. Description Certification of Certification of Certification of Chief Executive Officer Pursuant to Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase 101.LAB Inline XBRL Taxonomy Extension Label Linkbase 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Pursuant to the requirements 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. SIGA TECHNOLOGIES, INC. (Registrant) Date: August 6, By: Daniel J. Luckshire Executive Vice President and (Principal Financial Officer and3.1 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 April 14, 2016). ExhibitNo.DescriptionAmended and Restated Bylaws of SIGA Technologies, Inc. (incorporated by reference to the Current Report on Form 8-K of the Company filed on April 14, 2016). CertificationAmendment to Amended and Restated Bylaws of Chief Executive Officer PursuantSIGA Technologies, Inc. (incorporated by reference to Section 302the Current Report on Form 8-K of the Sarbanes-Oxley Act of 2002.Company filed on December 13, 2016). Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.Amendment of Solicitation/Modification of Contract 0002,0005, dated May 17, 2019,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 Rule 601(b)(10) of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed) (incorporated by reference to the Current Report on Form 8-K filed on May 20, 2019).AmendmentSolicitation/Modification of Contract 0019, dated May 22, 2019,Chief Executive Officer Pursuant to Agreement, dated June 1, 2011 by and between SIGA and the Biomedical Advanced Research and Development AuthoritySection 302 of the United States DepartmentSarbanes-Oxley Act of Health and Human Services (certain portions of this exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed).2002.Promotion Agreement, dated May 31, 2019, by and between SIGA Technologies, Inc. and Meridian Medical Technologies, Inc. (certain portionsthis exhibit have been omitted pursuantChief Financial Officer Pursuant to Rule 601(b)(10)Section 302 of Regulation S-K. The omitted information is (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed) (incorporated by reference to the Current Report on Form 8-K filed on June 3, 2019).Sarbanes-Oxley Act of 2002.AmendmentLoan and Security Agreement, dated July 24, 2019, by and among SIGA Technologies, Inc., and OCM Strategic Credit SIGTEC Holdings, LLC, Cortland Capital Market Services LLC, in its capacity as administrative agent and collateral agent.Section 906 of the Sarbanes-Oxley Act of 2002.101.INS104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). 20192020/s/ Daniel J. Luckshire Chief Financial Officer Principal Accounting Officer) 29