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Item 7. Management’s Discussion and Analysis

2025-03-11 compared with 2024-03-12 · 86 added, 114 removed, 116 unchanged (63% of the section changed)

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(“SIGA” or the “Company”) is a commercial-stage pharmaceutical company.

The Company sells its lead product, TPOXX® (“oral TPOXX®,” also known as "tecovirimat" in certain international markets), to the U.S.

The Company sells its lead product, TPOXX® (“oral TPOXX®,” also known as "tecovirimat," "Tecovirimat SIGA," or "TEPOXX (tecovirimat)" in certain international markets), to the U.S.

Government and international governments (including government affiliated entities).

In certain international markets, the Company may sell TPOXX® through a distributor.

Additionally, the Company sells the intravenous formulation of TPOXX® ("IV TPOXX®") to the U.S.

TPOXX® is an oral formulation antiviral drug for the treatment of human smallpox disease caused by variola virus.

TPOXX® is an antiviral drug for the treatment of human smallpox disease caused by variola virus.

On July 13, 2018, the United States Food & Drug Administration (“FDA”) approved oral TPOXX® for the treatment of smallpox.

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Strategic National Stockpile ("Strategic Stockpile") since 2013.

In connection with IV TPOXX®, SIGA announced on May 19, 2022 that the FDA approved this formulation for the treatment of smallpox.

In addition to being approved by the FDA, oral TPOXX® (tecovirimat) has regulatory approval with the European Medicines Agency ("EMA"), Health Canada and the Medicines and Healthcare Products Regulatory Agency ("MHRA") of the United Kingdom.

The EMA and MHRA approved label indication covers the treatment of smallpox, monkeypox ("mpox"), cowpox, and vaccinia complications following vaccination against smallpox.

The Health Canada approved label indication covers the treatment of smallpox.

With respect to the regulatory approvals by the EMA, MHRA and Health Canada, oral tecovirimat represents the same formulation that was approved by the FDA in July 2018 under the brand name TPOXX®.

In connection with a potential FDA label expansion of oral TPOXX® for an indication covering smallpox post-exposure prophylaxis (“PEP”), the Company completed an immunogenicity trial and an expanded safety trial in early 2023.

The nature and timing of a submission of a supplemental New Drug Application to the FDA (“Supplemental NDA”) for a smallpox PEP indication for oral TPOXX® will be based on the results of the trials;

the Company is currently targeting a Supplemental NDA filing in 2024.

In connection with the 2022 global response to an mpox outbreak, a series of observational and randomized, placebo-controlled clinical trials were initiated to assess the safety and efficacy of TPOXX® in participants with mpox.

As of December 31, 2023, there were five randomized, placebo-controlled clinical trials enrolling patients, when available, in locations including the United States, United Kingdom, the Democratic Republic of Congo ("DRC"), South America and Europe.

These randomized clinical trials are enrolling patients to collect data on the potential benefits of using TPOXX® as an antiviral treatment for active mpox disease.

The Company may be able to use data from the trials noted above, as well as from other trials, to potentially pursue an FDA label expansion of oral TPOXX® for an indication covering the treatment of mpox.

The viability, and timing, of a potential FDA submission for an mpox indication will be impacted by a series of factors, including the magnitude and severity of future mpox cases, the location of future cases, enrollment in clinical trials, and results of randomized, placebo-controlled and observational clinical trials.

Recent Developments

On January 27, 2024, Dr.

Diem Nguyen commenced her employment as our new Chief Executive Officer and was appointed to the Board.

During January and February of 2024, the Company delivered a total of approximately $7 million of oral TPOXX® to six countries in Europe pursuant to the $18 million firm commitment order announced in October 2023, as well as a total of approximately $15 million of oral TPOXX® to the U.S.

Strategic National Stockpile.

On March 12, 2024, the Board declared a special dividend of $0.60 per share on the common stock of the Company.

The special dividend is payable on April 11, 2024 to shareholders of record at the close of business on March 26, 2024.

On May 18, 2022 the FDA approved IV TPOXX® for the treatment of smallpox.

In addition to being approved by the FDA, oral TPOXX® (tecovirimat) has received regulatory approval from the European Medicines Agency ("EMA"), Health Canada, the Medicines and Healthcare Products Regulatory Agency ("MHRA") of the United Kingdom, and most recently, in December 2024, the Japanese Pharmaceuticals and Medical Devices Agency ("PMDA").

The EMA, MHRA and PMDA approved oral TPOXX® for the treatment of smallpox, monkeypox ("mpox"), cowpox, and vaccinia complications following vaccination against smallpox.

Health Canada approved TPOXX® for the treatment of smallpox.

With respect to the regulatory approvals by the EMA, PMDA, MHRA and Health Canada, oral tecovirimat represents the same formulation approved by the FDA in July 2018 under the brand name TPOXX®.

In connection with a potential FDA label expansion of oral TPOXX® for an indication covering smallpox post-exposure prophylaxis (“PEP”), the Company has completed an immunogenicity trial and an expanded safety trial.

The timing of a potential submission of a supplemental New Drug Application to the FDA (“Supplemental NDA”) for a smallpox PEP indication for oral TPOXX® will be based on the results of ongoing sample analyses from the immunogenicity trial;

the Company is currently targeting a Supplemental NDA submission in the next twelve months.

Procurement Contracts with the U.S.

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In addition to the delivery of TPOXX® courses, the contract includes funding from BARDA for a range of activities, including:

advanced development of IV TPOXX®, post-marketing activities for oral and IV TPOXX®, and procurement activities.

advanced development of IV TPOXX®, post-marketing activities for oral and IV TPOXX®, development for a pediatric formulation, and procurement activities.

As of December 31, 2024, the contract with BARDA (as amended, modified, or supplemented from time to time, the "19C BARDA Contract") contemplates up to approximately $602.5 million of payments, of which approximately $51.7 million of payments are included within the base period of performance, approximately $519.6 million of payments are related to exercised options and up to approximately $31.2 million of payments are currently specified as unexercised options.

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The $3.2 million received for the completed manufacture of IV BDS had been recorded as deferred revenue as of December 31, 2021, but with the delivery of IV FDP to the Strategic Stockpile during 2022, $2.9 million was recognized as revenue.

The remaining $0.3 million of deferred revenue will be recognized as IV FDP containing such IV BDS is delivered to and accepted by the Strategic Stockpile.

The options that have been exercised to date provide for payments up to approximately $407.1 million.

There are exercised options for the following activities:

The remaining $0.3 million of deferred revenue was recognized in the second quarter of 2024 as the IV FDP containing such IV BDS was delivered to and accepted by the Strategic Stockpile.

The options that have been exercised as of December 31, 2024, provide for payments up to approximately $519.6 million.

As of December 31, 2024, there are exercised options for the following activities:

payments up to $450.2 million for the manufacture and delivery of up to 1.5 million courses of oral TPOXX®;

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and payments of up to $14.6 million for funding of post-marketing activities for oral TPOXX®.

As of December 31, 2023, the Company has cumulatively delivered $323.0 million of oral TPOXX® to the Strategic Stockpile, of which $97.9 million was delivered in the fourth quarter of 2023;

has cumulatively received $20.5 million for the completed manufacture of IV BDS, of which $20.5 million has been recorded as deferred revenue as of December 31, 2023;

and has been cumulatively reimbursed $7.9 million in connection with post-marketing activities for oral and IV TPOXX®.

In the first two months of 2024 ended February 29, 2024, approximately $15 million of oral TPOXX® was delivered to the Strategic Stockpile.

As of December 31, 2024, a cumulative total of $396.9 million of oral TPOXX® has been delivered to the Strategic Stockpile and accepted, of which approximately $15 million was delivered in the first quarter of 2024, approximately $8 million was delivered in the third quarter of 2024, and approximately $51 million was delivered in the fourth quarter of 2024;

a cumulative total of $25.4 million of IV FDP has been delivered to the Strategic Stockpile and accepted, of which approximately $17 million of revenue (including recognition of deferred revenue) was recorded in the second quarter of 2024 and approximately $8 million of revenue (including recognition of deferred revenue) was recorded in the fourth quarter of 2024;

$10.3 million has been received for the manufacture of IV BDS (such amount is recorded as deferred revenue);

and the Company has been cumulatively reimbursed $9.4 million in connection with post-marketing activities for oral and IV TPOXX®.

Unexercised options specify potential payments up to approximately $31.2 million in total (if all such options are exercised), of which approximately $5.6 million relates to supportive activities that we currently do not expect to be required.

There are options for the following activities:

payments of up to $112.5 million for the delivery of oral TPOXX® to the Strategic Stockpile;

and payments of up to $25.6 million for the manufacture of courses of IV FDP, of which up to $10.2 million of payments would be paid upon the manufacture of IV BDS to be used in the manufacture of IV FDP.

The remaining unexercised options specify payments of up to $25.6 million for the manufacture of courses of IV FDP, of which up to $10.2 million of payments would be paid upon the manufacture of IV BDS to be used in the manufacture of IV FDP.

The options related to IV TPOXX® are divided into two primary manufacturing steps.

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To date, BARDA has exercised two of the three IV BDS options and two of the three IV FDP options.

If BARDA decides to only exercise the remaining IV BDS Option, then the Company would receive payments up to $10.2 million;

If BARDA decides only to exercise the remaining IV BDS Option, then the Company would receive payments up to $10.2 million;

alternatively, if BARDA decides to exercise the remaining IV BDS Option and IV FDP Option, then the Company would receive payments up to $25.6 million.

BARDA may also decide not to exercise either remaining option.

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 32,000 courses), BARDA has the option to independently purchase IV BDS or IV FDP.

The Company estimates that sales of the IV formulation under this contract (under current terms), assuming the remaining IV FDP Option was exercised, would have a gross margin (sales less cost of sales, as a percentage of sales) that is less than 40%.

Under the terms of this contract, exercise of procurement options is at the sole discretion of BARDA.

The request for proposal that preceded the award of the 19C BARDA Contract indicated that the expected purpose of the contract was to maintain the level of smallpox antiviral preparedness in the Strategic Stockpile.

Based on prior product delivery activity, and current FDA-approved shelf life of oral TPOXX®, the Company estimates that the remaining options under the 19C BARDA Contract for 363,000 courses of oral TPOXX® (value of $112.5 million) and 32,000 courses of IV FDP (value of $25.6 million) would need to be exercised in 2024 in order to approximately maintain historical stockpile levels of unexpired TPOXX® treatment in the Strategic Stockpile.

Department of Defense Procurement Contracts

On May 12, 2022, the Company announced a contract with the U.S.

Department of Defense ("DoD") for the procurement of oral TPOXX® ("DoD Contract #1").

The DoD Contract #1 included a firm commitment for the DoD to procure approximately $3.6 million of oral TPOXX®, and an option, exercisable at the sole discretion of the DoD, for the procurement of an additional approximately $3.8 million of oral TPOXX®.

In the second quarter of 2022, the Company delivered oral TPOXX® to the DoD and recognized revenue of $3.6 million, fulfilling the firm commitment in DoD Contract #1.

In the third quarter of 2022, the DoD exercised the option for $3.8 million of oral TPOXX® and the Company satisfied its obligation by delivering product in September 2022 and recognized the related revenue.

On September 28, 2022, the Company and the DoD signed a new procurement contract ("DoD Contract #2").

The DoD Contract #2 included a firm commitment for the DoD to procure approximately $5.1 million of oral TPOXX®, and an option, exercisable at the sole discretion of the DoD for the procurement of an additional approximately $5.5 million of oral TPOXX®.

In March 2023, the Company fulfilled the firm commitment by delivering $5.1 million of oral TPOXX® to the DoD, and recognized the related revenue.

Additionally, in March 2023 the DoD exercised the $5.5 million option in DoD Contract #2 for the procurement of oral TPOXX® and the Company delivered these courses to the DoD in the fourth quarter of 2023.

In February 2024, DoD Contract #2 was amended and approximately $1 million of oral TPOXX® was ordered by the DoD.

International Procurement Contracts

In 2023, the Company has delivered, and received acceptance for, approximately $21.3 million of oral TPOXX® to five European countries, one Middle Eastern country, and one Asia Pacific country.

In the first two months of 2024 ending February 29, 2024, the Company delivered an additional approximately $7 million of oral TPOXX® to six countries in Europe, completing greater than 95% of deliveries under the $18 million of firm commitment orders from 13 countries under the European Commission’s DG HERA (Health Emergency Preparedness and Response Authority) joint procurement mechanism, which was announced by the Company in October 2022.

Additionally, $0.7 million of oral TPOXX® was delivered to the Canada Department of National Defence ("CDND") in February 2024.

These deliveries were made in connection with orders and contracts under the International Promotion Agreement (defined and discussed below).

Through the International Promotion Agreement, Meridian Medical Technologies, Inc.

("Meridian") is the counterparty to international contracts under which orders are placed for the purchase of oral TPOXX®.

In addition to the above-mentioned orders and deliveries, the Company has a contract with the CDND under which the CDND has an option until December 31, 2025, exercisable at its sole discretion, for the purchase of up to an additional $6.7 million of oral TPOXX®.

As an international contract, this contract is also administered under the International Promotion Agreement.

The contract with the CDND (the "Canadian Military Contract"), issued in April of 2020 and subsequently amended, is option-based and initially specified that the CDND would purchase up to $14 million of oral TPOXX® if all options were exercised.

In 2024, the Company had sales of approximately $10 million with the U.S.

Department of Defense ("DoD").

Sales consist mostly of delivery of oral TPOXX®, with a minor amount of IV TPOXX® delivered.

In 2023, the Company had sales of approximately $11 million with the DoD.

Sales consist of delivery of oral TPOXX®.

Over the past three years, the Company has received three procurement contracts from the DoD, including a $9 million contract in August 2024, which has been fulfilled.

International Sales Activity

In the year ended December 31, 2024, the Company had international sales of $23.0 million consisting of deliveries of oral TPOXX® to 13 countries.

For international sales in the first and second quarters, Meridian Medical Technologies ("Meridian") was the counterparty to contracts under which the sales were made (see discussion and definition below regarding International Promotion Agreement).

For international sales in the third and fourth quarters, the Company was the counterparty to the contracts under which the sales were made.

In the year ended December 31, 2023, the Company had international sales of $21.3 million consisting of deliveries of oral TPOXX® to seven countries.

International Promotion Agreement

Under the terms of the International Promotion Agreement, as amended, which has an initial term that expires on May 31, 2024, Meridian was granted exclusive rights to market, advertise, promote, offer for sale, or sell oral TPOXX® in a field of use specified in the International Promotion Agreement in all geographic regions except for the United States (the “Territory”), and Meridian has agreed not to commercialize any competing product, as defined in the International Promotion Agreement, in the specified field of use in the Territory.

SIGA retains ownership, intellectual property, distribution and supply rights and regulatory responsibilities in connection with TPOXX®, and, in the United States market, also retains sales and marketing rights with respect to oral TPOXX®.

SIGA’s consent is required for the entry into any sales arrangement pursuant to the International Promotion Agreement.

Sales to international customers pursuant to the International Promotion Agreement are invoiced and collected by Meridian, and such collections are remitted, less Meridian's fees, to the Company under a quarterly process specified in the International Promotion Agreement.

The fee Meridian retains pursuant to the International Promotion Agreement is a specified percentage of the collected proceeds of sales of oral TPOXX®, net of certain expenses, for calendar years in which customer collected amounts net of such expenses are less than or equal to a specified threshold, and a higher specified percentage of such collected net proceeds for calendar years in which such net collected amounts exceed the specified threshold.

We exceeded the specified threshold in 2022 and therefore recorded the higher specified percentage for all International Promotion Agreement sales in 2022.

Taking into account Meridian’s fee and manufacturing costs of oral TPOXX®, it is currently estimated by the Company that international sales of oral TPOXX® each year will have a contribution margin (as expressed as a percentage of product sales, and before any consideration of expenses not directly related to manufacturing or Meridian activities) of between approximately 65% and 80%, depending on the international sales levels each year.

For purposes of this disclosure, contribution margin (in amount) represents international product sales less applicable cost of sales and the Meridian fee (which is included within selling, general and administrative expenses within the income statement).

Under the terms of the current International Promotion Agreement, which was amended on March 27, 2024, and effective June 1, 2024, and further amended on August 30, 2024, the Company has primary responsibility for the advertising, promotion and sale of oral TPOXX® in all geographic regions.

Meridian has limited, non-exclusive rights to advertise, promote, offer for sale and sell oral TPOXX® in the European Economic Area, Australia, Japan, Switzerland, the United Kingdom and the Association of Southeast Asian Nations and its member states (collectively, the “Current Territory”).

Meridian also performs non-promotional activities under specified contracts with third parties entered into prior to June 1, 2024, that provide for the sale of oral TPOXX® in the Current Territory.

The International Promotion Agreement entitles Meridian to receive a fee equal to a high single digit percentage of collected proceeds (whether collected by Meridian or the Company), net of certain expenses, of sales of oral TPOXX® in the Current Territory in the field of use specified in the International Promotion Agreement.

The International Promotion Agreement has a fixed term that expires on May 31, 2026, with no automatic renewal.

Under the terms of the original International Promotion Agreement ("Pre-amendment International Promotion Agreement"), which had an initial term that expired on May 31, 2024, Meridian had been granted exclusive rights to market, advertise, promote, offer for sale, or sell oral TPOXX® in a field of use specified in the International Promotion Agreement in all geographic regions except for the United States (the “Territory”), and Meridian agreed not to commercialize any competing product, as defined in the Pre-amendment International Promotion Agreement, in the specified field of use in the Territory.

Under the Pre-amendment International Promotion Agreement, as well as the current International Promotion Agreement, SIGA has always retained ownership, intellectual property, distribution and supply rights and regulatory responsibilities in connection with TPOXX®, and, in the United States market, also retained sales and marketing rights with respect to oral TPOXX®.

SIGA’s consent is required prior to the entry by Meridian into any sales arrangement pursuant to the International Promotion Agreement.

Sales to international customers pursuant to the Pre-amendment International Promotion Agreement were invoiced and collected by Meridian, and such collections were remitted, less Meridian's fees, to the Company under a quarterly process specified in the Pre-amendment International Promotion Agreement;

and Meridian was entitled to a specified percentage of the collected proceeds of sales of oral TPOXX®, net of certain expenses, for calendar years in which customer collected amounts net of such expenses were less than or equal to a specified threshold, and to a higher specified percentage of such collected net proceeds for calendar years in which such net collected amounts exceeded the specified threshold.

Subsequent to June 1, 2024, only specified procurement contracts for the Current Territory entered into prior to June 1, 2024, continue to involve Meridian invoicing and collecting proceeds, and retaining a fee pursuant to the International Promotion Agreement.

In connection with the 2022 response to a global mpox outbreak, a series of observational and randomized, placebo-controlled clinical trials were initiated to assess the safety and efficacy of TPOXX® in participants with mpox.

The purpose of these randomized clinical trials is to seek to collect data on the potential benefits of using TPOXX® as an antiviral treatment for active mpox disease.

As of December 31, 2024, two of the randomized, placebo-controlled clinical trials reported preliminary topline results:

a randomized, placebo-controlled clinical trial in the Democratic Republic of the Congo ("DRC") known as PALM 007 (Tecovirimat for Treatment of Monkeypox Virus - NCT05559099), which is funded and sponsored by the National Institutes of Health's (NIH) National Institute of Allergy and Infectious Diseases (NIAID);

and the Study of Tecovirimat for Human Mpox Virus (STOMP) clinical trial (NCT05534984), which is a randomized, placebo-controlled, double-blind study sponsored and funded by NIAID to evaluate the safety and efficacy of tecovirimat for the treatment of people with laboratory-confirmed or presumptive mpox disease that included enrollees from Argentina, Brazil, Japan, Mexico, Peru, Thailand, and the United States.

The PALM 007 study did not meet its primary endpoint of a statistically significant improvement in time to lesion resolution within 28 days post-randomization for patients in the DRC with mpox who received TPOXX® compared to patients who received placebo.

Some improvement versus placebo was observed in patients receiving TPOXX® whose symptoms began seven days or fewer before randomization and patients with severe or grave disease, defined by the World Health Organization (WHO) as having 100 or more skin lesions, however the significance of these data have not been established.

An interim analysis of data from the STOMP study showed that TPOXX® did not demonstrate efficacy in time to skin and mucosal lesion resolution compared to placebo in patients with mild to moderate clade II mpox.

Based on this result and additional analyses, the study Data Safety and Monitoring Board (DSMB) recommended to stop enrolling patients in the randomized arms of the study.

NIAID accepted this recommendation and subsequently decided to take a similar action in the open label arm of this study, which included severe and at-risk of developing severe disease patients.

Data analysis is not yet complete for primary endpoint subgroups and detailed secondary and exploratory endpoints.

In both studies, TPOXX® exhibited a safety profile comparable to placebo.

These safety results are consistent with prior studies and further support the strong safety profile that has been observed with tecovirimat over the past 15 years.

Three randomized clinical trials, UNITY (Switzerland, Brazil, Argentina), Platinum-CAN (Canada), and EPOXI (EU), are enrolling mpox patients.

Given the STOMP and PALM007 results and the design similarities across these mpox trials, the Company believes these ongoing trials are likely to yield similar results.

Research Agreements and Grants

In July 2019, the Company was awarded a multi-year research contract ultimately valued at approximately $27 million from the DoD to support work in pursuit of a potential label expansion for oral TPOXX® that would include post-exposure prophylaxis ("PEP") of smallpox (such work known as the "PEP Label Expansion Program" and the contract referred to as the "PEP Label Expansion R&D Contract").

As of December 31, 2023, the Company invoiced the full amount of available funding.

As of December 31, 2023, there is no remaining revenue to be recognized in the future under the PEP Label Expansion R&D Contract.

As of December 31, 2023, the Company invoiced the full amount of available funding, and as a result, there is no remaining revenue to be recognized in the future under the PEP Label Expansion R&D Contract.

Revenue from the performance obligation under the PEP Label Expansion R&D Contract was recognized over time using an input method using costs incurred to date relative to total estimated costs at completion.

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As such, the Company may not be eligible to receive all available funds.

Critical Accounting Estimates

Critical Accounting Estimate

The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the results we report in our consolidated financial statements, which we discuss under the heading “Results of Operations” following this section of our Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.

Our most critical accounting estimates include revenue recognition over time, and income taxes (including realization of deferred tax assets).

Our most critical accounting estimate is revenue recognition over time.

Revenue Recognition

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A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations.

Our income tax expense and deferred tax assets and liabilities reflect management’s best estimate of current and future taxes to be paid.

We are subject to U.S.

federal income tax and state income tax in numerous jurisdictions.

Significant judgments and estimates are required in the determination of our income tax expense.

Deferred income taxes arise from temporary differences between the tax basis of assets and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future.

Each reporting period, we assess the realizability of our deferred tax assets to determine if the deductible temporary differences will be utilized on a more-likely-than-not basis.

In making this determination, we assess all available positive and negative evidence to determine if our existing deferred tax assets are realizable on a more-likely-than-not basis.

Significant weight is given to positive and negative evidence that is objectively verifiable.

We consider the reversal of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operating results.

The amount of deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income change and/or if significant objective negative evidence is no longer present or if significant negative evidence becomes available.

Such changes could lead to a change in judgment related to the realization of the net deferred tax asset.

Future changes in the estimated amount of deferred taxes expected to be realized will be reflected in our financial statements in the period the estimate is changed with a corresponding adjustment to operating results.

Income tax benefits are recognized for a tax position when, in management’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority.

For a tax position that meets the more-likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority.

We have recorded a liability for unrecognized tax benefits resulting from tax positions taken, or expected to be taken, in an income tax return.

It is the Company’s policy to recognize interest and penalties related to uncertain tax positions as a component of income tax expense.

Uncertain tax positions are evaluated and adjusted as appropriate, while taking into account the progress of audits of various taxing jurisdictions.

Recently Issued Accounting Pronouncements

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Revenues from product sales and supportive services for the years ended December 31, 2024 and 2023 were $133.3 million and $130.7 million, respectively.

Such revenues for the year ended December 31, 2023 include $97.9 million of oral TPOXX® sales to the U.S.

Such revenues for the year ended December 31, 2024 include $73.9 million of oral TPOXX® sales and $26.2 million of IV TPOXX® sales to the U.S.

Government under the 19C BARDA Contract;

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and approximately $10.1 million of oral TPOXX® sales to the DoD.

Such revenues for the year ended December 31, 2022 include $71.0 million related to international sales of oral TPOXX®;

$7.5 million of oral TPOXX® sales to the DoD;

and approximately $7.2 million of sales of IV TPOXX® to the U.S.

Such revenues for the year ended December 31, 2023 include $97.9 million of oral TPOXX® sales to the U.S.

Government under the 19C BARDA Contract;

$21.3 million related to international sales of oral TPOXX®;

and approximately $10.7 million of oral TPOXX® sales to the DoD.

Revenues from research and development activities for the years ended December 31, 2024 and 2023, were $5.4 million and $9.2 million, respectively.

These revenues are mostly earned in connection with performance of research and development activities under the PEP Label Expansion R&D Contract and 19C BARDA Contract.

The decrease of $14.9 million of revenue is primarily related to a decrease in clinical trial activity.

The revenues for the year ended December 31, 2024, were mostly earned in connection with performance of research and development activities under the 19C BARDA Contract.

The revenue for the year ended December 31, 2023, were mostly earned in connection with performance of research and development activities under the PEP Label Expansion R&D Contract and the 19C BARDA Contract.

The decrease of $3.8 million of revenue is related to the completion of billable activities under the PEP Label Expansion R&D Contract in 2023.

Cost of sales and supportive services for the years ended December 31, 2024 and 2023 were $31.3 million and $17.8 million, respectively.

Such costs in 2023 were primarily associated with increases in the manufacture and delivery of oral TPOXX® courses to the U.S.

Government and various international countries.

Such costs in 2022 were primarily associated with the manufacture and delivery of oral TPOXX® courses to various international countries and approximately $4.4 million of costs for the manufacture and delivery of IV TPOXX®.

Such costs in 2024 were primarily associated with the manufacture and delivery of oral TPOXX® courses to the U.S.

Government, DoD and various international customers as well as the manufacture and delivery of IV TPOXX® courses to the U.S.

Such costs in 2023 were associated with the manufacturing and delivery of oral TPOXX® to the U.S.

Government as well as various international countries.

The difference in costs between years is primarily due to the inclusion of IV TPOXX® in 2024 sales;

manufacturing costs for IV TPOXX® are significantly higher than manufacturing costs for oral TPOXX®.

Selling, general and administrative expenses for the years ended December 31, 2024 and 2023 were $25.1 million and $22.0 million, respectively.

The decrease of $13.1 million mostly reflects a decrease in promotion fees to Meridian as international sales decreased from approximately $71 million in 2022 (in response to the mpox outbreak) to approximately $21 million in 2023, partially offset by higher professional fees.

The increase of $3.1 million reflects higher compensation expense, including stock-based compensation, associated with the hiring of multiple executive officers in 2024.

Research and development expenses were $12.3 million for the year ended December 31, 2024, a decrease of approximately $4.1 million from the $16.4 million incurred during the year ended December 31, 2023.

The decrease is mostly attributable to lower direct vendor-related expenses incurred in connection with clinical activity, partially offset by an increase in regulatory costs associated with EMA regulatory submissions and related activities.

Changes in the fair value of the liability classified warrant to acquire common stock were recorded within the income statement.

The warrant was fully exercised during the year ended December 31, 2022.

For the year ended December 31, 2023, we recorded no activity.

For the year ended December 31, 2022, we recorded a gain of approximately $0.4 million, reflecting a decrease in the fair value of the liability-classified warrant primarily due to the decrease in our stock price.

The decrease is primarily attributable to lower direct vendor-related expenses incurred in connection with a decrease in activities under the PEP Label Expansion R&D Contract, partially offset by an increase in compensation expense in connection with new hires.

Other income, net for the years ended December 31, 2024 and 2023 was $6.1 million and $4.2 million, respectively.

The increase relates to interest income earned on cash and cash equivalents at rates that are substantially higher in 2023 in comparison to 2022.

The increase relates to interest income earned on cash and cash equivalents as the average cash balance during the year ended December 31, 2024 was higher than in 2023.

Additionally, the average investment return rates in the year ended December 31, 2024 were higher than those in 2023.

For the year ended December 31, 2024, we recognized a tax provision of $16.9 million on pre-tax income of $76.1 million.

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Net cash provided by operations for the years ended December 31, 2024 and 2023 was $48.8 million and $94.8 million, respectively.

For the year ended December 31, 2024, net cash increase from operations is due to the receipt of approximately $122.5 million from sales of oral and IV TPOXX® to the U.S.

Government and international customers, of which approximately $102 million relates to 2024 sales and the remainder to collection of accounts receivable on the December 31, 2023 balance sheet, partially offset by the payment of approximately $30 million of income taxes as well as the use of cash for customary operating activities.

For the year ended December 31, 2023, the receipt of substantially all of the $45 million of accounts receivable as of December 31, 2022, the receipt of approximately $111 million of 2023 product sales of oral TPOXX®, as well as approximately $10 million received in connection with IV BDS deferred revenue was partially offset by the use of cash to proactively build inventory, and for operating activities.

For the year ended December 31, 2022, the receipt of approximately $80 million for the product delivery and acceptance of oral TPOXX® courses delivered to the Strategic Stockpile in December 2021, as well as the receipt of approximately $27 million in connection with 2022 product deliveries and advance payments were partially offset by the payment of $31 million of federal and state income taxes;

an increase in inventory investment in connection with broadening of the customer base for TPOXX® and mitigation of increasing general supply chain risks;

and costs in relation to customary operating activities.

On December 31, 2024 and 2023, our accounts receivable balance was approximately $21.2 million (which includes approximately $0.5 million of unbilled receivables) and $21.1 million, respectively.

Our accounts receivable balance as of December 31, 2023 primarily reflects sales of oral TPOXX® to the U.S.

Government under the 19C BARDA Contract as well as various international countries, of which approximately $11.2 million was received by the Company through the end of February 2024.

Our accounts receivable balance as of December 31, 2024 primarily reflects sales of oral TPOXX® to various international countries and the DoD, of which approximately $20.1 million was received by the Company through the end of February 2025.

The remaining amounts of the receivable balance are expected to be collected during the first or second quarter of 2025.

Our accounts receivable balance as of December 31, 2022 primarily reflected sales of oral TPOXX® to various international countries, of which approximately $35 million was received by the Company in February 2023.

Our accounts receivable balance as of December 31, 2023 primarily reflected sales of oral TPOXX® to the U.S.

Government under the 19C BARDA Contract as well as various international countries, of which approximately $11.2 million was received by the Company through the end of February 2024.

The remaining amounts of the receivable balance were collected during the second quarter of 2024.

Investing Activities

We used $21,686 for capital expenditures for the year ended December 31, 2023.

For the year ended December 31, 2022, there were no cash-related activities.

We used $42,450 and $21,686 for capital expenditures for the years ended December 31, 2024 and 2023, respectively.

Financing Activities

Cash used in financing activities for the years ended December 31, 2024 and 2023 was $43.5 million and $43.4 million, respectively.

For the year ended December 31, 2023, we paid a special dividend of approximately $32.1 million.

In addition, we purchased approximately 1.7 million shares of common stock for approximately $11.0 million.

For the year ended December 31, 2024, we paid a special dividend of approximately $42.7 million as well as approximately $0.8 million associated with the payment of tax obligations for employee common stock tendered.

For the year ended December 31, 2023, we paid a special dividend of approximately $32.1 million.

2 unchanged sentences

As of December 31, 2024, we have outstanding purchase orders associated with manufacturing obligations in the aggregate amount of approximately $2.4 million.

On March 12, 2024, the Board of Directors declared a special dividend of $0.60 per share on the common stock of the Company.

The special dividend is payable on April 11, 2024 to shareholders of record at the close of business on March 26, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis