Note 3 - Procurement Contracts and Research Agreements	3 Months Ended
Mar. 31, 2020
Notes to Financial Statements
Procurement Contract and Research Agreements [Text Block]	3 . Procurement Contracts and Research Agreements 19C BARDA Contract On September 10, 2018, the Company entered into a contract with the U.S. Biomedical Advanced Research and Development Authority ("BARDA") pursuant to which SIGA agreed to deliver up to 1,488,000 courses of oral TPOXX® to the 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 procurement activities. As of April 29, 2020, the contract with BARDA (as amended, modified, or supplemented from time to time, the "19C BARDA Contract") contemplates up to approximately $ 602.5 million of payments, of which approximately $ 51.7 million of payments are included within the base period of performance of five years, approximately $ 127.1 million of payments are related to exercised options and up to approximately $ 423.7 million of payments are currently specified as unexercised options. BARDA may choose in its sole discretion when, or whether, to exercise any of the unexercised options. The period of performance for options is up to ten years from the date of entry into the 19C BARDA Contract and such options could be exercised at any time during the contract term, including during the base period of performance. On May 20, 2019, an option for the manufacture and delivery of 363,070 courses of oral TPOXX® was modified to divide it into four procurement-related options. One of the four modified procurement-related options provides for the payment of $ 11.2 million for the procurement of raw materials to be used in the manufacture of at least 363,070 courses of oral TPOXX®. This option was exercised simultaneously with the aforementioned modification. Each of the other three options individually specifies the delivery of approximately 121,000 courses of oral TPOXX® for consideration of approximately $ 33.8 million. These options were exercised on April 29, 2020. In total, the four options under the May 2019 modification provide for the purchase of raw material for and the manufacture and delivery of 363,070 courses of oral TPOXX® for consideration of approximately $ 112.5 million. The option modification did not change the overall total potential value of the 19C BARDA Contract, nor did it change the total amount to be paid in connection with the manufacture and delivery of oral TPOXX® courses. The base period of performance specifies potential payments of approximately $ 51.7 million for the following activities: payments of approximately $11.1 million for the delivery of approximately 35,700 courses of oral TPOXX® to the Strategic Stockpile; payments of $8.0 million for the manufacture of 20,000 courses of final drug product of IV TPOXX® ("IV FDP"), of which $3.2 million of payments are related to the manufacture of bulk drug substance ("IV BDS") to be used in the manufacture of IV FDP; payments of approximately $32.0 million to fund advanced development of IV TPOXX®; and payments of approximately $0.6 million for supportive procurement activities. As of March 31, 2020 , the Company had received $11.1 million for the successful delivery of approximately 35,700 courses of oral TPOXX® to the Strategic Stockpile, $3.2 million for the manufacture of IV 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 for the manufacture of IV BDS has been recorded as deferred revenue as of March 31, 2020 and December 31, 2019 ; such amount is expected to be recognized as revenue when IV TPOXX® containing such IV BDS is delivered to the Strategic Stockpile or placed in vendor-managed inventory. The options that have been exercised to date provide for additional potential payments up to approximately $ 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 $ 14.6 million for funding of post-marketing activities for oral TPOXX®, of which, $2.3 million had been received as of March 31, 2020 . The $ 11.2 million received for the procurement of raw materials has been recorded as deferred revenue as of March 31, 2020 ; such amount is expected to be recognized as revenue when oral TPOXX® formulated with such materials is delivered to the Strategic Stockpile or placed in vendor-managed inventory. Unexercised options specify potential payments up to approximately $ 423.7 million in total (if all such options are exercised). There are options for the following activities: payments of up to $ 337.7 million for the delivery of up to approximately 1,089,000 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 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 mill ion 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 19C BARDA Contract includes: three separate IV BDS Options, each providing for the bulk drug substance equivalent of 64,000 courses of IV TPOXX®; and three separate IV FDP Options, each providing for 64,000 courses of final drug product of IV TPOXX®. BARDA has the sole discretion as to whether to simultaneously exercise IV BDS Options and IV FDP Options, or whether to 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. Other performance obligations under the 19C BARDA Contract generate revenue over time. For the three months ended March 31, 2020 and 2019 , the Company recognized revenues of $2.1 million and $1.3 million, respectively, on an over time basis. In contrast, revenue recognized for product delivery, and therefore at a point in time, for the three months ended March 31, 2019 was $7.1 million. There was no revenue recognized at a point in time during the three months ended March 31, 2020 . 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 BARDA Contract") includes a base contract, as modified, ( "2011 Base Contract") as well as options. The 2011 Base Contract specifies approximately $508.4 million of payments (including exercised options), of which, as of March 31, 2020 , $459.8 million has been received by the Company for the manufacture and delivery of 1.7 million courses of oral TPOXX® and $45.1 million has been received for certain reimbursements in connection with development and supportive activities. Approximately $3.5 million remains eligible to be received in the future for reimbursements of development and supportive activities. For courses of oral TPOXX® that have 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 the 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 base manufacturing. BARDA may choose, in its sole discretion not to exercise any or all of the unexercised options. In 2015, BARDA exercised two options related to extending the indication of the drug to the geriatric and pediatric populations. The stated value of those exercises was immaterial. 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. For the three months ended March 31, 2020 and 2019 , the Company recognized revenue of $0.1 million and $0.1 million, respectively, on an over time basis. There was no revenue recognized for product delivery and therefore at a point in time for either the three months ended March 31, 2020 or 2019 . Research Agreements and Grants The Company has an R&D program for IV TPOXX®. This program is funded by the 19C 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. As of March 31, 2020 , the IV Formulation R&D Contract provides for future aggregate research and development funding of approximately $2.6 million. Revenues in connection with the IV Formulation R&D Contract are recognized over time. For the three months ended March 31, 2020 and 2019 , the Company recognized revenue of $0.4 million and $1.9 million, respectively, under this contract. In July 2019, the Company was awarded a multi-year research contract valued at a total of $19.5 million, with an initial award of $12.4 million, from the 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 term of the initial award is five years. In February 2020, the DoD increased the value of the award to the total contract value of $19.5 million. As of March 31, 2020 the PEP Label Expansion R&D Contract provides for future aggregate research and development funding under the initial award of approximately $19.2 million. For the three months ended March 31, 2020 , the Company, under the PEP Label Expansion R&D Contract, recognized revenue of less than $0.1 million on an over time basis. Contracts and grants include, among other things, options that may or may not be exercised at the U.S. Government’s discretion. Moreover, contracts and grants contain customary terms and conditions including the U.S. Government’s right to terminate or restructure a contract or grant for convenience at any time. As such, we may not be eligible to receive all available funds.

. Procurement Contracts and Research Agreements

19C

BARDA Contract

September 10, 2018,

the Company entered into a contract with the U.S. Biomedical Advanced Research and Development Authority ("BARDA") pursuant to which SIGA agreed to deliver up to

1,488,000

courses of oral TPOXX® to the 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 procurement activities. As of

April 29, 2020,

the contract with BARDA (as amended, modified, or supplemented from time to time, the

"19C

BARDA Contract") contemplates up to approximately $

602.5

million of payments, of which approximately $

51.7

million of payments are included within the base period of performance of

five

years, approximately $

127.1

million of payments are related to exercised options and up to approximately $

423.7

million of payments are currently specified as unexercised options. BARDA

may

choose in its sole discretion when, or whether, to exercise any of the unexercised options. The period of performance for options is up to

ten

years from the date of entry into the

19C

BARDA Contract and such options could be exercised at any time during the contract term, including during the base period of performance. On

May 20, 2019,

an option for the manufacture and delivery of

363,070

courses of oral TPOXX® was modified to divide it into

four

procurement-related options. One of the

four

modified procurement-related options provides for the payment of $

11.2

million for the procurement of raw materials to be used in the manufacture of at least

363,070

courses of oral TPOXX®. This option was exercised simultaneously with the aforementioned modification. Each of the other

three

options individually specifies the delivery of approximately

121,000

courses of oral TPOXX® for consideration of approximately $

33.8

million. These options were exercised on

April 29, 2020.

In total, the

four

options under the

May 2019

modification provide for the purchase of raw material for and the manufacture and delivery of

363,070

courses of oral TPOXX® for consideration of approximately $

112.5

million. The option modification did

not

change the overall total potential value of the

19C

BARDA Contract, nor did it change the total amount to be paid in connection with the manufacture and delivery of oral TPOXX® courses.

The base period of performance specifies potential payments of approximately $

51.7

million for the following activities: payments of approximately

$11.1

million for the delivery of approximately

35,700

courses of oral TPOXX® to the Strategic Stockpile; payments of

$8.0

million for the manufacture of

20,000

courses of final drug product of IV TPOXX® ("IV FDP"), of which

$3.2

million of payments are related to the manufacture of bulk drug substance ("IV BDS") to be used in the manufacture of IV FDP; payments of approximately

$32.0

million to fund advanced development of IV TPOXX®; and payments of approximately

$0.6

million for supportive procurement activities. As of

March 31, 2020

, the Company had received

$11.1

million for the successful delivery of approximately

35,700

courses of oral TPOXX® to the Strategic Stockpile,

$3.2

million for the manufacture of IV 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 for the manufacture of IV BDS has been recorded as deferred revenue as of

March 31, 2020

and

December 31, 2019

; such amount is expected to be recognized as revenue when IV TPOXX® containing such IV BDS is delivered to the Strategic Stockpile or placed in vendor-managed inventory.

The options that have been exercised to date provide for additional potential payments up to approximately $

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 $

14.6

million for funding of post-marketing activities for oral TPOXX®, of which,

$2.3

million had been received as of

March 31, 2020

. The $

11.2

million received for the procurement of raw materials has been recorded as deferred revenue as of

March 31, 2020

; such amount is expected to be recognized as revenue when oral TPOXX® formulated with such materials is delivered to the Strategic Stockpile or placed in vendor-managed inventory.

Unexercised options specify potential payments up to approximately $

423.7

million in total (if all such options are exercised). There are options for the following activities: payments of up to $

337.7

million for the delivery of up to approximately

1,089,000

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

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

mill

ion 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

19C

BARDA Contract includes:

three

separate IV BDS Options, each providing for the bulk drug substance equivalent of

64,000

courses of IV TPOXX®; and

three

separate IV FDP Options, each providing for

64,000

courses of final drug product of IV TPOXX®. BARDA has the sole discretion as to whether to simultaneously exercise IV BDS Options and IV FDP Options, or whether to 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. Other performance obligations under the

19C

BARDA Contract generate revenue over time. For the

three

months ended

March 31, 2020

and

2019

, the Company recognized revenues of

$2.1

million and

$1.3

million, respectively, on an over time basis. In contrast, revenue recognized for product delivery, and therefore at a point in time, for the

three

months ended

March 31, 2019

was

$7.1

million. There was

revenue recognized at a point in time during the

three

months ended

March 31, 2020

2011

BARDA Contract

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

additional cost to BARDA.

The contract with BARDA (as amended, modified, or supplemented from time to time the

"2011

BARDA Contract") includes a base contract, as modified, (

"2011

Base Contract") as well as options. The

2011

Base Contract specifies approximately

$508.4

million of payments (including exercised options), of which, as of

March 31, 2020

$459.8

million has been received by the Company for the manufacture and delivery of

1.7

million courses of oral TPOXX® and

$45.1

million has been received for certain reimbursements in connection with development and supportive activities. Approximately

$3.5

million remains eligible to be received in the future for reimbursements of development and supportive activities.

For courses of oral TPOXX® that have 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

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

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 the aforementioned

-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 base manufacturing. BARDA

may

choose, in its sole discretion

not

to exercise any or all of the unexercised options. In

2015,

BARDA exercised

two

options related to extending the indication of the drug to the geriatric and pediatric populations. The stated value of those exercises was immaterial.

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.

For the

three

months ended

March 31, 2020

and

2019

, the Company recognized revenue of

$0.1

million and

$0.1

million, respectively, on an over time basis. There was

revenue recognized for product delivery and therefore at a point in time for either the

three

months ended

March 31, 2020

2019

Research Agreements and Grants

The Company has an R&D program for IV TPOXX®. This program is funded by the

19C

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.

As of

March 31, 2020

, the IV Formulation R&D Contract provides for future aggregate research and development funding of approximately

$2.6

million.

Revenues in connection with the IV Formulation R&D Contract are recognized over time. For the

three

months ended

March 31, 2020

and

2019

, the Company recognized revenue of

$0.4

million and

$1.9

million, respectively, under this contract.

July 2019,

the Company was awarded a multi-year research contract valued at a total of

$19.5

million, with an initial award of

$12.4

million, from the 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 term of the initial award is

five

years. In

February 2020,

the DoD increased the value of the award to the total contract value of

$19.5

million. As of

March 31, 2020

the PEP Label Expansion R&D Contract provides for future aggregate research and development funding under the initial award of approximately

$19.2

million. For the

three

months ended

March 31, 2020

, the Company, under the PEP Label Expansion R&D Contract, recognized revenue of less than

$0.1

million on an over time basis.

Contracts and grants include, among other things, options that

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.