SIGA TECHNOLOGIES INC (SIGA) stock intrinsic value fair value estimate & owner earnings analysis

SIGA Technologies makes TPOXX (tecovirimat), an oral and intravenous antiviral approved by the FDA in 2018 for treating smallpox. Its customers are governments that stockpile it against a biological attack: the U.S. Strategic National Stockpile above all, plus the Department of Defense and a rotating set of foreign governments. Revenue arrives in large, irregular government orders, so the business runs in contract cycles. It is not a steady annual stream. Where the business stands. The current U.S. contract (the 19C BARDA contract, signed September 2018, about $630 million) is essentially finished. Of its value, $545 million of options had been exercised by the end of 2025, only about $5.6 million remained unexercised, and the company says the $24 million intravenous delivery in the second quarter of 2026 completed the last procurement order under it. No replacement contract has been signed. Management says it is negotiating a new multi-year procurement contract and blames delays on HHS reorganizing contract management from BARDA to the Stockpile, with leadership posts vacant. The annual report adds that no request for proposal or request for information had arrived by July 1, 2025. One more fact matters: TPOXX is not the only FDA-approved smallpox antiviral. Emergent BioSolutions' TEMBEXA (brincidofovir) is approved and has its own U.S. procurement orders, so the two products compete for the same stockpile budget. How we measure earnings. We use owner earnings: operating cash flow with working-capital timing swings removed, less stock-based compensation, less the very small capital spending the business needs. Because SIGA has no debt and holds a large cash balance, we took the interest earned on that cash out of the earnings stream (about $0.07 per share after tax in 2025) and count the surplus cash separately, as described below. On that basis the business earned, per share: 2019 -$0.01, 2020 $1.01, 2021 $0.92, 2022 $0.40, 2023 $0.85, 2024 $0.77, 2025 $0.37. We measure from 2019 through 2025 because that is one complete contract cycle for the business as it exists after its 2016 exit from bankruptcy. The median of that cycle is about $0.77. Years before 2019 were distorted by the bankruptcy, the one-time payments released when the FDA approved the drug, and a $78 million sale of a priority review voucher. Earnings fell 53% in 2025 as the contract wound down. In the first half of 2026 net income was $9 million on $47 million of revenue, almost all of it from the final U.S. delivery and two foreign orders. In a quarter with no deliveries the business loses roughly $0.06 per share. The first year of every case below starts well under the 2025 figure, so the forecast does not assume a rebound before a contract exists. What we credited and what we left out. This is not a growth business, so no case credits growth. The question is whether the U.S. government keeps restocking. The evidence that it does: it has bought TPOXX under two successive contracts (a 2011 BARDA contract, then the 2018 contract) across roughly 13 years, and BARDA added $13.2 million in June 2025 to fund a pediatric formulation. The cases therefore differ on when the next U.S. contract is signed, how large it is, and how many more restocking cycles remain. We did not credit a repeat of the 2022-2024 mpox-driven surge in foreign and Department of Defense orders: large mpox trials (PALM007, STOMP) found no benefit, and European regulators were expected to withdraw the mpox indication. We gave nothing for the planned post-exposure prophylaxis filing (now targeted for the first half of 2027) or the pediatric formulation, because neither is approved. Base case (about the median outcome). The rest of 2026 and 2027 are lean gap years, losing about $0.12-0.13 per share a year, partly offset by foreign orders. Management is working on one foreign order to be delivered by March 2027, and SIGA signed a new Middle East and North Africa partnership with Hikma. A new U.S. contract is signed in 2027, and deliveries ramp in 2028 and run at about $0.65 per share a year from 2029 to 2033. That is below the last cycle's $0.77 median because the mpox surge does not recur and TEMBEXA shares the budget. After a two-year gap, a second restocking cycle from 2036 to 2041 earns about $0.55 per share a year, lower again because the listed U.S. patents expire between 2027 and 2031 (pending applications would run to 2037). The case then fades to zero by 2045, since we can point to no evidence beyond that. The business is worth about $4.15 per share (about $299 million). SIGA owes no debt and holds about $97.6 million of cash beyond a $20 million operating reserve ($117.6 million in total at June 30, 2026), or $1.36 per share. That puts the shares at about $5.51. Bear case (about the 10th percentile). HHS's reorganization pushes the next U.S. contract to 2028. TEMBEXA takes a larger share of the smallpox-antiviral budget, so the award is about half the size of the last one. Foreign sales stay thin, at the 2025 level of about $6 million from one country. The business loses $0.13-0.20 per share a year through 2028, earns about $0.30 a year from 2030 to 2034, and has one small tail cycle before ending in 2037. The business is worth about $0.77 per share (about $56 million). With no debt and the same $1.36 per share of surplus cash, the shares are worth about $2.13. Most of this case's value is cash already on the balance sheet. Bull case (about the 90th percentile). The new U.S. contract is signed early in 2027 with a first order that same year, and the foreign order is delivered on schedule. Deliveries run at about $0.80 per share a year from 2028 to 2033, near the last cycle's level, with foreign sales continuing at their 2020-2025 average of about $23 million a year. Gaps between contracts last only a year, and a third restocking cycle runs to 2049. The business is worth about $7.98 per share (about $575 million). Adding $1.36 per share of surplus cash gives about $9.34. Balance sheet. SIGA repaid its term loan in 2020 and has had no borrowings since. Its only liabilities are ordinary operating items (about $10 million at June 30, 2026), which the earnings figures already account for. There is therefore no debt to subtract in any case, and no maturity or covenant affects the outcome. The company has paid a special dividend of $0.60 per share in each of the last three years ($43 million in April 2026). That returns cash to owners but also runs down the cushion that carries the business through gaps between contracts. What changed since our previous estimate. We previously valued the shares at $0.33 (bear), $9.92 (base) and $15.34 (bull). Two things changed. First, the earlier estimate counted the interest earned on SIGA's cash as part of its earnings instead of counting the roughly $98 million of surplus cash directly. That understated the bear case, where the cash is most of the value, so the bear case rises to $2.13. Second, the earlier base and bull cases assumed the U.S. government relationship continued indefinitely, and described TPOXX as the only approved smallpox antiviral, which it is not. We now limit each case to the restocking cycles we can support, which lowers the base case to $5.51 and the bull case to $9.34. What would make this wrong. On the upside, a signed U.S. contract at or above the last one's scale, or FDA approval for post-exposure use, which would widen the market. On the downside, a U.S. decision to rely mainly on TEMBEXA or to let the TPOXX stockpile run down without restocking. In that case the value falls toward the cash on hand, and that cash shrinks by about $0.25 per share for each year without orders. Margin-of-safety price. Because the value depends on a single customer's contracting decision, the margin is wide: the margin-of-safety price is about $3.00 per share. That is roughly 45% below the base case and not far above the bear case, which is mostly cash. From that price, a new U.S. contract signed on the base-case timetable and a move to the base value within about three years implies roughly 20% a year before dividends.