Operator
turn the call over to SEGA management, please note that any forward-looking statements made during this call are based on management's current expectations and observations and are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements. SEGA does not undertake any obligation to update publicly any forward-looking statements to reflect events or change circumstances after this call. For a discussion of factors that could cause results to differ, please see the company's filings with the Securities and Exchange Commission, including, without limitation, the company's annual report on Form 10-K for the year ended December 31, 2025, and its subsequent reports on Form 10-Q and Form 8-K. With that, I will turn the call over to Zem Wint, Chief Executive Officer of SEGA. Please go ahead.
Good afternoon, everyone, and thank you for joining today's call and review of our business results. I am joined by Dan Luxhire, our Chief Financial Officer, and we appreciate this opportunity to provide an update on our company. After the update, we'll be happy to answer your questions. I am pleased to report that SEGA continues to make product deliveries and generate revenues while navigating an evolving and dynamic global environment. Despite the external challenges, our focus has not wavered. We continue to engage and partner with governments to build and strengthen long-term preparedness against potential biological threats, namely smallpox. We serve many countries with our smallpox antiviral treatment, and we remain committed to positioning TPOX for rapid, large-scale deployment the moment an outbreak demands it. The threat of smallpox is real, and preparedness requires proactive, sustained government investment in medical countermeasure stockpiles. We're proud of the role we play in those efforts. Turning now to our results. As I've said before, our business carries inherent quarter-to-quarter variability, so our results are best understood in the context of our longer horizon rather than any single period. With that backdrop, I'm pleased to share that for the second quarter of 2026, we recorded product-related revenues of $38 million, mostly comprised of $24 million of IV TPOCs delivered to the U.S. Strategic National Stockpile and $13 million of oral TPOCs delivered to two international customers, one in the Asia-Pacific region and one in Europe. This diversification across multiple formulations and customers demonstrates the enduring need for governments to protect against biological threats. Turning to the U.S., this quarter's IVTPOX delivery marks the fulfillment of the final product order under our 19C contract. Since 2018, we've successfully delivered on all our product obligations under the agreement, and we're proud of our performance and what it represents. We look forward to building on our more than a decade-long partnership with the U.S. government. This track record highlights the historical strength of SEGA's business model and the important long-term role TPOX has played in the government smallpox preparedness. We continue to actively engage with the U.S. government across multiple levels on a new multi-year procurement contract. Further, we are encouraged by the recent Senate Help Committee hearings and vote regarding the President's nominee for the role of Assistant Secretary for Preparedness and Response. I will say that while progress toward a new contract has been slower than in the past, we continue to believe the case for smallpox preparedness remains strong. Moreover, we believe the U.S. government's ongoing funding of TPOC development programs, together with TPOC's orders that were recently filled, reflect a continuing role for TPOCs in the National Smallpox Preparedness. Shifting to our international business, we continue to engage with governments and key stakeholders as they assess their preparedness strategies. Government procurement is, by nature, a complex process, but the direction of these discussions reinforces our view that there are opportunities for additional international sales. As noted last quarter, we received a $13 million order from a country in the Asia-Pacific region which we delivered in the second quarter. Additionally, we delivered a small number of oral TPOCs courses to a new customer in Europe in the second quarter. As a reminder, we recently entered into an exclusive license and distribution agreement with Hikma MENA FCE in connection with the MENA region, which includes countries in the Middle East and North Africa. Since then, we've been meeting regularly with Hikma to develop a detailed plan to expand TPOC's footprints across MENA, a region where SIGA has historically been underrepresented. Under the agreement, Hikma holds the right to register and commercialize TPOCs across MENA, and SIGA serves as the exclusive manufacturer and supplier of finished products. Hikma's regional presence and expertise in bringing innovative medicines to market make them the right partner to expand access to TPOCs in these markets. Turning to our pipeline, we continue to advance our post-exposure prophylaxis, or PEP, and pediatric programs. On the PEP program, the CDC is advancing its work on the immunogenicity samples, and we are targeting an FDA submission in the first half of 2027. On the pediatric program, our Phase I study results are expected by year-end, which will determine the next steps. Children will be among the most vulnerable in the smallpox outbreak, and a purpose-built liquid gives clinicians a reliable, weight-based way to treat them. Together with oral and IV formulations, it extends coverage across a full population from infants to adults. In short, we are focused on what has always driven SIGA, financial and operational discipline, and the partnerships that position us for the long-term success. As 2026 progresses, we believe the case for preparedness has never been clear, and neither has our purpose. Smallpox and other high-consequence viruses are a serious threat, but they are threats that we can manage with preparation. We believe TPOX is uniquely suited to meet the smallpox threat. With that, I'll turn over to Dan to review the financial results in more detail. Dan?
Thanks, Dan. As noted earlier in the call, the company had product-related revenues of $38 million in the second quarter, following the first quarter in which there were minimal product revenues, reflecting the variable rhythm of SIGA's business model. Product revenues for this quarter include approximately $24 million of IVTPOX deliveries to the S&S and approximately $13 million of international sales to two international customers. The $24 million of IVTPOX deliveries represent the completion of an order received in 2025 under the 19-seat contract. The $13 million of international sales is mostly attributable to an order received earlier this year from a customer in the Asia-Pacific region. For the six months ended June 30, 2026, product-related revenues are $41 million, mostly driven by activity in the second quarter in addition to product related revenues for the three and six months ended June 30th 2026 the company also had research and development revenues of approximately three million dollars and six million dollars respectively during those periods pre-tax operating income for the quarter which excludes interest income and taxes is approximately 14 million dollars For the six months ended June 30, 2026, pre-tax operating income is approximately $9 million. Net income for the quarter is approximately $12 million. For the six months ended June 30, 2026, net income is $9 million. In turn, fully diluted income per share for the quarter is 17 cents per share, while fully diluted income per share for the six months ended June 30, 2026 is $0.13 per share. The company continues to maintain a strong balance sheet. As of June 30, 2026, the company had a cash balance of approximately $118 million and no debt. This concludes the financial update. At this point, I will turn the call back to Zem.
Thank you, Dan. With that, we would like to open the call for questions. Thank you.
Operator
Ladies and gentlemen, if you do have any questions at this time, please press star followed by one on your touchtone phone. You will hear a prompt that your hand has been raised. And should you wish to decline from the polling process, please press star followed by two. And if you're using a speakerphone, you will need to lift the handsets first before pressing any keys. Please go ahead and press star one now if you do have any questions. First, we will hear from Yoti Prakash at Edison Group. Please go ahead.
Hi, congratulations on the strong quarter, and thanks for taking my questions. So my first question is related to the U.S. RFP. Now the process has been slower than expected. What do you believe is the reason for this delay, and do you still think that an award in the second half of the year is possible, and will that be timely enough to support TPOX deliveries in 2027? Hi, Josie.
It's nice to hear your voice. Just as a starting point, every new contract process is unique and different, and so there's inherent variability in the terms of timing and process. You're correct that this process has certainly taken longer than generally expected. We believe the scale of change within HHS, including new initiatives, evolving priorities, transition of our contract from BARDA to SNS, and also key open leadership positions have been a meaningful contributor to the slower pace toward this new contract. Based on the continuing funding of multiple initiatives at CIGA by BARDA and the recent delivery of the IV TPOX to the SNS, we remain confident in TPOX's role within the U.S. government's smallpox preparedness strategy. It's a real threat that the CDC still classifies as a Category A threat.
Thank you. and then just just to follow up on that so since the rfp has been delayed and there is some uncertainty on the timing are you placing greater strategic emphasis on international markets and we could see that from the recent hikma agreement and the 13 million international order which was delivered this quarter so do you expect any additional international orders within this year Thanks, Josie.
As you would expect, CEGA always has and will continue to focus on all of our customers, whether it's domestic or international. And given the broader geopolitical environment, we're seeing many governments start from their focus on biodefense as well as medical count and measure preparedness. The international procurement decisions are quite complex in nature. As such, we will not comment on specific outcomes at this stage. But what I can say and share is, without getting into details, discussions with an international customer have been progressing to the point that we're targeting a new contract, as well as an order against it, and targeting, hopefully, a delivery in that order by March of the next year.
Great. That's quite helpful. And just staying on the international business, your promotion agreement with Medigin recently expired. Has it been renewed or replaced? And if not, how is SEGA now going to manage the promotion and customer relations across Meridian's former territories?
Yes. So, Joji, as I shared, we're focused on all of our customers. And since 2024, SEGA has handled and been responsible for the sales, marketing, distribution, and manufacturing of T-Poxit in all of our international markets. even though the Meridian Agreement didn't officially expire until May. So from your perspective and everyone else's perspective, nothing has changed on our end. We continue running these functions as we have been. And as with the case of recent international orders, activities, and new partnerships, the international business continues to move forward without interruption.
That's great. Thank you so much, Ram. And that's all from my side. I appreciate your time, and I look forward to further updates in the next quarters. Thank you so much.
Operator
Thank you. Ladies and gentlemen, a reminder to please press star 1 should you have any questions. And at this time, we have no other questions registered, so I will turn the call back over Thanks, Sylphie.
I'd like to thank everybody for making time to join us on today's call and for your ongoing interest in CEGA. We look forward to speaking to you again in our third quarter call. Have a good evening.
Operator
Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time we do ask that you please disconnect your lines.
