Delaware Chancery Court Denies SIGA Technologies' Motion for Reargument PharmAthene to Receive 50% of Net Profits for ST-246
ANNAPOLIS, Md., Dec. 19, 2011 /PRNewswire/ -- PharmAthene, Inc. (NYSE Amex: PIP) today announced that the Delaware Court of Chancery has denied SIGA Technologies' motion for reargument filed on October 4, 2011, upholding the Court's original September 22, 2011 decision awarding PharmAthene 50% of the net profits over ten years from all sales of SIGA's smallpox antiviral therapeutic, ST-246, and related products, after SIGA receives the first $40 million in net profits. In addition, under the original September 22nd Opinion, the Court awarded PharmAthene one-third of its reasonable attorney's fees and expert witness costs.
"We are pleased by the Court's decision to uphold its original ruling in favor of PharmAthene," commented Eric I. Richman, President and Chief Executive Officer. "The Court's decision to award 50% of the net profits of ST-246 to PharmAthene represents a tremendous victory for our Company," continued Mr. Richman. "The significant economic interest and near-term revenue we expect to recognize following this decision will enable us to accelerate our path to profitability and generate immediate value for investors. Coupled with potential future revenue from our current programs, which continue to make exciting progress, PharmAthene is positioned to become one of the nation's premier biodefense innovators."
In its motion filed on October 4, 2011, SIGA had requested that the Court vacate the "equitable payment stream" or "equitable lien relief" it awarded to PharmAthene.
In its opinion denying the motion for re-argument, the Court notes that "SIGA . . . denied PharmAthene the benefit of its bargain by conducting those negotiations in bad faith and, thus, is liable for breach of contract and under the doctrine of promissory estoppel . . . . [T]he underlying purposes of a constructive trust and equitable lien [are] applicable to the circumstances of this case . . . ."
The Court further notes that "PharmAthene would have accepted the use of a 50/50 profit split . . . [and] SIGA wrongfully deprived PharmAthene of its expectation of a major role in controlling the pace of the ST-246 development and expenditures."
"We are currently in the process of developing a proposed form of final judgment for submission to the Court. Among other things, it will outline a definition of 'net profits,' based upon which the Court will render its final order," continued Mr. Richman.
In May 2011, SIGA estimated that if the government were to purchase an additional 12 million treatment courses of smallpox antiviral, as outlined in BARDA's "justification for other than full and open competition" notification issued that same month, the total value for the current U.S. civilian market, including the initial base contract, could be approximately $2.8 billion.
SIGA was awarded a base contract from the Biomedical Advanced Research and Development Authority (BARDA) under the Department of Health and Human Services (HHS) for the initial procurement of 1.7 million treatment courses of ST-246. The five-year base contract award is valued at $433 million, of which approximately $412.5 million is for purchase of the product.
A copy of the Court's opinion regarding the motion for reargument, as well as the initial Sept. 22 opinion in the case, is available on the Company's website at http://www.pharmathene.com/ under the "Investor Relations" tab.
ST-246 is an orally administered anti-viral drug candidate being developed by SIGA Technologies to treat orthopox virus diseases including smallpox. ST-246 acts by blocking the ability of the virus to spread to other cells, preventing it from causing disease. The FDA has designated ST-246 for "fast-track status" enabling potential expedited FDA review and approval. In addition, ST-246 has been granted Orphan Drug designation for both the treatment and prevention of smallpox.
In 2006, ST-246 became the first smallpox antiviral candidate to demonstrate 100% protection against human smallpox virus in a primate trial conducted at the Centers for Disease Control ("CDC"). Additional studies in non-human primate models demonstrated 100% protection for animals injected with high doses of monkeypox virus. One study was sponsored by the National Institute of Allergy and Infectious Diseases at the National Institutes of Health. The second study was conducted by the U.S. Army Medical Research Institute of Infectious Diseases and was funded by the Department of Defense's Threat Reduction Agency.
About PharmAthene, Inc.
PharmAthene was formed to meet the critical needs of the United States and its allies by developing and commercializing medical countermeasures against biological and chemical weapons. PharmAthene's lead product development programs include:
- SparVax™ – a second generation recombinant protective antigen (rPA) anthrax vaccine
- Valortim® – a fully human monoclonal antibody for the prevention and treatment of anthrax infection
- Recombinant BChE – a novel bioscavenger for the prevention and treatment of morbidity and mortality associated with exposure to chemical nerve agents
In addition, pursuant to an opinion issued September 22, 2011, from the Delaware Court of Chancery, PharmAthene is entitled to 50% of the net profits over 10 years from all sales of SIGA Technologies' ST-246, a novel smallpox antiviral agent being developed by SIGA for the treatment and prevention of morbidity and mortality associated with exposure to the causative agent of smallpox, and related products, once SIGA receives the first $40 million in net profits from sales of ST-246. For more information about PharmAthene, please visit www.PharmAthene.com.
Statement on Cautionary Factors
Except for the historical information presented herein, matters discussed may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Statements that are not historical facts, including statements proceeded by, followed by, or that include the words "potential"; "believe"; "anticipate"; "intend"; "plan"; "expect"; "estimate"; "could"; "may"; "should"; "will"; "project"; "potential"; or similar statements are forward-looking statements. PharmAthene disclaims any intent or obligation to update these forward-looking statements other than as required by law. Risks and uncertainties include risk associated with the reliability of the results of the studies relating to human safety and possible adverse effects resulting from the administration of the Company's product candidates, unexpected funding delays and/or reductions or elimination of U.S. government funding for one or more of the Company's development programs, the award of government contracts to our competitors, unforeseen safety issues, challenges related to the development, scale-up, technology transfer, and/or process validation of manufacturing processes for our product candidates, unexpected determinations that these product candidates prove not to be effective and/or capable of being marketed as products, as well as risks detailed from time to time in PharmAthene's Forms 10-K and 10-Q under the caption "Risk Factors" and in its other reports filed with the U.S. Securities and Exchange Commission (the "SEC"). In particular, there is significant uncertainty regarding the level and timing of sales of ST-246 and when and whether it will be approved by the U.S. FDA and corresponding health agencies around the world. We cannot predict with certainty when Siga will commence delivering any product or will begin recognizing profit on the sale thereof. Furthermore, SIGA has announced that is intends to appeal the decision, and there can be no assurances that the decision will not be reversed or that the remedy will not otherwise be modified. In addition, we cannot predict how long an appeal will delay the receipt of payments, if any, from SIGA. Copies of PharmAthene's public disclosure filings are available from its investor relations department and our website under the investor relations tab at www.PharmAthene.com.
SOURCE PharmAthene, Inc.