Delaware Chancery Court Issues Final Order And Judgment Upholding Its Favorable Ruling Court Provides Clarity on Payment Process to PharmAthene
ANNAPOLIS, Md., June 1, 2012 /PRNewswire/ -- PharmAthene, Inc. (NYSE Amex: PIP) today announced that the Delaware Court of Chancery has issued its final judgment in the Company's litigation against SIGA Technologies. Upholding its September 22, 2011 ruling, the Court awarded PharmAthene 50% of the net profits over a period of 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.
President and Chief Executive Officer, Eric I. Richman, said, "This decision brings this important phase of the litigation, which has been ongoing for over five years, to a positive close for PharmAthene shareholders. Recently, SIGA reaffirmed its guidance to investors that it anticipates delivery of ST-246 to the U.S. government to start in the first quarter 2013. The definition of net profits adopted by the Court in its final judgment should result in our realizing a significant share of revenue from those sales and will accelerate our profitability."
Under the Court's ruling, once SIGA earns $40 million in "net profits," PharmAthene shall be paid fifty percent (50%) of all net profits for a period from the date of entry of the Court's final order until ten (10) years from "first commercial sale." First commercial sale shall be deemed to occur following initial delivery of and payment for Product. The Court also awarded PharmAthene $2.4 million to cover a portion of its legal fees and expert witness and other costs, along with interest at the legal rate from the date of the final order until payment is made.
In 2011, the Biomedical Advanced Research and Development Authority (BARDA) awarded SIGA a base contract 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. 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, the total value for the current U.S. civilian market, including the initial base contract for 1.7 million courses of therapy, could be approximately $2.8 billion.
A copy of the Court's final judgment in the case, as well as the initial September 22nd opinion, 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. 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, PharmAthene has not verified independently any of the statements or estimates previously made by SIGA with respect to the timing of sales, the value of the market or with respect to final orders from the US government. Accordingly, no assurances can be given with respect to the accuracy or attainability of any of such estimates. Further, 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 and there can be no assurance that any profits received by SIGA and paid to us will be significant. Furthermore, SIGA has publicly stated it intends to appeal the Court of Chancery 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, to the extent that there is an appeal, we cannot predict how long that 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.