Suit against Siga going to trial

Siga Technologies, Inc., lost in a bid to preclude damages and reduce the scope in a breach of contract lawsuit brought by PharmAthene, Inc., over an agreement to develop and commercialize its smallpox drug.

The Annapolis, Maryland-based PharmAthene claims that Siga breached its obligations under a licensing agreement connected to the drug ST-246. Delaware Chancery Court Judge Donald  F. Parsons Jr. said that PharmAthene may be able to demonstrate that it is entitled to enforce the alleged agreement at trial, Business Week reports.

“Although it is unlikely that PharmAthene will be able to prove its claim for expectation damages or to overcome objections that such damages are simply too speculative in the context of this action, it would be premature to grant summary judgment on this issue,” Parsons wrote in an opinion made public this week, according to Business Week. “Rather, it should be considered in the context of all the issues and a full record after trial.”

The trial is set to begin on January 3, 2011. The New York-based Siga and PharmAthene had attempted to collaborate on the ST-246 drug in late 2005 because Siga had never before commercialized or developed a drug, unlike PharmAthene, which has conducted the process with over 25 products. Siga claims that that the agreement wasn’t binding, while PharmAthene believes it was a breach of contract and sued in 2006.

Siga recently signed a military contract for $500 million to product 1.7 million treatments of a smallpox antiviral drug that could protect the U.S. against potential terrorist attacks. If all options are exercised, the contract could be worth as much as $2.8 billion, Siga announced.