Court denies SIGA's motion for re-argument
The Delaware Court of Chancery denied SIGA Technologies' motion for re-argument that was filed on October 4, upholding the court's original September 22 decision regarding compensation for PharmAthene, Inc.
The decision awarded PharmAthene 50 percent of the net profits over 10 years from all sales of SIGA's smallpox antiviral therapeutic, ST-246, and related products after SIGA receives the initial net profits of $40 million. The court also awarded PharmAthene one-third of its reasonable expert witness costs and attorney's fees.
"We are pleased by the Court's decision to uphold its original ruling in favor of PharmAthene," Eric I. Richman, the president and chief executive officer of PharmAthene, said. "The court's decision to award 50 percent of the net profits of ST-246 to PharmAthene represents a tremendous victory for our company. 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 the motion filed on October 4, SIGA requested that the court vacate the "equitable lien relief" or "equitable payment stream" it awarded to PharmAthene.
"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…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," the court said in its opinion.
SIGA was awarded a base contract for the initial procurement of 1.7 million treatment courses of ST-246 from the Biomedical Advanced Research and Development Authority. The award is valued at $433 million, $412.6 million of which is for the purchase of the product. PharmAthene was formed to meet the needs of the U.S. and its allies by developing and commercializing medical countermeasures against chemical and biological weapons.