Court orders pharmaceutical companies to share smallpox drug profits

Siga Technologies and PharmAthene were ordered by a court to share in the windfall from a major government contract this week but are still disputing the terms of the payout.

The Delaware court of chancery issued a final judgment ordering Siga to hand over a portion of the net profits from a $433 million biodefense contract to PharmAthene. The two rivals shared a merger agreement under a contract with the U.S. Biomedical Advanced Research and Development Authority, according to

After Siga pulled out of the deal, PharmAthene sued over Siga's rights to the developmental anti-smallpox drug ST-246. The court ruled that the Maryland-based PharmAthene is entitled to share in the profits from the BARDA contract to deliver 1.7 million courses of ST-246 to national biodefense stockpiles.

The chancery court ruled that Siga will be allowed to keep the first $40 million in net profits from the contract, but must then split the remainder evenly with PharmAthene over the next 10 years. Siga has also been ordered to pay a portion of its rival's court costs.

"We obviously remain disappointed at the overall result, but we are focused on executing on our BARDA contract and obtaining FDA approval for ST-246," Siga CEO Eric Rose said, reports.

In a statement, Siga said that it was pleased that the court decided to take development expenses into account when calculating net profits. The company also said it plans to appeal the court's judgment.