(By Balaseshan) PharmAthene Inc. (NYSEAMEX:PIP), a biodefense company, said the Delaware Court of Chancery has issued its final judgment in the company's litigation against SIGA Technologies Inc. (NASDAQ:SIGA). Following the news, shares of PIP jumped 34.43% in premarket.
The court upholded its September 22, 2011 ruling and 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 gets the first $40 million in net profits.
Recently, SIGA reaffirmed its guidance to investors that it expects 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 PharmAthene's realizing a significant share of revenue from those sales and will accelerate its profitability.
Under the Court's ruling, once SIGA earns $40 million in net profits, PharmAthene shall be paid 50% of all net profits for a period from the date of entry of the Court's final order until 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 about $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 about $2.8 billion.
PIP closed Thursday's regular session down 3.17% at $1.22, while SIGA ended down 1.28% at $2.31.