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Rx Communications Group, LLC
PHARMATHENE REPORTS YEAR-END 2014 FINANCIAL
AND OPERATIONAL RESULTS; ANNOUNCES PLAN TO REALIGN OPERATIONAL RESOURCES
2014 Operational Highlights
ANNAPOLIS, MD - March 9, 2015
- PharmAthene, Inc. (NYSE MKT: PIP), a biodefense company developing medical countermeasures against biological and
chemical threats, today reported its financial and operational results for the year ended December 31, 2014. In addition, the Company
announced that its Board of Directors approved a realignment plan to maximize, for its shareholders, the value of any proceeds
from its litigation with SIGA Technologies, Inc. and its existing biodefense assets.
Year-End 2014 Financial Results
For the year ended December 31, 2014, PharmAthene
recognized revenue of approximately $10.2 million, compared to approximately $17.9 million in 2013. The decrease in revenue in
2014 is primarily attributable to a reduction in activity in the Company's SparVax and rBChE bioscavenger
programs during 2014, due to the de-scoping and partial termination for convenience of the SparVax contract and
expiration of the bioscavenger contract.
Research and development expenses in 2014
were approximately $9.3 million, compared to approximately $15.3 million in 2013, representing a year-over-year decrease of approximately
39%. Research and development expenses declined in 2014 primarily as a result of decreased costs related to the SparVax
anthrax vaccine program, as noted above.
Expenses associated with general and administrative
functions decreased approximately 18% to $10.9 million in 2014, compared to $13.3 million in 2013. The decrease in general and
administrative costs was primarily due to a reduction in merger and acquisition costs in 2014, partially offset by increased severance
and share-based compensation expense.
For the year ended December 31, 2014, PharmAthene's
net loss was approximately $10.0 million, or $0.17 per share, compared to a net loss of $11.7 million, or $0.23 per share, for
At December 31, 2014, PharmAthene had cash
and cash equivalents totaling approximately $18.6 million, compared to $10.5 million at December 31, 2013. The increase in cash
in 2014 resulted from net proceeds of approximately $18.1 million raised through the sale of the Company's common stock under
a Controlled Equity Offering Agreement, and $0.7 million in warrant exercises, partially offset by $8.5 million in net cash used
in operations and $2.1 million used for other financing activities. The Company is currently reconciling the close out of its SparVax
contract with the government and may receive an additional payment.
In connection with the realignment plan,
PharmAthene plans to reduce its staffing levels by approximately two thirds. Eric Richman, President and Chief Executive Officer,
will remain a member of the Board of Directors, but will no longer serve as an Officer of the Company after March 11, 2015. He
will continue to play a key role in managing the ongoing litigation, other legal matters and strategic transactions in his role
as Director. Linda Chang will continue to serve as Chief Financial Officer through April 30, 2015. In accordance with meeting cost-saving
objectives, the Board will be reduced from eight members to six and Messrs. Joel McCleary and Brian A. Markison intend to resign
The Company expects its cost-saving initiatives
will preserve cash and cash equivalents sufficient to finance its operations beyond the adjudication of the appeal of the decision
of the Delaware Chancery Court awarding PharmAthene $195 million plus post-judgment interest. PharmAthene will maintain necessary
resources in order to execute under its current government contract with NIAID and seek partners, co-developers or acquirers for
its other biodefense programs.
Dr. Mitchel Sayare, Chairman of the Board
of Directors, noted, "On behalf of the Board, I would like to express our deep gratitude to all of the employees affected
by this reduction. I wish to thank Eric and Linda for their outstanding leadership and valuable contributions to the Company, including
the favorable judgment in the SIGA litigation, awarding us nearly $195 million. We also want to thank our Directors for their service
to PharmAthene shareholders over the past several years.
"The Board is confident that our
strategy adopted today is in the best interests of shareholders and provides the clearest path for value creation while maintaining
the viability of our existing biodefense assets as we identify appropriate collaborators moving forward."
John M. Gill, a Director of the Company
for the past nine years, will assume the role of President and Chief Executive Officer. Mr. Gill is a seasoned biotech executive
with more than 30 years' experience in corporate development and strategic planning. Previously, he served as Co-Founder
and Chief Executive Officer of TetraLogic Pharmaceuticals and Chief Operating Officer of 3-Dimensional Pharmaceuticals until its
sale to Johnson & Johnson. In addition, Mr. Gill spent 20 years at SmithKline Beecham, where he served in various positions.
Current Vice President and Controller, Philip MacNeill, will become the Chief Financial Officer following the departure of Linda
Chang. Mr. Gill is expected to devote necessary time to carry out his duties as President and Chief Executive Officer, and although
he does not have other employment, he is not expected to devote his full time to the business of the Company, which his compensation
"We have undertaken this approach
to preserve the value of the judgment award while maintaining and capturing the value of our underlying biodefense assets. I am
looking forward to working towards effecting a positive return of value to our shareholders," stated Mr. Gill.
Since 2001, PharmAthene
has been a biodefense company engaged in the development of next generation medical countermeasures against biological and chemical
threats. During this time, it has devoted substantial effort and resources to the development of medical countermeasures for the
prevention and treatment of anthrax infection and the prevention of nerve agent poisoning. PharmAthene's biodefense portfolio includes
the following product candidates:
On January 15, 2015, the Delaware Court
of Chancery issued its Final Order and Judgment in PharmAthene's litigation against SIGA Technologies, Inc. The Court of
Chancery awarded to PharmAthene lump sum expectation damages for the value of PharmAthene's lost profits for SIGA's
smallpox antiviral, Tecovirimat, also known as ST-246 (formerly referred to as "Arestvyr " and
referred to by SIGA in its recent SEC filings as "Tecovirimat"). In addition, the Court of Chancery ordered SIGA to
pay pre-judgment interest and varying percentages of PharmAthene's reasonable attorneys' and expert witness fees. The
court's determination of the final amount of the award, along with the decision itself, will remain subject to appeal by
SIGA to the Delaware Supreme Court and PharmAthene's ability to collect a monetary judgment from SIGA remains subject to
that appeal and further proceedings in the Bankruptcy Court.
Forward-Looking Statement Disclaimer
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 preceded 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 risks associated with our interest in Tecovirimat, also known as ST-246 (formerly referred to as "Arestvyr "
and referred to by SIGA in its recent SEC filings as "Tecovirimat") (including the risk that we will not be able to
collect any amounts related thereto); risks relating to our continuing ability to recognize cost reductions; risks 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; funding delays and/or reductions or elimination of U.S. government funding and/or non-renewal
of expiring funding under our September 2014 contract with NIAID after we receive funding of approximately $5.2 million over the
base period (if all technical milestones are met); risks associated with our common stock; risks associated with the GE Loan Agreement;
risks associated with our net operating loss carryforwards, or NOLs; risks associated with delays caused by third parties challenging
government contract awards to us; risks associated with unforeseen safety and efficacy issues; risks associated with our realignment
plan; risks associated with accomplishing any future strategic partnerships or business combinations; risks associated with continuing
funding requirements and dilution related thereto; risks relating to our ability to continue to satisfy the listing requirements
of the NYSE MKT and other 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.
On January 15, 2015, the Delaware Court
of Chancery issued its Final Order and Judgment in PharmAthene's litigation against SIGA Technologies, Inc. The Court of
Chancery awarded to PharmAthene lump sum expectation damages for the value of PharmAthene's lost profits for SIGA's