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Rx Communications Group, LLC
Phone: (917) 322-2568
PharmAthene Reports Year-End 2016 Financial
and Operational Results
ANNAPOLIS, MD - March 14, 2017
- PharmAthene, Inc. (NYSE MKT: PIP), a biodefense company developing medical countermeasures against anthrax, today reported
its financial and operational results for the year ended December 31, 2016.
Fourth quarter and subsequent operational
For the year ended December 31, 2016, PharmAthene
recognized revenue of $5.2 million. Of such amount, $4.4 million was derived from an existing contract with the National Institutes
of Allergy and Infectious Diseases for the development of a next generation lyophilized anthrax vaccine, SparVax-L, intended to
be stored at room temperature and to provide extended shelf life. The additional $0.8 million was the result of an audit by the
Biomedical Advanced Research and Development Agency on a closed contract.
Research and development expenses for 2016
of $4.8 million were incurred primarily to advance the Company's next generation anthrax vaccine programs. General and administrative
expenses for 2016 were $11.5 million compared to $6.2 million in 2015. The increase is primarily due to an increase in stock compensation
and other expenses related to the proposal and protest submitted to and filed with the Department of Health and Human Services
in response to its request for a next generation anthrax vaccine, as well as costs associated with merger activities, offset by
a decrease in SIGA-related legal expenses.
Other income for the year ended December
31, 2016 primarily consists of payments of approximately $217.1 million received from SIGA pursuant to a judgment stemming from
a lawsuit filed by PharmAthene in December 2006. The complaint PharmAthene filed against SIGA alleged, among other things, that
PharmAthene has the right to license exclusively the development and marketing rights for SIGA's drug candidate, Tecovirimat,
also known as ST-246.
For the year ended December
31, 2016, PharmAthene's reported net income of $193.9 million, or $2.95 per diluted share, compared to a net loss of $3.4
million, or $0.05 per diluted share, for the prior year. Cash and cash equivalents were $154.0 million and short-term investments
were $66.8 million in 2016. In 2015, cash and cash equivalents were $15.6 million. The increase in cash, cash equivalents and short-term
investments from 2015 were due to the payments the Company received from SIGA.
PharmAthene is engaged in the development
of a next generation anthrax vaccine that is intended to improve protection and safety while having favorable dosage and storage
requirements compared to other anthrax vaccines.
On January 18, 2017, PharmAthene entered
into an agreement and plan of merger and reorganization pursuant to which its wholly-owned subsidiary, Mustang Merger Sub, Inc.,
will be merged with and into Altimmune, Inc., with Altimmune as the surviving subsidiary, and immediately thereafter, Altimmune
will be merged with and into Mustang Merger Sub LLC, with Mustang Merger Sub LLC as the surviving entity in such merger. Following
the consummation of the mergers, PharmAthene will change its name to "Altimmune, Inc." PharmAthene's Board of Directors
has established a record date of March 22, 2017 for a Special Meeting of Stockholders scheduled for May 4, 2017 at which stockholders
of PharmAthene will have an opportunity to approve the proposals relating to the mergers.
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"; or similar statements are forward-looking statements. Risks and
uncertainties include risks associated with our ability to consummate the mergers with Altimmune, our ability to advance our next
generation anthrax vaccine programs; and other risks detailed from time to time in PharmAthene's Forms 10-K and 10-Q under
the caption "Risk Factors", its Registration Statement on Form S-4 filed with the U.S. Securities and Exchange Commission
(SEC) on February 3, 2017 (File No. 333-215891) and in its other reports and registration statements filed with the SEC. PharmAthene
disclaims any intent or obligation to update these forward-looking statements other than as required by law.
Additional Information and Where to
In connection with the proposed mergers
involving PharmAthene, Inc. and Altimmune, Inc., PharmAthene has filed with the SEC a current report on Form 8-K, which included
the merger agreement and related documents. In addition, PharmAthene has filed a registration statement on Form S-4 with the SEC,
which contains a proxy statement/prospectus/consent solicitation and other relevant materials, and plans to file with the SEC other
documents regarding the proposed transaction. The information in the preliminary proxy statement/prospectus/consent solicitation
is not complete and may be changed. The final proxy statement/prospectus/consent solicitation will be sent to the stockholders
of PharmAthene and Altimmune. The final proxy statement/prospectus will contain information about PharmAthene, Altimmune, the proposed
merger and related matters. STOCKHOLDERS ARE URGED TO READ THE FINAL PROXY STATEMENT/PROSPECTUS/CONSENT SOLICITATION (INCLUDING
ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY, AS THEY CONTAIN IMPORTANT
INFORMATION THAT STOCKHOLDERS SHOULD CONSIDER BEFORE MAKING A DECISION ABOUT THE MERGERS AND RELATED MATTERS. In addition to receiving
the proxy statement/prospectus/consent solicitation and proxy card by mail, stockholders will also be able to obtain the proxy
statement/prospectus/consent solicitation, as well as other filings containing information about PharmAthene, without charge, from
the SEC's website (http://www.sec.gov) or, without charge, by directing a written request to: PharmAthene, Inc., One Park
Place, Suite 450, Annapolis, Maryland 21401, Attention: Investor Relations.
This communication shall not constitute
an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, or a solicitation
of any vote or approval, nor shall there be any offer, solicitation or sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Participants in Solicitation
PharmAthene and its executive officers
and directors may be deemed to be participants in the solicitation of proxies from PharmAthene's stockholders with respect
to the matters relating to the proposed mergers. Altimmune and its officers and directors may also be deemed participants in such
solicitation. Information regarding PharmAthene's executive officers and directors is available in PharmAthene's Annual
Report on Form 10-K, to be filed with the SEC on March 14, 2017. Information regarding any interest that PharmAthene, Altimmune
or any of the executive officers or directors of PharmAthene or Altimmune may have in the transaction with Altimmune is set forth
in the proxy statement/prospectus/consent solicitation described above.
Copies of PharmAthene's public disclosure
filings are available on our website under the investor relations tab at www.PharmAthene.com.
CONSOLIDATED BALANCE SHEETS
| December 31, | ||||||||
| 2016 | 2015 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 153,994,922 | $ | 15,569,813 | ||||
| Short-term investments | 66,810,962 | - | ||||||
| Billed accounts receivable | 301,824 | 511,994 | ||||||
| Unbilled accounts receivable | 697,321 | 963,345 | ||||||
| Prepaid expenses and other current assets | 464,797 | 181,714 | ||||||
| Total current assets | 222,269,826 | 17,226,866 | ||||||
| Property and equipment, net | 120,944 | 233,694 | ||||||
| Other long-term assets and deferred costs | - | 53,384 | ||||||
| Goodwill | 2,348,453 | 2,348,453 | ||||||
| Total assets | $ | 224,739,223 | $ | 19,862,397 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 926,529 | $ | 521,122 | ||||
| Dividends payable | 197,083,993 | - | ||||||
| Accrued expenses and other liabilities | 2,083,472 | 1,248,708 | ||||||
| Accrued income taxes payable | 3,157,563 | - | ||||||
| Accrued restructuring expenses - current | 109,126 | 381,950 | ||||||
| Other short-term liabilities | 11,588 | 11,250 | ||||||
| Current portion of derivative instruments | 1,465,272 | 16,411 | ||||||
| Total current liabilities | 204,837,543 | 2,179,441 | ||||||
| Accrued restructuring expenses, less current portion | - | 108,641 | ||||||
| Other long-term liabilities | 442,589 | 433,407 | ||||||
| Derivative instruments, less current portion | - | 491,791 | ||||||
| Total liabilities | 205,280,132 | 3,213,280 | ||||||
| Stockholders' equity: | ||||||||
| Common stock, $0.0001 par value; 100,000,000 shares authorized; 67,726,458 and 64,382,086 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively | 6,773 | 6,438 | ||||||
| Additional paid-in capital | 49,323,222 | 240,366,704 | ||||||
| Accumulated other comprehensive loss | (1,052 | ) | - | |||||
| Accumulated deficit | (29,869,852 | ) | (223,724,025 | ) | ||||
| Total stockholders' equity | 19,459,091 | 16,649,117 | ||||||
| Total liabilities and stockholders' equity | $ | 224,739,223 | $ | 19,862,397 |
CONSOLIDATED STATEMENTS OF OPERATIONS
| Year Ended December 31, | ||||||||||||
| 2016 | 2015 | 2014 | ||||||||||
| Contract revenue | $ | 5,230,196 | $ | 10,640,660 | $ | 10,190,205 | ||||||
| Operating expenses: | ||||||||||||
| Research and development | 4,836,035 | 5,133,512 | 9,319,828 | |||||||||
| General and administrative | 11,515,071 | 6,222,185 | 10,911,724 | |||||||||
| Restructuring expense | - | 2,546,159 | - | |||||||||
| Depreciation | 143,437 | 141,604 | 149,958 | |||||||||
| Total operating expenses | 16,494,543 | 14,043,460 | 20,381,510 | |||||||||
| Loss from operations | $ | (11,264,347 | ) | $ | (3,402,800 | ) | $ | (10,191,305 | ) | |||
| Other income (expense): | ||||||||||||
| Interest income (expense), net | 168,150 | (54,581 | ) | (210,399 | ) | |||||||
| Realization of cumulative translation adjustment | - | (229,192 | ) | - | ||||||||
| Change in fair value of derivative instruments | (957,070 | ) | 299,477 | 508,817 | ||||||||
| Other income - litigation | 217,068,969 | - | - | |||||||||
| Other income (expense) | 7,847 | 8,137 | (762 | ) | ||||||||
| Total other income (expense) | 216,287,896 | 23,841 | 297,656 | |||||||||
| Income (loss) before income taxes | 205,023,549 | (3,378,959 | ) | (9,893,649 | ) | |||||||
| Income tax provision | (11,169,376 | ) | (61,746 | ) | (61,746 | ) | ||||||
| Net income (loss) | $ | 193,854,173 | $ | (3,440,705 | ) | $ | (9,955,395 | ) | ||||
| Basic net income (loss) per share | $ | 2.97 | $ | (0.05 | ) | $ | (0.17 | ) | ||||
| Diluted net income (loss) per share | $ | 2.95 | $ | (0.05 | ) | $ | (0.17 | ) | ||||
| Weighted-average shares used in calculation of basic net income (loss) per share | 65,306,962 | 63,986,013 | 57,535,325 | |||||||||
| Weighted-average shares used in calculation of diluted net income (loss) per share | 65,657,802 | 63,986,013 | 57,535,325 |