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PharmAthene Reports Second Quarter 2015
Financial and Operational Results
ANNAPOLIS, MD - August 5, 2015
- PharmAthene, Inc. (NYSE MKT: PIP), a biodefense company developing medical countermeasures against biological threats,
today reported its financial and operational results for the second quarter of 2015.
For the three months ended June 30, 2015,
PharmAthene recognized revenue of $1.1 million compared to $3.7 million for the corresponding period in 2014. The decrease was
primarily due to an overall reduction in development activity in the Company's biodefense programs, including the de-scoping
of the SparVax anthrax vaccine contract.
Research and development expenses in the
second quarter of 2015 were $1.2 million compared to $2.4 million for the corresponding period in 2014. Research and development
expenses decreased primarily as a result of reduced activity under the Company's biodefense contracts, including the de-scoping
of our SparVax anthrax vaccine contract.
Expenses associated with general and administrative
functions were $1.8 million in the second quarter of 2015 compared to $2.4 million for the same period in 2015. The decrease was
primarily due to a reduction in labor and stock option expenses related to the Company's realignment plan, the implementation
of which reduced its workforce by approximately two-thirds.
For the second quarter of 2015, the Company
reported a net loss of $2.3 million, or $0.04 per share, compared to a net loss of $0.4 million, or $0.01 per share, for the corresponding
At June 30, 2015, PharmAthene had cash
and cash equivalents totaling $18.4 million compared to $18.6 million at December 31, 2014. U.S. Government billed and unbilled
accounts receivable totaled $1.2 million at June 30, 2015, compared to approximately $0.4 million at December 31, 2014. The increase
in receivables was mainly due to an increase in the amount due from the U.S. Government under the Company's anthrax vaccine
development contract with the National Institutes of Allergy and Infectious Diseases (NIAID). The sum total of cash and cash equivalents
and U.S. Government accounts receivable at June 30, 2015 was $19.6 million compared to $19.1 million at December 31, 2014.
During March 2015, the Company implemented
its realignment plan and reduced its workforce by two-thirds in an effort to maximize the value of any proceeds from its litigation
with SIGA and its existing biodefense assets. The Company expects its cost-saving initiatives will preserve and maximize 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 has maintained the resources necessary to execute
under its current government contract with NIAID and to seek partners, co-developers or acquirers for its other biodefense programs.
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
Anthrax vaccines - including SparVax , a second generation liquid recombinant
protective antigen (rPA) anthrax vaccine, and a next generation lyophilized anthrax vaccine containing rPA.
On January 15, 2015, the Delaware Court
of Chancery issued its Final Order and Judgment in PharmAthene's litigation against SIGA. 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. SIGA has filed a notice of
appeal with the Delaware Supreme Court and PharmAthene has filed a notice of cross-appeal. 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 the judgment relating to 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. 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. 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. Under the Final Order
and Judgment, PharmAthene is also entitled to post-judgment simple interest. PharmAthene's entitlement to interest from and
after SIGA's bankruptcy filing (as described below) may be negatively impacted by the Bankruptcy Code. SIGA has filed a notice
of appeal with the Delaware Supreme Court in which it challenges various findings of the Court of Chancery and seeks to set aside
the Final Order and Judgment, and we have filed a notice of cross-appeal.
As a result, the decision could be reversed,
remanded or otherwise changed. There can be no assurances if and when PharmAthene will receive any payments from SIGA as a result
of the decision. SIGA has stated publicly that it does not currently have cash sufficient to satisfy the award. It is also uncertain
whether SIGA will have such cash in the future. PharmAthene's ability to collect the Judgment depends upon a number of factors,
including SIGA's financial and operational success, which is subject to a number of significant risks and uncertainties (certain
of which are outlined in SIGA's filings with the SEC), as to which we have limited knowledge and which we have no ability
to control, mitigate or fully evaluate. SIGA disclosed in its Current Report on Form 8-K filed April 29, 2015 that it entered into
a modification to its contract with BARDA on April 29, 2015 to increase the provisional dosage of Tecovirimat and extend the delivery
schedule. Furthermore, because SIGA has filed for protection under the federal bankruptcy laws, PharmAthene is automatically stayed
from taking any enforcement action in the Delaware Court of Chancery. By agreement of the parties, and with the approval of the
Bankruptcy Court, the automatic stay has been lifted for the sole purpose of allowing the Delaware Court of Chancery to enter a
money judgment and to allow the parties to exercise their appellate rights. Our ability to collect a money judgment from SIGA,
if any, remains subject to further proceedings in the Bankruptcy Court. Further, at this point, future government funding to support
the development of rBChE and SparVax is unlikely. Even if we received such funding, significant additional non-clinical
animal studies, human clinical trials, and manufacturing development work remain to be completed for all of our product candidates.
It is also uncertain whether any of our product candidates will be shown to be safe and effective and approved by regulatory authorities
Finally, PharmAthene can offer no assurances
that it has correctly estimated the resources necessary to execute under its NIAID contract and seek partners, co-developers or
acquirers for its other programs under its realignment plan. If a larger workforce or one with a different skillset is ultimately
required to implement the realignment plan successfully, or if PharmAthene inaccurately estimated the cash and cash equivalents
necessary to finance its operations until SIGA's appeal has been adjudicated and it has received SIGA's payment, if