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PharmAthene Reports Second Quarter 2016
Financial and Operational Results
ANNAPOLIS, MD - August
4, 2016 - PharmAthene, Inc. (NYSE MKT: PIP), a biodefense company developing medical countermeasures against anthrax,
today reported its financial and operational results for the second quarter of 2016.
Under SIGA's Reorganization Plan,
approved by U.S. Bankruptcy Court for the Southern District of New York, PharmAthene received from SIGA an initial payment of $5
million in April 2016, and an aggregate of $3.9 million in payments calculated as interest on the PharmAthene judgment for the
period from April 12 to June 30, 2016. PharmAthene received an additional $20 million from SIGA in July 2016, as payment to extend
by 90 days, until October 19, 2016, the date by which SIGA must satisfy the PharmAthene judgment. $25 million of these payments
are creditable against final satisfaction of the judgment in favor of PharmAthene of approximately $208 million plus interest and
For the three months ended June
30, 2016, PharmAthene recognized revenue of $2.1 million compared to $1.1 million for the corresponding period in 2015. The Company
recognized $1.3 and $1.1 million in revenue during the second quarters of 2016 and 2015, respectively, under its contract with
the National Institute of Allergy and Infectious Diseases for the development of a next generation lyophilized anthrax vaccine.
Under PharmAthene's contract with the Biomedical Advanced Research and Development Authority for the development of SparVax ,
the Company recognized $0.8 million in revenue in the second quarter of 2016.
Research and development expenses in the
second quarter of 2016 and 2015 were $1.1 million and $1.2 million, respectively. These expenses resulted from research and development
activities related primarily to the Company's anthrax vaccine programs.
Expenses associated with general and administrative
functions were $1.4 million in the second quarter of 2016 compared to $1.8 million in the second quarter of 2015. The decrease
resulted from implementation of the Company's restructuring and a reduction in legal expenses.
For the second quarter of 2016, the Company's
net income was $8.0 million, or $0.12 per share, compared to net loss of $2.3 million, or $(0.04) per share, for the corresponding
Cash at the end of the second quarter of
2016 was $23.2 million compared to a cash balance of $15.6 million at the end of fiscal year 2015.
On April 8, 2016, the U.S. Bankruptcy Court
for the Southern District of New York entered an order confirming SIGA's third amended reorganization plan (the Plan), effective
April 12, 2016. Subsequently, SIGA and PharmAthene filed a joint motion, which is subject to approval by the bankruptcy court,
seeking approval of amendments to the Plan that would extend the deadline for SIGA to satisfy the previously disclosed judgment
owed to PharmAthene from October 19, 2016 to November 30, 2016, conditioned on SIGA paying to PharmAthene a nonrefundable $100
million on or prior to October 19, 2016 that will be applied against PharmAthene's judgment. SIGA will continue to calculate
interest on any unpaid balance which will continue to accrue at 8.75% per year and be paid monthly to PharmAthene by SIGA.
The Plan provides that SIGA will satisfy
PharmAthene's judgment through one of the following ways:
PharmAthene's taxable income from
receipt of the SIGA judgment is expected in part to be offset by PharmAthene's net operating loss (NOLs) carryforwards. At
December 31, 2015 PharmAthene had available $156 million in NOLs. The Company is evaluating tax effects of winding down its UK
subsidiary which it believes may increase U.S. tax NOLs by an estimated $9 million to $22 million.
If SIGA pays PharmAthene cash in full and
barring any unexpected material events, PharmAthene intends to distribute at least 90% of the after tax net cash proceeds of such
payment to its shareholders. The timing and form of such a potential distribution will depend upon PharmAthene's analysis
of its current situation, applicable corporate statutes relating to distributions and the economic consequences to its shareholders.
Concurrently, PharmAthene
is developing a transition plan and strategy for operating SIGA as a separate business without disruption in the event SIGA
chooses to pay the claim by turning over 100% of its common stock to PharmAthene.
PharmAthene is a biodefense company engaged
in the development of next generation medical countermeasures against biological threats. The Company's development portfolio includes
one next generation Anthrax vaccine that is intended to improve protection while having favorable dosage and storage requirements
compared to other Anthrax vaccines.
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 fully collect a money judgment from SIGA; risks relating to the timing of payments, if any, under the
SIGA litigation; our ability to make distributions of a substantial portion of the cash proceeds we may receive from SIGA;
the timing, amount and form of such a distribution; our ability to develop a successful transition plan and strategy for
operating SIGA as a separate business; risks relating to our continuing ability to recognize cost reductions; funding delays
and/or reductions or elimination of U.S. government funding and/or non-renewal of expiring funding; risks associated with the
availability of our NOLs, the amounts of available NOLs and any increases thereof and preservation of such NOLs; risks
associated with our implementation of the shareholder rights plan to protect the tax benefits of our NOLs; risks associated
with accomplishing any future strategic partnerships or business combinations; 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. PharmAthene disclaims any intent or obligation to update these forward-looking statements
other than as required by law.
Copies of PharmAthene's public disclosure
filings are available on our website under the investor relations tab at www.PharmAthene.com.
Condensed Consolidated Balance Sheets
| June 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 23,157,883 | $ | 15,569,813 | ||||
| Billed accounts receivable | 1,024,374 | 511,994 | ||||||
| Unbilled accounts receivable | 797,913 | 963,345 | ||||||
| Prepaid expenses and other current assets | 418,636 | 181,714 | ||||||
| Total current assets | 25,398,806 | 17,226,866 | ||||||
| Property and equipment, net | 183,695 | 233,694 | ||||||
| Other long-term assets and deferred costs | - | 53,384 | ||||||
| Goodwill | 2,348,453 | 2,348,453 | ||||||
| Total assets | $ | 27,930,954 | $ | 19,862,397 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 711,106 | $ | 521,122 | ||||
| Accrued expenses and other liabilities | 1,510,003 | 1,248,708 | ||||||
| Accrued restructuring expenses - current | 237,125 | 381,950 | ||||||
| Other short-term liabilities | 11,588 | 11,250 | ||||||
| Current portion of derivative instruments | 798,788 | 16,411 | ||||||
| Total current liabilities | 3,268,610 | 2,179,441 | ||||||
| Accrued restructuring expenses, less current portion | - | 108,641 | ||||||
| Other long-term liabilities | 411,640 | 433,407 | ||||||
| Derivative instruments, less current portion | - | 491,791 | ||||||
| Total liabilities | 3,680,250 | 3,213,280 | ||||||
| Stockholders' equity: | ||||||||
| Common stock, $0.0001 par value; 100,000,000 shares authorized; 64,785,846 and 64,382,086 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively | 6,479 | 6,438 | ||||||
| Additional paid-in-capital | 241,150,682 | 240,366,704 | ||||||
| Accumulated deficit | (216,906,457 | ) | (223,724,025 | ) | ||||
| Total stockholders' equity | 24,250,704 | 16,649,117 | ||||||
| Total liabilities and stockholders' equity | $ | 27,930,954 | $ | 19,862,397 |
Condensed Consolidated Statements of Operations
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Contract revenue | $ | 2,111,254 | $ | 1,149,570 | $ | 3,116,948 | $ | 8,218,316 | ||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 1,143,182 | 1,222,527 | 2,172,313 | 2,836,154 | ||||||||||||
| General and administrative | 1,435,381 | 1,819,241 | 2,628,679 | 4,015,361 | ||||||||||||
| Restructuring expense | - | 35,982 | - | 2,096,791 | ||||||||||||
| Depreciation | 40,435 | 36,687 | 78,136 | 73,793 | ||||||||||||
| Total operating expenses | 2,618,998 | 3,114,437 | 4,879,128 | 9,022,099 | ||||||||||||
| Loss from operations | $ | (507,744 | ) | $ | (1,964,867 | ) | $ | (1,762,180 | ) | $ | (803,783 | ) | ||||
| Other income (expense): | ||||||||||||||||
| Interest income, net | 1,478 | (13,279 | ) | 428 | (38,604 | ) | ||||||||||
| Realization of cumulative translation adjustment | - | (229,192 | ) | - | (229,192 | ) | ||||||||||
| Change in fair value of derivative instruments | (330,484 | ) | (120,615 | ) | (290,586 | ) | 217,630 | |||||||||
| Other income - litigation | 8,895,038 | - | 8,895,038 | - | ||||||||||||
| Other income (expense) | 1,622 | (1,911 | ) | 5,741 | 7,285 | |||||||||||
| Total other income (expense) | 8,567,654 | (364,997 | ) | 8,610,621 | (42,881 | ) | ||||||||||
| Net income (loss) before income taxes | 8,059,910 | (2,329,864 | ) | 6,848,441 | (846,664 | ) | ||||||||||
| Income tax provision | (15,436 | ) | (11,068 | ) | (30,873 | ) | (30,873 | ) | ||||||||
| Net income (loss) | $ | 8,044,474 | $ | (2,340,932 | ) | $ | 6,817,568 | $ | (877,537 | ) | ||||||
| Basic net income (loss) per share | $ | 0.12 | $ | (0.04 | ) | $ | 0.11 | $ | (0.01 | ) | ||||||
| Diluted net income (loss) per share | $ | 0.12 | $ | (0.04 | ) | $ | 0.10 | $ | (0.01 | ) | ||||||
| Weighted average shares used in calculation of basic net income (loss) per share | 64,737,820 | 63,745,834 | 64,571,108 | 63,691,214 | ||||||||||||
| Weighted average shares used in calculation of diluted net income (loss) per share | 65,206,075 | 63,745,834 | 64,917,267 | 63,691,214 |