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PHARMATHENE REPORTS FIRST QUARTER 2014
FINANCIAL AND OPERATIONAL RESULTS
ANNAPOLIS, MD - May 8, 2014
- 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 first quarter of 2014.
For the three months ended March 31, 2014,
PharmAthene recognized revenue of approximately $3.7 million, compared to approximately $6.5 million for the corresponding period
in 2013. Revenue was derived primarily from contracts with the U.S. government for the development of the Company's biodefense
product candidates. The decrease in revenue in the first quarter of 2014 reflects a reduction in development activity in the Company's
SparVax anthrax vaccine program as a result of the clinical hold imposed by the U.S. Food and Drug Administration
(FDA) in December 2013, as well as a shift in focus in the Company's bioscavenger program from manufacturing to nonclinical
Research and development expenses in the
first quarter of 2014 were approximately $3.4 million, compared to approximately $5.2 million for the corresponding period in 2013.
Research and development expenses decreased in the first quarter of 2014 primarily as a result of reduced activity under the Company's
biodefense contracts.
Expenses associated with general and administrative
functions were approximately $2.7 million in the first quarter of 2014, compared to approximately $2.3 million in the first quarter
For the first quarter of 2014, PharmAthene
recorded other income of $0.2 million compared to other expense of $1.0 million for the first quarter of 2013. The change in other
income (expense) between the periods was largely the result of a change in the fair value of the Company's derivative financial
For the first quarter of 2014, PharmAthene's
net loss was $2.3 million, or $0.04 per share, compared to a net loss of $2.1 million, or $0.04 per share, for the corresponding
At March 31, 2014, PharmAthene had cash
and cash equivalents totaling approximately $9.5 million, compared to approximately $10.5 million at December 31, 2013. U.S. government
billed and unbilled accounts receivable totaled approximately $1.6 million at March 31, 2014, compared to approximately $3.6 million
at March 31, 2013. The decrease in receivables in the first quarter of 2014 is a result of reduced development activity in the
Company's biodefense programs, as discussed above. The sum total of cash and cash equivalents and U.S. government accounts
receivable at March 31, 2014 was approximately $11.2 million, compared to approximately $14.1 million at December 31, 2013.
"Regarding our SparVax
anthrax vaccine program, we have received guidance from the Department of Health and Human Services (HHS), Biomedical Advanced
Research and Development Authority (BARDA) on the de-scoping and partial termination for convenience of our current SparVax
contract. BARDA has authorized us to complete select activities, which we currently anticipate will be completed by the end of
the fourth quarter of 2014," remarked Eric I. Richman, President and Chief Executive Officer. "Separately, we recently
obtained new data from a non-clinical anthrax aerosol challenge study demonstrating 100% survival and non-inferiority of SparVax
compared to the currently licensed anthrax vaccine, BioThrax . Preliminary data show that the antibody titers
for SparVax in this study were up to 2-fold higher than BioThrax . We believe that these data,
in combination with our other achievements will enable us to pursue other funding opportunities for SparVax . In
the meantime, we continue to await a decision from the Delaware Court of Chancery regarding a proposed remedy in relation to the
ongoing litigation with SIGA Technologies, Inc. We look forward to a decision from the Court imminently."
Linda L. Chang, Senior Vice President,
Chief Financial Officer and Corporate Secretary, commented, "We are continuing to carefully manage our cash resources while
we evaluate other funding opportunities for SparVax and await the outcome of the SIGA litigation."
PharmAthene is a leading biodefense company
engaged in the development and commercialization of next generation medical countermeasures against biological and chemical threats.
PharmAthene's current biodefense portfolio includes the following product candidates:
SparVax - a next generation recombinant protective antigen (rPA) anthrax vaccine
rBChE bioscavenger - a medical countermeasure for nerve agent poisoning by organophosphorous compounds,
including nerve gases and pesticides
Valortim - a fully human monoclonal antibody for the prevention and treatment of anthrax
In addition, in May 2013, the Delaware
Supreme Court issued its ruling on the appeal in our litigation with SIGA Technologies, affirming the Court of Chancery's
finding that SIGA was liable for breach of contract, reversing its finding of promissory estoppel, and remanding the case back
to the Court of Chancery to reconsider the appropriate remedy and award of attorney's fees and expert witness costs in light of
the Supreme Court's opinion. For more information about PharmAthene, please visit www.PharmAthene.com.
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 "will"; "potential"; "believe";
"anticipate"; "look forward"; "intend"; "plan"; "expect"; "estimate";
"could"; "may"; "should"; or similar statements are forward-looking statements. Such statements include,
but are not limited to those referring to potential future government contracts or grant awards; potential payments under government
contracts or grants; specifically those referring to the de-scoping and partial termination of the current SparVax anthrax
vaccine contract; the outcome of the SIGA litigation; and our ability to deploy our resources. PharmAthene disclaims any intent
or obligation to update these forward-looking statements. Risks and uncertainties include, among others, risks associated with
the reliability of the results of the studies relating to human safety and possible adverse effects resulting from the company's
product candidates; unexpected funding delays and/or reductions or elimination of U.S. government funding for one or more of the
company's development programs; awards of government contracts to our competitors; unforeseen safety issues; unexpected determinations
that these product candidates prove not to be effective and/or capable of being marketed as products; as well as risks detailed
from time to time in PharmAthene's Annual Reports on Form 10-K and quarterly reports on Form 10-Q under the caption "Risk
Factors" and in its other reports filed with the U.S. Securities and Exchange Commission. In particular, there is significant
uncertainty regarding the level and timing of sales of Arestvyr and whether and when it will be approved by the U.S. FDA
and corresponding health agencies around the world. PharmAthene cannot predict with certainty if or when SIGA will begin recognizing
profit on the sale thereof and there can be no assurance that any profits received by SIGA will be significant. In its May 2013
decision, the Delaware Supreme Court reversed the remedy ordered by the Delaware Court of Chancery and remanded the issue of a
remedy back to the trial court for reconsideration in light of the Delaware Supreme Court's opinion. As a result, there can
be no assurance that the Delaware Court of Chancery will issue a remedy that provides PharmAthene with a financial interest in
Arestvyr and related products or any remedy. In addition, significant additional research work, non-clinical animal
studies, clinical trial, and manufacturing development work remains to be done with respect to PharmAthene's product candidates.
At this point, there can be no assurance that any of these product candidates will be shown to be safe and effective and approved
by regulatory authorities for use in humans. Copies of PharmAthene's public disclosure filings are available from its investor
relations department and its website under the investor relations tab at www.pharmathene.com.
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2014 (Unaudited) | December 31, 2013 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 9,534,720 | $ | 10,480,979 | ||||
| Accounts receivable (billed) | - | 1,427,113 | ||||||
| Unbilled accounts receivable | 1,649,896 | 2,199,525 | ||||||
| Prepaid expenses and other current assets | 401,448 | 231,491 | ||||||
| Total current assets | 11,586,064 | 14,339,108 | ||||||
| Property and equipment, net | 380,572 | 386,068 | ||||||
| Other long-term assets and deferred costs | 59,132 | 65,660 | ||||||
| Goodwill | 2,348,453 | 2,348,453 | ||||||
| Total assets | $ | 14,374,221 | $ | 17,139,289 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 471,803 | $ | 1,128,172 | ||||
| Accrued expenses and other liabilities | 1,929,379 | 3,182,687 | ||||||
| Deferred revenue | 62,261 | 341,723 | ||||||
| Short-term debt | - | 1,091,740 | ||||||
| Current portion of long-term debt | 999,996 | 999,996 | ||||||
| Current portion of derivative instruments | 2,018 | 51,663 | ||||||
| Total current liabilities | 3,465,457 | 6,795,981 | ||||||
| Other long-term liabilities | 602,398 | 588,745 | ||||||
| Long-term debt, less current portion | 485,388 | 730,279 | ||||||
| Derivative instruments, less current portion | 1,495,576 | 1,688,572 | ||||||
| Total liabilities | 6,048,819 | 9,803,577 | ||||||
| Stockholders' equity: | ||||||||
| Common stock, $0.0001 par value; 100,000,000 shares authorized; 53,773,705 and 52,304,426 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively | 5,377 | 5,230 | ||||||
| Additional paid-in-capital | 221,125,757 | 217,877,117 | ||||||
| Accumulated other comprehensive loss | (219,367 | ) | (218,710 | ) | ||||
| Accumulated deficit | (212,586,365 | ) | (210,327,925 | ) | ||||
| Total stockholders' equity | 8,325,402 | 7,335,712 | ||||||
| Total liabilities and stockholders' equity | $ | 14,374,221 | $ | 17,139,289 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended March 31, | ||||||||
| 2014 | 2013 | |||||||
| Contract Revenue | $ | 3,742,525 | $ | 6,475,138 | ||||
| Operating expenses: | ||||||||
| Research and development | 3,427,000 | 5,233,475 | ||||||
| General and administrative | 2,677,452 | 2,279,795 | ||||||
| Depreciation | 39,939 | 52,602 | ||||||
| Total operating expenses | 6,144,391 | 7,565,872 | ||||||
| Loss from operations | $ | (2,401,866 | ) | $ | (1,090,734 | ) | ||
| Other income (expense): | ||||||||
| Interest income and expense, net | (69,872 | ) | (99,008 | ) | ||||
| Change in fair value of derivative instruments | 242,641 | (905,777 | ) | |||||
| Other income (expense) | 362 | (6,123 | ) | |||||
| Total other income (expense) | 173,131 | (1,010,908 | ) | |||||
| Net loss before provision for income taxes | (2,228,735 | ) | (2,101,642 | ) | ||||
| Provision for income taxes | (29,705 | ) | (9,743 | ) | ||||
| Net loss | $ | (2,258,440 | ) | $ | (2,111,385 | ) | ||
| Basic and diluted net loss per share | $ | (0.04 | ) | $ | (0.04 | ) | ||
| Weighted average shares used in calculation of basic and diluted net loss per share | 53,044,119 | 48,359,181 |