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PHARMATHENE PROVIDES THIRD QUARTER 2014
OPERATIONAL AND FINANCIAL UPDATE
Recent Operational Highlights
ANNAPOLIS, MD - November 6, 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 third quarter of 2014.
Mr. Eric I. Richman, President and Chief
Executive Officer, commented, "PharmAthene remains committed to advancing next generation medical countermeasures solutions
that offer potential improvements in cost, efficacy and safety for our Nation. We made important advances in our biodefense programs
during the third quarter. In September, we were awarded a contract from the National Institute of Allergy and Infectious Diseases
(NIAID) to develop a thermostable next generation anthrax vaccine that could be effective in fewer doses - a key advantage
for deployment in the civilian Strategic National Stockpile. This contract is valued at up to $28.1 million if all contract options
are exercised. Additionally, new non-clinical data from our SparVax program were presented demonstrating equivalent
protection to BioThrax , the currently licensed anthrax vaccine. We also announced a strategic alliance with Nanotherapeutics,
Inc., to potentially advance the development of certain medical countermeasures. "
"Finally, with regard to the litigation
against SIGA, proceedings in the Delaware Court of Chancery resumed in the third quarter following a partial modification of the
automatic stay by the United States Bankruptcy Court. As a result, we submitted our proposed order to the Delaware Court of Chancery
and look forward to a final order being entered by the Court," said Mr. Richman.
Third Quarter Financial Results
For the three months ended September 30,
2014, PharmAthene recognized revenue of approximately $1.0 million, compared to approximately $3.5 million for the corresponding
period in 2013. The decrease in revenue in the third quarter of 2014 is primarily attributable to a reduction in activity under
the Company's SparVax anthrax vaccine contract as a result of its partial termination, as previously reported.
Research and development expenses in the
third quarter of 2014 were approximately $1.7 million, compared to approximately $2.6 million for the corresponding period in 2013.
The decrease is primarily due to reduced activity under the Company's SparVax contract, and corresponds with
the Company's transition to its next generation, lyophilized rPA anthrax vaccine program.
Expenses associated with general and administrative
functions were approximately $3.2 million in the third quarter of 2014, compared to approximately $4.1 million for the same period
For the third quarter of 2014, PharmAthene's
net loss was $4.6 million, or $0.08 per share, compared to a net loss of $3.9 million, or $0.08 per share, for the corresponding
At September 30, 2014, PharmAthene had
cash and cash equivalents totaling approximately $19.6 million, compared to approximately $10.5 million at December 31, 2013. The
increase in cash year-to-date is the result of proceeds from the sale of $15.5 million of the Company's common stock under
a Controlled Equity Offering Agreement, offset by net cash used in operations of $5.0 million, and $1.2 million used for other
financing activities.
PharmAthene is a 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:
In August 2014, the Delaware Court of Chancery
issued a Memorandum Opinion and Order and awarded to PharmAthene lump sum expectation damages for the value of PharmAthene's
lost profits for SIGA Technologies, Inc.'s smallpox antiviral, Tecovirimat, also known as ST-246 (formerly
referred to as "Arestvyr " and referred to by SIGA in its Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2014 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. A judgment, specifying the
damages amount and fees payable to PharmAthene is expected to be issued by the Court of Chancery later this year and will remain
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 Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014 as "Tecovirimat");
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 for one or more of the Company's development programs, such as BARDA's recent
decision to de-scope the current SparVax anthrax vaccine contract through a partial termination for convenience,
or a decision by NIAID not to exercise its options under our September 2014 contract after we receive funding of approximately
$5.2 million over the base period; 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 the award of government contracts to our competitors
or delays caused by third parties challenging government contract awards to us; risks associated with unforeseen safety and efficacy
issues; risks associated with challenges related to the development, technology transfer, scale-up, and/or process validation of
manufacturing processes for our product candidates; risks associated with unexpected determinations that these product candidates
prove not to be effective and/or capable of being marketed as products; risks associated with accomplishing any future strategic
acquisitions 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. Further,
at this point, future government funding to support the development of Valortim , 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. In its August 2014 decision, the Delaware
Court of Chancery awarded to PharmAthene lump sum expectation damages for the value of PharmAthene's lost profits for Tecovirimat,
but the court did not specify an amount of damages, and such amount is subject to dispute between the parties. The amount
of the award remains subject to further calculation and approval by the Delaware Court of Chancery and there may be further proceedings
before the final amount is approved by the Delaware Court of Chancery, which determination, along with the decision itself, will
remain subject to appeal by SIGA to the Delaware Supreme Court. 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 potential award. 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 remains subject to further proceedings in
the Bankruptcy Court.
Copies of PharmAthene's public disclosure
filings are available from its investor relations department and our website under the investor relations
tab at www.PharmAthene.com.
CONDENSED CONSOLIDATED BALANCE
| September 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 19,620,392 | $ | 10,480,979 | ||||
| Billed accounts receivable | - | 1,427,113 | ||||||
| Unbilled accounts receivable | 303,667 | 2,199,525 | ||||||
| Prepaid expenses and other current assets | 661,360 | 231,491 | ||||||
| Total current assets | 20,585,419 | 14,339,108 | ||||||
| Property and equipment, net | 362,458 | 386,068 | ||||||
| Other long-term assets and deferred costs | 53,384 | 65,660 | ||||||
| Goodwill | 2,348,453 | 2,348,453 | ||||||
| Total assets | $ | 23,349,714 | $ | 17,139,289 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 282,024 | $ | 1,128,172 | ||||
| Accrued expenses and other liabilities | 2,552,674 | 3,182,687 | ||||||
| Deferred revenue | 56,786 | 341,723 | ||||||
| Current portion of long-term debt | 993,322 | 999,996 | ||||||
| Current portion of derivative instruments | - | 51,663 | ||||||
| Short-term debt | - | 1,091,740 | ||||||
| Total current liabilities | 3,884,806 | 6,795,981 | ||||||
| Other long-term liabilities | 507,072 | 588,745 | ||||||
| Long-term debt, less current portion | - | 730,279 | ||||||
| Derivative instruments, less current portion | 851,793 | 1,688,572 | ||||||
| Total liabilities | 5,243,671 | 9,803,577 | ||||||
| Stockholders' equity: | ||||||||
| Common stock, $0.0001 par value; 100,000,000 shares authorized; 62,215,986 and 52,304,246 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively | 6,222 | 5,230 | ||||||
| Additional paid-in-capital | 235,979,613 | 217,877,117 | ||||||
| Accumulated other comprehensive loss | (225,872 | ) | (218,710 | ) | ||||
| Accumulated deficit | (217,653,920 | ) | (210,327,925 | ) | ||||
| Total stockholders' equity | 18,106,043 | 7,335,712 | ||||||
| Total liabilities and stockholders' equity | $ | 23,349,714 | $ | 17,139,289 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Contract revenue | $ | 962,451 | $ | 3,488,142 | $ | 8,363,909 | $ | 14,258,680 | ||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 1,728,929 | 2,556,383 | 7,528,616 | 11,192,403 | ||||||||||||
| General and administrative | 3,192,427 | 4,086,348 | 8,289,788 | 8,698,873 | ||||||||||||
| Depreciation | 37,125 | 44,593 | 113,272 | 139,049 | ||||||||||||
| Total operating expenses | 4,958,481 | 6,687,324 | 15,931,676 | 20,030,325 | ||||||||||||
| Loss from operations | $ | (3,996,030 | ) | $ | (3,199,182 | ) | $ | (7,567,767 | ) | $ | (5,771,645 | ) | ||||
| Other income (expense): | ||||||||||||||||
| Interest income | 8 | 31 | 690 | 2,470 | ||||||||||||
| Interest expense | (46,938 | ) | (89,817 | ) | (174,046 | ) | (289,635 | ) | ||||||||
| Change in fair value of derivative instruments | (560,487 | ) | (628,622 | ) | 464,703 | (1,181,575 | ) | |||||||||
| Other income (expense) | 80 | 507 | (1,470 | ) | (3,506 | ) | ||||||||||
| Total other income (expense) | (607,337 | ) | (717,901 | ) | 289,877 | (1,472,246 | ) | |||||||||
| Net loss before income taxes | (4,603,367 | ) | (3,917,083 | ) | (7,277,890 | ) | (7,243,891 | ) | ||||||||
| Income tax provision | (25,068 | ) | (28,804 | ) | (48,105 | ) | (49,753 | ) | ||||||||
| Net loss | $ | (4,628,435 | ) | $ | (3,945,887 | ) | $ | (7,325,995 | ) | $ | (7,293,644 | ) | ||||
| Basic and diluted net loss per share | $ | (0.08 | ) | $ | (0.08 | ) | $ | (0.13 | ) | $ | (0.15 | ) | ||||
| Weighted average shares used in calculation of basic and diluted net loss per share | 58,952,731 | 52,166,733 | 55,577,550 | 50,105,641 |