SIGA (SIGA) Confirms Court Ruled in Favor of PharmAthene (PIP)
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SIGA Technologies, Inc. (Nasdaq: SIGA) announced today that the Delaware Court of Chancery has issued its post-trial opinion in the litigation commenced by PharmAthene, Inc. in 2006.
The Court denied PharmAthene's contention that a draft license term sheet attached to the parties' 2006 merger agreement was a binding license and denied PharmAthene's request for specific performance of the alleged license. The Court ruled in PharmAthene's favor, however, on its claims for promissory estoppel and breach of the duty to negotiate a license agreement. The Court, after acknowledging that PharmAthene did not establish a right to any traditional form of relief on these claims, awarded to PharmAthene an "equitable payment stream" consisting of 50% of the net profits that SIGA achieves from the next ten years of sales of ST-246®, its smallpox drug, after the first $40 million of net profits goes entirely to SIGA.
Commenting on the opinion, SIGA's Chief Executive Officer Dr. Eric A. Rose commented, "We are gratified that the Court appreciated that the draft term sheet did not constitute a binding license agreement, but we respectfully disagree with the unprecedented decision to grant to PharmAthene a continuing interest in the net profits of this life-saving drug, which SIGA has worked so hard to bring to commercialization. We are continuing to study our options, but, at this point, we believe that we will appeal the unfavorable aspects of today's decision. Most importantly, while we formulate our legal strategy with regard to today's ruling, we remain committed to continuing our leadership in developing life-saving biodefense drugs and the smooth execution of the $433 million contract awarded to SIGA by BARDA earlier this year."
The Court denied PharmAthene's contention that a draft license term sheet attached to the parties' 2006 merger agreement was a binding license and denied PharmAthene's request for specific performance of the alleged license. The Court ruled in PharmAthene's favor, however, on its claims for promissory estoppel and breach of the duty to negotiate a license agreement. The Court, after acknowledging that PharmAthene did not establish a right to any traditional form of relief on these claims, awarded to PharmAthene an "equitable payment stream" consisting of 50% of the net profits that SIGA achieves from the next ten years of sales of ST-246®, its smallpox drug, after the first $40 million of net profits goes entirely to SIGA.
Commenting on the opinion, SIGA's Chief Executive Officer Dr. Eric A. Rose commented, "We are gratified that the Court appreciated that the draft term sheet did not constitute a binding license agreement, but we respectfully disagree with the unprecedented decision to grant to PharmAthene a continuing interest in the net profits of this life-saving drug, which SIGA has worked so hard to bring to commercialization. We are continuing to study our options, but, at this point, we believe that we will appeal the unfavorable aspects of today's decision. Most importantly, while we formulate our legal strategy with regard to today's ruling, we remain committed to continuing our leadership in developing life-saving biodefense drugs and the smooth execution of the $433 million contract awarded to SIGA by BARDA earlier this year."
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