ANNAPOLIS, Md., March 9, 2015 /PRNewswire/ --
2014 Operational Highlights
- Delaware Court of Chancery
issues final judgment granting lump sum award to PharmAthene
totaling approximately $195
million
- NIAID awards contract for next generation anthrax vaccine
program
- New non-clinical data demonstrate SparVax® provides
equivalent protection to BioThrax® in head-to-head
comparison
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 year ended December 31,
2014. In addition, the Company announced that its Board of
Directors approved a realignment plan to maximize, for its
shareholders, the value of any proceeds from its litigation with
SIGA Technologies, Inc. and its existing biodefense assets.
Year-End 2014 Financial Results
For the year ended December 31,
2014, PharmAthene recognized revenue of approximately
$10.2 million, compared to
approximately $17.9 million in 2013.
The decrease in revenue in 2014 is primarily attributable to a
reduction in activity in the Company's SparVax® and
rBChE bioscavenger programs during 2014, due to the de-scoping and
partial termination for convenience of the SparVax®
contract and expiration of the bioscavenger contract.
Research and development expenses in 2014 were approximately
$9.3 million, compared to
approximately $15.3 million in 2013,
representing a year-over-year decrease of approximately 39%.
Research and development expenses declined in 2014 primarily as a
result of decreased costs related to the SparVax®
anthrax vaccine program, as noted above.
Expenses associated with general and administrative functions
decreased approximately 18% to $10.9
million in 2014, compared to $13.3
million in 2013. The decrease in general and administrative
costs was primarily due to a reduction in merger and acquisition
costs in 2014, partially offset by increased severance and
share-based compensation expense.
For the year ended December 31,
2014, PharmAthene's net loss was approximately $10.0 million, or $0.17 per share, compared to a net loss of
$11.7 million, or $0.23 per share, for the prior year.
At December 31, 2014, PharmAthene
had cash and cash equivalents totaling approximately $18.6 million, compared to $10.5 million at December
31, 2013. The increase in cash in 2014 resulted from net
proceeds of approximately $18.1
million raised through the sale of the Company's common
stock under a Controlled Equity Offering Agreement, and
$0.7 million in warrant exercises,
partially offset by $8.5 million in
net cash used in operations and $2.1
million used for other financing activities. The Company is
currently reconciling the close out of its SparVax®
contract with the government and may receive an additional
payment.
REALIGNMENT PLAN
In connection with the realignment plan, PharmAthene plans to
reduce its staffing levels by approximately two thirds.
Eric Richman, President and Chief
Executive Officer, will remain a member of the Board of Directors,
but will no longer serve as an Officer of the Company after
March 11, 2015. He will continue to
play a key role in managing the ongoing litigation, other legal
matters and strategic transactions in his role as Director.
Linda Chang will continue to serve
as Chief Financial Officer through April 30,
2015. In accordance with meeting cost-saving objectives, the
Board will be reduced from eight members to six and Messrs.
Joel McCleary and Brian A. Markison intend to resign from the
Board.
The Company expects its cost-saving initiatives will preserve
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 will maintain necessary
resources in order to execute under its current government contract
with NIAID and seek partners, co-developers or acquirers for its
other biodefense programs.
Dr. Mitchel Sayare, Chairman of
the Board of Directors, noted, "On behalf of the Board, I would
like to express our deep gratitude to all of the employees affected
by this reduction. I wish to thank Eric and Linda for their
outstanding leadership and valuable contributions to the Company,
including the favorable judgment in the SIGA litigation, awarding
us nearly $195 million. We also want
to thank our Directors for their service to PharmAthene
shareholders over the past several years.
"The Board is confident that our strategy adopted today is in
the best interests of shareholders and provides the clearest path
for value creation while maintaining the viability of our existing
biodefense assets as we identify appropriate collaborators moving
forward."
John M. Gill, a Director of the
Company for the past nine years, will assume the role of President
and Chief Executive Officer. Mr. Gill is a seasoned biotech
executive with more than 30 years' experience in corporate
development and strategic planning. Previously, he served as
Co-Founder and Chief Executive Officer of TetraLogic
Pharmaceuticals and Chief Operating Officer of 3-Dimensional
Pharmaceuticals until its sale to Johnson & Johnson. In
addition, Mr. Gill spent 20 years at SmithKline Beecham, where he
served in various positions. Current Vice President and Controller,
Philip MacNeill, will become the
Chief Financial Officer following the departure of Linda Chang. Mr. Gill is expected to devote
necessary time to carry out his duties as President and Chief
Executive Officer, and although he does not have other employment,
he is not expected to devote his full time to the business of the
Company, which his compensation will reflect.
"We have undertaken this approach to preserve the value of the
judgment award while maintaining and capturing the value of our
underlying biodefense assets. I am looking forward to working
towards effecting a positive return of value to our shareholders,"
stated Mr. Gill.
About PharmAthene
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 the following product
candidates:
- Anthrax vaccines - including SparVax®, a second
generation liquid recombinant protective antigen (rPA) anthrax
vaccine, and a next generation lyophilized anthrax vaccine
containing rPA;
- 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 infection
On January 15, 2015, the
Delaware Court of Chancery issued
its Final Order and Judgment in PharmAthene's litigation against
SIGA Technologies, Inc. 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. 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
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 Technologies, Inc. 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. Since then, 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.
SIGA's ability to make any payments to PharmAthene depends in part
on its 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. 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. 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.
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, its business, results of
operations, financial condition and cash flows may be materially
and adversely affected.
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.
PHARMATHENE,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
2014
|
|
2013
|
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
18,643,351
|
|
$
10,480,979
|
|
Billed accounts
receivable
|
110,656
|
|
1,427,113
|
|
Unbilled accounts
receivable
|
297,431
|
|
2,199,525
|
|
Prepaid expenses and
other current assets
|
199,194
|
|
231,491
|
Total current
assets
|
19,250,632
|
|
14,339,108
|
|
|
|
|
|
Property and
equipment, net
|
325,772
|
|
386,068
|
Other long-term
assets and deferred costs
|
53,384
|
|
65,660
|
Goodwill
|
2,348,453
|
|
2,348,453
|
Total
assets
|
$
21,978,241
|
|
$
17,139,289
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
391,396
|
|
$
1,128,172
|
|
Accrued expenses and
other liabilities
|
1,195,412
|
|
3,182,687
|
|
Deferred
revenue
|
-
|
|
341,723
|
|
Current portion of
long-term debt
|
746,146
|
|
999,996
|
|
Other short term
liabilities
|
70,326
|
|
-
|
|
Current portion of
derivative instruments
|
178,509
|
|
51,663
|
|
Short-term
debt
|
-
|
|
1,091,740
|
Total current
liabilities
|
2,581,789
|
|
6,795,981
|
|
|
|
|
|
Other long-term
liabilities
|
493,137
|
|
588,745
|
Long-term debt, less
current portion
|
-
|
|
730,279
|
Derivative
instruments, less current portion
|
629,170
|
|
1,688,572
|
Total
liabilities
|
3,704,096
|
|
9,803,577
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Common stock, $0.0001
par value; 100,000,000 shares authorized; 63,603,303 and 52,304,246
shares issued and outstanding at December 31, 2014 and 2013,
respectively
|
6,360
|
|
5,230
|
|
Additional
paid-in-capital
|
238,780,633
|
|
217,877,117
|
|
Accumulated other
comprehensive loss
|
(229,528)
|
|
(218,710)
|
|
Accumulated
deficit
|
(220,283,320)
|
|
(210,327,925)
|
Total stockholders'
equity
|
18,274,145
|
|
7,335,712
|
Total liabilities and
stockholders' equity
|
$
21,978,241
|
|
$
17,139,289
|
|
PHARMATHENE,
INC.
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
2014
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
Contract
revenue
|
$
10,190,205
|
|
$
17,912,607
|
|
$
25,175,887
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
Research and
development
|
9,319,828
|
|
15,290,142
|
|
19,509,629
|
|
General and
administrative
|
10,911,724
|
|
13,279,186
|
|
11,628,732
|
|
Depreciation
|
149,958
|
|
182,487
|
|
303,916
|
Total operating
expenses
|
20,381,510
|
|
28,751,815
|
|
31,442,277
|
|
|
|
|
|
|
|
Loss from
operations
|
$
(10,191,305)
|
|
$
(10,839,208)
|
|
$
(6,266,390)
|
Other income
(expense):
|
|
|
|
|
|
|
Interest expense,
net
|
(210,399)
|
|
(366,706)
|
|
(324,753)
|
|
Realization of
cumulative translation adjustment
|
-
|
|
-
|
|
1,227,656
|
|
Change in fair value
of derivative instruments
|
508,817
|
|
(444,622)
|
|
591,039
|
|
Other income
(expense)
|
(762)
|
|
(6,071)
|
|
47,862
|
Total other income
(expense)
|
297,656
|
|
(817,399)
|
|
1,541,804
|
|
|
|
|
|
|
|
Loss before income
taxes
|
(9,893,649)
|
|
(11,656,607)
|
|
(4,724,586)
|
|
Income tax
provision
|
(61,746)
|
|
(61,746)
|
|
(195,529)
|
Net loss
|
$
(9,955,395)
|
|
$
(11,718,353)
|
|
$
(4,920,115)
|
|
|
|
|
|
|
|
Basic and diluted net
loss per share
|
$
(0.17)
|
|
$
(0.23)
|
|
$
(0.10)
|
Weighted average
shares used in calculation of basic and diluted net loss per
share
|
57,535,325
|
|
50,659,116
|
|
48,323,067
|
To view the original version on PR Newswire,
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SOURCE PharmAthene, Inc.