ANNAPOLIS, Md., Nov. 25, 2015 /PRNewswire/ -- PharmAthene,
Inc. (NYSE MKT: PIP) announced today that its Board of
Directors has adopted a stockholder rights plan (Rights Plan) in an
effort to preserve the value of its net operating loss
carryforwards (NOLs) under Section 382 of the Internal Revenue Code
(Code).
PharmAthene's use of its NOLs could be substantially limited if
the Company experiences an "ownership change" as defined in Section
382 of the Code. In general, an ownership change occurs if there is
a cumulative change in PharmAthene's ownership by 5% shareholders
(as defined in Section 382 of the Code) that increases by more than
50 percentage points over the lowest percentage owned by such
shareholders at any time during the prior three years on a rolling
basis. The Rights Plan was adopted to reduce the likelihood of an
unintended ownership change occurring.
In connection with the adoption of the Rights Plan, on
November 25, 2015, the Board declared
a non-taxable dividend of one preferred share purchase right
(Right) for each outstanding share of common stock to the Company's
stockholders of record as of the close of business on December 9, 2015. After the Rights Plan takes
effect, any person or group that acquires beneficial ownership of
4.99% or more of the Company's common stock without approval from
the Board would be subject to significant dilution in the ownership
interest of that person or group. Stockholders who currently own
4.99% or more of the outstanding shares of PharmAthene common stock
will not trigger the preferred share purchase rights unless they
acquire shares representing a percentage of common stock that
exceeds by 0.5% or more, the lowest percentage of common stock that
such stockholder had at any time since November 25, 2015. In addition, in its
discretion, the Board may exempt certain persons whose acquisition
of securities is determined by the Board not to jeopardize the
availability to the Company's NOLs or other tax benefits and may
also exempt certain transactions.
The Rights will expire on the earliest of (i) the close of
business on November 25, 2018, (ii)
the time at which the Rights are redeemed or exchanged under the
Rights Plan, (iii) the repeal of Section 382 or any successor
statute and the Board's determination that the Rights Plan is no
longer necessary for the preservation of the Company's NOLs or (iv)
the beginning of a taxable year of the Company in which the
Board determines that no NOLs may be carried forward.
The issuance of the Rights is not a taxable event and will not
affect the Company's reported financial condition or results of
operations, including earnings per share.
Additional information regarding the Rights Plan is contained in
a Form 8-K and in a Registration Statement on Form 8-A that
PharmAthene is filing with the Securities and Exchange
Commission.
About PharmAthene
PharmAthene is a biodefense company engaged in the development
of next generation medical countermeasures against biological and
chemical threats. The Company's development portfolio includes two
next generation Anthrax vaccines that are intended to improve
protection while having favorable dosage and storage requirements
compared other Anthrax vaccines.
On January 15, 2015, the
Delaware Court of Chancery issued
its Final Order and Judgment in PharmAthene's litigation against
SIGA. 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. On October 7, 2015 oral
arguments in SIGA's appeal and PharmAthene's cross-appeal of the
January 15, 2015 Final Order and
Judgement took place in the Delaware Supreme Court. 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 the
judgment relating to 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 $7.5 million over the base period and the first
option; risks associated with our common stock; risks associated
with the preservation of our NOLs; the difficulty of determining
all of the facts relevant to Section 382 of the Code; risks
associated with the unreported buying and selling activity of our
stockholders; risks associated with unanticipated interpretations
of the Code and related regulations; the risk that the adoption of
the Rights Plan does not prevent one or more stockholders of the
Company from, notwithstanding the dilution to such stockholder's
interests under the Rights Plan, engaging in buying and selling
activity that may have an adverse impact on the Company's tax
attributes; risks associated with the ability of the Rights Plan to
preserve the value of our NOLs; risks associated with the
enforceability of the Rights Plan under Delaware law or other applicable law; the risk
that the Rights Plan may discourage third-party offers to acquire
the Company, or an interest therein; the risk that the Rights Plan
may have an adverse effect on the value of our common stock; 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. 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. Under the Final
Order and Judgment, PharmAthene is also entitled to post-judgment
simple interest. PharmAthene's entitlement to interest from and
after SIGA's bankruptcy filing (as described below) may be
negatively impacted by the Bankruptcy Code. 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. On October 7,
2015 oral arguments in SIGA's appeal and PharmAthene's
cross-appeal of the January 15, 2015
Final Order and Judgment took place in the Delaware Supreme
Court. There can be no assurances that the Delaware Supreme
Court will rule in PharmAthene's favor.
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. PharmAthene's ability to
collect the Judgment depends upon a number of factors, including
SIGA's 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. SIGA disclosed in its Current Report on Form 8-K
filed April 29, 2015 that it entered
into a modification to its contract with BARDA on April 29, 2015 to increase the provisional dosage
of Tecovirimat and extend the delivery schedule. 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, if any,
remains subject to further proceedings in the Bankruptcy Court.
Further, at this point, future government funding to support the
development of 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. It is also
uncertain whether any of our product candidates will be shown to be
safe and effective and approved by regulatory authorities for use
in humans.
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, if PharmAthene prevails on appeal,
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
on our website under the investor relations tab at
www.PharmAthene.com.
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SOURCE PharmAthene, Inc.