Siga Files Bankruptcy Following Dispute with PharmAthene
Siga Technologies Inc, has filed for voluntary bankruptcy protection while seeking time to appeal a court order in its licensing dispute with PharmAthene Inc.
Siga Technologies Inc.
Siga develops drugs against diseases, and is a supplier of antiviral smallpox drug to the U.S. strategic stockpile. The company is also working on development of a potential treatment against Ebola. The company has a number of partnerships with U.S. agencies including the Centers for Disease Control and Prevention, the Department of Health and Human Services, and the Department of Defense.
In early August, the Delaware Court of Chancery ruled PharmAthene is entitled to a lump sum payment (of an expected $232 million, according to court documents) in damages from Siga because of the company’s failure to execute a license agreement related to Tecovirimat, the company’s main antiviral smallpox drug. PharmAthene helped fund the development of Tecovirimat, and was entitled to a 50 percent profit once the drug was sold.
PharmAthene sued Siga in 2006, accusing the company of reneging on its promise to grant a licensing agreement. In 2011 Siga won a five-year U.S. government contract that could be worth as much as $2.8 billion. The contract was for 2 million doses of Tecovirimat.
Siga is set to appeal the ruling. But first, according to Delaware law, must post a bond for the full amount of the claimed damages, plus post-judgment interest.
The only way to stop to Chancery court’s judgment to pay the lump sum, as well continue normal operations was to file for bankruptcy protection. The filing also preserves the company’s ability to supply the antiviral smallpox drug to the U.S. Strategic National Stockpile under Project BioShield Act of 2004. In its Chapter 11 petition with the Southern District of New York, Siga listed total assets of $209.5 million and liabilities of $197.9 million.
Upon approval Tecovirimat will be sold under the brand name Arestvyr. The drug has fast-track status from the U.S. Food and Drug Administration
Shares of Siga fell 31 percent. And PharmAthene’s shares are down 21 percent.
Source: Reuters, UPDATE 2-Biodefense drugmaker Siga files for bankruptcy, September 16, 2014