PharmAthene, Inc. Reports Second Quarter 2016 Financial and Operational Results
ANNAPOLIS, Md., Aug. 4, 2016 /PRNewswire/ -- PharmAthene, Inc. (NYSE MKT: PIP), a biodefense company developing medical countermeasures against anthrax, today reported its financial and operational results for the second quarter of 2016.
Under SIGA's Reorganization Plan, approved by U.S. Bankruptcy Court for the Southern District of New York, PharmAthene received from SIGA an initial payment of $5 million in April 2016, and an aggregate of $3.9 million in payments calculated as interest on the PharmAthene judgment for the period from April 12 to June 30, 2016. PharmAthene received an additional $20 million from SIGA in July 2016, as payment to extend by 90 days, until October 19, 2016, the date by which SIGA must satisfy the PharmAthene judgment. $25 million of these payments are creditable against final satisfaction of the judgment in favor of PharmAthene of approximately $208 million plus interest and is not refundable.
For the three months ended June 30, 2016, PharmAthene recognized revenue of $2.1 million compared to $1.1 million for the corresponding period in 2015. The Company recognized $1.3 and $1.1 million in revenue during the second quarters of 2016 and 2015, respectively, under its contract with the National Institute of Allergy and Infectious Diseases for the development of a next generation lyophilized anthrax vaccine. Under PharmAthene's contract with the Biomedical Advanced Research and Development Authority for the development of SparVax®, the Company recognized $0.8 million in revenue in the second quarter of 2016.
Research and development expenses in the second quarter of 2016 and 2015 were $1.1 million and $1.2 million, respectively. These expenses resulted from research and development activities related primarily to the Company's anthrax vaccine programs.
Expenses associated with general and administrative functions were $1.4 million in the second quarter of 2016 compared to $1.8 million in the second quarter of 2015. The decrease resulted from implementation of the Company's restructuring and a reduction in legal expenses.
For the second quarter of 2016, the Company's net income was $8.0 million, or $0.12 per share, compared to net loss of $2.3 million, or $(0.04) per share, for the corresponding period in 2015. Cash at the end of the second quarter of 2016 was $23.2 million compared to a cash balance of $15.6 million at the end of fiscal year 2015.
On April 8, 2016, the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming SIGA's third amended reorganization plan (the Plan), effective April 12, 2016. Subsequently, SIGA and PharmAthene filed a joint motion, which is subject to approval by the bankruptcy court, seeking approval of amendments to the Plan that would extend the deadline for SIGA to satisfy the previously disclosed judgment owed to PharmAthene from October 19, 2016 to November 30, 2016, conditioned on SIGA paying to PharmAthene a nonrefundable $100 million on or prior to October 19, 2016 that will be applied against PharmAthene's judgment. SIGA will continue to calculate interest on any unpaid balance which will continue to accrue at 8.75% per year and be paid monthly to PharmAthene by SIGA.
The Plan provides that SIGA will satisfy PharmAthene's judgment through one of the following ways:
(i) | payment in full in cash of the unpaid balance of the PharmAthene $208 million claim plus interest; | |
(ii) | delivery to PharmAthene of 100% of SIGA's common stock; or | |
(iii) | such other treatment as may be mutually agreed upon in writing by SIGA and PharmAthene and approved by the Bankruptcy Court. |
PharmAthene's taxable income from receipt of the SIGA judgment is expected in part to be offset by PharmAthene's net operating loss (NOLs) carryforwards. At December 31, 2015 PharmAthene had available $156 million in NOLs. The Company is evaluating tax effects of winding down its UK subsidiary which it believes may increase U.S. tax NOLs by an estimated $9 million to $22 million.
If SIGA pays PharmAthene cash in full and barring any unexpected material events, PharmAthene intends to distribute at least 90% of the after tax net cash proceeds of such payment to its shareholders. The timing and form of such a potential distribution will depend upon PharmAthene's analysis of its current situation, applicable corporate statutes relating to distributions and the economic consequences to its shareholders.
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