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SIGA Technologies Inc. Message Board

  • csmclemore csmclemore Jun 7, 2013 3:14 AM Flag

    A Summary

    Parsons' original remedy (that got reversed) wasn't based on the agreed upon (binding) contract between SIGA and PIP to "to negotiate in good faith for a definitive license agreement in accordance with the LATS’s terms". Instead, it was based on a series of made up "promises" pulled from snippets of both parties' courtroom testimony in a blatant abuse of the doctrine of promissory estoppel. The SC reversed him and told him to try again, this time by looking to the contract to come up with damages.

    So in what way is Parsons original attempt at a remedy not in accordance with the requirements of contract law? In other words, why did it get reversed? The primary answer is the unavoidable requirement that damages must be proved with reasonable certainty under contract law without the assistance of made up crutches through promissory estoppel (oh, nothing in the contract on that? Well, I find there was a promise made...).

    Fundamentally, a remedy is speculative when it has terms based loosely on those of an unconsummated final license agreement and (even assuming away the speculation through the questionable finding that a final license agreement would have come into existence had the parties negotiated in good faith as Parsons did) is also required to have terms "substantially similar" to the terms of the original LATS, which was found to be missing essential terms for the purposes of being the basis of a final license agreement.

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    • Parsons 9/22/11 decision under section B "Facts": SIGA's largest shareholder was unwilling to invest additional money, as a result SIGA lacked ability to fund development by itself (S2 pg 5). Section 4 starting on page 12 lays out contents of term sheet which is now considered to be a Type II agreement. SIGA grants PIP worldwide exclusive license cover ST-246 and all related products. PIP agreed to fund development based on a defined budget. PIP pays $6 million "license fee" + $10 million in milestones for specific sale and regulatory events. PIP to pay SIGA 8% royalty on sales $250 million and 12% on sales greater than $1 billion. In addition, SIGA to receive 50% of any amount by which net margin exceeds 20% on sales to the U.S. government. Footnote on page 26 makes it clear that Parsons saw evidence of huge difference between LATS, where PIP would have received 70% of economic interests and SIGA's proposal to change (now confirmed to have been constructed and offered in bad faith) which would have limited PIP to 16%. Page 56 Parsons says "I find it unlikely . . . that the parties would have wasted time and money negotiating specific economic terms of the LATS without intending to give those terms significance in later negotiations." Then on page 61 he nails the problem SIGA now faces "With the benefit of hindsight, it appears M&F and SIGA's board made a terrible business decision in opting to offer a major stake in ST-246 for a relatively small capital infusion. The evidence is unmistakable, however, that Drapkin and SIGA knew what they were doing and went ahead anyway." Parsons puts it best on page 98 "I am convinced that a license agreement between PharmAthene and SIGA for ST-246 would have resulted in terms no less favorable to PharmAthene than the 50/50 profit split . . . and an increase in the upfront and milestone payments from a total of $16 million . . . to something in the range of $40 million."

    • It is impossible for Parsons to get around the fact that 1) there are missing essential terms and 2) he is making them up

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