Who knows how many more months will pass before a resolution and appeals are exhausted. I hear about this supposed meeting on 6/26 between the judge and legal reps from both sides. Seen it on twitter and the SA hit piece. No idea if it's actually taking place, but I wouldn;t be opposed to SIGA settling at this pint. Heck, giving PIP anything less than 50% and removing the case overhang would have to be positive IMO.
Can't do worse than the last 30 days or so with red every day. Why not settle when you have the most leverage over a hostile judge? Thoughts?
I believe that SIGA will either attempt a merger agreement with PIP (which may be the reason for the drop of SIGA shares), or the Pharmathene is in the process of being bought out by Emergent Biosolutions (EBS).
Because of the bad blood between SIGA and PIP, and because EBS needs a third generation Anthrax vaccine to win a new contract with BARDA, and has the capability to produce the drug in bulk, will be the most likely suitor for Pharmathene.
The SC of Delaware has already determined that the merger agreement is, in fact, an actual contract, and that the Chancery Court should look to the LATS agreement for the terms to determine "expectation damages". I would suspect that PIP should receive an award similar to the original agreement between SIGA and PIP, prior to the modified terms that SIGA proposed before pulling out of the contract. That would mean that PIP will receive worldwide rights to produce the smallpox vaccine with an 8-11 percent license fee paid to SIGA. Although PIP will also have the license to produce the drug in the US, PIP would have to split the profits with SIGA 50-50. EBS will make the transition to a global biotech company for smallpox distribution much easier since SIGA has not developed the capacity to produce the drug in larger quantities. PIP has the capacity already to produce over 300 million doses a year, so SIGA could leverage their capabilities in going global. However, Sparvax is maybe 2 - 6 months away from possible "orphan" drug approval, and the 300 million dose production capability could easily be used up just from the production of Sparvax vaccines, if a larger contract is awarded to PIP for Sparvax production.
I would guess that Parsons will award an equal or better outcome to PIP than originally determined in 2011 since the SC affirmed the liability of SIGA and made a determination that the merger contract was binding. The LATS was indefinite, not just for 10 years....
Pass me whatever you're smoking on a Friday night as your post was truly in la la land. The SC said nothing of the sort. If the LATS amounted to a full contract PIP would have been entitled to specific performance... which, they were not. PIP does not have the right to mfg and produce ST-246. Barda's contract is exclusive with Siga...I doubt if they've ever even heard of PIP and certainly they are not approved to mfg or produce ST-246 for a national defense contract,
You contradict yourself. First you say PIP has the wordwide rights to produce ST-246 and pay Siga an 8-11% royalty. Then you say PIP would also have the "license" to produce ST-246 in the US where they would split those profits 50-50? Is the U.S.not included in your defintion of "worldwide rights" of is it a different planet?
Not sure what you intended to mean but EBS isn't in the picture and never could be even if they make the mistake of acquiring PIP. You see a BARDA contract just can't be given willy nilly to anyone you think can handle the situation...LOL! Their contract is with Siga...period. It's non assignable. If Siga can't handle it they void that contract and put it out for bidding once again...Probably to CMRX this time around.
Parsons never believed there was an enforceable contract between Siga amd PIP. Parsons never felt that
expectation damages could be proven by PIP with reasonable certainty. Parson's did feel Siga acted in bad faith in the negotiations.
So Parsons may be forced to accept the SC holding that there was some type of contract between PIP and Siga that came out of the LATS and that Siga acted in "bad faith", but still the issue of damages remains.
And the SC did not tell Parsons he has to find expectation damages in favor of PIP, but only to go back and attempt to determine appropriate damages in light of their findings. If he finds the inabllity to determine
expectation damages with reasonable certainty as ihe did at the time of trial, PIP loses bigtime.
You better hope to god that isn't what parsons rules, because then PIP will be assured of getting nothing. SIGA would rather BK than take 11 percent for doing all the work. Your forecast is beyond ludicrous IMO. PIP's only chance is if Parsons rules something reasonable so 1. SIGA doesn't appeal again and get him overturned (taking another year+), or 2. BK's and starts another company.
The only way the parties could settle this mess would be if PIP would accept a license agreement in the 10% range of gross sales for ST-246. Under the current BARDA contract that would be around 40 million, which is 50% of the current market value of PIP. Not bad for lending someone 3 million dollars for a few months and getting it repaid in full with interest. IMHO anything more than that and Siga simply BK's the judgment out and starts all over. If ST-246 ever becomes a 500 million dollar per year selling drug PIP would get 50 million dollars a year, pure profit...no overhead...Just sit back and collect the cash. Would almost be like having sales of 200 million a year with a 25% net profit margin. Pretty nice.
They will never be in business together. That is a certainty.
Golong, are you or have you ever been involved with royalty contracts? I am. They very clearly define if royalties are paid on gross or net sales and go on to define how those net or gross sales are calculated. For example, trademark royalties are paid on what is called "net sales" but cogs are not a part of net. These contracts, their terms, deductible costs, etc, can be very detailed and tedious and often STILL wind up creating long drawn out legal battles post audit. So for parsons to even think they were close to a clear agreement on a licensing deal is ludicrous.
Settling isn't about having leverage over a hostile judge, from SIGA perspective settling would avoid risk of a hostile judge. From PIP perspective would give some input into key factors (such as length of license) that may otherwise place it at ongoing risk of SIGA attempts to stretch out revenue recognition in an attempt to avoid payment to PIP as much as possible. Just not certain management from these two companies could ever sit across from one another and agree to anything given their shared history.
My point was they're never going to have more leverage than after this partial reversal from the SC to make Parsons consider reasonable damages. All three parties have a vested interest in this not being appealed yet again (either by SIGA or PIP). The fact that SIGA proved it can have the ruling kicked back to Parsons does give their arguments more leverage, IMO.
But I agree there could be way too much hostility on all three sides of the triangle for a settlement.