Doubts Resolved in Favor of Non-Breaching Party - Expectation Damages
Parsons had no problem determining that value of stake PIP should have had under license they would have were it not for SIGA's acting in bad faith. While he has ruled out a lump sum award of damages as speculative (especially given uncertainty of sales/profits that existed at time deal was contemplated), he had no problem arriving at an estimate of economic value of deal based on terms the parties had agreed under LATS and subsequent discussions after merger terminated.
Summary of decision by Weil Gotshal & Manges LLP under title The New Frontier of Agreements to Negotiate:
"This decision and its financial result are an obvious hammer to those found to have acted in bad faith, and these potential consequences are likely a surprise to many deal professionals and attorneys."
Wouldn't be much of a hammer if only nominal damages are awarded, especially in egregious actions of Chairman not just in his conduct with PIP but also with the Court itself.
Besides there is another key to determining expectations damages: To the extent that the calculation of expectation damages remains somewhat uncertain, doubts are resolved in favor of the non-breaching party.
"to the extrent that the calculation of expectation damages remains somewhat uncertain ...." You're kidding aren't you? Tell us you were just kidding and pulling our legs...LOL!
So if you think damages to a reasonable certainty could have been proven by PIP almost 7 years ago, then proving those damages today with the real known contract figures...overhead...customer base...approval process status, pipeline status, and projected operating costs, and everything else related to the BARDA contract with Siga for Phase 1 of the ST-246 order virtually known... Please tell us oh soothsayer of the west...Just what are those damages exactly?? Give us a figure pray tell? And PLEASE don't say something like "at least a billion dollars" because those figures were th lowball figures testified to at the time of trial by the so called "experts". The entire company is worth 120 million dollars today so let's try and come up with something real here...LOL! And while you're at it can you please tell us if BARDA is going to exercise any option to renew the contract for Phase 2? I'm sure you Pipsters have an answer to that question as well..LOL!
It's not a figure in the form a a fixed dollar amount as Parsons has already ruled such a determination to be too speculative. It will be something similar to terms set forth in the LATS and be, according to Parsons himself (p. 99) "an appropriate remedy would be to afford PharmAthene a stream of future payments if and when commercial sales of ST-246 commence, after accounting for certain marginal expenses. Such a remedy would operate somewhat similarly to an award of a constructive trust or of an equitable lien on a partial interest in the proceeds derived from the patents and related intellectual property for ST-246. A remedy of this sort would comport with the Court’s authority to provide relief 'as justice and good conscience may require' and the requirement to avoid speculative damages."
Whether he calls it a constructive trust or an equitable lien matters not, what matters is that PIP gets what SIGA had promised to negotiate in good faith and that is the economic value of a license to ST-246. According to Parsons "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. M&F, through Drapkin, categorically refused to invest more money in SIGA in late 2005 and early 2006. The emails of SIGA insiders Konatich and Hruby clearly reflect the extent to which SIGA was squeezed by that decision and its need for cash. They also demonstrate that SIGA knew just how much control of ST-246 it was offering to cede to PharmAthene to get the cash it needed to continue its development in 2006. Nevertheless, SIGA took the cash."
If by Phase 2 you mean a follow on order for more larger stockpile, I expect BARDA won't consider it until SIGA completes or is nearly complete in delivery on existing order. Look at what they have done with Anthrax.