Cidofovir or ST-246, you decide what U.S. Govt. wanted in 2006?
5% of those vaccinated for smallpox have no outward visible signs of a response. They have “no-take” to vaccination and are also referred to as nontake. Those nontakes are at significant risk of smallpox infection and, if infected, would need to be treated within a few days of exposure with a smallpox antiviral . Hence the need for a smallpox antiviral and the U.S. government interest in ST-246. ST-246 was then (2006) and is now the most advanced treatment specifically designed to treat smallpox. When Parsons references ST-246 significantly greater effectiveness (“At the time of the breach, ST-246 appears to have been 8,000 times more effective than its closest competing product”), I believe he is referring to Cidofovir (Vistide,® Gilead). Problem is Vistide is known to cause kidney failure with just one or two doses, yet in 2003 CDC document it is referred to as the only antiviral known to have demonstrated effectiveness in animal models of orthopox.
As such, ST-246 was the only viable option for U.S. government procurement at time of the breach in Dec. 2006. ST-246 had passed first human safety studies in July 2006 and had demonstrated 100% effectiveness in smallpox challenge study, results of which were announced by SIGA on Oct. 18, 2006. Also, Parsons in notes to his opinion states that “since SIGA’s breach, it repeatedly has touted the superiority of ST-246 to alternative pharmaceuticals, even stating its belief in December 2009 that ST-246 had ‘at least a three-year lead compared to any other potential product candidate in regard to non-human primate efficacy testing.”
Government knew what SIGA and PIP knew, there was no reasonable alternative to meet a pressing need (the gaping whole in biodefense protection it was creating for the U.S. population). They had one vaccine/person and new that 5% at a minimum, 5% would not respond and potentially be exposed. That 5% gets you to a need for 14-15 million courses of antiviral treatment. Cidofovir was known to cause kidney failure that could lead to death, not a very viable option, unless you have nothing else. There was a significant need for a better option and ST-246 was only other option even close in 2006. Chimerix wasn't even close in 2009, Parsons points that out from SIGA's own statements.
Potential need was much greater than 14-15 million courses of treatment because of huge list of contraindications for the smallpox vaccine itself. Millions more would potentially be exposed as a result of not being viable candidates for vaccination (persons with atopic dermatitis, cancer, HIV/AIDS, autoimmune diseases, etc). That, along with possible reorders to replenish supply as it became dated (expired shelf life), and international orders are the reason SIGA and PIP both thought the potential was much greater. These variables explain reasons Baliban and others would have had a wide range of estimates for ST-246 in 2006. And they remain reasons ST-246 could still see more orders than it has thus far received.
"U.S. Government healthcare sources acknowledged that not all patients vaccinated would be immune. For this one you can look at CDC February 21, 2003 Morbidity and Mortality Weekly Report entitled “Smallpox Vaccination and Adverse Reactions”. Also note the millions (beyond “no-take”) that may also need access to smallpox antiviral because they are contraindicated to the vaccine.
The contraindications read as follows.
Smallpox vaccination in the preoutbreak setting is contraindicated for persons who have the following conditions or have a close contact with the following conditions:
1) History of atopic dermatitis (irrespective of disease severity)
2) active acute, chronic exofoliative skin conditions that disrupt the epidermis
3) pregnant women or women who desire to become pregnant in the 28 days after vaccination
4) persons who are immunocompromised as a result of HIV/AIDS, autoimmune conditions, cancer, radiation treatment, immunosuppressive medications or other immunodeficiencies.
This would have formed reasonable basis for assuming orders even greater than 5% of U.S. population. Hence multiple models, with multiple assumptions for various markets (U.S. and International). In other words 5% (14-15 million courses) would have been at the very low-end of U.S. needs. In 2006, both companies expected it to be at least this large and likely larger. It is independently verifiable by third party sources that existed before acts of bad faith, it likely forms the basis for models both companies were utilizing in their discussions about LATS and the acquisition, and it appears in the record of the case.
As such, it is in the record of the case, it is reasonable (both parties referenced or did not object in testimony of experts), and Parsons believed it worthy to use for establishing expectation damages."