Over the weekend, we saw both sides claim victory in their press releases. Furthermore, on message boards such as this, you can find 101 reasons that one side trumped the other - depending upon which message board you're looking at. I think I've changed my opinion on who the real "winner" is about ten times so far, and I'll likely change it a few more times. Many good points and theories by both sides, and unlike many others, I don't claim to be a doctor, lawyer, or astronaut - just a regular investor with some genuine interest in the inner workings of the legal system.
One side says LATS are now in effect, PIP has full control over the drug and SIGA will only get a small royalty. Others say no way, too speculative, and PIP will end up receiving nothing more than a few million dollars. Then again, we hear that Parsons, who notoriously leans PIP, was not reversed on his damages award, just asked to reconsider based upon the new law of the land in Delaware and therefore the previous damages will likely stay near the same (50/50). However, PIP and SIGA never even completed a contract, perhaps it was simply a starting point, so how could one side or the other ever be held to it?
I could go on and on, over and over, back and forth with a thousand reasons favoring one or the other - but at the end of the day, one stock was up 26% today, and the other was barely up 5%. So I ask those who are convinced SIGA is the winner (and believe PIP has been tossed aside only to receive a negligible amount), why?
I have no doubt, that both stocks may be "undervalued" to some extent based on the risk and uncertainty surrounding the last several years. However there has to be some logic (as well as some serious cash that can afford some very expensive legal interpretation) behind 3x volume and 5x percentage gain in a single day for PIP versus SIGA. The amount of $$ that moved these stocks today is more than anyone here can claim to have.
Appreciate anyone's input. Good luck to all.
Bypp...An excellent post from obviously a reasoning man. Let me make just a few comments while skirting around the edges of your proposition. You used percentages in your argument so let me do the same. SIga is a higher priced stock than PIP, therefore even if both stocks advanced the same Siga would have a lower percentage.move .Okay? Secondly PIP had advanced more than Siga in the previous after-hours session and therefore logic would hint at a continuance of the same pattern in the ensuing regular session unless there was new news in the interim and that was lacking. Third and lastly, the most vexing question going into the announcement was would there be a reversal of the guilty verdict assigned to Siga and the answer to that is NO. A secondary question was that of damages and how they would be squared away. I think so far that judgment finds favor with the defendants so the scoreboard in that issue has to be a narrow squeaking win for Siga. That gives PIP a narrow win in the third element, perhaps a 6/5 verdict. That's it Bypp, I do not proclaim a winner here, it's too early but I do hope I answered part of the mystery.
Pensive, agree in regards to the afterhours movements from Friday. I had not previously considered that. Also agree that it was probably shocking to some that the entire case wasn't overturned, which could certainly help PIP keep from dropping. To make matters worse, the supreme court apparently created a "new" law, with no 100% clear indication as to what exactly that means for PIP/SIGA. So now we all wait to see what Judge Parsons has to say, which I suppose could be another reason SIGA isn't booming....there's certainly not a positive history for SIGA in his courtroom.
Parson's original trial damage award of a 50-50 split of all net profits for ST-246 after Sigia first receives back the sum of 40 million dollars (under the equity doctrine of promissory estoppel) was totally reversed. The issue of damages, and the amount, was remanded back to Parson's to consider such under the law of contracts
and "expectation" damages, not the law of equity, and the doctrine of promissory estoppel.
Parson's was not "asked" to do anything. He was told to reconsider the issue of damages based on
the law of contracts...not equity.
PIP will never have full, or even minority control over ST-246. That is not even at issue here.
The BARDA contract, which forms the only current value of both companies, was awarded to Siga.
IMHO the most likely ending to the story is a settlement providing for a license agreement to PIP for
ST-246. I'm personally thinking a 7-10% royalty on all net sales.
Why was PIP up 26% and Siga 5%. Because the average investor just reads headlines and for them
you can buy 2x's the amount of $1.65 stock rather than one share of a $3.65 stock. Having more shares to the average Joe is better than one of something else! PIP at $1.65 had a lot more to move up percentage wise.
Who the heck knows.
But the entire verdict was not thrown out so factually now, .PIP is going to get something.
Before yesterday that was not a fact.
Golong has it correct. All the headlines were screaming “PIP won”. Those 13X PIP buyers today only saw “PIP won” and the low price. The herd ran with it. But everybody here, long and short knew the question of liability was a forgone conclusion. And damages are now back in play.
Those 13X PIP buyers missed this part which wasn’t in the headlines…”we reverse the Vice Chancellor’s damages award and remand for him to reconsider it in light of this opinion.” (last page of opinion)
Interestingly, The Supreme Court opinion which was put up on the PIP site yesterday along with all the other previous court proceedings, was taken down today.
Ya got some good points there mr.
You are right, Money talks...so let's see what the rest of the week brings. Wall st. has a way of taking the long way around the block sometimes. If PIP is still over $2 by Friday I will be surprised. OTOH, No one will ever know with SIGA what is going to happen...Why did the stock touch $4.50 out of the BLUE a month ago?
To be sure there are a LOT of handshakes going on behind the scenes. After all, this is a GOV'T contract we are talking about. SIGA is not going to be left out in the cold.
Agreed. It's seriously impossible to explain how the stock could be valued at $4.50 when the marketplace thought SIGA was paying 50% of all profits, yet can't even touch that price after they're (possibly) given back significant control of profits.
Full disclosure: I have no SIGA holdings, and PIP comprises a very small part of my portfolio. I've simply hung on for so long just for the entertainment and interest of following this circus between these two companies.