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| Legal Rulings | |
| 12/20/06: | PharmAthene commenced legal action, asserting 7 claims for relief: |
| | Count 1 seeks specific performance - alleges definitive license agreement in accordance with License Agreement Term Sheet (LATS), bridge loan and merger agreement must be executed |
| | Count 2 seeks declaratory judgement - Siga obligated to execute license agreement and not allowed to negotiate with third parties |
| | Count 3 asserts they entered an enforceable license agreement, which Siga breached |
| | Count 4 asserts Siga breached agreement to execute license agreement in accordance with LATS terms |
| | Count 5 asserts Siga breached bridge loan and merger agreement by not negotiating in good faith in line with LATS terms, and not using best efforts to complete the deal |
| | Count 6 seeks relief on a theory of promissory estoppel |
| | Count 7 seeks relief on a theory of unjust enrichment |
| 1/16/08: | Court denies Siga's motion to dismiss |
| | Determines motions should be analyzed under Delaware law (in agreement with PharmAthene) |
| 7/10/09: | Court overrules Siga's claims of attorney-client privilege/work product immunity for several documents |
| 11/23/10: | Court denies Siga's motion for partial summary judgement, which claimed parties never entered a binding licensing agreement |
| | Judge is skeptical of PharmAthene's claim for expectation damages because they are speculative, but believes it is premature to grant summary judgement |
| 9/22/11: | Court rules in favor of PharmAthene on multiple claims (counts 5 and 6): |
| | Finds Siga did not breach a binding license agreement, but breached obligations to negotiate in good faith |
| | Finds Siga is liable under doctrine of promissory estoppel |
| | Denies PharmAthene's claims for specific performance of a license agreement with terms from LATS, as well as a lump sum award for expectation damages |
| | However, court believes PharmAthene is entitled to a share in profits after an adjustment for upfront payments that would've been likely under a licensing agreement |
| | After Siga earns $40M in net profits, PharmAthene entitled to 50% of all net profits for 10 years following first commercial sale |
| | Also awards PharmAthene recovery of 33% of attorney fees and expenses |
| | At end of 2005, both companies agree market potential for ST-246 ranged from $1B-$1.26B |
| | PharmAthene's independent damages expert (Baliban) used 2 discounted earnings analyses (inputs as of Dec 2006 and as of trial date) to estimate damages of $402M-$1.07B |
| 12/16/11: | Court denies Siga's motion for reargument as to the unprecedented remedy ordered |
| 5/31/12: | Court issues resolution for 30 discrete points of disagreement between each party's proposed implementation of equitable remedy |
| 5/24/13: | Upon appeal, Delaware Supreme Court reverses prior ruling of promissory estoppel and equitable damages, and remands case to reconsider the award |
| 8/8/14: | Judge rules PharmAthene should be awarded a lump sum payment with interest/fees based on expected US government purchases in December 2006 |
| | Also awards 40% of legal fees incurred through post-trial argument (33% for the following remand proceedings) and 60% of expert witness costs through trial arguments (10% for following remand proceedings) |
| | Total award will not be established until after the court considers calculations to be provided by a designated expert |
| | Judge believes the court should consider Siga's BARDA contract in determining an award |
| | Judge favors Baliban's $1.07B damages valuation based on Dec 2006 knowledge: |
| | Assumes 91.9M vials sold 2008-17 (29.8M from 2008-12) at $100 each, 84% probability of commercialization success, 23.1% discount rate |
| | Judge believes US government sales would've begun in 2010 (not 2008), SNS portion of sales (14.8M) over the course of 5 years (not 4), DoD portion of sales (250K) should be halved, ROW sales (14.8M) should be eliminated, repurchase aspect rejected |
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| Timeline | |
| 1/26/06: | License Agreement Term Sheet (LATS) is drawn up to establish a development/comercialization partnership |
| | Unsigned document with the footer "Non Binding Terms" |
| | Sets forth a framework for many things, including patents, licenses, license fees and royalties: |
| | $6M license fee ($2M upfront, $2.5M deferred over 12 months and $1.5M after Siga obtained financing over $15M) |
| | $10M in milestone payments (sales targets, reg approvals) |
| | Royalties of 8% (sales under $250M), 10% (sales over $250M) and 12% (sales over $1B) |
| | Siga gets 50% of LLC's remaining profits when net margin exceeds 20% on sales to US government |
| 3/9/06: | Sign LOI with annexed Merger Term Sheet |
| | Specifically, it is an indication of the parties intention to consummate a merger - says non binding |
| | Parties agree to negotiate in good faith and use best efforts to execute a definitive merger agreement |
| | Upon any termination, parties agree to negotiate terms of a definitive license agreement in accordance with terms in LATS |
| 3/20/06: | Parties enter a bridge loan agreement for $3M |
| | If merger isn't executed, PharmAthene has 90 day exclusivity period to negotiate licensing agreement |
| | Subject to New York state laws |
| 6/8/06: | Merger agreement executed |
| | If merger isn't executed, PharmAthene has 90 day exclusivity period to negotiate licensing agreement |
| | Subject to Delaware state laws |
| 9/30/06: | Deadline to close merger, PharmAthene requests an extension (Siga doesn't respond) |
| | Around this time, both parties become aware that results from Siga-246 trials are highly successful |
| 10/4/06: | Siga sends notice terminating merger agreement, stating deadline has passed |
| 10/12/06: | PharmAthene sends a license agreement in accordance with original LATS for execution |
| 10/13/06: | Siga responds saying it will review by October 16 |
| 10/18/06: | Siga publicly announces results of Siga-246 clinical trials |
| 10/19/06: | Siga obtains $9M in a private placement and wants to pay back the bridge loan |
| 11/6/06: | Siga claims LATS terms aren't binding and that the terms are no longer acceptable |
| | Siga suggests $40-45M upfront and 50/50 profit split |
| 11/21/06: | Siga forwards a partnership agreement ignoring LATS terms, which PharmAthene disputed, but offered to continue negotiations |
| | Upfront payment for license increased from $6M to $100M |
| | Milestone payments increased from $10M to $235M |
| | Royalties raised from 8-12% to 18-28% |
| | Siga gets 50% of LLC's remaining profits (not just when net margin exceeds 20% on sales to US government) |
| | Also includes other provisions (unilaterally resolve disputes, block distributions to PharmAthene, PharmAthene fully funds LLC's costs, right to terminate LLC and retain full product rights) |
| 12/12/06: | Siga states further partnership discussions are useless if PharmAthene adheres to terms in LATS, bridge loan and merger agreement |
| 12/20/06: | PharmAthene commenced legal action |
| 1/9/07: | Siga moved to dismiss the complaint |
| 1/16/08: | Court denies Siga's motion to dismiss |
| 5/4/09: | PharmAthene files amended complaint |
| 5/18/09: | Siga files an answer to the amended complaint and counterclaim |
| | Denies reaching a binding licensing agreement, but rather an unenforceable agreement to agree |
| | Denies promising control of ST-246 |
| | Contends PharmAthene assistance was unsolicited and of little value |
| | Claims PharmAthene breached duty to negotiate in good faith, causing Siga unneccessary expense of drafting new LLC agreement |
| 7/10/09: | Court overrules Siga's claims of attorney-client privilege |
| 3/19/10: | Siga moves for partial summary judgement |
| 11/23/10: | Court denies Siga's motion for partial summary judgement |
| Jan 2011: | 11 day court trial |
| 4/29/11: | Final arguments presented |
| 9/22/11: | Court rules in favor of PharmAthene |
| | After Siga earns $40M in net profits, PharmAthene entitled to 50% of all net profits for 10 years following first commercial sale |
| 10/4/11: | Siga files motion for reargument as to the unprecedented remedy ordered |
| 12/16/11: | Court denies Siga's motion for reargument as to the unprecedented remedy ordered |
| 5/31/12: | Court issues resolution for 30 discrete points of disagreement between each party's proposed implementation of equitable remedy |
| 5/24/13: | Upon appeal, Delaware Supreme Court reverses prior ruling of promissory estoppel and equitable damages, and remands case to reconsider the award |
| 8/8/14: | Judge rules PharmAthene should be awarded a lump sum payment with interest/fees based on expected US government purchases in December 2006 |
| | Also awards 40% of legal fees incurred through post-trial argument (33% for the following remand proceedings) and 60% of expert witness costs through trial arguments (10% for following remand proceedings) |
| | Total award will not be established until after the court considers calculations to be provided by a designated expert |