One of PharmAthene’s competitors within the Biotechnology space, Celgene Corp. (NASDAQ: CELG), provided on January 09, 2016, its business update as well as its preliminary 2016 unaudited results and financial guidance for 2017. AWS will be initiating a research report on Celgene in the coming days.
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Breaking down the agreement
Backed by investors such as Novartis Venture Fund, HealthCap, Redmont Capital, and Truffle Capital, Altimmune will be a wholly owned subsidiary under PharmAthene subject to the agreement and will result in the development of a fully-integrated and diversified immunotherapeutics company with four clinical stage and one preclinical stage programs. Under the terms of the merger, PharmAthene will issue shares of common stock to Altimmune shareholders, where Altimmune’s share equity holders will receive 58.2% of the fully-diluted equity Company. The combined Company will operate as a publically listed Company under the name Altimmune.
The transaction does not alter the $2.91 special cash dividend per share of common stock announced on November 17, 2016, for PharmAthene’s stockholders. Payable on February 03, 2017, this special dividend represents an aggregate payment of about $217 million (including interest) from SIGA with reference to the judgment delivered in favor of PharmAthene. The cash dividend is calculated on the basis of 98% of the after-tax net cash proceeds received from SIGA.
The Product Pipeline of the Merger
Clinical Stage Products:
- NasoVAX: It is an intranasal, single dose, state-of-the-art recombinant influenza vaccine. Phase-2 of the pivotal test is expected to commence during the mid-2017, with initial data expected around Q4 2017.
- HepTcell: It is the first-in-class immunotherapeutics for chronic hepatitis B which holds the potentials to offer a functional cure. Phase-1 of the tests is ongoing with data expected to be released in Q4 2017.
- SparVax-L: It is the next-gen lyophilized anthrax vaccine (NIAID-funded) which can be stored at room temperature, hence ensuring longer shelf life. The Phase-2 bridging study is expected to commence in second half of 2017 with data expectations in 2018.
- NasoShield: It is an intranasal, single dose, first-in-class anthrax vaccine. Funded by the BARDA under a $120.2 million, 5-year contract (announced in August 2016) this vaccine offered protection within a few weeks of administration (based on preclinical studies). Phase-1 trial is expected to begin during the second half of 2017, with data anticipations in the first half of 2018.
The SIGA Story
PharmAthene sued SIGA in 2006, alleging that the former partner refused to honor its obligations under a licensing agreement term sheet after merger talks fell through and early trials of smallpox antiviral ST-246 showed its potential profitability. In May 2011, SIGA landed on a five-year contract with the US Department of Health and Human Services, for sale of ST-246 with purchases worth up to $2.8 billion, which was revised to $433 million in the final deal.
PharmAthene received the first lot of payment of $5 million creditable against the final satisfaction of PharmAthene’s claim of about $205 million plus interest. Later, on November 16, 2016, the final payment of $83.9 million was received from SIGA, which the Company plans to distribute to its shareholders.
PharmAthene views this agreement as an ideal strategic match and assistance to continue building value for PharmAthene’s stockholders post the distribution of the SIGA litigation proceeds. Altimmune will benefit from PharmAthene’s existing US public company infrastructure, where access to capital markets will be provided to the subsidiary, which is crucial to the development and distribution of Altimmune’s proprietary platform technologies.
At the closing bell, on Thursday, January 19, 2017, PharmAthene’s share price finished yesterday’s trading session at $3.15, dropping 7.35%. A total volume of 2.92 million shares exchanged hands, which was higher than the 3 months’ average volume of 874.59 thousand shares. The stock has rallied 11.70% and 23.05% in the last three months and past six months, respectively. The stock is trading at a PE ratio of 1.81 and currently has a market cap of $207.08 million.
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