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c31973

c31973
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  • PharmAthene's Damage Award Will Be Limited To Reliance Damages [View article]
    We are actually quite close in our thinking, whether VC Parsons agrees is another question.

    My other concern is that the SC's decision implies that the determination of expectation damages is potentially different under promissory estoppel than under a contractual theory of liability. I can imagine wider latitude under promissory estoppel but I have not seen any case law that supports a view that establishing expectation damages can differ between the two findings. If not, the SC could/should have just reversed the 50/50 award and stated whatever finding Parsons based his damages on is irrelevant. An equitable payment stream is out. The fact that the SC did not makes me worry that they are open minded to Parsons trying to put forth a justification.
    Jun 27, 2013. 03:52 PM | 1 Like Like |Link to Comment
  • Anacor Pharmaceuticals: A Small Cap With Tremendous Upside And Multiple Short To Mid Term Catalysts [View article]
    Thanks for the write-up.

    "Even more importantly for investors is the fact that Anacor claims to have sufficient cash resources to survive past the end of the year. This helps to alleviate the risk of sudden dilution and as such should be a bit of positive news for investors."

    Absent a win in arbitration, would you agree that a dilutive event is coming early in 2014 (based on the cash burn rate), the fear of which could pressure the stock from here?
    Jun 27, 2013. 02:57 PM | Likes Like |Link to Comment
  • PharmAthene's Damage Award Will Be Limited To Reliance Damages [View article]
    To your first point, I believe VC Parsons may (perhaps likely) come back and state that the 50/50 profit split is not “not uncertain, contingent, conjectural, or speculative” at all because the remedy does not rely on a single contingency or estimate. Quite the contrary, PharmAthene is not awarded a penny until that penny is earned (after the first $40 million). No matter what profit ST-246 makes, PharmAthene will receive a precisely calculated amount based on actual audited sales. The formula is backward looking not forward looking. Thus, the relevant amounts are known with complete certainty before PharmAthene receives a payment.

    To your second point, this is why I continue to hold the stock. If PharmAthene had acquired ST-246 according to the terms of the LATS, the company could have lost money. I believe this was the point one of the SC judges made in oral arguments when he said that PharmAthene’s position in the case was “a heads I win and a tails you lose.” I am betting on this argument carrying the day.

    To your third point, if so, why did the SC not simply give that guidance to VC Parsons? The SC’s lack of commentary on the remedy has introduced an unnecessary delay.
    Jun 27, 2013. 01:57 PM | 2 Likes Like |Link to Comment
  • PharmAthene's Damage Award Will Be Limited To Reliance Damages [View article]
    I agree with one important exception. With respect to your statement:

    “I am sure there are still people out there who believe PharmAthene could be awarded an equitable payment stream based upon some formula Vice Chancellor Parsons manufactures.”

    VC Parsons did not “manufacture” the formula. He made a finding from the record (see page 97):

    “I also find that, but for SIGA’s bad faith negotiations, the parties likely would have reached agreement on a transaction generally in accordance with the LATS. PharmAthene was willing to agree to a license agreement for ST-246 on terms that varied “to some extent” from the LATS.227 I find that one such variation PharmAthene would have accepted is the use of a 50/50 profit split.228”

    So, the question is whether this formulaic remedy meets the standards required for expectation damages. I hope not but I believe the question is unanswered in the law.

    Do you disagree?
    Jun 27, 2013. 12:24 PM | Likes Like |Link to Comment
  • SIGA Technologies Vs. PharmAthene: A Comprehensive Analysis Of The Legal Issues [View article]
    Although I am long SIGA, I am not entrenched. I have no idea how this case will ultimately get decided. I am partially persuaded by both sides.

    I will offer comments on your points (probably not helpful ones). On #2, I would think a remedy that is found not speculative under PE law is also not speculative under contract law. I assume the SC never reached a conclusion on whether the remedy was speculative or not. They stopped when they decided the CC erred on PE. That said I do not see why the SC could not have reversed the CC on PE and affirmed on contract law and affirmed (or not) the remedy. I suppose the fact the SC did not take that route opens up the possibility that the SC thinks “speculative” under one finding is potentially not under the other. If so, I would think a PE breach has more latitude.

    This reasoning also applies to #4. I assume the SC stopped deliberations before reaching any decision on the profit sharing scheme.

    I was confused by the “Heads I win, tails you lose” comment. He may have simply meant even though the negotiations were not concluded PharmAthene’s argument presupposes that PharmAthene would “win” and SIGA would “lose.” He saw the possibility that even with good faith negotiations the parties may have not reached agreement. The judge may have changed his mind on this point because the CC found otherwise and this finding was not reversed or remanded.

    I may not understand #1. My interpretation is the CC found that the LATS was not an enforceable contract because the LATS lacked essential terms. However, with good faith negotiations, the parties would have reached agreement on a contract.

    (I wish the companies would merge at current values which would effectively give 33% of the NewCo to PIP holders and 67% to SIGA holders. The companies are in the same industry addressing the same customers. Redundant costs could get cut. PharmAthene has a promising drug but needs development money. SIGA will start receiving significant cash this quarter and could help fund development. The “bad blood” is way overstated. Drapkin was the source of the contention and he is long gone.)
    Jun 11, 2013. 05:57 PM | Likes Like |Link to Comment
  • SIGA Technologies Vs. PharmAthene: A Comprehensive Analysis Of The Legal Issues [View article]

    If the SC is pointing the judge strictly back to the LATS, I can see where is profit sharing is flawed from a foresee-ability and certainty standpoint. At the time of the breach, no one knew the ultimate profit margin on ST-246 or the final development costs. In fact, many years later we still do not know the profit margin. Further, at the time of the breach, one could imagine another antiviral (perhaps a broad spectrum drug) displacing ST-246. If the profit margin was low/zero/negative (particularly after paying license fees to SIGA), and/or development costs were elevated, or if ST-246 did not go to market, or the drug killed people, PharmAthene would have been better off NOT getting ST-246 and SIGA would have been better off with the license agreement. Judge Parsons’ remedy is not self correcting for these possibilities which makes the sharing scheme look speculative to me.
    Jun 11, 2013. 09:56 AM | 1 Like Like |Link to Comment
  • SIGA Technologies Vs. PharmAthene: A Comprehensive Analysis Of The Legal Issues [View article]

    All very thought provoking. The SC apparently thinks Parsons should/could make a different award based on "failure to negotiate in good faith a Type II contract" than under "promissory estoppel," even though Parsons seemed to indicate otherwise (his "overlapping" comment among others). I am surprised the SC did not provide more guidance on any differences they see in "expectation damages" under the two different findings. Whatever Parsons decides, the case is going right back to the SC. I could imagine that Parsons has more room in making an equitable award under promissory estoppel than under a contractual theory of liability. If the question comes down to whether his damage award puts PIP in the same position absent the breach, I would say no. They were supposed to get ST-246 and make milestone and license fee payments to SIGA. Instead, PIP got a profit sharing agreement. PIP might be worse off or better off. No one can say. In either case, they are closer to getting what they deserve, but I am not sure if that is the criteria given the standard of "certainty."


    Jun 5, 2013. 10:16 AM | Likes Like |Link to Comment
  • Anacor Knocking On The Door [View article]

    That said, Tavaborole had a higher mycological cure rate than those in either of Efinaconazole trials suggesting (I believe) a higher cure rate for Tavaborole beyond 52 weeks.

    Also, and perhaps more telling, Tavaborole's vehicle rate was 0.5%. Efinaconazole's vehicle rates were 3.3% and 5.5%.

    Are you too pessimistic? Or, am I reaching?

    Feb 21, 2013. 03:13 PM | Likes Like |Link to Comment
  • Anacor Knocking On The Door [View article]
    Kevin,

    Thanks for your work on Anacor.

    Are you persuaded that the differences (inclusion criteria and trial methodology) in the Phase III trials of Tavaborole and IDP-108 made IDP-108 look superior to Tavaborole? The vehicle rates seemed to back that up. Still, investors are obviously not taking that view.
    Feb 19, 2013. 10:53 AM | Likes Like |Link to Comment
  • Good Chance For PharmAthene To Jump On Lucrative SIGA Litigation [View article]
    The more I reflect, the more I think you are probably right. Some of the courts' frustration was potentially more with the law than the case itself. At least one judge did not know where to draw the line between "good faith" and "bad faith" negotiations (and questioned the whole concept). He also mused (above) that any expectation damages are speculative because they are not based on an agreement because an agreement was never reached (even Parsons found that the parties never reached an agreement) and, in fact, how could one ever even claim expectation damages in a "bad faith" claim because by definition no agreement underpins the damage calculation (so the calculation is speculative). I suppose the Court could make new law in these hazy areas and the question is which side of the line the case falls.
    Jan 16, 2013. 10:24 AM | Likes Like |Link to Comment
  • Good Chance For PharmAthene To Jump On Lucrative SIGA Litigation [View article]
    I agree nothing new was introduced. However, the Court seemed more receptive to SIGA’s arguments than to PharmAthene’s. SIGA argued that PIP never made a claim based on SIGA not negotiating in good faith. Instead SIGA argued that PIP’s claim was based on SIGA reneging on a done deal. SIGA argued that the Chancery Court committed an error by even ruling that SIGA breached a duty of good faith. The Court did not push back at all. Instead they commented on the difficulty of even defining good faith negotiations and that many states do not even recognize the concept. For example, from one of the judges “I mean if any relief at all is granted, whether its reliance damages or expectation damages, that necessarily presupposes that the negations would have concluded with some agreement. And, that’s speculative by its very nature, because that’s unknowable.….. If full effect is given to that argument then no relief is granted. In which case, why have a claim? Why recognize a claim for breach of a duty to negotiate in good faith at all?” Even if PIP prevails here, the Court appeared receptive to the argument that reliance damages were all that were warranted. I was surprised how often SIGA’s attorney argued that the trial judge committed an error without any rebuttal from the Court. We will see. To a previous poster’s point, none of this matters if ST-246 is not procured in large quantities for many years --- and that is currently the market’s judgment given the valuations of both companies.
    Jan 12, 2013. 12:35 PM | Likes Like |Link to Comment
  • Good Chance For PharmAthene To Jump On Lucrative SIGA Litigation [View article]
    Agree, well said.
    Jan 12, 2013. 10:26 AM | Likes Like |Link to Comment
  • Good Chance For PharmAthene To Jump On Lucrative SIGA Litigation [View article]

    The audio of the of the oral arguments are on the Delaware Courts website. Listen to the judge's comments. I would not touch PIP with a barge pole.

    http://1.usa.gov/VYH5kD
    Jan 11, 2013. 07:13 PM | 1 Like Like |Link to Comment
  • Good Chance For PharmAthene To Jump On Lucrative SIGA Litigation [View article]
    I listened to the oral arguments in front of the Delaware Supreme Court. The judges seemed very skeptical of the Chancery Court decision, largely agreeing with SIGA's attorney and aggressively questioning PIP's attorney, particularly with respect to damages.
    Jan 11, 2013. 04:02 PM | 2 Likes Like |Link to Comment
  • Superior Industries International: A Superior Investment Opportunity? [View article]
    Agree on the positive points. However, the flip side of the plant closures is that I believe the company is currently operating at or near capacity and will have to build new plant to grow. Investing in more PP&E takes time and money and given the fragile state of the economy may or may not make sense.

    Jun 14, 2012. 10:59 AM | 1 Like Like |Link to Comment
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