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PharmAthene Reports Second Quarter 2009 Financial and Operational Results

ANNAPOLIS, Md., Aug. 13 /PRNewswire-FirstCall/ -- PharmAthene, Inc. (NYSE Amex: PIP), a biodefense company developing medical countermeasures against biological and chemical threats, today reported financial and operational results for the second quarter and six months ended June 30, 2009.

For the second quarter of 2009, PharmAthene recognized revenues of $8.1 million compared to $11.7 million in the same period of 2008. For the six months ended June 30, 2009 and 2008, the Company reported revenues of $13.6 million and $17.5 million, respectively. Revenues for the three and six month periods ended June 30, 2009 consisted primarily of contract funding from the U.S. government for the development of Protexia((R)), SparVax(TM) and Valortim((R)).

Research and development expenses were $9.5 million and $12.3 million for the quarter ended June 30, 2009 and 2008, respectively. For the six months ended June 30, 2009 and 2008, research and development expenses were $15.2 million and $18.2 million, respectively. Expenses for each period consisted primarily of research and development activities related to programs for Valortim((R)) and Protexia((R)), and for the three month period ended June 30, 2009 also reflect activities related to the SparVax(TM), RypVax(TM) and the Company's third generation rPA anthrax vaccine programs.

General and administrative expenses for the Company were $4.4 million and $4.6 million for the quarter ended June 30, 2009 and 2008, respectively. For the six months ended June 30, 2009 and 2008, general and administrative expenses were $9.6 million and $9.0 million, respectively. General and administrative expenses were essentially flat for the three months ended June 30, 2009 and increased by approximately $600,000 in the first six months of 2009, compared to the same period last year. The year to date increase was primarily due to increased consulting and legal services associated with compliance requirements related to operating as a publicly traded entity, costs related to preparing and submitting various bids and proposals and litigation efforts, along with increased non-cash, stock-based compensation costs. These increases were partially offset by reduced travel and other administrative overhead costs.

For the second quarter of 2009, PharmAthene's net loss attributable to common shareholders was $6.6 million or $0.24 per share, compared to $21.6 million or $0.98 per share in the same period of 2008. For the six months ended June 30, 2009, the Company's net loss attributable to common shareholders was $12.6 million or $0.47 per share, compared to $26.3 million or $1.19 per share in the same period of 2008.

As of June 30, 2009, available cash, cash equivalents and short term investments were $15.5 million, excluding restricted cash totaling $1.5 million.

Subsequent to the second quarter and effective July 28, 2009, PharmAthene issued 2-year, 10% unsecured senior convertible notes and common stock purchase warrants in a private placement totaling approximately $19.3 million. In connection with the private placement, the Company received gross cash proceeds of approximately $10.5 million from new investors, including an aggregate of approximately $8.5 million from unaffiliated investors, and also canceled approximately $8.8 million in outstanding principal and unpaid accrued interest under the Company's 8% senior unsecured convertible notes originally issued in August 3, 2007 and due August 3, 2009. The Company estimates that at its currently projected rate of cash consumption, the net proceeds from this financing, along with existing sources of cash, will be sufficient to fund operations through the end of 2010.

David P. Wright, President and Chief Executive Officer of PharmAthene commented, "The second quarter was a period of continued momentum for the Company. Of note, in response to the latest amendments to the RFP issued by the U.S. Department of Health and Human Services to develop and deliver up to 25 million doses of a recombinant protective antigen (rPA) anthrax vaccine for the Strategic National Stockpile, in late May, we submitted our regulatory strategy to the U.S. Food and Drug Administration (FDA), outlining our non-clinical and clinical development plans for licensure of SparVax(TM). Just after quarter end, in early July, we announced that the FDA had completed its review of our development plan. We have since submitted the FDA's feedback to the Biomedical Advance Research and Development Authority (BARDA) and are currently in the process of updating our proposal for submission to BARDA."

Mr. Wright continued, "In the meantime, development activities for SparVax(TM) continue pursuant to our existing development contract, which was transferred from the National Institutes of Health to BARDA on April 1, 2009. We are also making progress in the development of Valortim((R)), our fully human monoclonal antibody for the prevention and treatment of anthrax infection. During the quarter, we received an additional $2 million under the current contract with the National Institute of Allergy and Infectious Diseases to perform certain manufacturing and non-clinical activities. Additionally, we submitted to BARDA our full proposal in response to a Broad Agency Announcement (BAA) for anthrax anti-toxins and therapeutics. Specifically, we have proposed a development program of an IV formulation of Valortim((R)) for the treatment of anthrax and will also be developing a lyophilized formulation. We have requested substantial funding to support these activities. The government has indicated that contracts under the BAA will be awarded by the end of the third quarter."

Conference Call and Webcast Information

PharmAthene management will host a conference call to discuss the Company's second quarter and six month financial and operational results today at 11:00 a.m., E.T. The dial-in number for U.S. callers is 800-706-7748 and for international callers is 617-614-3473. The participant passcode is 28915363.

A replay of the conference call will be available beginning at approximately 2:00 p.m. Eastern Time on August 13, 2009 until approximately 11:59 p.m. Eastern Time September 11, 2009. The dial-in number from within the United States is 888-286-8010. For international callers, the dial-in number is 617-801-6888. The participant passcode is 35226593.

The webcast of the conference call will be available until September 13, 2009 and can be accessed from the company's website at A link to the webcast may be found on the Investor Relations section of the website.

About PharmAthene, Inc.

PharmAthene was formed to meet the critical needs of the United States and its allies by developing and commercializing medical countermeasures against biological and chemical weapons. PharmAthene's lead product development programs include:

  • SparVax(TM) - a second generation recombinant protective antigen (rPA) anthrax vaccine
  • Third generation rPA anthrax vaccine
  • Valortim((R)) - a fully human monoclonal antibody for the prevention and treatment of anthrax infection
  • Protexia((R)) - a novel bioscavenger for the prevention and treatment of morbidity and mortality associated with exposure to chemical nerve agents

For more information about PharmAthene, please visit

Statement on Cautionary Factors

Except for the historical information presented herein, matters discussed may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Statements that are not historical facts, including statements preceded by, followed by, or that include the words "potential"; "believe"; "anticipate"; "intend"; "plan"; "expect"; "estimate"; "could"; "may"; "should"; or similar statements are forward-looking statements. PharmAthene disclaims, however, any intent or obligation to update these forward-looking statements. Risks and uncertainties include risk associated with the reliability of the results of the studies relating to human safety and possible adverse effects resulting from the administration of the Company's product candidates, unexpected funding delays and/or reductions or elimination of U.S. government funding for one or more of the Company's development programs, including without limitation our bid related to SparVax((TM)) under the DHHS Request for Proposals for an Anthrax Recombinant Protective Antigen (rPA) Vaccine for the Strategic National Stockpile, the award of government contracts to our competitors, unforeseen safety issues, challenges related to the development, scale-up, technology transfer, and/or process validation of manufacturing processes for our product candidates, unexpected determinations that these product candidates prove not to be effective and/or capable of being marketed as products, unexpected financial obligations that could increase the rate of our cash consumption as well as risks detailed from time to time in PharmAthene's Forms 10-K and 10-Q under the caption "Risk Factors" and in its other reports filed with the U.S. Securities and Exchange Commission (the "SEC"). We have based our projection of future cash needs on the Company's current and anticipated operations, which do not take into account any potential future government contracts that may be awarded to the Company, merger & acquisition or corporate partnering activities, or unexpected financial obligations.

Copies of PharmAthene's public disclosure filings are available from its investor relations department and our website under the investor relations tab at

                                -- Tables Follow --

                                   PHARMATHENE, INC.

                                   Three months ended       Six months ended
                                        June 30,                June 30,
                                    2009        2008        2009        2008
                                      (unaudited)              (unaudited)

    Contract revenue          $8,071,211 $11,703,448 $13,593,114 $17,522,502
    Other revenue                      -           -           -      21,151
                               8,071,211  11,703,448  13,593,114  17,543,653
    Operating expenses:
     Research and development  9,464,629  12,274,553  15,159,955  18,203,872
     General and
      Administrative           4,416,248   4,605,791   9,562,247   8,963,750
     Acquired in-process
      research and development         -  15,906,002           -  15,906,002
     Depreciation and
      amortization               199,699     239,914     392,177     436,017
     Other expense               760,720           -     884,561           -
    Total operating expenses  14,841,296  33,026,260  25,998,940  43,509,641

    Loss from operations      (6,770,085)(21,322,812)(12,405,826)(25,965,988)
    Other income (expense)
     Interest income              92,853     362,170     197,098     833,935
     Interest expense           (598,395)   (651,778) (1,200,510) (1,318,775)
     Change in market value of
      derivative instruments     643,702      26,263     764,291     115,543
    Total other income
     (expense)                   138,160    (263,345)   (239,121)   (369,297)

    Net loss                  (6,631,925)(21,586,157)(12,644,947)(26,335,285)
    Basic and diluted net
     loss per share              $ (0.24)    $ (0.98)    $ (0.47)    $ (1.19)
    Weighted average shares
     used in calculation of
     basic and diluted net
     loss per share           28,056,824  22,087,121  27,038,761  22,087,121

                               PHARMATHENE, INC.

                                                    June 30,   December 31,
                                                      2009         2008
    Current assets:
      Cash and cash equivalents                   $ 9,272,803 $ 19,752,404
      Restricted cash                               1,500,000   12,000,000
      Short-term investments                        6,177,616    3,190,912
      Accounts receivable                           2,438,415    8,890,077
      Other receivables (including unbilled
       receivables)                                13,594,575    1,391,512
      Prepaid expenses and other current assets       594,690      917,125
    Total current assets                           33,578,099   46,142,030

    Long-term restricted cash                               -    1,250,000
    Property and equipment, net                     5,909,053    5,313,219
    Patents, net                                      908,374      925,489
    Other long-term assets                            252,974      220,531
    Deferred costs                                     23,845       37,092
    Goodwill                                        2,348,453    2,502,909
    Total assets                                 $ 43,020,798 $ 56,391,270


    Current liabilities:
      Accounts payable                            $ 2,573,453  $ 3,870,871
      Accrued expenses and other liabilities       11,318,882   14,624,757
      Convertible notes                            14,300,517   13,377,505
      Current portion of derivative instruments        69,021            -
      Current portion of long-term debt             2,955,264    4,000,000
                                                   31,217,137   35,873,133

    Other long-term liabilities                       426,874      626,581
    Derivative instruments                          1,045,770            -
    Long-term debt                                          -      928,117
    Total liabilities                              32,689,781   37,427,831

    Stockholders' equity:
      Common stock, $0.0001 par value;
       100,000,000 shares authorized;
       28,070,663 and 25,890,143 shares issued
       and outstanding, respectively                    2,807        2,589
      Additional paid-in-capital                  147,396,332  142,392,163
      Accumulated other comprehensive (loss)
       income                                        (392,293)     386,351
      Accumulated deficit                        (136,675,829)(123,817,664)
    Total stockholders' equity                     10,331,017   18,963,439
    Total liabilities and stockholders' equity   $ 43,020,798 $ 56,391,270

SOURCE PharmAthene, Inc.
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