Big Gain Hunting: PIP

PIP has the possibility for making a huge move within the next few weeks. It already had an initial EP August 8, 2014 when the Chancery court of Delaware issued a decision finding that PIP was entitled to damages from SIGA:

 "I conclude that PharmAthene has proven adequately that it is entitled to an award of a lump sum as expectation damages for SIGA‟s breach of contract."

Per the decision, the damges will be submitted by PIP's expert and SIGA is only permitted to challege computational errors and not the availability of such damages. 

The interesting thing is that the Court did not actually specify a damage itemization. PIP's attorneys have to supply that.  Undoubtedly there will be a short briefing schedule which could extend the date into next month.  That being said, PIP is likely to obtain a court decision (and investors will get a press release announcing that PIP has been awarded something in excess of $200,000,000.

That is a tremendous amount of money for PIP, which currently has a market cap of only 127 Million and 14 Million in sales.

Will they collect?  First, in hunting this big gain candidate, I'm not sure that it matters, the announcement should spark the move in itself as the initial decision on the merits of the suit did.

Appeal?  Probably.   Issues of credibility are nearly impossible to overturn, so I would say that SIGA would have an uphill battle unless they can overturn the legal theory of the expectation damages.  I don't think that will be the case since it already came down from the Delaware Supreme Court, which agreed that it was a proper measure of damages.

In addition SIGA should have to put up a supersedas bond to avoid collection.

Collectibility? A concern, but as if SIGA attempts a BK, PIP will be the largest creditor it would likely obtain an exclusive license on the drug and the government contracts that go with it. Notably, in the court decision, the court observed:

"SIGA valued ST-246 conservatively at approximately $1 billion. In mid-to-late 2006, as ST-246 began to look “more and more like a multi-billion dollar drug,” SIGA began experiencing “seller‟s remorse,” which was the primary impetus for its bad faith conduct later."

So the question is what effect does $200 + million  award have on a company with a market cap of 127 Million?  I don't see how its a negative.