PharmAthene, SIGA plan `reverse merger'

BUSINESS DIGEST

March 15, 2006|By TRICIA BISHOP | TRICIA BISHOP,SUN REPORTER

PharmAthene Inc., a biodefense biotechnology company in Annapolis, announced plans yesterday to shed its private status by merging with a public company based in New York, taking on SIGA Technologies Inc.'s assets as well as its spot on the Nasdaq stock market.

The combined business will be known as PharmAthene and will maintain its headquarters in Maryland.

After the stock deal, SIGA shareholders will own about 32 percent of the new company, and investors in PharmAthene will own the rest. The board of directors will be stacked with a similar breakdown of representatives.

The transaction, still in the preliminary stages, is contingent upon a final agreement along with regulatory and shareholder approval. In addition to trading stock, PharmAthene has provided SIGA with $3 million in "interim financing."

This is the second time in the past year that a Maryland biotechnology business has become a public company through a process known as a "reverse merger." Last spring, Rexahn Corp. of Rockville merged with a one-man Internet marketing company in Long Island, N.Y., that offered little more than its public status.

Reverse mergers usually involve a private company looking for a public shell of some sort that has few, if any, assets or liabilities. But the merger between PharmAthene and SIGA is a little different in that SIGA appears to bring something more to the table than its ticker symbol. The New York company, founded in 1995, is developing a smallpox treatment that complements PharmAthene's biodefense portfolio, which includes developing treatments for anthrax and chemical nerve agent poisoning.

If the deal goes through, PharmAthene could be trading shares on the stock market in less than six months - an achievement that typically takes years. SIGA's stock rose 4 cents to close at $1.03 yesterday.

tricia.bishop@baltsun.com

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