By Mark Tarallo
The Delaware Supreme Court recently issued a ruling in Siga Technologies, Inc. vs. PharmAthene, Inc., one of the longer-running disputes in the Delaware court system. The case arose out of the failed license agreement and merger between Siga Technologies, Inc. (“SIGA”) and PharmAthene, Inc. (“PharmAthene”) in 2006. SIGA had initially sought the business arrangement in order to survive, and then backed away from the transaction as its prospects began to improve over the course of 2006. After SIGA terminated discussions and refused to enter a license agreement on the terms set forth in a term sheet the parties had agreed to, PharmAthene sued SIGA in the Delaware Chancery Court. The Chancery Court issued an order awarding damages to PharmAthene. Both parties appealed, and on May 24, 2013, the Delaware Supreme Court issued a ruling (referred to as “SIGA I”) remanding the case to the Chancery Court for consideration of certain issues relating to damages. The Chancery Court issued an order on January 15, 2015, awarding PharmAthene approximately $113 million in damages, and to the surprise of absolutely no one, both parties again appealed. On December 23, 2015, the Delaware Supreme Court issued a ruling (likely to be referred to as “SIGA II”) upholding the actions of the Chancery Court.
The basis of the dispute was a detailed license agreement term sheet signed by the parties and referred to throughout the litigation as the “LATS.” The Chancery Court relied on some of the terms set forth in the LATS when calculating damages, despite the claims of SIGA that this was too speculative a measure. The Supreme Court disagreed, and ruled that the Chancery Court could use an estimate of lump sum expectation damages (based on the terms in the LATS), as long as the plaintiff could prove the existence of such damages with reasonable certainty. The Supreme Court agreed with the Chancery Court’s determination that PharmAthene had met that burden, and upheld the Chancery Court’s award of damages. The full text of the opinion can be found at here.