Late last year shares of Siga Technologies (SIGA) started taking a dive as news of a lawsuit filed by rival PharmAthene (PIP) circulated the wires. Having traded for over ten dollars for some time, shares quickly found a home at below four bucks when a judge essentially ruled in favor of PharmAthene and awarded the company 50% of Siga's profits for the smallpox antiviral ST-246, for which Siga landed a huge contract from the Biomedical Advanced Research and Development Authority of the United States Department of Health and Human Services (BARDA) last year.
Some high level conflicts-of-interest may have also played part in the share price decline.
As a result of the Judge's ruling, Siga asked the court to reconsider its verdict, but news last week revealed that the previously-rendered decision would stand.
The next logical step for Siga was to file an official appeal, which the company did and announced this week via press release.
While no absolute determination can be made at this time as to how the appeals court will rule, many feel that Siga's case is strong enough to merit due consideration and that a reversal-of-decision is a distinct possibility. Should that turn out to be the case, it's likely that a swift rebound in the SIGA share price could take place.
In the meantime, SIGA shares have traded with enough volatility to warrant consideration as a short term trade, but the long term potential of the company still remains, offering longs the opportunity to load up at the currently depressed prices.
It's unlikely that any larger company would step in and provide a major partnership or buyout offer of Siga's technology while the lawsuit is still ongoing, but once the full round of litigation is finished, SIGA could also be viewed as a potential takeover target, based on the technology behind ST-246 alone.
Possibly one to take advantage of on the dips as the company's long term potential stands, but the short term movement will - barring any unexpected developments - still follow any news related to the ongoing PIP litigation.
PharmAthene has got to be pretty happy with the official outcome, given the company has thus far put nothing into the development of ST-246, and as a result, the PIP share price spiked after the recent news that the original decision was upheld.
Disclosure: Long SIGA.
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