Special Notice announces BARDA's intentions to negotiate contract modification with PharmAthene

PharmAthene, Inc. (NYSE Amex: PIP) a biodefense company specializing in the development and commercialization of medical countermeasures against chemical and biological threats, today commented on a Special Notice published by the US Department of Health and Human Services (DHHS), Assistant Secretary for Preparedness and Response, Biomedical Advanced Research and Development Authority (BARDA) on December 29, 2009. This Special Notice, Solicitation Number: HHSO100200900103C announced BARDA's intentions to negotiate a contract modification with PharmAthene Inc. for continued development of the Company's recombinant protective rPA anthrax vaccine candidate, SparVax(TM).

"We look forward to working closely with BARDA to meet their needs and the critical needs of the Strategic National Stockpile as quickly as possible," said David P. Wright, PharmAthene's President and Chief Executive Officer. "We believe the Special Notice reflects BARDA's commitment to work with companies to provide funding to advance the development of rPA vaccines and ensure the maintenance of the timeline set under RFP BARDA 08-15 as if a contract had been awarded for our rPA anthrax vaccine candidate under that solicitation."

This Special Notice appears to be consistent with BARDA's stated intention to develop and eventually procure a second generation recombinant anthrax vaccine (rPA) for the Strategic National Stockpile, and is consistent with the remarks made by Mr. Wright in an investor teleconference on December 9, 2009 where he described BARDA's intention to develop and stockpile improved anthrax vaccines as demonstrated by the Special Notice and the ability of PharmAthene to submit a proposal under BARDA Broad Agency Announcement (BAA-09-34).

This Special Notice was published by DHHS as a procedural matter prior to a contract modification. The Special Notice states, "PharmAthene Inc. has been under contract with the US government since 2003 to develop an rPA vaccine via Contract N01-AI-30052. These development activities were transferred to BARDA as of April 1, 2009 (HHSO100200900103C). This product has matured as demonstrated by successful clinical and non clinical studies. Many of the (R&D) activities that are currently being executed have a direct impact on the government's urgent need to devise effective measures to protect US citizens from harmful effects of anthrax spores used as instruments of terror. This contracts increased level of effort does not represent a material difference between the modified contract and the contract that was originally awarded." According to the BARDA Special Notice, an amended contract scope of activities include manufacturing activities such as process scale-up and validation, assay validation, and non-clinical safety assessment and study plans.

BARDA announced on December 7, 2009, it has amended an existing Broad Agency Announcement (BAA-09-34) to accommodate proposals for rPA-based vaccine development. If awarded, the Company's expectation is that the funding under a BAA contract would be sufficient to advance the rPA vaccine program to the stage of a procurement solicitation. PharmAthene plans to submit a white paper as required under the BAA instructions by February 1, 2010.