Government Awards Anthrax Vaccine Program To PharmAthene

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PharmAthene, Inc. (Amex: PIP), a biodefense company developing medical countermeasures against biological and chemical threats, announced today that the National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH), has awarded the Company a multi-year contract for up to $83.9 million for advanced development of a third generation recombinant protective antigen (rPA) anthrax vaccine.

The objective of the government's third generation program is to develop an rPA anthrax vaccine which can be stored, transported and used without the need for a conventional cold chain - an important advantage for civilian biodefense deployment within the Strategic National Stockpile. In particular, the vaccine must maintain stability for three years at 35º C and induce protective immunity in just one or two doses.

Under the contract, PharmAthene will receive initial funding of approximately $13.2 million during a "base period" of performance. During this time the Company will be responsible for preclinical activities, including, development and qualification of assays, stability testing, toxicology studies and development of non-clinical animal models. During the base period NIAID retains the option of extending the contract under two separate options with a combined value of up to $9.7 million. Additional options covering advanced manufacturing and clinical development could bring the total potential value of the contract up to approximately $83.9 million, provided that certain milestones are achieved and that all contract options and extensions are exercised by the government.

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"We are pleased that NIAID has awarded such a significant contract to fund the continued development of our third generation rPA anthrax vaccine program. This latest contract is in addition to an earlier NIH contract for up to $6.9 million, which was awarded in 2005," commented David P. Wright, President and Chief Executive Officer. "PharmAthene has built a diversified, best-in-class portfolio of novel biodefense product candidates and we view this latest award as a direct validation of our technology as well as a reaffirmation of the U.S. government's commitment to the development and procurement of next generation medical countermeasure solutions."

Mr. Wright added, "Based on development efforts to date, PharmAthene's third generation vaccine could offer significant improvements in both stability and storage compared to the current FDA approved vaccine, thereby meeting the government's requirements for civilian deployment in the Strategic National Stockpile. By comparison, the currently available anthrax vaccine, BioThrax(R) Anthrax Vaccine Adsorbed, which was initially licensed by the Food and Drug Administration in 1970, requires six doses over a period of eighteen months to achieve protective immunity and is required to be stored at between 2 degrees Celsius and 8 degrees Celsius."

PharmAthene believes that the third generation rPA anthrax vaccine contract is part of a broader strategy by the Department of Health and Human Services to ensure that the Strategic National Stockpile (SNS) contains the most efficacious anthrax medical countermeasures currently available. Near-term, the Company believes second generation rPA anthrax vaccine will gradually replace the currently licensed vaccine. Longer-term, third generation rPA vaccine -- with substantial improvements in stability and storage requirements -- will be the procurement option of choice.

Mr. Wright continued, "PharmAthene is strategically building a leading franchise in anthrax countermeasures - a potential billion dollar market. This includes not only our third generation rPA vaccine candidate, but also our novel second generation rPA anthrax vaccine, SparVax(TM) which is positioned for near-term procurement consideration. As previously disclosed on July 31, 2008, we submitted our response to a request for proposals to the Department of Health and Human Services (DHHS) for SparVax(TM). The solicitation outlined a requirement to procure 25 million doses of a second generation rPA anthrax vaccine intended for inclusion in the Strategic National Stockpile. We were notified by DHHS recently that our proposal was technically acceptable and within the competitive range. The second generation rPA vaccine market represents another significant opportunity for PharmAthene, with a total potential contract award of between $350 million and $600 million. We are confident in the Company's competitive prospects for this award, which DHHS has stated should be announced by year-end 2008."

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