ANNAPOLIS, Md., Nov. 13 /PRNewswire-FirstCall/ -- PharmAthene, Inc. (NYSE Alternext US: PIP), a biodefense company developing medical countermeasures against biological and chemical threats, today reported financial and operational results for the third quarter and nine months ended September 30, 2008.

For the third quarter of 2008, PharmAthene recognized revenues of $10.7 million compared to $3.4 million in the same period of 2007. For the nine months ended September 30, 2008 and 2007, the Company reported revenues of $27.4 million and $8.7 million, respectively. These revenues consisted primarily of contract funding from the U.S. government for the development of the Company's medical countermeasures, Protexia(R), SparVax(TM) and RypVax(TM). As a result of the Avecia vaccines acquisition in the second quarter of 2008, and particularly the acquired U.S. government contracts supporting the development of the rPA anthrax vaccines and RypVax(TM) plague vaccine product candidates, revenues for the three and nine month periods ended September 30, 2008 were further boosted by $5.5 million and $8.9 million, respectively.

Research and development expenses were $9.4 million and $3.6 million for the quarter ended September 30, 2008 and 2007, respectively. For the nine months ended September 30, 2008 and 2007, research and development expenses were $26.5 million and $10.7 million, respectively. Expenses for the third quarter and nine months of 2008 resulted from research and development activities related to programs for Valortim(R) and Protexia(R) as well as expenses related to the Company's SparVax(TM) and RypVax(TM) programs, which were acquired in the second quarter of 2008. The increase in research and development expenses is primarily due to process development expenses, manufacturing activities and clinical development expenses related to the Company's programs.

General and administrative expenses for the Company were $4.8 million and $3.2 million for the quarter ended September 30, 2008 and 2007, respectively. For the nine months ended September 30, 2008 and 2007, general and administrative expenses were $14.7 million and $8.6 million, respectively. General and administrative expenses increased as a result of additional employee costs due to the increase in headcount following the Avecia acquisition, as well as increased travel expenses, non-cash stock compensation expense, and increased legal and consulting expenses.

For the third quarter of 2008 PharmAthene's net loss attributable to common shareholders was $4.3 million or $0.20 per share, compared to $1.0 million or $0.07 per share in the same period of 2007. For the nine months ended September 30, 2008, the Company's net loss attributable to common shareholders was $31.2 million or $1.41 per share, compared to $12.6 million or $2.44 per share in the same period of 2007.

As of September 30, 2008, available cash, cash equivalents and short term investments were $13.2 million, excluding restricted cash totaling $14.5 million and gross proceeds from the Panacea Biotec investment of $13.1 million received in October 2008.

"The past several months have been an extraordinarily exciting time for PharmAthene as we continue to execute successfully against our objectives and achieve significant milestones in each of our biodefense programs," said David P. Wright, President and Chief Executive Officer.

"The next several months will be a pivotal time for our organization as we transition from a development company to one potentially generating product revenues if we are awarded a procurement contract for SparVax(TM)," continued Mr. Wright.

"We also strengthened our balance sheet in October 2008, adding gross proceeds of $13.1 million as part of a strategic investment by Panacea Biotec Ltd. Together these achievements provide a solid foundation from which to continue to advance our business objectives and build value for our shareholders," said Mr. Wright.

Conference Call and Webcast Information

PharmAthene management will host a conference call to discuss the Company's third quarter and nine month results on November 13, 2008, at 4:30 p.m., E.T. The dial-in number for U.S. callers is 800-798-2801 and for international callers is 617-614-6205. The participant passcode is 81927054.

A replay of the conference call will be available for 30 days, beginning at approximately 6:30 p.m. E.T. on November 13, 2008 until approximately 11:50 p.m. E.T. December 13, 2008. The dial-in number for U.S. callers is 888-286-8010, and for international callers is 617-801-6888. The participant passcode is 74215682.

The webcast of the conference call can be accessed from the company's website at http://www.pharmathene.com. A link to the webcast may be found on the Investor Relations section of the website.

About PharmAthene, Inc.

PharmAthene was formed to meet the critical needs of the United States and its allies by developing and commercializing medical countermeasures against biological and chemical weapons. PharmAthene's lead product development programs include:

    -- SparVax(TM) - a second generation recombinant protective antigen (rPA)
       anthrax vaccine
    -- Valortim(R) - a fully human monoclonal antibody for the prevention and
       treatment of anthrax infection
    -- Protexia(R) - a novel bioscavenger for the prevention and treatment of
       morbidity and mortality associated with exposure to chemical nerve
       agents
    -- RypVax(TM) - a recombinant dual antigen vaccine for plague
    -- a third generation rPA anthrax vaccine.


    For more information about PharmAthene, please visit www.PharmAthene.com.

Statement on Cautionary Factors

Except for the historical information presented herein, matters discussed may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Statements that are not historical facts, including statements preceded by, followed by, or that include the words "potential"; "believe"; "anticipate"; "intend"; "plan"; "expect"; "estimate"; "could"; "may"; "should"; or similar statements are forward-looking statements. PharmAthene disclaims, however, any intent or obligation to update these forward-looking statements. Risks and uncertainties include risk associated with the reliability of the results of the studies relating to human safety and possible adverse effects resulting from the administration of the Company's product candidates, unexpected funding delays and/or reductions or elimination of U.S. government funding for one or more of the Company's development programs, including without limitation our bid related to SparVax(TM) under the DHHS Request for Proposals for an Anthrax Recombinant Protective Antigen (rPA) Vaccine for the Strategic National Stockpile, the award of government contracts to our competitors, unforeseen safety issues, challenges related to the development, scale-up, and/or process validation of manufacturing processes for our product candidates, unexpected determinations that these product candidates prove not to be effective and/or capable of being marketed as products, as well as risks detailed from time to time in PharmAthene's Forms 10-K and 10-Q under the caption "Risk Factors" and in its other reports filed with the U.S. Securities and Exchange Commission (the "SEC").

Copies of PharmAthene's public disclosure filings are available from its investor relations department and our website under the investor relations tab at http://www.pharmathene.com.

                              PHARMATHENE, INC.
                         CONSOLIDATED BALANCE SHEETS

                                                September 30,   December 31,
                                                     2008           2007
                                                 (unaudited)
                    ASSETS

    Current assets:
     Cash and cash equivalents                    $10,140,919    $40,582,643
     Restricted cash                                5,000,000              -
     Short-term investments                         3,107,108     12,153,945
     Accounts receivable                           10,912,569      4,005,693
     Other receivables                                543,309      1,240,069
     Prepaid expenses and other current assets        844,375        492,294
    Total current assets                           30,548,280     58,474,645

    Long-term restricted cash                       9,500,000              -
    Property and equipment, net                     6,191,093      6,571,024
    Patents, net                                    1,128,222      1,312,991
    Other long-term assets                            183,588        183,588
    Deferred costs                                    251,193         68,884
    Goodwill                                        2,502,909              -
    Total assets                                  $50,305,285    $66,611,132


         LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities:
     Accounts payable                              $3,205,696     $1,393,664
     Accrued expenses and other liabilities         9,299,964      3,602,886
     Note payable                                  12,932,973              -
     Current portion of long-term debt              4,000,000      4,000,000
    Total current liabilities                      29,438,633      8,996,550

    Other long-term liabilities                     7,793,835        374,040
    Long-term debt                                  1,904,936     16,668,458
    Total liabilities                              39,137,404     26,039,048


    Stockholders' equity:
     Common stock, $0.0001 par value; 100,000,000
      shares authorized; 22,113,684 and
      22,087,121 shares issued and outstanding;
      respectively, at September 30, 2008 and
      December 31, 2007                                 2,212          2,209
     Additional paid-in capital                   128,705,555    126,490,647
     Accumulated other comprehensive income         1,075,828      1,481,779
     Accumulated deficit                         (118,615,714)   (87,402,551)
    Total stockholders' equity                     11,167,881     40,572,084
    Total liabilities and stockholders' equity    $50,305,285    $66,611,132



                              PHARMATHENE, INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS

                              Three months ended        Nine months ended
                                 September 30,             September 30,
                              2008         2007         2008         2007
                                (unaudited)               (unaudited)

    Contract revenue      $10,643,705  $3,371,299   $27,377,207    $8,672,485
    Other revenue              32,461         831        53,612         7,831
                           10,676,166   3,372,130    27,430,819     8,680,316

    Operating expenses:
     Research and
      development           9,414,093   3,647,329    26,475,436    10,734,292
     General and
      administrative        4,803,190   3,150,894    14,655,971     8,605,147
     Acquired in-process
      research and
      development             225,000           -    16,131,002             -
     Depreciation and
      amortization            205,409     209,420       641,425       518,713
    Total operating
     expenses              14,647,692   7,007,643    57,903,834    19,858,152

    Loss from operations   (3,971,526) (3,635,513)  (30,473,015)  (11,177,836)
    Other income (expense):
     Interest income          200,979     275,550     1,034,914       424,763
     Gain on the
      extinguishment of
       debt                         -   1,206,743             -     1,206,743
     Other income (expense)    49,035           -        49,035             -
     Interest expense        (628,470)   (593,893)   (1,947,245)   (1,365,165)
     Change in market
      value of derivative
      instruments               7,604   2,430,199       123,148     2,423,370
    Total other expense      (370,852)  3,318,599      (740,148)    2,689,711

    Net loss               (4,342,378)   (316,914)  (31,213,163)   (8,488,125)
    Accretion of
     redeemable
     convertible
     preferred stock to
     redemptive value               -    (653,197)            -    (4,133,733)
    Net loss
     attributable to
     common shareholders  $(4,342,378)  $(970,111) $(31,213,163) $(12,621,858)
    Basic and diluted net
     loss per share            $(0.20)     $(0.07)       $(1.41)       $(2.44)
    Weighted average
     shares used in
     calculation of
     basic and diluted
     net loss per share    22,095,545  14,154,116    22,089,949     5,181,823

SOURCE PharmAthene, Inc.