Thursday, November 18, 2010

SIGA Peril Somewhat Relieved

Apologies to the vast majority of you who have no interest in SIGA. I promise not to turn the Slog into an all-SIGA-all-the-time affair, but some readers have invested, and I feel I owe updates, especially at big shift points (note: if you buy just a handful of shares - currently $12/share - then you can play along, and likely see your stake double within a few months!).

BARDA this morning signalled that it's swiftly pursuing alternative avenues to award the smallpox contract. SIGA's price is recovering a bit with that news, but the really bright news for investors is that there is now a clear "next step" in this process. So if the Small Business Administration denies the appeal, SIGA won't be perceived to have lost the contract, and its stock price won't temporarily collapse. And with that peril removed, the odds that Ron Perelman, enticed by firesale prices, will buy controlling interest with intention to take the company private (never a very likely scenario) have shot down dramatically. I'm no longer worried about this.

And my other worry, that Chimerix will stall this process further, is somewhat lower. It seems clear that BARDA is working to find a bulletproof means to award this contract. And the language of their announcement this morning (like the language of the original contract offering) makes it clear that SIGA's the only candidate that's remotely suitable.

On the other hand, BARDA has been conscious of Chimerix's pressure from the get-go (defensively changing and amending the process a zillion times already in what would otherwise have been an extremely straightforward contract process), and yet the stalling and gamesmanship have continued unrelentingly...and may for some time more.

But things are looking up. So I'd recommend holding on. And if an SBA appeal decision causes the price to dip a little, buy more.

[Forgot to note: Pharmathene's stock shot up dramatically yesterday, on reasonable volume, with no discernible reason. That company's fate is tied to SIGA's, so this indicates that when Chimerix was informed by BARDA of the next step in the process, someone there may have illegally passed on the information to Pharmathene and/or its investors. Which is interesting, because Pharmathene and Chimerix appear to have diametrically conflicting interests in all this; their only commonality being a desire to try, in one way or another, to screw with SIGA.]


a_laze said...

nice synopsis, Jim. thanks.

can I ask if you have a position in SIGA? I do!

Jim Leff said...

a_laze, yep, I'm a SIGA investor. That's why I'm writing about it! This isn't a financial blog; I just post about the stuff I'm into....

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