NEW YORK (AP) â¿¿ Shares of Siga Technologies Inc. declined Monday after the company said a federal agency determined it is not eligible for small business assistance, meaning it may not receive a smallpox treatment contract worth up to $2.8 billion.
Siga's shares plunged as much as 22.5 percent in morning trading.
Last month, the U.S. Department of Health and Human Services said it intended to give Siga a contract to deliver 1.7 million doses of smallpox treatment. The deal was worth $500 million, with options that could have increased its value to $2.8 billion. A competitor protested the award.
Siga said Sunday that an office within the Small Business Administration determined the company is not a small business. Siga plans to appeal the decision, and will continue developing the smallpox treatment, which is called ST-246.
According to Siga's latest annual report, which was filed in March, the company had 55 full-time employees. Its market capitalization of $663 million as of Friday.
The protest, which was filed by Chimerix Inc., is based on the company's size as of March 2009. Siga had 43 employees at the time.
RBC Capital Markets analyst Jason Kantor said he thinks Siga will ultimately get the contract. He said Siga is still small enough to meet the Small Business Administration's standards. The SBA may have based its decision on Siga's relationship with MacAndrews & Forbes Holdings Inc., a much larger holding company run by billionaire investor Ronald Perelman. As of March 2009, MacAndrews & Forbes owned 13.4 percent of Siga, he said.
Siga shares fell $1.39, or 10.5 percent, to $11.83 in midday trading. The shares are up 54.4 percent since Oct. 12, the day before the award was announced. The stock jumped 45.7 percent on Oct. 13.