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SIGA Shares Leap On Likely Gov't Contract

NEW YORK (AP) â¿¿ Shares of biodefense company SIGA Technologies Inc. rose more than 19 percent Tuesday after government actions signaled that the company is a top contender to supply millions of doses of smallpox treatment for a national stockpile.

THE SPARK: In October, SIGA won a version of the deal that required that some of the money go to small businesses. However, a smaller competitor protested to the Small Business Administration. The SBA agreed with the smaller company, Chimerix Inc., based in Durham, N.C., calling SIGA "other than small." Last week, however, the government scrapped its request for proposals. A replacement RFP was nearly identical, but omitted the rules about small business participation.

Analysts said the new RFP, issued on behalf of the Biomedical Advanced Research and Development Authority, is designed to make SIGA the only viable bidder.

THE BIG PICTURE: The government's purchasing rules encourage contracts with small businesses and other types of protected companies. The requirements are written into RFPs. Removing them often is a sign that the government prefers a particular company that fails to satisfy some qualification.

THE ANALYSIS: The government gave bidders exactly a week to submit their responses. It often takes longer to prepare a complete, competitive submission. "The new RFP. . . is, in our opinion, a procedural maneuver that now allows BARDA to issue a contract to SIGA," Wedbush Securities analysts wrote in a research note Tuesday.

The analysts "strongly" reiterated an "Outperform" rating on the stock, saying the contract, if awarded, calls for 1.7 million courses, valued at $500 million, with a potential follow-on contract valued at $2.8 billion. "We anticipate an ongoing annual demand of approximately 1.5 million doses to be worth $225 million in annual sales to SIGA," they wrote.

SIGA, based in New York, makes and supplies drugs used to treat and prevent infectious diseases including those in biological weapons.

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