NEW YORK ( TheStreet) -- SIGA Technologies ( SIGA) investors appeared to get the news Wednesday they'd long been hoping for -- a giant contract to supply the U.S. government with smallpox vaccines intended to thwart the impact of a potential act of bioterrorism.

In a celebratory press release issued before the opening bell Wednesday, SIGA said the contract, for 1.7 million doses, would generate a total of $500 million in revenue, and as much as $2.8 billion if "all options are exercised."

The stock predictably exploded in frantic trading Wednesday. In late-morning action, it was changing hands at $12.00, up 40% from the previous close. Earlier this year, in June, SIGA shares traded as low as $6.15 as hopes about the contract flagged.

Indeed, SIGA's potential as a going concern was largely based on winning the contract, administered by the Department of Health and Human Services. The U.S. is building a national stockpile of drugs against the fear of some diabolical unleashing of deadly diseases by terrorists.

But there was one hitch. The obscure New York-based biotech said that the government agency has "announced its intention" to award the contract.

SIGA's rival in the bidding for the vaccine-supply deal, Chimerix, a Durham, N.C., drug developer, has filed a protest against the SIGA award. Chimerix is arguing that SIGA, which has about 55 full-time employees, isn't a small business, one of the government's conditions for the contract.

SIGA said it will "respond promptly" to the protest, which will be heard by the Small Business Administration.

As it stands, then, there is no contract. In its press release, SIGA said it expects to defeat Chimerix's protest, but that "there can be no assurance concerning the outcome."

-- Written by Scott Eden in New York

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