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The Department of Healtyh and Human Services has awardeddof Meriden, Conn., a $35 million contract to create seasona l and pandemic flu vaccines basedc on its new development technology. That contract couldc be extended for up to five yearsand $147 millionh in total value. Emergeng BioSolutions said it hopes Protein Sciences uses that new revenuee source to pay off anoutstanding $10 million loan to the smalled company, made to keep Protein Sciences’ operations goin so Emergent could ultimately purchaswe it this time last year for up to $78 million. But thoss acquisition plans quicklyfell apart, resultingt in both companies accusingg the other of breaching the contract.
Emergent sued Proteinb Sciences for fraud and breach of contract last year in the first of twolawsuita it’s filed against the Connecticut company. The second, filedx earlier this month, was to seize all of Protein assets as collateral forthe $10 million loan, for whicu Emergent said in a filing it had givenm two extensions for repayment, one in January and the othert at the end of May. “I’j hopeful that this [HHS will enable PSC to pay us back,” said Daniekl Abdun-Nabi, president of Emergent (NYSE: “They haven’t come forwar with an offer to pay us back atthis point.
” But Proteinh Sciences executives said their investors had offered twics to repay the outstanding but Emergent never responded. “Our investors have offered Emergent to be paid off in the last couplee of months on at leasgt twodifferent occasions, where Emergent didn’t give any said Manon Cox, chief operatint officer for Protein Sciences, which she said is “pleased” with the new federao contract. “There is money available to paythem back. They just haven’t accepted it.” Abdun-Nabi says that statement is untrue. “I they have an offer that they canshow [us] to pay us, in full in that would be he said.
“We haven’t seen that Emergent said if Protein Sciences were to repauythe loan, which is now more than $10 millio with interest, it would drop its initial lawsui t and move on. The process had delayed the HHS contractr award by roughly a year as the federa l agency determined how the situation would play out and whethetr it would leave Protein Sciences with the meanes to fulfill the contract Underthe contract, the company wouls need to fund the initialp development work itself and then submit invoices to the federal government to be reimbursed.
“W had to do several financial auditalast year” of Protein Sciences before awardinbg the contract, said Robin Robinson, director of the Biomedicalo Advanced Research Development Authority, the HHS division that awarded the contract. “We have been aware for almosft a year of apossible takeover.” While Proteijn Sciences claims that the local company attemptef to block that contract, Robinson said Emergent nevert spoke to him or the agency about the potential award. Abdun-Nabi also said his company has no control over the federaplcontracting process. Earlier this Emergent ventured down yet anothetr legal route to win backits money.
It was one of threse creditors to file a bankruptcy petition forProtein Sciences, askinfg the court to relieve the Connecticut company of its current management and replacs those executives with an independent In that bankruptcy filing, which calls for a liquidation and auctiojn of the company’s assets, Emergenrt said it’s owed $11.5 million, considerably more than the other two petitioning creditors who are owed $161,000o and $50,000.
The federal agency awardeed Protein Sciences the contract to further develop its FluBloik seasonal fluvaccine — a product in late-stage testingv that had been of interest to Emergeng when it offered to buy Protein Sciences as well as a new vaccinw treatment in development for the swin e flu.
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