Biotech Values

[DewDiligence]

Spurned by SIGA (#msg-13791785), PharmAthene
finds a new marriage partner: a cash-rich corporate
shell called Healthcare Acquisition Corp. PharmAthene
will acquire HAQ in a reverse merger to obtain its
Amex listing, and the merged company will assume
PharmAthene’s name.

http://biz.yahoo.com/prnews/070122/dcm005a.html?.v=1

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PharmAthene and Healthcare Acquisition Corp. Announce Definitive Merger Agreement

Monday January 22, 7:00 am ET

Transaction Provides PharmAthene With Up to $70 Million in Cash

ANNAPOLIS, Md., Jan. 22 /PRNewswire/ -- Privately-owned PharmAthene, Inc., a leading biodefense company specializing in the development and commercialization of medical countermeasures against biological and chemical terrorism, and Healthcare Acquisition Corp. (Amex: HAQ ), a publicly-traded special purpose acquisition company, announced today that they have signed a definitive merger agreement under which Annapolis-based PharmAthene will become a public company through a merger with Healthcare Acquisition Corp.

The new company will be named PharmAthene, Inc., and it is expected that its shares will trade on the American Stock Exchange upon completion of the merger. Healthcare Acquisition Corp. is expected to have up to approximately $70 million in cash at the closing before payment of expenses, which will remain in the merged company and be available to finance product development, clinical trials, research and development, and potential product and technology acquisitions and for general corporate purposes.

David P. Wright, President and Chief Executive Officer of PharmAthene, will remain President and Chief Executive Officer of the company, which will be headquartered in Annapolis, Maryland with research and development facilities in Montreal, Canada.

"A merger with HAQ provides a strong financial foundation with enhanced access to capital and will further PharmAthene's strategy of taking a leadership position in biodefense to help meet the urgent biosecurity needs of the U.S. and its allies," Mr. Wright said. "Our strategy emphasizes rapid product development and this transaction represents the best way to meet both our short- and long-term growth objectives."

Mr. Wright added, "We are seeking to apply the classic defense contractor model of developing multiple government customers -- Defense, Homeland Security, state and regional authorities -- and then adapting our products for wider commercial use. Biodefense products should be available to all levels of government, large venues, commercial offices, hotels, hospitals and even to individual consumers, and we intend initially to develop and commercialize products for all of these markets while evaluating dual-use applications for our products within broader commercial markets."

John Pappajohn, Chairman of Healthcare Acquisition Corp., said, "This merger combines PharmAthene's research, development and marketing strengths with HAQ's enhanced access to the capital markets. PharmAthene has a strong management team with a proven track record -- collectively, the team has previously commercialized 30 pharmaceutical products with over $4 billion in revenues. They are a highly focused, creative team with the ability to execute and a reputation for expanding their product markets."

"Since its inception, PharmAthene has raised approximately $65 million in venture capital and private equity from premier healthcare investors, and been awarded government contracts that can provide up to $246 million in government funding. They currently have two best-in-class products -- Valortim(TM) for the prevention and treatment of anthrax infection and Protexia® to prevent and treat nerve agent poisoning -- each targeting high priority biodefense needs. A recently awarded contract for up to $213 million from the Department of Defense for Protexia® validates management's ability to execute," Mr. Pappajohn added.

SUMMARY OF THE TRANSACTION

* Under the terms of the agreement, Healthcare Acquisition Corp. will issue 12.5 million new shares to PharmAthene's shareholders, resulting in PharmAthene's current shareholders owning at least 52% of the outstanding basic shares upon completion of the merger (subject to adjustment to the extent Healthcare Acquisition Corp. shareholders exercise their right to convert their Healthcare Acquisition Corp. shares into cash).

* PharmAthene holders will agree to certain lockup provisions prohibiting the sale of any of the Healthcare Acquisition Corp. shares they receive in the merger until a minimum of six months after consummation of the merger, with only 50% of such shares released from the lockup six months after the merger, and the remaining 50% being released twelve months after the merger.

* In the event that PharmAthene enters into a contract prior to December 31, 2007 for the sale of Valortim(TM) with the U.S. government for more than $150,000,000 in anticipated revenue, PharmAthene's shareholders will also be eligible for additional cash payments, not to exceed $10 million, equal to 10% of the actual collections from the sale of Valortim(TM).

* PharmAthene's currently outstanding secured convertible notes will be exchanged for $12.5 million of new unsecured 8% Convertible Notes maturing in 24 months. The Convertible Notes will be convertible at the option of the holder into common stock at $10.00 per share and may be redeemed by the company without penalty after 12 months.

* HAQ's 9.4 million warrants, expiring July 2010 with an exercise price of $6.00 per share, will remain outstanding, giving the combined company potential access to an additional $56.4 million if all of the warrants are exercised.

* PharmAthene will merge with a subsidiary of Healthcare Acquisition Corp. and, following the transaction, will be a subsidiary of HealthCare Acquisition Corp; Healthcare Acquisition Corp will change its name to PharmAthene, Inc.

The merger has been approved by the Boards of Directors of both companies and by the requisite majority of PharmAthene's shareholders and is subject to approval by Healthcare Acquisition Corp.'s shareholders, regulatory approval and other customary closing conditions. In addition, closing of the merger is also conditioned on holders of fewer than 20% of the shares of Healthcare Acquisition Corp. common stock voting against the merger and electing to convert their Healthcare Acquisition Corp. common stock into cash. As a result of the execution of this agreement, pursuant to its certificate of incorporation, Healthcare Acquisition Corp. has until August 3, 2007 to complete the transaction before it would otherwise be required to liquidate.

Bear, Stearns & Co. Inc. served as financial advisor to PharmAthene in connection with the transaction and Maxim Group served as financial advisor to Healthcare Acquisition Corp. McCarter & English is serving as counsel to PharmAthene in the transaction and Ellenoff Grossman & Schole LLP is acting as counsel to Healthcare Acquisition Corp.
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