Can Pharmathene Go From $2 To $20? Seeking Alpha's James Altucher Investigates

James Altucher has taken an

at Pharmathene, Inc.

, a company he believes can go from its current price, $2.64, to $20 or higher. There are two reasons for his prediction. The first relates to a lawsuit against SIGA Technologies, Inc.

, a company that was just awarded a massive government contract for its smallpox antiviral product. The lawsuit involves that same product: ST-246. Pharmathene alleges that it should have received the license development and marketing rights after a merger with SIGA fell through. But since Pharmathene never received those rights, it decided to sue. Altucher believes that, should Pharmathene win the lawsuit (or come to a settlement), it could gain $100 to $400mm. Since Pharmathene has a market cap of $70mm, Altucher says that this would create anywhere from a $5 to $10 per share value for the company. Alternatively, he believes that Pharmathene could receive an ongoing royalty of 20-30% on sales of ST-246, which he says would instantly catapult the stock up to $10+. “Most likely a settlement would be some combination of the above two (e.g. $150mm in cash, 5% royalty, etc),” Altucher writes. If everything goes as planned, Pharmathene's shares will still need another $10 boost to reach the anticipated $20 share price. Altucher believes that boost will come from a product that Pharmathene produces: a next-generation vaccine for Anthrax. Right now, he says, Emergent Biosolutions, Inc.

is the only approved supplier of an Anthrax vaccine, which requires five doses over 18 months and costs $120 per dose. According to Eric Richman, the CEO of Pharmathene, its second-generation vaccine requires three doses over 60 days and costs about $45 a dose. Altucher says that the fundamental value of this vaccine is the (potentially) lower price point, the ability to forego sales and marketing expenses (the government would be the only customer), and the fact that there is only one other competitor. “Let's assume the government buys 25 million of its 75 million dose requirement from PIP,” Altucher writes. “That means $250 million in earnings in three years. This alone could easily justify a stock jump to the $7-10 level, or even significantly higher.” When combined, these two scenarios paint a $20 picture for Pharmathene's shares.