Altimmune, Inc. signed a definitive agreement to acquire PharmAthene, Inc. (AMEX:PIP) in a reverse merger transaction on January 18, 2017. Under the terms of agreement, PharmAthene will issue shares to Altimmune shareholders. Each of Altimmune’s outstanding shares of common stock and preferred stock will be converted into the right to receive a number of shares of PharmAthene common stock such that the holders of outstanding equity of Altimmune will own 58.2% of the outstanding equity of PharmAthene and holders of outstanding equity of PharmAthene will own 41.8% of the outstanding equity of PharmAthene after the merger. No fractional shares of PharmAthene common stock will be issued, and any fractional share of PharmAthene common stock that would thereby be issuable will be rounded up to the next whole share. In addition, all outstanding Altimmune options, as well as Altimmune’s 2001 Employee Stock Option Plan and its Non-Employee Stock Option Plan will be assumed by PharmAthene. Each option or warrant to purchase one share of Altimmune common stock will be converted into an option or warrant, to purchase a number of shares of PharmAthene common stock representing the number of Altimmune shares for which the exchanged option or warrant was exercisable multiplied by the exchange ratio. The exercise price will be proportionately adjusted. Upon the completion of the merger, 10% of the merger consideration issuable to the stockholders of Altimmune will be held in escrow as security for indemnification claims under the merger agreement. In a related transaction, Altimmune entered into a definitive agreement to participate in a private placement of convertible securities of Altimmune to raise an aggregate of no less than $3.5 million of gross proceeds and participate in a private placement of PharmAthene common stock to raise an aggregate of no less than $5 million of gross proceeds for PharmAthene to be received by PharmAthene within 135 days of the closing date of the transaction. Upon completion, Altimmune will become a wholly owned subsidiary of PharmAthene. The combined company will operate as a public company under the name Altimmune and will trade on NYSE MKT under the ticker symbol ALT. In case of termination of agreement, PharmAthene may be required to pay Altimmune a termination fee of $2 million. Bill Enright, Chief Executive Officer of Altimmune and Elizabeth Czerepak, Chief Financial Officer and Executive Vice President of Corporate Development of Altimmune will serve in their respective positions for the combined company. Immediately following the mergers, the Board of Directors of the combined company is expected to be composed of seven directors, four to be designated by Altimmune, consisting of William Enright, David J. Drutz, Philip Hodges and Klaus Schafer, and three to be designated by PharmAthene, consisting of Mitchel Sayare, Derace L. Schaffer and John M. Gill. The combined company's headquarters will be located in Gaithersburg, MD. The merger is subject to the approval of Board of PharmAthene and Altimmune, approval of at least 65% of the outstanding shares of Altimmune Class A Common Stock and Preferred Stock and a majority of the Class A Common Stock in order to approve and adopt the mergers, shareholders of PharmAthene, S-4 Registration Statement Effectiveness, PharmAthene shareholders vote to approve an amendment of PharmAthene's certificate of incorporation to effect a reverse stock split prior to the effective time of the mergers at a ratio of not less than 1-for-10 and not more than 1-for-75, with the exact Reverse Ratio to be finally determined and mutually agreed to by the PharmAthene and Altimmune Boards of Directors, to approve the 2017 Omnibus Incentive Plan, $3.5 million of capital committed to Altimmune will have been received by Altimmune in connection with the Altimmune private placement, the total amount of indebtedness and certain outstanding specified liabilities of Altimmune will not exceed $2.5 million and all excess indebtedness and liabilities of Altimmune will have been repaid, settled or otherwise extinguished, the net cash of PharmAthene will not be less than $10.25 million, the shares of PharmAthene common stock to be issued in the mergers must be approved for listing on the NYSE MKT LLC and other customary closing conditions. The transaction was unanimously approved by Boards of Directors of Altimmune and PharmAthene. On January 18, 2017, certain of PharmAthene's stockholders, owning approximately 7.04% of the outstanding PharmAthene common stockholders, agreed to vote their shares in favor of the adoption of the merger agreement. On January 19, 2017, certain of Altimmune's stockholders, owning 68% of the outstanding shares of Altimmune capital stock, agreed to vote their shares in favor of the adoption of the merger agreement. As of February 2, 2017, all Directors and Executive Officers of Altimmune owning approximately 66% agreed to vote in favor of the transaction. In connection with the merger agreement, on January 28, 2017, Altimmune entered into the definitive Altimmune Financing Agreement with certain of its stockholders, including Novartis Bioventures Ltd., HealthCap V LP, OFCO Club V, UFF Innovation 14 FCPI, UFF Innovation 15 FCPI, who may be deemed to beneficially own greater than 5% of Altimmune’s capital stock, pursuant to which such stockholders have irrevocably committed to participate in the Altimmune private placement of its convertible securities in an aggregate amount of not less than $3.5 million of gross proceeds for Altimmune that is to be received by Altimmune prior to the effective time and participate in the post-closing private placement to raise an aggregate of not less than $5.0 million of gross proceeds for PharmAthene to be received by PharmAthene within 135 days of the closing date of the mergers. On March 29, 2017, PharmAthene, Altimmune and the other parties to the merger entered into amendment, pursuant to which PharmAthene and Altimmune agreed that the certificate of incorporation of PharmAthene to change its name to “Altimmune, Inc.” and PharmAthene and Altimmune agreed to amend and restate the bylaws of PharmAthene immediately after the effective time of the mergers. PharmAthene's stockholders at a special meeting of PharmAthene's stockholders scheduled for May 4, 2017, the combined company has been approved for listing on the Nasdaq Global Market under the symbol "ALT." If the merger is approved by PharmAthene's stockholders and subsequently completed, trading of the combined company's common stock on the Nasdaq Global Market is expected to commence on May 5, 2017, the day after the anticipated completion of the merger. PharmAthene's common stock will continue to trade on the NYSE MKT until the completion of the merger, and, if the merger is not completed, PharmAthene's common stock will continue to trade on the NYSE MKT. The transaction is expected to be completed on May 4, 2017. Piper Jaffray & Co. acted as a financial advisor for Altimmune. Jeffrey A. Baumel and Ilan Katz of Dentons US LLP acted as legal advisors to PharmAthene and Altimmune in the transaction. Ori Solomon and Michael Ellis of Proskauer Rose LLP acted as legal advisors to Altimmune. Shareholder Representative Services LLC acted as securityholders’ representative in the transaction. Houlihan Lokey Capital, Inc. acted as financial advisor PharmAthene and is entitled to an aggregate fee of $0.4 million as fees. Continental Stock Transfer & Trust Company acted as escrow agent for the transaction. Okapi Partners, LLC acted as information agent for PharmAthene and will receive fees of 0.02 million. O'Melveny & Myers LLP acted as the advisor to Houlihan Lokey Capital, Inc. in the transaction.