Panacea Biotec has entered into a strategic alliance with US-based PharmAthen, that includes a strategic equity investment in PharmAthene through its wholly-owned subsidiary, Kelisia Holdings Ltd., of $13.1 million in exchange for the acquisition of common stock and warrants.

Under the financing, Panacea Biotec's arm has decided to purchase approximately 3.73 million shares of PharmAthene common stock at a negotiated price of US $3.50 per share, which represents a 90% premium above the closing price of PharmAthene's common stock on September 29.

In addition, upon the closing, Panacea Biotec's unit will also obtain 12-month warrants to buy up to approximately 2.75 million additional shares of PharmAthene common stock at an exercise price of USD 5.10 per share.

Annapolis, Maryland-based PharmAthene was formed to develop and commercialize medical countermeasures against biological and chemical weapons. The transaction is expected to close on or before October 20, 2008.