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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2011	Feb. 29, 2012	Jun. 30, 2011
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Trading Symbol	PIP
Entity Registrant Name	PHARMATHENE, INC
Entity Central Index Key	0001326190
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		48,357,010
Entity Public Float			$ 104,000,000

CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 11,236,771	$ 11,785,327
Accounts receivable (billed)	4,874,632	5,367,130
Unbilled accounts receivable, net of allowance of $0 and $244,949 as of December 31, 2011 and 2010, respectively	3,021,208	3,976,260
Prepaid expenses and other current assets	380,395	1,354,912
Restricted cash	100,000	100,000
Assets held for sale		1,000,100
Total current assets	19,613,006	23,583,729
Property and equipment, net	788,666	1,178,416
Other long-term assets and deferred costs	53,384	88,447
Goodwill	2,348,453	2,348,453
Total assets	22,803,509	27,199,045
Current liabilities:
Accounts payable	1,445,700	3,128,203
Accrued expenses and other liabilities	3,169,642	3,035,284
Total current liabilities	4,615,342	6,163,487
Other long-term liabilities	449,709	461,858
Derivative instruments	1,886,652	8,362,995
Total liabilities	6,951,703	14,988,340
Stockholders' equity:
Common stock, $0.0001 par value; 100,000,000 shares authorized; 48,236,172 and 46,238,244 shares issued and outstanding at December 31, 2011 and 2010, respectively.	4,824	4,624
Additional paid-in-capital	208,525,917	200,847,468
Accumulated other comprehensive income	1,010,522	1,250,497
Accumulated deficit	(193,689,457)	(189,891,884)
Total stockholders' equity	15,851,806	12,210,705
Total liabilities and stockholders' equity	$ 22,803,509	$ 27,199,045

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	Dec. 31, 2011	Dec. 31, 2010
Contract revenue	$ 24,266,274	$ 20,993,605
Revenues, Total	24,266,274	20,993,605
Operating expenses:
Research and development	21,219,853	20,875,536
General and administrative	14,311,079	18,015,761
Depreciation and amortization (including $4,635,489 impairment charges in 2010)	461,073	5,655,865
Total operating expenses	35,992,005	44,547,162
Loss from operations	(11,725,731)	(23,553,557)
Other income (expenses):
Interest income	16,660	6,955
Interest expense	(54,573)	(5,936,480)
Gain on sale of assets held for sale	781,760
Other income (expense)	39,328	91,355
Change in market value of derivative instruments	7,144,983	(5,457,550)
Total other income (expenses)	7,928,158	(11,295,720)
Net loss	$ (3,797,573)	$ (34,849,277)
Basic and diluted net loss per share	$ (0.08)	$ (1.08)
Weighted average shares used in calculation of basic and diluted net loss per share	47,331,763	32,309,621

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit
Beginning Balance (in shares) at Dec. 31, 2009		28,130,284
Beginning Balance at Dec. 31, 2009	$ 3,152,399	$ 2,813	$ 157,004,037	$ 1,188,156	$ (155,042,607)
Net loss	(34,849,277)				(34,849,277)
Net unrealized (losses) on short-term investments	(6,483)			(6,483)
Foreign currency translation adjustments	68,824			68,824
Comprehensive income (loss)	(34,786,936)
Issuance of common stock, net issuance costs (in shares)		9,397,382
Issuance of common stock, net issuance costs	19,472,024	$ 940	19,471,084
Exercise of stock purchase warrants (in shares)		14,537
Exercise of stock purchase warrants	2,699	$ 1	2,698
Share-based compensation - stock options	2,292,479		2,292,479
Shares issued upon exercise of stock options (in shares)		22,316
Shares issued upon exercise of stock options	56,208	$ 2	56,206
Employee vesting of restricted shares, net (in shares)		84,742
Employee vesting of restricted shares, net	191,495	$ 9	191,486
Conversion of July 2009 convertible debt (in shares)		8,588,983
Conversion of July 2009 convertible debt	21,830,337	$ 859	21,829,478
Ending Balance (in shares) at Dec. 31, 2010		46,238,244
Ending Balance at Dec. 31, 2010	12,210,705	$ 4,624	200,847,468	1,250,497	(189,891,884)
Net loss	(3,797,573)				(3,797,573)
Foreign currency translation adjustments	(239,975)			(239,975)
Comprehensive income (loss)	(4,037,548)
Issuance of common stock, net issuance costs (in shares)		1,857,143
Issuance of common stock, net issuance costs	5,068,728	$ 186	5,068,542
Share-based compensation - stock options	2,251,501		2,251,501
Shares issued upon exercise of stock options (in shares)		44,464
Shares issued upon exercise of stock options	118,309	$ 4	118,305
Employee vesting of restricted shares, net (in shares)		96,321
Employee vesting of restricted shares, net	240,111	$ 10	240,101
Ending Balance (in shares) at Dec. 31, 2011		48,236,172
Ending Balance at Dec. 31, 2011	$ 15,851,806	$ 4,824	$ 208,525,917	$ 1,010,522	$ (193,689,457)

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	Dec. 31, 2011	Dec. 31, 2010
Operating activities
Net loss	$ (3,797,573)	$ (34,849,277)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt (recovery) expense	(40,524)	2,935,063
Change in market value of derivative instruments	(7,144,983)	5,457,550
Gain on the sale of assets held for sale	(781,760)
Depreciation and amortization	461,073	1,020,376
Impairment of assets held for sale		4,635,489
Share-based compensation expense	2,565,961	2,513,159
Non cash interest expense on debt		4,653,633
Changes in operating assets and liabilities:
Accounts receivable	208,048	1,830,221
Unbilled accounts receivable	987,408	4,606,418
Prepaid expenses and other current assets	1,293,850	(399,270)
Accounts payable	(1,682,461)	1,245,975
Accrued expenses and other liabilities	122,408	(8,513,914)
Net cash used in operating activities	(7,808,553)	(14,864,577)
Investing activities
Purchases of property and equipment	(71,439)	(374,581)
Proceeds from the disposal of assets held for sale	1,758,960
Proceeds from sales of short-term investments		3,130,588
Net cash provided by investing activities	1,687,521	2,756,007
Financing activities
Payments of debt obligations		(11,439)
Change in restricted cash requirements		(100,000)
Net proceeds from issuance of common stock and warrants	5,781,328	21,571,891
Net cash provided by financing activities	5,781,328	21,460,452
Effects of exchange rates on cash	(208,852)	(240,122)
(Decrease) increase in cash and cash equivalents	(548,556)	9,111,760
Cash and cash equivalents, at beginning of year	11,785,327	2,673,567
Cash and cash equivalents, at end of year	11,236,771	11,785,327
Supplemental disclosure of cash flow information
Cash paid for interest	54,573	$ 1,234,142
Cash paid for income taxes	$ 10,630

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Summary of Significant Accounting Policies

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

Our consolidated financial statements include the accounts of PharmAthene, Inc. and its wholly-owned subsidiaries, PharmAthene Canada, Inc, and PharmAthene UK Limited. All significant intercompany transactions and balances have been eliminated in consolidation. Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States. We currently operate in one business segment. Certain prior period amounts have been reclassified to conform with current period presentation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Foreign Currency Translation

The functional currency of our wholly owned foreign subsidiaries located in Canada and the United Kingdom is their local currency. Assets and liabilities of our foreign subsidiaries are translated into United States dollars based on exchange rates at the end of the reporting period. Income and expense items are translated at the weighted average exchange rates prevailing during the reporting period. Transaction gains or losses are included in the determination of net gain or loss, which was an approximate $0.1 million loss and an approximately $0.1 million gain for the years ending December 31, 2011 and 2010, respectively.

Comprehensive Loss and Accumulated Other Comprehensive Income

Comprehensive loss includes the total of our net loss and all other changes in equity other than transactions with owners, including (i) changes in equity for cumulative translation adjustments resulting from the consolidation of foreign subsidiaries as the financial statements of the subsidiaries located outside of the United States are accounted for using the local currency as the functional currency, and (ii) unrealized gains and losses on short term available-for-sale investments.

Accumulated Other Comprehensive Income consists of the following:

				Unrealized			Accumulated
	Foreign Currency			Gains (Losses)			Other Comprehensive
	Translation			on Investments			Income

Balance as of December 31, 2009	$	1,181,673		$	6,483		$	1,188,156
2010 other comprehensive income		68,824			(6,483	)		62,341
Balance as of December 31,2010	$	1,250,497		$	-		$	1,250,497
2011 other comprehensive income		(239,975	)		-			(239,975	)
Balance as of December 31,2011	$	1,010,522		$	-		$	1,010,522

Cash and Cash Equivalents

Cash and cash equivalents, are stated at market value. We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. Interest income earned on cash and cash equivalents and short-term investments was approximately $17,000 and $7,000 in 2011 and 2010, respectively.

Restricted Cash and Letter of Credit

As of December 31, 2011 and 2010 we had $0.1 million in restricted cash associated with a letter of credit to support our corporate credit card program.

Significant Customers and Accounts Receivable

Our primary customers are the U.S. Department of Defense (the “DoD”), Chemical Biological Medical Systems (“CBMS”), the National Institute of Allergy and Infectious Diseases (“NIAID”), the Biomedical Advanced Research and Development Authority (“BARDA”), and the National Institute of Health (“NIH”).

As of December 31, 2011 and 2010, the Company’s trade receivable balances were comprised solely of receivables from these customers. Unbilled accounts receivable totaling $3.0 million and $4.0 million as of December 31, 2011 and 2010, respectively, relate to the contracts with these same customers.

Property and Equipment

Property and equipment consist of leasehold improvements, furniture and office equipment and computer and other equipment and are recorded at cost. Leasehold improvements are amortized over the economic life of the asset or the lease term, whichever is shorter. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the respective assets as follows:

		Estimated Useful Life
Asset Category		(in Years)

Leasehold improvements		8– 10
Furniture and office equipment		5
Computer and other equipment		3– 5

Impairment of Long-Lived Assets

Long-lived assets consist primarily of property and equipment. We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. Recoverability measurement and estimating of undiscounted cash flows is done at the lowest possible level for which we can identify assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of assets exceeds the fair value of the assets. We have realized an impairment of certain assets in the fourth quarter of 2010 associated with the closing of our Canadian operations upon the expiration of the Protexia^® contract with the DoD. We recorded an impairment charge of approximately $4.6 million included in depreciation and amortization expense in our 2010 consolidated statement of operations. In 2010 the remaining assets in Canada were reclassified as assets held for sale consisting of land and buildings of approximately $0.5 million and $0.5 million respectively. These assets were sold in the fourth quarter 2011 with a recognized gain of approximately $0.8 million.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk are primarily cash, restricted cash and cash equivalents, and billed and unbilled accounts receivable. We maintain our cash, restricted cash and cash equivalents in the form of money market accounts and overnight deposits with financial institutions that we believe are credit worthy.

Fair Value of Financial Instruments

Our financial instruments primarily include cash, restricted cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued and other liabilities and derivative instruments. Due to the short-term nature of the cash and cash equivalents, accounts receivable (billed and unbilled), other current assets, accounts payable and accrued and other liabilities (including derivative instruments), the carrying amounts of these assets and liabilities approximate their fair value.

Intangible Assets and Goodwill

In 2010 all of the patents associated with Protexia^® were written down by approximately $0.8 million associated with the decision to shut down the Canadian operation upon the expiration of the Protexia^® contract with the DoD. There were no patents capitalized as of December 31, 2011 and December 31, 2010.

Goodwill represents the excess of purchase price over the fair value of net identifiable assets associated with acquisitions. We review the market value of the company as set by our stock price and the number of outstanding shares as of the end of the year. If that value is greater than the net book value of the Company’s equity, no further analysis is needed. Changes in the Company’s business strategy or adverse changes in market conditions could impact the impairment analyses and require the recognition of an impairment charge equal to the excess of the carrying value over its estimated fair value.

Revenue Recognition

We generate our revenue from different types of contractual arrangements: cost-plus-fee contracts, cost reimbursable grants and fixed price contracts. Costs consist primarily of actual internal labor charges and external sub-contractor costs incurred plus an allocation of fringe benefits, overhead and general and administrative expenses as defined in the contract.

Revenues on cost-plus-fee contracts are recognized in an amount equal to the costs incurred during the period plus an estimate of the applicable fee earned. The estimate of the applicable fee earned is determined by reference to the contract: if the contract defines the fee in terms of risk-based milestones and specifies the fees to be earned upon the completion of each milestone, then the fee is recognized when the related milestones are earned, as further described below; otherwise, pursuant to the terms of the cost-plus fee contract, we estimate the fee earned in a given period by using a proportional performance method based on costs incurred during the period as compared to total estimated project costs and application of the resulting fraction to the total project fee specified in the contract.

Under the milestone method of revenue recognition, milestone payments, including milestone payments for fees, contained in research and development arrangements are recognized as revenue when: (i) the milestones are achieved; (ii) no further performance obligations with respect to the milestone exist; (iii) collection is reasonably assured; and (iv) substantive effort was necessary to achieve the milestone. Milestones are considered substantive if all of the following conditions are met: (1) it is commensurate with either our performance to meet the milestone or the enhancement of the value of the delivered item or items as a result of a specific outcome resulting from our performance to achieve the milestone, (2) it relates solely to past performance, and (3) the value of the milestone is reasonable relative to all the deliverables and payment terms (including other potential milestone consideration) within the arrangement . If a milestone is deemed not to be substantive, the Company recognizes the portion of the milestone payment as revenue that correlates to work already performed; the remaining portion of the milestone payment is deferred and recognized as revenue as the Company completes its performance obligations.

For fixed price contracts without substantive milestones as described above, revenue is recognized on the percentage-of-completion method in accordance with the applicable accounting guidance for long term contracts. The percentage-of completion method recognizes income as the contract progresses; recognition of revenue and profits generally related to the costs incurred in providing the services required under the contract. The use of the percentage-of completion method depends on the ability to make reasonable dependable estimates. The fact that circumstances may necessitate frequent revision of estimates does not indicate that the estimates are unreliable for the purpose for which they are used. Estimating is an integral part of our business activities, and there may be a necessity to revise estimates on contracts continually as the work progresses. As a result, amounts invoiced may differ from revenue recognized. Amounts invoiced to customers in excess of revenue recognized are reflected on the balance sheet as deferred revenue, a component of accrued expenses and other liabilities. We had recorded approximately $0.5 million and $0.0 million as deferred revenue as of December 31, 2011 and 2010, respectively.

As revenue is recognized in accordance with the terms of the contracts, related amounts are recorded as unbilled accounts receivable in our consolidated balance sheets. As specific contract invoices are generated and sent to our customers in accordance with a contract, invoiced amounts are transferred out of unbilled accounts receivable and into billed accounts receivable. Invoicing frequency and payment terms for cost-plus-fee contracts with our customers are defined within each contract, but are typically monthly invoicing with 30-60 day payment cycles.

We analyze each cost reimbursable grant to determine whether we should report such reimbursements as revenue or as an offset to our expenses incurred. For the years ended December 31, 2011 and 2010, we recorded approximately $0.7 million and $2.9 million, respectively, of costs reimbursed by the government as an offset to research and development expenses. Included in the 2010 grants was approximately $0.9 million in therapeutic discovery tax grants which was offset against research and development expense in 2010.

Collaborative Arrangements

Even though most of our products are being developed in conjunction with support by the U.S. Government, we are an active participant in that development, with exposure to significant risks and rewards of commercialization relating to the development of these pipeline products. In collaborations where we are deemed to be the principal participant of the collaboration, we recognize costs and revenues generated from third parties using the gross basis of accounting; otherwise, we use the net basis of accounting.

Research and Development

Research and development costs are expensed as incurred; advance payments are deferred and expensed as performance occurs. Research and development costs include salaries, facilities expense, overhead expenses, material and supplies, pre-clinical expense, clinical trials and related clinical manufacturing expenses, stock-based compensation expense, contract services and other outside services.

Share-Based Compensation

We expense the estimated fair value of share-based awards granted to employees under our stock compensation plans. The fair value of restricted stock grants is determined based on the quoted market price of our common stock. Share-based compensation cost for stock options is determined at the grant date using an option pricing model. We have estimated the fair value of each stock option award using the Black-Scholes option pricing model. The Black-Scholes model considers, among other factors, the expected life of the award and the expected volatility of the Company’s stock price. The value of the award that is ultimately expected to vest is recognized as expense on a straight line basis over the employee’s requisite service period.

The fair value of restricted stock grants is determined based on the closing price of our common stock on the NYSE Amex on the award date and is ratably recognized as expense over the requisite service period. Employee share-based compensation expense is calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures.

Share-based compensation expense for 2011 and 2010, respectively, was:

	Year ended December 31,
	2011		2010

Research and development	$	754,554	$	1,008,368
General and administrative		1,811,407		1,504,791
Total share-based compensation expense	$	2,565,961	$	2,513,159

During 2011, we granted 1,934,566 options to employees, non-employee directors and consultants, and made restricted stock grants of 145,000 shares. At December 31, 2011, we had total unrecognized stock based compensation expense related to unvested awards of options and restricted shares of approximately $4.0 million that we expect to recognize as expense over the next four years.

Income Taxes

We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recorded for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a tax rate change on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We record valuation allowances to reduce net deferred tax assets to the amount considered more likely than not to be realized. Changes in estimates of future taxable income can materially change the amount of such valuation allowances. As of December 31, 2011, we had recognized a valuation allowance to the full extent of our net deferred tax assets since the likelihood of realization of the benefit does not meet the more likely than not threshold.

We file a U.S. federal income tax return as well as returns for various state and foreign jurisdictions. Our income taxes have not been examined by any tax jurisdiction since our inception. Uncertain tax positions taken on our tax returns are accounted for as liabilities for unrecognized tax benefits. We recognize interest and penalties, if any, related to unrecognized tax benefits in other income (expense) in the consolidated statements of operations.

Basic and Diluted Net Loss Per Share

Income (loss) per share: Basic income (loss) per share is computed by dividing consolidated net income (loss) by the weighted average number of common shares outstanding during the period, excluding unvested restricted stock.

For periods of net income when the effects are not anti-dilutive, diluted earnings per share is computed by dividing our net income by the weighted average number of shares outstanding and the impact of all potential dilutive common shares, consisting primarily of stock options, unvested restricted stock and stock purchase warrants. The dilutive impact of our dilutive potential common shares resulting from stock options and stock purchase warrants is determined by applying the treasury stock method.

For the periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all dilutive potential common shares is anti-dilutive due to the net losses. A total of approximately 12.0 million and 10.7 million potential dilutive shares have been excluded in the calculation of diluted net loss per share in 2011 and 2010, respectively, because their inclusion would be anti-dilutive.

Recent Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update 2009-13, “Revenue Recognition (Topic 605) Multiple-Deliverable Revenue Arrangements, a consensus of the FASB Emerging Issues Task Force,” or ASU 2009-13. ASU 2009-13 amends existing accounting guidance for separating consideration in multiple-deliverable arrangements. ASU 2009-13 establishes a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third party evidence if vendor-specific evidence is not available, or the estimated selling price if neither vendor-specific evidence nor third-party evidence is available. ASU 2009-13 eliminates the residual method of allocation and requires that consideration be allocated at the inception of the arrangement to all deliverables using the “relative selling price method.” The relative selling price method allocates any discount in the arrangement proportionately to each deliverable on the basis of each deliverable’s selling price. ASU 2009-13 requires that a vendor determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a stand-alone basis. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with earlier adoption permitted. We adopted ASU 2009-13 on January 1, 2011. The adoption of ASU 2009-13 did not have any material effect on our results of operation, financial position or cash flows.

In April 2010, the FASB issued Accounting Standards Update 2010-17, “Revenue Recognition—Milestone Method (Topic 605) Milestone Method of Revenue Recognition, a consensus of the FASB Emerging Issues Task Force” or ASU 2010-17. ASU 2010-17 provides guidance on the criteria that should be met for determining whether the milestone method of revenue recognition is appropriate. A vendor can recognize consideration that is contingent upon achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. For the milestone to be considered substantive, the considerations earned by achieving the milestone should meet all of the following criteria: (i) be commensurate with either the vendor’s performance to achieve the milestone or the enhancement of the value of the item delivered as a result of a specific outcome resulting from the vendor’s performance to achieve the milestone, (ii) relate solely to past performance, and (iii) be reasonable relative to all deliverables and payment terms in the arrangement. An individual milestone may not be bifurcated and an arrangement may include more than one milestone. Accordingly, an arrangement may contain both substantive and non-substantive milestones. ASU 2010-17 is effective prospectively for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010, with earlier adoption permitted. We adopted ASU 2010-17 on January 1, 2011. The adoption of ASU 2010-17 did not have any material effect on our results of operation, financial position or cash flows.

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (ASU 2011-05). This guidance is intended to increase the prominence of other comprehensive income in financial statements by presenting it in either a single statement or two-statement approach. ASU 2011-05 is effective for the Company beginning January 1, 2012. The adoption of ASU 2011-05 will not have a material effect on the Company’s results of operation, financial position or cash flows.

In September 2011, the FASB issued ASU 2011-08, Intangibles-Goodwill and Other (Topic 350) (ASU 2011-08). Previous guidance required an entity to test goodwill for impairment, on at least an annual basis, by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit is less than its carrying amount, then a second step of the test must be performed to measure the amount of the impairment loss, if any. Under the amendments in ASU 2011-08, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The provisions of ASU 2011-08 become effective January 1, 2012. We do not expect the adoption of ASU 2011-08 to have a material effect on our results of operation, financial position or cash flows.

Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value Measurements

Note 4 - Fair Value Measurements

We define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. We report assets and liabilities that are measured at fair value using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently and therefore have little or no price transparency are classified as Level 3.

We have segregated our financial assets and liabilities that are measured at fair value into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. We have no non-financial assets and liabilities that are measured at fair value at December 31, 2011.

	As of December 31, 2011
	Level 1		Level 2		Level 3		Balance

Liabilities
Derivatives	$	-	$	-	$	1,886,652	$	1,886,652

	As of December 31, 2010
	Level 1		Level 2		Level 3		Balance

Liabilities
Derivatives	$	-	$	-	$	8,362,995	$	8,362,995

The following table sets forth a summary of changes in the fair value of our Level 3 liabilities for the years ended December 31, 2011 and 2010:

Description	Balance as of December 31, 2010		New Liabilities		Unrealized (Gains)			Balance as of December 31, 2011

Stock purchase warrants	$	8,362,995	$	668,640	$	(7,144,983	)	$	1,886,652

Description	Balance as of December 31, 2009		New Liabilities		Unrealized Losses		Balance as of December 31, 2010

Stock purchase warrants	$	835,299	$	2,070,146	$	5,457,550	$	8,362,995

The gains on the derivative instruments are classified in other income (expenses) as the change in market value of derivative instruments in our consolidated statements of operations. The fair value of our stock purchase warrants and conversion option is determined based on the Black-Scholes option pricing model. Use of the Black-Scholes option-pricing model requires the use of unobservable inputs such as the expected term, anticipated volatility and expected dividends.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15C, 15D
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies

Note 9 - Commitments and Contingencies

Leases

We lease our offices in the United States under a 10 year operating lease, which commenced on May 1, 2007. We also lease offices in North Carolina with the lease term expiring in December 2012. Remaining annual minimum payments for these two leases are as follows:

2012	$	797,500
2013	$	774,400
2014	$	797,700
2015	$	821,600
2016	$	846,200
2017	$	356,900

For each of the years ended December 31, 2011 and 2010 total rent expense under operating lease agreements approximated $0.8 million and $1.0 million, respectively.

License Agreements

In connection with an acquisition in March 2005, we acquired a license agreement for the rights to certain technologies. This agreement included an option to license product processing technology necessary to perform development of Protexia® as required under our government contract with the DoD. We executed a new licensing agreement with a development company in 2007 which resulted in a license to all technology provided under the original agreement including the necessary purification technology previously included in an option and access to additional information and technology deemed to be essential for development of Protexia® and performance under the DoD contract.

In 2006 we licensed certain patent rights from a research company. The license agreement required a $50,000 up-front payment, provides for a sublicense fee of 20% and provides for milestone payments of $25,000 upon the granting of a U.S. patent, $200,000 upon the initiation of certain studies or trials, and $250,000 upon Biologic License Application approval. Upon commercialization, the license agreement requires royalty payments equal to a specified percentage of future sales of products for both government procurement and commercial market sales subject to the license through the expiration of the licensed patents. No sublicense fee or milestone payments were incurred in 2011 or 2010.

In 2006 we entered into a research and licensing agreement allowing for the licensing of certain patent rights from a research company. The agreement includes research expense reimbursement payments and certain development milestone payments. Upon commercialization, the license agreement requires royalty payments equal to a specified percentage of future sales of products for both government procurement and commercial market sales subject to the license through the expiration of the licensed patents. No research expense reimbursement payments or milestone payments were incurred in 2011 or 2010.

In connection with an acquisition in 2008, we acquired license agreements with The Defence Science and Technology Laboratory of the United Kingdom Ministry of Defence (“DSTL”) for the rights to certain technologies. These agreements allow for the licensing of certain patents and technology necessary to perform development of the rPA and plague vaccine programs as required under the Company’s government contracts with the NIAID. Upon commercialization, the license agreements require that PharmAthene make royalty payments equal to a specified percentage of future sales of products for both government procurement and commercial markets. No royalty payments on these licenses have been incurred.

SIGA Litigation

In December 2006, we filed a complaint against SIGA Technologies, Inc. (“SIGA”) in the Delaware Court of Chancery. The complaint alleged, among other things, that we have the right to license exclusively development and marketing rights for SIGA’s drug candidate, ST-246, pursuant to a merger agreement between the parties that was terminated in 2006. The complaint also alleged that SIGA failed to negotiate in good faith the terms of such a license pursuant to the terminated merger agreement.

In September 2011, the Court issued an opinion in the case finding that SIGA had breached certain contractual obligations to us and upholding our claims of promissory estoppel. The Court awarded us the right to receive 50% of all net profits related to the sale of ST-246 and related products for 10 years following initial commercial sale of the drug once SIGA earns $40 million in net profits from the sale of ST-246 and related products. The Court also awarded us one-third of our reasonable attorney's fees and expert witness fees.

SIGA has stated it intends to appeal this decision to the Delaware Supreme Court. We can provide no assurances that SIGA will not prevail on its appeal and that the Delaware Supreme Court will not overturn the trial court’s decision awarding us a 10 year 50% net profit in sales of ST-246 and related products.

Government Contracting

Payments to the Company on cost-plus-fee contracts are provisional and are subject to adjustment upon audit by the Defense Contract Audit Agency. In our opinion, adjustments that may result from audits are not expected to have a material effect on the our financial position, results of operations, or cash flows.

Registration Rights Agreements

We entered into a Registration Rights Agreement with the investors who participated in the July 2009 private placement of Convertible Notes and related warrants. We subsequently filed two registration statements on Form S-3 with the Securities and Exchange Commission to register the shares underlying the Convertible Notes and related warrants, which registration statements have been declared effective. We are obligated to maintain the registration statements effective until the date when all shares underlying the Convertible Notes and related warrants (and any other securities issued or issuable with respect to in exchange for such shares) have been sold.

We have separate registration rights agreements with investors, under which we have obligations to keep the corresponding registration statements effective until the registrable securities (as defined in each agreement) have been sold, and under which we may have separate obligations to file registration statements in the future on either a demand or “piggy-back” basis or both.

Under the terms of the Convertible Notes, if after the 2nd consecutive business day (other than during an allowable blackout period) on which sales of all of the securities required to be included on the registration statement cannot be made pursuant to the registration statement (a “Maintenance Failure”), we will be required to pay to each selling stockholder a one-time payment of 1.0% of the aggregate principal amount of the Convertible Notes relating to the affected shares on the initial day of a Maintenance Failure. Our total maximum obligation under this provision would be approximately $0.2 million.

Following a Maintenance Failure, we will also be required to make to each selling stockholder monthly payments of 1.0% of the aggregate principal amount of the Convertible Notes relating to the affected shares on every 30th day after the initial day of a Maintenance Failure, in each case prorated for shorter periods and until the failure is cured. Our total maximum obligation under this provision would be approximate $0.2 million for each month until the failure is cured.

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Stockholders' Equity

12 Months Ended

Dec. 31, 2011

Stockholders' Equity

Note 10 - Stockholders’ Equity

Common Stock

In April 2010, we completed a public offering of 1,666,668 shares of our common stock at $1.50 per share and warrants to purchase an aggregate of 500,000 shares of our common stock at an exercise price of $1.89 per share, generating gross proceeds of approximately $2.5 million. The warrants became exercisable on October 13, 2010 and expire on October 13, 2015. Placement fees of approximately $175,000 and legal and other fees of approximately $140,000 were incurred in connection with this transaction.

In July 2010, we completed a public offering of 2,785,714 shares of our common stock at $1.40 per share and warrants to purchase an aggregate of 1,323,214 shares of our common stock at an exercise price of $1.63 per share, generating gross proceeds of approximately $3.9 million. The warrants become exercisable on January 23, 2011 and expire on January 23, 2017. Placement fees of approximately $260,000 and legal and other fees of approximately $145,000 were incurred in connection with this transaction.

In November 2010, we completed an underwritten public offering of 4,945,000 shares of our common stock at a price to the public of $3.50 per share, generating gross proceeds of approximately $17.3 million. We incurred offering expenses of approximately $1.0 million and legal and other fees of approximately $0.4 million in connection with this transaction.

In June 2011, we completed a public offering of 1,857,143 shares of common stock at a $3.50 per share inclusive of warrants to purchase up to an additional 371,423 shares of common stock. The warrants are exercisable immediately at an exercise price of $3.50 per share until the fifth anniversary of the date of issuance which is June 15, 2016. The warrants are classified as derivative instruments because they include net settlement provisions. We received gross proceeds of approximately $6.5 million and net proceeds of approximately $5.1 million for stock and $0.7 million for derivative instruments.

Long-Term Incentive Plan

In 2007, the Company’s stockholders approved the 2007 Long Term Incentive Plan (the “2007 Plan”) which provides for the granting of incentive and non-qualified stock options, stock appreciation rights, performance units, restricted common awards and performance bonuses (collectively “awards”) to Company officers and employees. Additionally, the 2007 Plan authorizes the granting of non-qualified stock options and restricted stock awards to Company directors and to independent consultants.

In 2008, the Company’s shareholders approved amendments to the 2007 Plan, increasing from 3.5 million shares to 4.6 million shares the maximum number of shares authorized for issuance under the plan and adding an evergreen provision pursuant to which the number of shares authorized for issuance under the plan will increase automatically in each year, beginning in 2009 and continuing through 2015, according to certain limits set forth in the 2007 Plan. At December 31, 2011, there are approximately 7.1 million shares approved for issuance under the 2007 plan, of which approximately 0.2 million shares are available to be issued. The Board of Directors in conjunction with management determines who receives awards, the vesting conditions and the exercise price. Options may have a maximum term of ten years.

The following tables summarize the activity of the 2007 Plan for options:

						Weighted-
				Weighted-		Average
				Average		Remaining
				Exercise		Contractual
	Shares			Price		Term

Options
Outstanding January 1, 2010		4,913,366		$	3.88		8.1
Granted		2,722,131			2.50
Exercised		(22,316	)		2.56
Forfeited		(2,273,768	)		3.89
Outstanding, December 31, 2010		5,339,413			3.18		8.3
Granted		1,934,566			1.71
Exercised		(44,464	)		2.66
Forfeited		(936,533	)		3.07
Outstanding, December 31, 2011		6,292,982		$	2.74		8.0

					Weighted-
			Weighted-		Average
			Average		Remaining
			Exercise		Contractual
	Shares		Price		Term

Exercisable, December 31, 2011		2,940,672	$	3.41		6.7
Vested and expected to vest, December 31, 2011		5,890,707	$	2.78		7.9

The aggregate intrinsic value is calculated as the difference between (i) the closing price of the common stock at December 31, 2011 and (ii) the exercise price of the underlying awards, multiplied by the number of options that had an exercise price less than the closing price on the last trading day. The aggregate intrinsic value of options outstanding and exercisable was approximately $5,000 as of December 31, 2011.

At December 31, 2011, total compensation costs for unvested stock option awards outstanding approximated $3.9 million and will be recognized as stock compensation expense over the next four years.

Valuation assumptions used to determine fair value of share-based compensation

The weighted–average grant date fair value for options granted in 2011 and 2010 approximated $1.17 and $1.88, respectively. The fair value for the 2011 and 2010 awards were estimated at the date of grant using the Black-Scholes option-pricing model using the following assumptions:

	December 31,
	2011			2010
Weighted-average volatility		83	%		87	%
Risk-free rate		0.79% - 2.79	%		0.28% - 3.2	%
Expected annual dividend yield		-			-
Expected weighted-average life, in years		5.9			6.0

The valuation assumptions were determined as follows:

Weighted average volatility: We determine expected volatility by using our historical volatility weighted 50% and the average historical volatility from comparable public companies with an expected term consistent with our weighted 50%.

Risk-free interest rate: The yield on zero-coupon U.S. Treasury securities for a period that is commensurate with the expected term of the award.

Expected annual dividend yield: The estimate for annual dividends is zero because we have not historically paid a dividend and do not intend to do so in the foreseeable future.

Expected life: The expected term of the awards represents the period of time that the awards are expected to be outstanding. The Company estimated the expected term using the “simplified-method” as it does not have sufficient historical exercise data to provide a reasonable estimate.

The following table summarizes the activity of the 2007 plan for restricted shares:

				Weighted-
				Average
				Grant Date
	Shares			Fair Value
Restricted Shares
Outstanding January 1, 2010		305,316		$	3.36
Granted		35,000		$	2.67
Vested		(101,899	)	$	3.29
Forfeited or expired		(127,286	)	$	3.95
Outstanding, December 31, 2010		111,131		$	2.92
Granted		145,000		$	1.43
Vested		(123,066	)	$	2.59
Forfeited or expired		(9,168	)	$	2.46
Outstanding, December 31, 2011		123,897		$	1.53

At December 31, 2011, total compensation costs for unvested Restricted Stock awards approximated $0.1 million and will be recognized over three years.

Warrants

At December 31, 2010, we had warrants outstanding to purchase 5,202,121 shares of our common stock (of which 1,323,214 were not exercisable until January 2011) as follows;

Number of Common
Shares Underlying	Exercise		Expiration
Warrants	Price		Date
705,354(1)	$	3.00		September 2014
2,572,775		2.50		January 2015
500,000(1)		1.89		October 2015
1,323,214(1)		1.63		January 2017
100,778		3.97		March 2017

(1)

The warrants to purchase the shares are accounted for as derivative liabilities. The fair value of these liabilities (see note 4) is remeasured at the end of every reporting period and the change in fair value is reported in the consolidate statements of operation as other income (expense).

The above warrants remained outstanding as of December 31, 2011. Also, in connection with the June 2011 public offering of 1,857,143 shares of common stock, we issued warrants to purchase up to an additional 371,423 shares of common stock at an exercisable price of $3.50 per share. The warrants were immediately exercisable upon issuance and expire June 2016. These warrants are classified as derivative liabilities.

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

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-Number 12
-Paragraph 10
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Reference 19: http://www.xbrl.org/2003/role/presentationRef
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Reference 21: http://www.xbrl.org/2003/role/presentationRef
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Reference 22: http://www.xbrl.org/2003/role/presentationRef
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+ Details

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Dec. 31, 2011	Dec. 31, 2010
Unbilled accounts receivable, allowance	$ 0	$ 244,949
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	48,236,172	46,238,244
Common stock, shares outstanding	48,236,172	46,238,244

CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical)	12 Months Ended
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical)	Dec. 31, 2010 USD ($)
Depreciation and amortization, impairment charges	$ 4,635,489

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical)	12 Months Ended
	Dec. 31, 2010
Conversion convertible debt, Date	2009-07