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CORRESP
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    kl12052.htm

    420
Lexington Avenue - Suite 408

    New
York, NY 10170

    December
17, 2008

    VIA
EDGAR

    Mr. Jim
B. Rosenberg

    Senior
Assistant Chief Accountant

    United
States Securities and Exchange Commission

    Division
of Corporation Finance

    100 F
Street, N.E.

    Washington,
D.C. 20549

              Re:

              SIGA Technologies,
      Inc.

    Form
10-K for the Year Ended December 31, 2007

    Filed
March 13, 2008

    Form
10-Q for the Quarterly Period Ended September 30, 2008

    Filed
on November 6, 2008

    Form
DEF 14A

    Filed
on April 9, 2008

    File
No. 000-23047

    Dear Mr.
Rosenberg:

    Reference
is made to the letter (the “Comment Letter”), dated November 26, 2008, setting
forth the comments of the staff (the “Staff”) of the Division of Corporation
Finance of the Securities and Exchange Commission (the “SEC”) regarding the
filings of SIGA Technologies, Inc. (“SIGA,” the “Company” or “we”) referenced
above.

    This
letter contains the Company’s responses to the Staff’s comments in the Comment
Letter.  For your convenience, the Staff’s comments contained in the
Comment Letter have been restated below in their entirety, with the responses to
each comment set forth immediately under the comment.  The paragraph
numbers of this letter correspond to the numbers appearing next to the Staff’s
comments as set forth in the Comment Letter.

    Form
10-K for the Year Ended December 31, 2007

    General

              1.

              We
      note your reference to grant agreements with NIH throughout the Form 10-K
      and your statement on page 37 that for the years ended December 31, 2007,
      2006 and 2005, revenues from NIH contracts and grants were 71%, 53% and
      87%, respectively, of total revenues recognized.  We note that
      you have included one agreement with NIH from September 2006 as an exhibit
      to the Form 10-K.  In the text of the Form 10-K, however, you
      refer to other contracts with NIH from October and August of 2006 and July
      and September of 2007.  Please include all material contract and
      grant agreements with NIH as exhibits to the Form 10-K.  If the
      agreements with NIH from October and August of 2006 and July and September
      of 2007 are not material, please provide us with your analysis supporting
      this determination.

    The
Company respectfully advises the Staff that we have previously filed all
material agreements. During the year ended December 31, 2006, SIGA entered into
a 3-year, $16.5 million agreement with the NIH.  Because this new
agreement exceeded $5.0 million at the time signed, it was deemed to be material
by management and was included as an exhibit to the Form 10-K for such
year.  The August and October 2006 grants mentioned in the comment
were “continuation grants” ($4.8 million to support our smallpox initiative and
$6.0 million to support our Lassa initiative). These awards extended grants that
were already active and were filed in their original form as exhibits to our
Form 10-K for the year ended December 31, 2004.  Additionally, during
the year ended December 31, 2007, SIGA was awarded a 2-year grant for $615,000
and a two-year grant for $555,000. These grants were not deemed to be material
by management as they are below the $5.0 million materiality threshold which
existed when the agreements were executed.  Further, we respectfully
advise the Staff that awards of NIH grants are completed using a standard cover
letter, which, we believe, does not add any information material to the reader
of our financial reports.

    During
2008, SIGA entered into a modification to its original agreement with the NIH,
increasing its original amount by $20 million, and a new agreement for $54.5
million.  These material agreements were included as exhibits to our
Form 10-Q for the period ended September 30, 2008.  Additionally,
during 2008, we were also awarded a two-year grant by the NIH, for a total
amount of $964,000, which we did not deem to be material.

    Management
evaluates materiality of new agreements and grants for filing purposes in the
period in which the agreements are executed.  As a practice, we do not
include continuation award documents as exhibits, as there are no substantive
changes to the original form of award filed by the Company.  Further,
we do not file agreements for awards that do not exceed the materiality
thresholds which are established based on SIGA’s operations at the time of the
award.  As stated above, during 2006 and 2007, agreements and grant
awards for less than $5.0 million were not considered material.

    Form
10-Q for the Quarterly period ended September 30, 2008

    Consolidated Financial
Statements (Unaudited)

    3.  Stockholders’
Equity, page 8

              2.

              You
      disclose that you entered into a letter agreement with MacAndrews &
      Forbes, LLC (M&F) whereby they committed to invest up to $8 million
      over a one-year period.  You indicate that M&F will receive
      common stock at the lesser of $3.06 per share and the volume-weighted
      average price per share for the fine trading days immediately preceding
      each funding date as well as warrants.  Although you indicate
      that M&F will receive common stock and warrants upon your request for
      funding, you also indicate that M&F has the option to invest in you at
      the same terms for a one-year period.  Please explain to us why
      you do not apparently account for the right that M&F holds to purchase
      your stock as a liability under EITF 00-19.  In this regard, it
      appears that if your stock price drops substantially you may not have
      enough authorized shares to issue to M&F if it exercised its right to
      invest in you as discussed in paragraph 19 of SFAS
  00-19.

    The
Company has considered the comment and respectfully advises the Staff that the
provisions of EITF 00-19, “Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company’s own
Stock,” have been evaluated as it relates to the determination that the
right that M&F holds does not represent a liability of the
Company.  The right held by M&F does not enable net-cash
settlement of the agreement in accordance with par. 8 and par. 12 of EITF
00-19.  Further, as required under par. 13 of EITF 00-19, the Company
has evaluated the additional conditions necessary for equity classification
specified under par. 14-32 of EITF 00-19 and respectfully advises the Staff that
each of these conditions supporting equity classification were addressed as
follows:

              o

              SIGA
      can deliver unregistered shares under its agreement with M&F, and a
      failed registration statement has not occurred in the six months prior to
      SIGA’s classification assessment
date.

              o

              There
      are no required cash payments to the counterparty in the event the company
      fails to make timely filings with the SEC or for any other
      reason.  The agreement also does not require the payment of any
      cash penalties for any reason.

              o

              Specifically,
      as it relates to requirements to maintain sufficient authorized shares to
      settle the agreement and explicit limits on the number of shares to be
      issued under par. 19-21 of EITF 00-19, the Company advises the Staff that
      the agreement with M&F contains an explicit limit on the number of
      shares to be delivered in the share settlement such that M&F will only
      consummate that portion of the investment transaction that will not
      require shareholder approval under applicable Nasdaq rules (which require
      approval of investments in excess of 20% of outstanding common
      stock).  At the date of the letter agreement the limit
      calculated to a total of 7,019,810, or 4,844,150 shares of common stock
      and 2,175,660 warrants.  The Company has 100,000,000 authorized
      common shares, of which only 35,379,690
      shares of common stock are currently outstanding and the fully diluted
      common shares amounts to 49,910,341 shares.  Based on these
      facts, the Company has sufficient authorized and unissued shares available
      to settle its contact with M&F during the maximum period which the
      agreement could remain outstanding.

              o

              There
      are no provisions in the agreement that indicate that M&F has rights
      that rank higher than those of a shareholder of
  stock.

              o

              There
      is no requirement in the agreement to post collateral at any point for any
      reason.

              o

              Specific
      provisions of EITF 00-19 not listed above describe features, conditions or
      obligations which do not exist in our agreement with M&F and,
      therefore, are not applicable and do not impact equity
      classification.

    Based on
the evaluation of the 00-19 requirements as described above, equity
classification has been determined to be appropriate.  In our Form
10-K for the year ended December 31, 2008 and applicable subsequent filings, we
will disclose the limit  on the number of shares to be issued to the
extent that such right held by M&F remains outstanding other pertinent terms
and conditions related to this transaction will also be disclosed.

              3.

              You
      disclose your intent to charge the transaction costs associated with your
      M&F letter agreement to additional paid-in-capital upon the issuance
      of common stock and warrants under the agreement.  Please
      explain to us how you intend to account for these transaction costs if you
      do not draw the entire $8 million under the agreement and revise your
      disclosures as appropriate.  Please reference for us the
      authoritative literature you relied upon to support your
      accounting.

    The
Company respectfully advises the Staff that our intention is to exercise our
right to receive the full $8 million upon issuance of common stock to M&F,
prior to expiration of the agreement.  The Company will account for
the transaction costs in accordance with the provisions of EITF Topic D-98 as
supplemented by the guidance under SAB Topic 5A, “Expenses of
Offering.”  Under EITF Topic D-98, costs of obtaining new capital by
issuing common stock that is classified as permanent equity are considered a
reduction of the related proceeds.  As such, we believe that when we
issue stock under the agreement with M&F, we will charge the entire amount
of the deferred transaction costs to additional-paid-in-capital, hence reducing
the net proceeds from the transaction.  Based on the guidance provided
for transaction costs, we believe it is appropriate to record as deferred costs
until such time that we issue stock under the agreement.  In the event
that we do not issue stock under the agreement, we will charge the entire amount
of deferred transaction costs to the results of operations at the end of our
agreement with M&F.  We also advise the Staff that the guidance
under SAB Topic 5A, which states that “specific incremental costs directly
attributable to a proposed or actual offering of securities may be properly
deferred and charged against the gross proceeds of the offering,” further
supports our intention.

    7.  Commitments
and Contingencies

    Other, page
10

              4.

              Please
      revise your disclosure to include an estimate of the possible loss or
      range of loss or state that such an estimate cannot be made as
      appropriate.  If you cannot make an estimate, please disclose
      the facts and circumstances that prevent management from making such an
      estimate and include a discussion of what is being sought in the
      complaint.  Refer to paragraph 10 of SFAS
  5.

    In our
Form 10-K for the year ended December 31, 2008, we will note, as required
pursuant to paragraphs 8 (b) and 10 of SFAS 5, that a possible loss or range of
loss cannot be reasonably estimated because PharmAthene, Inc., in its Complaint,
seeks injunctive and declaratory relief as well as unspecified monetary damages
and we have asserted what we believe to be meritorious
defenses.  Therefore, management has concluded that it is not possible
to reasonably estimate a range of loss.

    Item
2.  Management’s Discussion and Analysis of Financial Condition and
Results of Operations

    Results of Operations, page
14

              5.

              We
      note that the Company has experienced material changes in its accounts
      receivable, prepaid expenses and deferred revenue balances from December
      31, 2007, to September 30, 2008.  Please revise the discussion
      in your MD&A to provide an explanation for the material changes to
      these balance sheet items.  Item 303(b)(1) of Regulation S-K
      requires you to “Discuss any material changes in financial condition from
      the end of the preceding fiscal year to the date of the most recent
      interim balance sheet provided.”

    In
consideration of the Staff’s comment and based upon the requirements of Item
303(b)(1) of Regulation S-K, we will enhance our disclosures in our Form 10-K
for the year ended December 31, 2008 and applicable subsequent filings to
explain the additional material changes specified in this
comment.  Specifically, as it relates to prepaid expenses, we paid a
deposit of $1.25 million to a third party for the manufacturing of ST-246 for
testing, which increased the balance as of September 30, 2008.  Upon
submitting an invoice to the NIH for the deposit paid to the third party, we
booked a receivable and corresponding deferred revenue.  We received
payment in full from the NIH for the receivable that was outstanding at
September 30, 2008.  The amount recorded as prepaid expense will be
recognized as expense as the related manufacturing takes place, and revenue will
be recognized accordingly.  To the extent that material changes in
these or other accounts exist in the future, we will discuss these changes in
our Forms 10-K and other filings as required and in accordance with Item
303(b)(1) of Regulation S-K.

              6.

              We
      note your statement on page 15 that, “In reviewing and recommending the
      compensation of the Chief Executive Officer and other executive officers,
      the Compensation Committee considers the compensation awarded to officers
      of similarly situated companies.”  Please disclose if the
      Committee engaged in any benchmarking of total compensation, or any
      material element of compensation, identifying the benchmark and, if
      applicable, its components.  You should identify the companies
      that comprise the peer group used for benchmarking purposes, provide
      insight into the basis for selecting the peer group, and disclose the
      relationship between actual compensation and the data utilized in the
      benchmarking or peer group studies.  See Item 402(b)(xiv) of
      Regulation S-K and our related Compliance & Disclosure Interpretation
      118.05.

    The
Company respectfully advises the Staff that, as a framework for its 2008
compensation decisions regarding our named executive officers, the Compensation
Committee evaluated aggregate executive compensation data from the fiscal years
2006 and 2007 regarding the chief executive officer, chief financial officer,
and chief scientific officer of each of Emergent Biosolutions Inc., Human Genome
Sciences, Inc., and Neurogen Corporation, and the chief executive officer,
senior vice president and vice president of PharmAthene, Inc.  These
companies were selected as similarly situated because they are all biotechnology
companies specializing either in small molecule drugs or solutions to
bioterrorism, and