SecProbe.io

CORRESP
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  1221 Avenue of the
  Americas

  New York, NY 10020-1089

  212.768.6700

  Jeffrey A. Baumel

  212.768.6800 fax

  973.912.7189

  www.sonnenschein.com

  jbaumel@sonnenschein.com

October 14, 2009

Jeffrey
Riedler

Scott
Foley

Division
of Corporation Finance

United
States Securities and Exchange Commission

100
F Street, N.E.

Washington,
D.C. 20549

Re:                             PharmAthene, Inc.

Amendment No. 1 to Registration Statement on Form S-3

Filed August 31, 2009

File No. 333-161587

Dear Messrs. Riedler
and Foley:

By letter dated September 17, 2009, the staff
(the “Staff”) of the Securities and Exchange Commission (the “Commission”)
provided comments on Amendment No. 1 to Registration Statement on Form S-3
filed by the Company with the Commission on August 31, 2009 (File No. 333-161587)
(the “Registration Statement”).

This letter sets forth the Company’s responses to
the Staff’s comments.  For your
convenience, we have reproduced below in italics each comment and have provided
the Company’s response immediately below the comment.

General

1.                                      We note that
you are registering the sale of 11,704,010 common shares. Given the size
relative to the number of shares outstanding held by non-affiliates, the nature
of the offering and the selling security holders, the transaction appears to be
a primary offering. Because you are not eligible to conduct a primary offering
on Form S-3 you are not eligible to conduct a primary at-the-market
offering under Rule 415(a)(4).

If you disagree with our analysis, please advise the
staff of the company’s basis for determining that the transaction is
appropriately characterized as a transaction that is eligible to be made under Rule 415(a)(1)(i).
In your analysis, please address the following among any other relevant
factors:

Brussels        Chicago        Dallas        Kansas
City        Los Angeles        New
York        Phoenix        St.
Louis

San
Francisco        Short Hills,
N.J.        Silicon Valley        Washington,
D.C.        Zurich

·                  The date on which and the manner in which
each selling shareholder received the shares and/or the overlying securities;

·                  The relationship of each selling shareholder
with the company, including an analysis of whether the selling shareholder is
an affiliate of the company;

·                  Any relationships among the selling
shareholders;

·                  The dollar value of the shares registered in
relation to the proceeds that the company received from the selling
shareholders for the securities, excluding amounts of proceeds that were
returned (or will be returned) to the selling shareholders and/or their
affiliates in fees or other payments;

·                  The discount at which the shareholders will
purchase the common stock underlying the convertible notes (or any related
security, such as a warrant or option) upon conversion or exercise; and

·                  Whether or not any of the selling
shareholders is in the business of buying and selling securities.

Response:

For the reasons set forth below, the Company
respectfully asserts that the offering of securities to be registered pursuant
to the Registration Statement is a valid secondary offering and is eligible to
be made under Rule 415(a)(1)(i) under the Securities Act of 1933 (the
“Act”) as contemplated by the Registration Statement.

Summary
Conclusion — This transaction is not of the type that raises concerns about a
disguised primary offering

The terms of the Financing, in which the Notes and
Warrants (all as defined under “Background” below) were issued, do not include
any price “resets”, floating price conversion rights or other “toxic” features
that have previously prompted the Staff’s concerns regarding “Extreme
Convertible” transactions.  Further, the
Notes and Warrants do not even provide for anti-dilution protection based on
the price of future issuances by the Company.
The only anti-dilution provisions in the Notes and Warrants are
customary “plain vanilla” structural anti-dilution protection provisions in the
event of fundamental organic changes in the Company’s capital structure, such
as stock splits.  These anti-dilution
adjustments are consistent with those that the Staff has previously indicated
on numerous occasions do not raise a concern with respect

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to the Staff’s interpretation
of Rule 415(1).  As John White,
former Director of Corporation Finance, stated in a speech on February 23,
2007 in Dallas Texas, “I’ll be very clear about this — the staff’s view of PIPE
transactions has not changed; we have simply addressed the recent development
where convertible note transactions are structured in an abusive manner.”

Where a PIPE is not structured in an abusive manner,
the number of shares registered is not a central concern.  However, it bears noting that, while the
total number of shares registered under the Registration Statement represents
85.1% of the Company’s public float, the number of shares actually issuable
upon the closing of the Financing on July 28, 2009, not including the
shares representing interest on the Notes that had not yet accrued or shares
issuable upon exercise of the Warrants that are not exercisable for six months
from the closing, represents only 55.2% of the Company’s public float.  Since the investors would have to hold the
Notes over the long term in order to receive the shares that are issuable in
lieu of interest, and must hold the Warrants for six months in any event, and
the investors will bear full market risk on such securities since they contain
no toxic price reset provisions, the shares issuable in lieu of interest and
upon exercise of the Warrants do not raise the short-term flipping concerns
that might call into question the true nature of a secondary offering.

Additionally, in connection with the Financing, the
Company cancelled its previously issued 8% Notes (as defined below) convertible
into shares representing 5.5% of the Company’s public float, the resale of
which was previously registered. Less than a week after the closing of the
Financing, the remaining 8% Notes, representing another 3.5% of the Company’s
public float, matured and were repaid. As a result, the net addition of shares
issuable upon the closing and subject to registration represents only 46.3% of
the Company’s public float.

Finally, the Financing was priced as an “at-market” deal
for purposes of NYSE Amex rules, i.e., the conversion price of the Notes and
the exercise price of the Warrants are equal to or greater than the closing
price of the Company’s shares on the NYSE Amex immediately preceding the time
that the Company entered into the binding agreement to issue the Notes and
Warrants.  Such closing price also
represents the closing price of the Company’s shares on the NYSE Amex
immediately preceding the public announcement of the Financing by the
Company.  We refer to such closing price
as the “Date of Sale Price.”

At the time of the Financing, an investment bank
evaluated market conditions for financing alternatives and the only available
financing alternative was on terms significantly less favorable to the
Company.  Accordingly, not only does the
Financing not have the type of toxic price reset provisions that trigger a Rule 415
concern, the financial terms of the Financing were very reasonable.

(1) See Speech by John
W. White, Director, Division of Corporation Finance, February 23, 2007;
Keller, Stanley and Hicks, William, “Unblocking Clogged PIPEs: SEC Focuses on
Availability of Rule 415,” Insights, May 2007.

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Since the Financing was not a toxic reset deal, the
number of shares issuable as of the closing was only 55.2% of the public float
(and 46.3% net of the shares underlying the cancelled and matured 8% Notes) and
the shares are not issuable at a discount, this deal is not the type of abusive
transaction that the Securities and Exchange Commission (the “SEC”) is
concerned about and the registration of the shares issuable under the Financing
should not be considered a primary offering by the Company.

Background

On July 28, 2009, the Company issued, in a
private placement (the “Financing”), the 10% convertible notes due July 28,
2011 (the “Notes”) and related warrants (the “Warrants”) to purchase up to
2,572,775 shares of the Company’s common stock, par value $0.0001 per share
(the Common Stock”) to (i) holders (the “Existing Noteholders”) of then
outstanding 8% senior unsecured convertible notes, due August 3, 2009 (the
“8% Notes”), in lieu of a cash payment covering principal and accrued interest
on the 8% Notes, in the aggregate amount of $8,767,606, and (ii) certain
other new investors (collectively with the Existing Noteholders, the “Investors”)
for $10,528,196 in cash.

The Notes mature on July 28, 2011 (the “Maturity
Date”) and are immediately convertible into shares of Common Stock at a
conversion price of $2.541667 per share (the “Conversion Price”).  Interest on each Note accrues over the term
of the Note at a rate of 10% per annum and, in the event of a conversion, is
converted into Common Stock along with the principal amount of such Note.  The Warrants are exercisable for shares of
Common Stock from January 28, 2010 through January 28, 2015, at an
exercise price of $2.50 per share (the “Exercise Price”).  The closing price of the Common Stock on the
NYSE Amex immediately preceding the time that the Company entered into the
binding agreement to issue the Notes and Warrants was $2.50 per share.

The maximum number of shares of Common Stock (the “Shares”)
into which the Notes and the Warrants can be converted or exercised, as
applicable, assuming conversion of all of the Notes on the Maturity Date, is
11,704,010.  Of that amount, up to
7,591,790 shares are issuable upon conversion of the aggregate principal amount
of the Notes, up to 1,539,445 shares are issuable in respect of interest that
has begun accruing and will continue to accrue throughout the term of the Notes
and up to 2,572,775 shares are issuable upon exercise of the Warrants.

In connection with the Financing, the Company and
the Investors entered into a note and warrant purchase agreement, dated as of July 24,
2009 and as amended as of July 26, 2009 and July 28, 2009 (as so
amended, the “Note and Warrant Purchase Agreement”).   The Company and the Investors also entered
into a registration rights agreement (the “Registration Rights

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Agreement”), which provides
the Investors with, among other things, registration rights covering the
Shares.  The Registration Rights
Agreement requires the Company to file with the SEC a registration statement
covering such shares within 30 days after closing of the Financing and to use
its best efforts to cause the registration statement to become effective no
later than 90 days after closing, or 120 days in case the SEC reviews the
registration statement.

The Investors in the Financing were:

·                  Baker Bros. Investments II, L.P., Baker
Brothers Life Sciences, L.P. and 14159, L.P. (collectively, “Baker Brothers”);

·                  MPM Asset Management Investors 2004 BVIII
LLC, MPM Bioventures III, LP, MPM Bioventures III GmbH & Co.
Beteiligungs KG, MPM Bioventures III Parallel Fund, LP and MPM Bioventures
III-QP, LP. (collectively, “MPM”);

·                  Healthcare Ventures VII, LP (“HCV”);

·                  Ontario Teachers’ Pension Plan Board;

·                  Mary Pappajohn;

·                  Derace Schaffer;

·                  James Desnick;

·                  Edward Heil;

·                  Argyris (R.J.) Vassiliou;

·                  The Ann Vassiliou Children’s Trust;

·                  Jerome Parks;

·                  Joel McCleary;

·                  David Wright;

·                  Eric Richman; and

·                  Christopher Camut.

Of the $19,295,802 in aggregate principal amount of
Notes and Warrants to purchase 2,572,775 shares issued in the Financing, Notes
in the aggregate principal amount of $9,706,270 and Warrants to purchase
1,294,170 shares of Common Stock (representing approximately 50.3% of the
Financing and the Shares), were issued to persons that, as of the date of this
letter, are deemed to be “affiliates” of the Company (“Affiliates”), as that
term is defined in Rule 405 under the Act (“Rule 405”) and using the
definition of “beneficial ownership” in Rule 13d-3

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under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).  The Investors deemed to be Affiliates(2) are:

·                  MPM, beneficial owner of 18.59% of the Common
Stock, has the right to designate a nominee for director on the Company’s Board
of Directors (the “Board”).  Dr. Steven
St. Peter, a director of the Company, is affiliated with MPM but is not a
member of the general partners and thus is not deemed to have beneficial
ownership of the shares of Common Stock owned by MPM.

·                  HCV, beneficial owner of 14.39% of the Common
Stock, has the right to designate a nominee for director on the Company’s board
of directors (the “Board”) as required by the Note and Warrant Purchase
Agreement.  Dr. James Cavanaugh, a
director of the Company, is a general partner of the general partner of HCV.

·                  Mary Pappajohn, the spouse of John Pappajohn,
the chairman of the Company’s Board.

·                  Derace Schaffer, director.

·                  Joel McCleary, director.

·                  David Wright, CEO and director.

·                  Eric Richman, Senior VP, Business Development
and Strategic Planning.

·                  Christopher Camut, CFO at the time of the
Financing and currently Vice President, Government Contracts and Special
Projects.

The Notes and Warrants were issued pursuant to the
exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended (the “Act”) and Regulation D promulgated
thereunder.  In the Note and Warrant
Purchase Agreement, the Investors made representations and warranties regarding
their investment intent, including, among others, representations that they
were purchasing their securities for their own accounts, for investment
purposes and not with a view to distribution or resale of the securities except
in full compliance with all applicable provisions of the Act.  In addition, each of the Investors
represented that it had made its own independent decision to purchase
securities in the Financing.

(2) The Notes purchased by Baker
Brothers, if fully converted within 60 days of August 25, 2009 (the date as of
which information was provided in the Registration Statement) would amount to
approximately 11.7% of the Company’s outstanding Common Stock.  However, as disclosed in the Registration
Statement, the Notes and Warrants issued to Baker Brothers provide that such
Notes and Warrants are only convertible or exercisable to the extent that the
holders thereof and their affiliates would beneficially own no more than 9.999%
of the outstanding shares of Common Stock after such conversion or exercise and
that such limitations on conversion and exercise may not be waived.  In light of these provisions (and the fact
that Baker Brothers does not have any board representation), the Company does
not deem Baker Brothers to be an Affiliate.

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As disclosed in the Company’s definitive proxy
statement filed with the Commission on September 29, 2009, as of September 11,
2009, the Company had an aggregate of 28,427,348 shares of Common Stock
outstanding.  Of the number of shares of
Common Stock outstanding, 13,747,978 shares, representing the “public float”,
were held by non-affiliates of the Company.
The number of shares outstanding on a fully diluted basis, i.e.,
assuming conversion or exercise of all outstanding notes, warrants or options
convertible or exercisable into Common Stock, was 47,528,366.

On August 31, 2009, the Company