The Supreme Court affirmed the Court of Chancery's ruling that SIGA had breached its obligation to negotiate in good faith under both the bridge loan and merger agreements. In rejecting SIGA's argument that a non-binding term sheet cannot form the basis for an enforceable obligation to negotiate, the Supreme Court explicitly reaffirmed its holding in Titan Investment Fund II, LP v. Freedom Mortgage Corp. that an express contractual obligation to negotiate in good faith is binding on the contracting parties. The Supreme Court also agreed with the Court of Chancery that the phrase in the bridge loan and merger agreements "in accordance with the terms set forth" meant that the parties had a duty to negotiate a license agreement on terms substantially similar to those found in the term sheet, even though the term sheet was not, in and of itself, a binding contract. In addition, the Supreme Court rejected SIGA's argument that holding it to this obligation would introduce uncertainty and litigation risk. As it explained, acting in "bad faith" implies a "conscious doing of a wrong" with a "dishonest purpose" or "ill will," not merely acting negligently or with bad judgment. This standard of conduct should not introduce a great deal of uncertainty into negotiations.

Because SIGA presented terms radically different from the terms negotiated in the term sheet, and did so in bad faith, the Supreme Court affirmed the Court of Chancery's finding that SIGA had breached its obligation to negotiate in good faith.

The Supreme Court reversed the Court of Chancery's ruling that SIGA was liable under the promissory estoppel doctrine, stating that promissory estoppel does not apply if an enforceable contract governs the promise to negotiate in good faith. Instead, a court must look to the contract to determine the remedy for a breach of the duty to negotiate in good faith. Because the Supreme Court found that the duty to negotiate in good faith was expressly incorporated into both the bridge loan and merger agreements, the contract would govern the remedy.

The Supreme Court noted that its decision in Titan Investment left open the question of whether a judge could grant expectation damages when a factual finding is made that an agreement would have been reached but for the defendant's breach. The Court of Chancery had noted that there was no consensus in Delaware or in other jurisdictions over whether a plaintiff could recover expectation damages or only reliance damages. While noting that it must apply Delaware law, the Supreme Court looked to other federal courts' interpretations of New York law, which recognizes two types of binding preliminary agreements:

The license-agreement term sheet at issue in this case would be considered a Type II agreement. The Supreme Court concluded that a plaintiff is entitled to recover contract expectation damages if:

Delaware courts had not previously recognized that a plaintiff could recover expectation damages under Type II agreements. Key to the Supreme Court's ruling though is that a plaintiff must be able to prove damages with reasonable certainty, requiring therefore that the Type II agreement encompass enough major terms to determine what the contract would have looked like but for the breach.

The Supreme Court remanded the case to the Court of Chancery for reconsideration of the damages award in light of the Supreme Court's clarification that "Delaware recognizes Type II agreements and permits a plaintiff to recover expectation damages."