The worst outbreak of one the world's most gruesome and deadly diseases – Ebola hemorrhagic fever – has boosted the profile, if not the stock, of a Vancouver biotechnology company that has been testing a new drug to treat the disease.
Tekmira Pharmaceuticals Corp.'s (TSX:TKM) stock spiked 65% on August 8, jumping to $25.84 per share from $15.61, the day after the company announced that the U.S. Food and Drug Administration (FDA) had partially lifted a hold it had placed on the new drug's clinical trials.
Tekmira's share prices then dropped below $19 on August 13, the day after a second-quarter earnings conference call in which company CEO Mark Murray downplayed the prospects for its TKM-Ebola drug providing a cure any time soon.
Tekmira's stock was up in recent weeks, due to an Ebola outbreak in Africa that has killed more than 1,000 people and favourable regulatory decisions in the U.S. aimed at accelerating Tekmira's TKM-Ebola through clinical trials.
TKM-Ebola is one of four main drug candidates in Tekmira's pipeline, but it's the one that has been getting all the attention from the press, investors and analysts.
The company has just completed Phase 1 clinical trials for the drug (testing in healthy human subjects). The trials were put on hold in July by the FDA, but earlier this month it partially lifted that hold, which will allow TKM-Ebola to be tested on infected patients.
“This action permits the use of TKM-Ebola in subjects with confirmed or suspected Ebola infections,” Murray confirmed in last week's conference call.
Last week, the World Health Organization also announced it would recommend testing of unapproved new drugs and vaccines on Ebola victims.
Asked if that opens up the prospect of the drug being used outside the U.S. on Ebola patients, Murray said his company is in discussions with a number of governments but added that it was premature to speculate any further.
Tekmira is one of at least three companies working on Ebola drugs. North Carolina-based BioCryst Pharmaceuticals Inc. (Nasdaq:BCRX) is another.
Tekmira and BioCryst have both received funding from the U.S. Department of Defense's Defense Threat Reduction Agency to help them develop their Ebola drugs.
Meanwhile a partnership of American and Canadian companies and government agencies is also working to develop a vaccine, and Mapp Biopharmaceutical, a private American company, is working on an Ebola drug called ZMapp.
The company has already exhausted its supply of ZMapp, prompting analysts last week to ask Murray if Tekmira has enough TKM-Ebola to meet a sudden spike in global demand.
Murray said the company has enough of the drug for clinical trials.
“We are exploring what it would take to produce more,” he said, adding it would take months to make more of the drug.
“To meet the broader demand of the outbreak, it would take months to ramp up manufacturing, and the scale, value and profitability of the possible contracts remain unclear at this time,” RBC Capital Markets analyst Michael Yee said in an August 14 investor's note.
The current Ebola outbreak will likely be over long before any company can get a new drug approved for general use by key American and European regulatory organizations because it can take a minimum of three to five years and hundreds of millions of dollars to get a new drug approved.
However, there will likely be more outbreaks to fuel demand for a new drug, said Paul Drohan, president of LifeSciences BC. Currently, there is no vaccine to prevent Ebola and no drug to cure it.
“The Ebola outbreak is here and now, and this is just one compound, one development program, that Tekmira has,” Drohan said. “There will be another episode of Ebola. We can count on it.”
In the meantime, speculative investing generated by the current outbreak has bounced Tekmira's share price around.
At the beginning of 2014, the company's stock was trading at $8.31 per share. It started climbing in March with the FDA's announcement it would fast-track TKM-Ebola trials. The stock peaked at an all-time high of $34.16 on March 11, the day after Tekmira announced a $60 million common share offering. It had dropped below $19 per share last week.
Tekmira specializes in using small interfering RNA (siRNA) to interrupt the production of certain proteins in cells.
Ebola belongs to a group of viruses whose genetic material comes from RNA, not DNA. Tekmira's technology is based on the design and delivery of siRNA molecules that disrupt the function of a virus' RNA.
In addition to TKM-Ebola, Tekmira is developing therapeutics for cancer and hepatitis B. The company said it hopes to move straight to testing TKM-HBV in infected hepatitis B patients in early 2015.
