Update: Tekmira Clinical Hold Lifted

Aug. 8.14 | About: Arbutus Biopharma (ABUS)

Summary

Lifting of FDA clinical hold will allow for Tekmira to continue testing Ebola therapeutic.

This event helps to confirm my opinion on the long-term potential for Tekmira.

This event was not anticipated by my article.

The News

Tekmira Pharmaceuticals (TKMR) investors received a positive piece of news right after the market closed yesterday. The FDA announced that they are lifting the clinical hold on Tekmira's experimental Ebola therapeutic. Shares were understandably trading higher after hours and pre-market. The purpose of this article is to update my previous article armed with the newest information. The FDA has announced that it has modified the full clinical hold on Tekmira's experimental Ebola therapeutic to a partial clinical hold. Previously, the FDA forced Tekmira to halt trials for the therapeutic after reportedly causing nausea, chills and shortness of breath in some patients after injection. The injections were being administered to healthy participants as part of a dose escalation study. The partial clinical hold should allow for Tekmira to continue its trial, albeit at a more cautious pace.

Why This News Matters

With the public widely aware of an outbreak of Ebola in Liberia, there has been a lot of focus on potential Ebola drugs. We largely now know that the FDA has allowed for an experimental drug from Mapp Pharmaceuticals (privately held), called ZMapp to be given to two American patients afflicted with the virus. However, Tekmira is different. Tekmira's therapeutic would allow for Tekmira to essentially render worthless zMapp, given that there would be no need to have zMapp should the vaccine be effective at stopping the infection.

Besides just feeling good about itself, there is also a rather large incentive for Tekmira to continue upon testing the Ebola therapeutic. Tekmira has a $140 million contract to develop the therapeutic from the Department of Defense. As the therapeutic continues to advance through the various stages of clinical testing, Tekmira will receive more money through the contract. With such a large potential for an Ebola outbreak, I would expect for the therapeutic to be able to generate substantial sales to the strategic US stockpile, as Ebola has long been a worry for the US government. It should also be noted that Tekmira receive a fast-track designation from the FDA in March. This will allow for Tekmira to be able to get the drug to the market faster, barring anymore setbacks. With all of the new information regarding Tekmira's therapeutic I still consider the stock a buy in line with my previous article. Tekmira has done a fantastic job up to this point of advancing its relatively young pipeline, as the company continues to advance the pipeline I see a continued increase in share price on the horizon for shareholders. This event was not predicted by my previous article, as I did not predict the clinical hold in the first place. The lifting of the clinical hold helps to justify continued optimism towards Tekmira's share price.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.