Can Tek­mira make money from its Ebola treat­ment?

Financial Mirror (Cyprus) - - FRONT PAGE -

Tek­mira Phar­ma­ceu­ti­cals Corp. (NAS­DAQ: TKMR) has made a name for it­self pi­o­neer­ing new ex­per­i­men­tal treat­ments in the wake of the most re­cent Ebola scare. Ebola is con­sid­ered one of the dead­li­est viruses on the planet with a fa­tal­ity rate of up to 90%. Canada-based Tek­mira is one of a few com­pa­nies which are look­ing to tackle this prob­lem.

The com­pany hopes to al­le­vi­ate the world of the ebola scare. The mil­lion dol­lar ques­tion (lit­er­ally) is whether or not Tek­mira and/or oth­ers can make se­ri­ous money in the process – and whether it is enough to jus­tify the cur­rent hope. Pri­vately held Mapp Bio­phar­ma­ceu­ti­cal and BioCryst Phar­ma­ceu­ti­cals (NAS­DAQ: BCRX) are also de­vel­op­ing ther­a­pies to com­bat Ebola.

The US Food and Drug Ad­min­is­tra­tion as of last Thurs­day an­nounced that it would give Tek­mira the go-ahead to be­gin treat­ing pa­tients with its ex­per­i­men­tal Ebola treat­ment on hu­mans that were in­fected with the Ebola virus. The fol­low­ing day af­ter this an­nounce­ment, Tek­mira shares soared. Again, the ques­tion is whether or not Tek­mira and other com­pa­nies will be able to turn in­vestor hopes into ac­tual prof­its.

In­vestors may be con­cerned that the stock’s most re­cent highs are not even close to be­ing at the lev­els they were in March. That is the case even if Tek­mira’s stock price has been climb­ing higher since the FDA made an ex­cep­tion for the ex­per­i­men­tal treat­ment.

As of Mon­day, Tek­mira shares reached a high of $26.05. This is a mas­sive move when you con­sider that Tek­mira closed at $14.27 just last Thurs­day. The long and short of the mat­ter is that this stock has sky­rock­eted by more than 80% in a short pe­riod of time. Still, Tek­mira shares would have to reach $31.48 to reach its all-time high.

In­vestors have one se­ri­ous con­cern to think of here when it comes to how much the com­pany can ac­tu­ally make here. There is a fear that out­side of govern­ment fund­ing for hu­man­i­tar­ian con­cerns, the fi­nan­cial side of an ebola drug mar­ket alone may not be all that lu­cra­tive. Then there was a prior FDA scare from the drug hav­ing pre­vi­ously been on hold. One sav­ing grace that could al­le­vi­ate some of the con­cerns that ebola has been de­clared an in­ter­na­tional health

is emer­gency by the WHO. Another is­sue that in­vestors have to con­sider is that some traders could think a blow-off vol­ume top is be­ing formed. Tek­mira did not even av­er­age more than a few hun­dred thou­sand shares per day prior to this most re­cent ebola scare. Last Mon­day it traded al­most 10 mln shares when it was at $13.26. Then on Fri­day it traded 28.6 mln shares when it rose to $20.70. Now we saw to­tal trad­ing vol­ume of over 23 mln shares by the close of trad­ing on Mon­day.

Tek­mira’s 52-week range is $5.08 to $31.48 and shares were up another 18% at $24.40 late on Mon­day. The Thom­son Reuters con­sen­sus an­a­lyst tar­get price is $26.63, but there is only a very small hand­ful of an­a­lysts cov­er­ing this stock. Over the past week the stock has ranged $12.82 to $26.05.

The point here is not whether you have seen a peak in short-term trad­ing. We have seen in­stances where biotech out­fits have risen ex­po­nen­tially, and we would not dare count this as a sit­u­a­tion that could not re­peat the other gains else­where. Our ques­tion is how much money Tek­mira can ac­tu­ally make long-term from this.

Tek­mira’s rev­enues have av­er­aged $15 mln per year over the last three years. It was in 2013 that Tek­mira was awarded a US govern­ment con­tract worth up to $140 mln to de­velop an RNAi ther­a­peu­tic against the ebola virus. This De­part­ment of De­fense grant was un­der the DoD’s Chem­i­cal and Bi­o­log­i­cal De­fense Pro­gramme. More than 15% of the es­ti­mated value of that award was to be sub­con­tracted to US busi­nesses, and the ini­tial phase made Tek­mira el­i­gi­ble to re­ceive up to $34.7 mln over the next three years.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.