|Tekmira Selloff Could Be Exaggerated|
|By Brian Wilson - Lead Contributor|
|Monday, 07 July 2014 08:30|
On July 3rd of last week, Tekmira (TKMR) fell over 15% after the FDA put a clinical hold on the company’s Phase I trial for TKM-Ebola – an early-stage RNAi therapeutic for the Ebola virus. Although the Ebola program is still promising, I don’t see it as a primary value driver for shares of Tekmira and I believe the selloff was primarily attributed to the potential threat that this clinical hold poses to the Hepatitis B program.
The reasoning behind the FDA’s clinical hold had to do with the inflammatory response that is regularly seen after administration of Tekmira’s Ebola therapeutic at higher doses. This seems to be caused by an elevation in cytokine levels, which has a direct correlation with the level of immune system activity in the body. This increased immune system activity led to serious adverse events in patients, including nausea, emesis, sinus tachycardia, and hypotension.
To combat autoimmune problems in previous trials, Tekmira used steroids on patients to proactively. In this Phase I trial, Tekmira did not suppress patients’ immune systems prior to infusion because they believed that the immune-stimulating effect would be lessened with 3rd gen products.
It appears that they were wrong, but this certainly does not mean the end for Tekmira’s Ebola program. And the implications on the HBV program may be small, or nonexistent.
Although they are based on the same SNALP LNP platform, the HBV therapeutic will be developed to interact with hepatocytes (liver cells). This could make the drug more efficient at lower doses, and could reduce the severity of side effects.
So like others have suggested over the weekend, I believe that the market overreacted to the news. This means that buying the dip in TKMR could be a great opportunity for investors who are willing to take on some risk. Traders can also take advantage of higher options premiums in TKMR options as a result of last week’s activity by employing short volatility strategies.