Friday, June 19, 2015 8:11:56 PM
June 19, 2015, 3:23 P.M. ET
By Johanna Bennett
I’ve lost count of how many times this scenario has been played out by investors.
Panic sets in when news hits that some fearsome virus has landed on U.S. shores, stoking the paranoia of anyone who has ever watched one of those apocalyptic deadly virus movies. Small drug makers scramble to come up with a cure, and stock prices spike only to eventually return to pre-paranoia levels when the drugs fail or folks lose interest in the news headlines.
Tekmira Pharmaceuticals (TKMR) plunged almost 12% Friday afternoon after the drug maker reported it was halting enrollment in tests for an Ebola-fighting drug after finding the therapy wasn’t helping infected patients.
The drug, known as TKM-Ebola-Guinea, was in Phase II clinical trials in Sierra Leone.
There are no approved treatments for Ebola. Tekmira was among many companies that sped up development of drugs and vaccines as an epidemic ravaged West Africa last year. The CDC confirmed the first ever case of Ebola in the U.S. in late September.
By early October, Tekmira’s share price hit a high of almost $30 a share, or more than twice the $13.25 it now fetches.
At the time, the Motley Fool called it “emotional trading,” complaining that “not a single Ebola vaccine drug maker is anywhere close to bringing a drug to market, yet all are soaring as if the potential patient pool just skyrocketed.”
Other drug makers working on an Ebola therapy have also fallen by the wayside. Chimerix (CMRX) scrapped testing of its experimental antiviral in Ebola patients in Liberia in February, saying the number of infections had dropped in recent weeks, and that only a handful of patients had been enrolled in the Liberian study.
Tekmira did not go all-in on Ebola. Earlier this year the drug maker merged with privately held OnCore Biopharma, acquiring a hepatitis B franchise.
As Leerink analysts Michael Schmidt and Jonathan Chang wrote:
We spoke with TKMR who highlighted the complexities around conducting a clinical trial in an outbreak scenario vs. controlled clinical trials. It is unclear if uncontrollable factors such as for example baseline viral loads or time between infection and treatment seen in the field have had an impact to outcomes. A more complete analysis of the data will be conducted to fully explain the results. While we view this update as disappointing given the recently published positive non-human primate data, we don’t believe there is significant read-through to TKMR’s other programs, including the HBV program, which we view as the main value driver for the stock long-term. We currently only attribute $1 (3%) of our $30 valuation to TKM-Ebola.
http://blogs.barrons.com/stockstowatchtoday/2015/06/19/with-its-ebola-drug-gone-is-tekmira-worth-the-risk/
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