Tekmira Pharmaceuticals Shares Soar 57% After Merger Agreement With OnCore Biopharma

Shares of Tekmira Pharmaceuticals (TKMR) soared as much as 57% on Monday Jan. 12, 2015 after the company reported that it had entered into a merger agreement with Oncore Biopharma. Tekmira is a biotechnology company focused on developing RNAi therapeutics for both rare diseases and other highly prevalent diseases. Oncore Biopharma focuses primarily on developing hepatitis B virus treatments by utilizing a chemical compound known as a second generation cyclophilin inhibitor. The cyclophilin inhibitor is responsible for preventing the viral replication that takes place in hepatitis B patients.

Upon the transaction being completed OnCore Biopharma will become a wholly-owned subsidiary of Tekmira and shareholders of OnCore will own about 50% of the new combined entity. Tekmira has its hepatitis B drug candidate TKM-HBV, which uses RNAi -- RNA interference to attempt to knock down the genes of the disease. On the other hand Oncore targets cccDNA -- Covalently closed circular DNA. In doing so the company intends to stop the replication of the hepatitis B virus and create an oral pill that will attempt to cure the disease. Why OnCore probably agreed to merge with Tekmira is because the company believes that the best approach to cure hepatitis B is establishing combination therapies.

Both companies may be able to create combination therapies where the efficacy may be far superior than just doing standalone therapies. Of course more testing will be needed but this deal makes sense for both companies. Tekmira expects to start treating patients with its TKM-HBV drug starting in Q1 2015 and then expects to begin the phase 2 trial towards the end of the year. OnCore expects to initiate its phase 1 trial of hepatitis B sometime this year. Hepatitis B is a large market and is far more prevalent than hepatitis C therefore if Tekmira and Oncore can develop a good combination therapy it may have the opportunity to be first to market with an efficacious therapy.

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Disclosure: No position in any stocks mentioned.

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