Ebola stocks are still in vogue, though for new reasons on Thursday.
The DailyMail reported on Wednesday evening that up to four drug companies, including Shire Plc (SHPG) and GlaxoSmithKline (GSK), are stalking Tekmira Pharmaceuticals (TKMR) for its experimental Ebola therapeutic, TKM-Ebola. TKMR was up 10% in Thursday trading.
GlaxoSmithKline announced just hours after the Daily Mail article that its own Ebola vaccine could be given to healthy subjects in the UK, Gambia, and Mali by mid-September, with trials finished by the end of the year. The vaccine is being developed by GSK in partnership with the US National Institutes of Health (NIH). Funding in the form of a £2.8 million grant will expedite initiation of the trials, and GSK says it will begin manufacturing of 10,000 doses for stockpiling. The vaccine came to GSK as part of its 2013 acquisition of Okairos.
The Daily Mail has a poor track record of calling acquisitions in the pharmaceutical space (remember Ariad (ARIA)?), and the fact that GSK is prepping a vaccine of its own doesn’t corroborate the acquisition rumor (though TKM-Ebola is a therapeutic). We note that it took a $3.5M grant and external trial sponsors just for GSK to get its own vaccine moving in the clinic; large pharma isn’t going to cough up the $600M+ it would take to buy this RNAi company just for an Ebola product. While headline traders may not make the connection – having run TKMR up 100% in the last month – industry understands that Ebola as it stands today isn’t a multi-million dollar market opportunity.
Longtime Tekmira investors know that the company is about much more than Ebola – which we’ve been explaining since early 2013. Tekmira will soon begin testing an HBV therapy in humans, not far behind competitor Arrowhead Research (ARWR), and will bring new pipeline candidates into the clinic in 2015. To understand the longterm TKMR thesis, read PropThink’s previous coverage.
The news of a vaccine from GSK is net-negative for NewLink Genetics (NLNK), as well, which also develops an Ebola vaccine and has seen its stock rise 40% in the last few weeks.
One or more of PropThink’s contributors are long TKMR.
