PropThink Subscribers who followed us into Tekmira (TKMR) at $4.70 in mid-April saw the stock touch a recent high of just over $6.00 early last week before retracing to $5.32 by the end of Wednesday’s trading session.
We continue to view Tekmira as an attractive long-term holding given multiple shots on goal, plenty of cash, and that the stock acts as a risk-mitigated proxy on RNAi-giant Alnylam Pharmaceuticals (ALNY). Tekmira carries a market capitalization of $77 million and has $40.7M in the bank (the company expects to end 2013 with $30-35 million). With no long-term debt, investors are paying less than $40M for Tekmira’s pipeline and RNAi delivery platform.
Nevertheless, the market continues to view Tekmira as a platform story, discounting significantly its pipeline of proprietary products. We expect that as Tekmira moves new candidates from discovery into the clinic – one of which should be announced before year-end – and more proof of concept for its two in-house candidates materialize in 2014, the valuation disparity between it and Alnyam, a $3 billion company, should begin to close.
Tekmira’s lead candidate, TKM-PLK1, utilizes the company’s LNP (lipid nanoparticle) delivery technology to target the polo-like kinase-1 (PLK-1). Silencing PLK1 expression prevents tumor cells from completing cell division, resulting in death of the cancer cell. TKM-PLK1 demonstrated a clinical benefit in some cancer patients in a Phase I trial (n=26, dose escalation of 0.15 to 0.9 mg/kg), and Tekmira this week initiated a proof of concept Phase II study in advanced Gastrointestinal Neuroendocrine Tumors (GI-NET) or Adrenocortical Carcinoma (ACC) based on the previous results, with plans for another Phase I/II trial in Hepatocellular Carcinoma (HCC) to begin in the first half of 2014. According to the company, the GI-NET study should read-out by mid-2014.
(For a more comprehensive look at Tekmira, see PropThink’s previous coverage.)
Recall that Tekmira beat out Sarepta Therapeutics (SRPT) in 2012 in garnering government support for an Ebola Virus program. The Department of Defense is committed to $140M for the development of Tekmira’s TKM-Ebola, and as with most conditions caused by exposure to lethal toxic agents, TKM-Ebola is being developed under the FDA’s “Animal Rule,” providing for FDA approval based on well-controlled animal studies and demonstrated safety in humans. Tekmira successfully completed pre-clinical trials in non-human primates in 2010 but announced in May the integration of a more potent LNP formulation, advancements in manufacturing technology, including lyophilization, and new pre-clinical studies to support testing in humans. Tekmira expects results from these latest non-human trials yet this year and to submit an IND during the second half of 2013 to support an in vivo Phase I safety study.
Additionally, the company’s LNP delivery technology is used in a number of ALNY pipeline products – ALN-TTR, ALN-VSP, ALN-PCS – and TKMR receives royalties and milestones based on their development. Not only is success at Alnylam incrementally positive for the top-line at Tekmira, but it also offers validation of this LNP delivery technology. We’re not particularly optimistic, but Tekmira also receives royalties on the approved Ph- acute lymphoblastic leukemia treatment, Marqibo, which Spectrum Pharmaceuticals (SPPI) acquired in the purchase of Talon Therapeutics last month.
Perhaps most interesting is Tekmira’s progress with new, subcutaneous formulations (current administration is intravenous) of LNP. Testing in rodents has demonstrated an ability to knockdown liver targets by 96% at 1 mg/kg with a single administration, or 67% knockdown at 0.5 mg/kg.
In addition, Tekmira plans to identify another therapeutic for movement into the clinic by the end of 2013.
Recall that in late 2012 Tekmira and Alnylam settled a lengthy IP and licensing dispute, with Tekmira receiving $65M in cash from ALNY. Almost a year later, Alnylam is holding out on a $5M payment to Tekmira that, says Tekmira, was due following the transfer of ALN-VSP manufacturing technology to China-based Ascletis Pharmaceuticals. The two are entering into arbitration, but Tekmira indicates that the payment is included in projections for its cash position to last through mid-2015.
TKMR’s 50-day SMA at $5.05 coincides approximately with the lower bound of Tekmira’s current uptrend and may provide support as the stock breaks down this week. Also note the cup and handle that formed just prior to our mid-April initiation. We like the long-term chart here, and will be adding to our position on the current dip, as Tekmira is a cheap and compelling play on the RNAi segment.
In connection with TKMR, PropThink has taken a long position
