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Tekmira to Merge with Private HBV Drug Developer OnCore


NEW YORK (GenomeWeb) – Canadian RNAi drug developer Tekmira Pharmaceuticals has announced that it has agreed to merge with US-based OnCore Biopharma to create a new company focused on an oral cure for hepatitis B virus infection.

As a result of the transaction, which is expected to close in the first half of this year, Tekmira will shift away from being a pure-play RNAi drug firm aiming to use the gene-silencing technology to treat multiple different diseases to a company focused on developing multiple technologies against a single indication.

"The combined company will have the potential to advance multiple, highly active, and complementary agents into the clinic in rapid succession," Tekmira CEO Mark Murray said during a conference call held today to discuss the merger. "We are leveraging Tekmira's industry-leading RNAi platform, bringing together our Phase I-ready HBV therapeutic [called TKM-HBV] … with OnCore's robust portfolio of compounds."

News of the deal was well-received on Wall Street. During late Monday morning trading on the Nasdaq, shares of Tekmira surged nearly 60 percent percent to $24.92.

Despite the merged company's focus on HBV, Tekmira's other RNAi drug programs — including the Phase II cancer therapy TKM-PLK1 and the Phase I Ebola drug TKM-Ebola — will continue to advance, Murray said.

The details of how those efforts will be handled, however, still have yet to be worked out. Murray said that the company's new management team hopes to establish a path forward for these other RNAi initiates prior to the close of the merger.

According to OnCore CSO Michael Sofia, the companies expect that the combination of their pipelines will enable the merged firm to address the three primary issues behind HBV drug resistance: uncontrolled viral replication; suppression of an HBV-specific immune response; and the persistence of viral covalently closed circular DNA (cccDNA), which gives rise to immunosuppressive viral proteins and viral genomic materials.

"We firmly believe that in order to achieve an HBV cure, all facets of HBV persistence need to be addressed [and] that impacting only a single target will not be sufficient to achieve a cure," he said during the conference call.

The merged company's lead program will be TKM-HBV, which comprises siRNAs targeting several sites on the HBV genome and is delivered using Tekmira's third-generation lipid nanoparticles. In preclinical testing, the drug has been shown to trigger reductions in HBV surface antigen, a key indicator of active infection, as well as cccDNA.

TKM-HBV is slated to enter Phase I testing in the first quarter of this year.

Next up is OnCore's OCB-030, a second-generation cyclophilin inhibitor designed to suppress viral replication, as well as stimulate and reactivate the body's immune response. This compound is expected to enter Phase I in the second half of 2015.

Murray said that the merged company anticipates filing investigational new drug applications on several more of OnCore's earlier-stage drug candidates in 2016.

"Together, Tekmira and OnCore will have the technologies, the science, and the leadership to transform the HBV treatment landscape by developing a regimen designed to eradicate hepatitis B virus," he said.

Under the transaction, privately held OnCore will merge with a wholly owned subsidiary of Tekmira. At the time of closing, OnCore shareholders will own approximately 50 percent of the total number of Tekmira's outstanding shares.

The implied market value of the merged company, Tekmira said, is about $750 million.

After the merger is completed, Murray will remain Tekmira's CEO, while OnCore CEO Patrick Higgins will become its COO. Sofia will be the new company's CSO, filling the gap left by Ian MacLachlan, who switched from Tekmira's CSO to its chief technology officer about a year ago and resigned from the company at the end of 2014

Shifting priorities

When Tekmira was formed through the merger of Protiva Biotherapeutics and its one-time parent firm in 2008, the company was fully focused on advancing its proprietary lipid nanoparticles for the delivery of RNAi therapeutics.

Although Tekmira has advanced two products into human trials in TKM-PLK1 and TKM-Ebola, over the past year the company has become increasingly focused on TKM-HBV, which Murray said earlier this year is now the firm's "most compelling program."

Indeed, across the RNAi industry there has been growing attention on HBV given the indication's market potential — the World Health Organization estimates a third of the world's population has been infected with the virus — and the lack of effective treatments for chronic infection. In addition to Tekmira, Alnylam Pharmaceuticals and Arrowhead Research are developing their own RNAi-based HBV therapies.

By merging with OnCore to go all-in on HBV, however, Tekmira is betting that there is greater value to be found in focusing on a cure for the disease than in a pipeline spread over multiple indications.