This article has been updated to include additional stock information and analyst comment.
Tekmira Pharmaceuticals may lose its most lucrative research and development contract, the company revealed this week when it announced that the US Department of Defense issued a temporary stop-work order related to its government-funded Ebola program due to financial constraints.
Tekmira shares took a big hit on the news, falling more than 9 percent to $2.98 during Monday morning trading on the Nasdaq. However, they regained ground the next day, and were trading at around $3.40 by midday Thursday.
"Due to budgetary pressure in the US, we understand that the DoD must complete a thorough assessment of its ongoing programs,” Tekmira President and CEO Mark Murray said in a statement. “We expect a decision by September 1 ... on the future direction of our collaboration.”
At that time, Tekmira expects to be told whether the stop-work order has been canceled or extended, or whether the contract has been terminated entirely.
Tekmira's Ebola treatment, dubbed TKM-Ebola, has been under development in partnership with the US government for a number of years, with researchers from the company and US Army Medical Research Institute of Infectious Diseases reporting in 2006 that siRNAs delivered using Tekmira's lipid nanoparticles could provide complete post-exposure protection from a lethal dose of Ebola virus in guinea pigs.
In 2010, the collaborators published data showing that a cocktail of modified siRNAs targeting the Zaire Ebola virus L polymerase, viral protein 24, and viral protein 35 could completely protect non-human primates from a lethal dose of the virus when delivered using the nanoparticle technology (GSN 6/3/2010).
That same year, Tekmira announced that it had been awarded a contract from the DoD through its Transformational Medical Technologies program to develop the Ebola drug. The deal included a commitment from the government to provide the firm with up to $34.7 million in funding over three years, which would cover the costs of preclinical development, the filing of an investigational new drug application, and a phase I safety study.
The US government also had the option to extend the arrangement through to US Food and Drug Administration approval of TKM-Ebola, which would provide Tekmira with up to $140 million in total funding from the entire program.
The phase I trial began early this year (GSN 2/9/2012).
Company officials declined to comment on the situation, or confirm the status of the study.
The TMT was established in 2006 to increase the US' ability to deal with “emerging and genetically engineered biothreats.” The program has come under fire, however, for failing to yield any approved drug despite hundreds of millions in funding.
Tekmira is not alone in facing a loss of TMT funding. Also this month, antisense firm Sarepta Therapeutics (formerly AVI BioPharma) disclosed that it, too, had received a stop-work order from the DoD related to its contract to develop an Ebola treatment.
Byron Capital Markets analyst Doug Loe said that, should the DoD ultimately terminate its contract with Tekmira, it seems unlikely the company would continue the TKM-Ebola program on its own given the relatively small market for Ebola drugs.
According to the US Centers of Disease Control and Prevention, there have been around 2,200 known cases of Ebola infection in human since 1976, primarily in Africa.
“That would be the very definition of an orphan indication,” Loe told Gene Silencing News. “The Ebola market would only be for an epidemiological organization like the CDC or the equivalent in other nations.”
Given that the US government's interest in the Ebola program is “sufficiently modest that it just killed two programs that were reasonably well advanced,” unless Tekmira struck a deal with such an organization in other country, it would make little economic sense to advance TKM-Ebola, he said.