Tekmira Pharmaceuticals Corp.'s head office is pictured in Burnaby, B.C., on Aug. 5, 2014.Ben Nelms/Reuters
Shares in Canadian biotech firm Tekmira Pharmaceuticals Corp. leapt more than 50 per cent Monday after the company said it plans to merge with a U.S. company that specializes in hepatitis B treatments, a move designed to speed up development of a cure for the damaging liver infection.
In a stock-transfer deal that valued the combined company at $750-million (U.S.) – before the stock price jump – Tekmira will merge with Pennsylvania-based OnCore Biopharma Inc., a privately held biotech firm that has several hepatitis B treatments in progress.
Together, the companies hope to find a cure for people who suffer from the disease, which is caused by a virus usually spread from mothers to children at birth, or by sexual contact. A cure would likely involve the combination of a number of different kinds of treatments working together. Most current treatments suppress the disease but don't cure it.
Tekmira, based in Vancouver, has been working on a hepatitis B drug for years, but in recent months drew a lot of investor interest when it said it would supply an experimental Ebola treatment for clinical studies in west Africa. It plans to continue work on its Ebola drug, as well as other treatments for cancer.
As many as 350 million people around the world are infected with Hepatitis B, Tekmira chief executive Mark Murray said on a conference call, and as many as 780,000 die every year as a result. It is increasingly a problem in the developed world, as well as in developing countries.
Consequently, the global market for a cure is "measured in the billions," Dr. Murray said.
OnCore, a company currently controlled by its founders and executives, was considering an initial public offering of shares, but will now merge with Tekmira instead.
After the combination, which will involve issuing new Tekmira shares, OnCore's owners will hold about 50 per cent of the new company's stock. The deal is expected to close some time in the first half of this year, after regulatory and shareholder approvals are received.
OnCore CEO Patrick Higgins said that because the combined company will have "multiple assets under one roof, [it] should speed up development" of a hepatitis B cure. Current treatments, he said, require lifelong therapy and don't provide a complete cure.
Analysts were very positive about the potential for the merged company. Michael Yee of RBC Capital Markets said the deal would create a "huge portfolio" of eight hepatitis B drugs, and a market opportunity of as much as $20-billion. "The synergies from these early stage Hep B assets that could all be combined are quite powerful," he said.
Tekmira shares rose above the $29 mark Monday. A little over a year ago, the stock was trading at less than $10.