VANCOUVER — Shares in Tekmira Pharmaceuticals (TSX:TKM) jumped 40 per cent Monday following a friendly merger proposal with OnCore Biopharma Inc., a U.S. drug developer working on complementary products for treating hepatitis B.
Tekmira shares were up $8.15 at C$26.98 in late morning trading on the Toronto Stock Exchange, but had traded as high as $29.45 early in the session.
The stock has been through a number of peaks and valleys over the past year. It began 2014 below $9 and soared over $30 twice before ending the year around $18.
Executives at Vancouver-based Tekmira and OnCore Biopharma, Inc. of Doylestown, Penn., told analysts Monday in a conference call that the proposed merger would create a global leader in research for hepatitis B drugs.
The friendly deal would create a publicly traded company worth about US$750 million, owned 50 per cent by shareholders of Tekmira and 50 per cent by shareholders of OnCore.
Under the proposal, top executives and board members of both companies would remain, including Tekmira CEO Mark Murray, who would be the top executive of the combined company, and OnCore CEO Pat Higgins, who would become president and chief operating officer.
"We believe that we are creating a new leading global HBV therapeutics company focused on developing a curative regimen for hepatitis B by combining multiple therapeutic approaches. This is a merger which is driven by true scientific and technical synergy," Murray said.
"The combined company will have the potential to advance multiple highly active and complementary agents into the clinic in rapid succession."
The boards of both companies unanimously support the deal, which also requires approval from Tekmira shareholders.
Under the deal, OnCore would merge with a subsidiary of Tekmira and become a subsidiary of the Canadian company.
Tekmira is the developer of one of the Canadian experimental treatments for the Ebola virus, which that has swept several West African countries.
However, hepatitis B — while not making headlines — is more widespread and affects far more people than Ebola.
"Immigration has made it a global problem in the developed world and the arising economies and emerging middle class of Asia, South America, Eastern Europe have made it easier for patients to get a cure," Higgins said.
He said current HBV treatments generate about US$2 billion in sales annually but only generally work to suppress the virus. A cure would require two additional abilities — bolstering the patient's immune response and eliminating reservoirs of viral genetic material within the patient.
The companies say their combined pipeline of eight drug candidates would target all three capabilities necessary to develop a cure for the hepatitis B virus.
Tekmira's lead product TKM-HBV — which targets the viral reservoirs — is on track to begin human clinical trials in the first quarter of this year and OnCore's OCB-030 — which inhibits viral replication and stimulates the host immune response — is expected to begin human clinical trials in the second half of the year.
The companies say the World Health Organization estimate up to 350 million people around the world may be infected with hepatitis B and that more than 780,000 deaths per year can be attributed to the disease.
The WHO estimated last week that about 8,153 people have died in the Ebola outbreak in West Africa, where the most cases have been identified.
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