Tekmira shares soar on deal with OnCore Biopharma

Mon Jan 12, 2015 12:25pm EST
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Jan 12 (Reuters) - Tekmira Pharmaceuticals Corp's shares jumped as much as 56.4 percent after the company said it would buy Pennsylvania-based OnCore Biopharma Inc.

The companies said on Sunday they will focus on developing a hepatitis B virus treatment by combining multiple therapeutic methods.

Tekmira's U.S.-listed shares jumped as much as 56.9 percent on Monday. The company's shares were among the top gainers on the Nasdaq and the Toronto Stock Exchange.

More than 9 million shares changed hands on the Nasdaq by noon, more than 12 times their 10-day moving average.

The implied market value of the merged company is about $750 million, based on Tekmira stock's closing price of $15.70 on the Nasdaq on Jan. 9, the companies said in a statement.

As Tekmira last traded at a $349 million market capitalization, this implies it acquired/merged into OnCore's valuation of $400 million which we think appears cheap for 7 hepatitis B oral drugs in development, RBC Capital Markets analyst Michael Yee wrote in a note.

"We think this is a very good deal for Tekmira holders as this could now be the leading pure-play and public hepatitis B company," he said.

Eight unique drug candidates will be used in combination to develop a cure for hepatitis B, the companies said.

Tekmira said it will continue with its oncology and anti-viral programs, including Ebola.

Tekmira said last year it supplied one of its experimental Ebola treatments for clinical studies to be in conducted in West Africa.

Tekmira shares were trading at C$26.85 on the Toronto Stock Exchange and at $22.45 on the Nasdaq. (Reporting By Manya Venkatesh in Bengaluru; Editing by Don Sebastian)