Oct 1 (Reuters) - Tekmira Pharmaceuticals Corp shares jumped as much as 25 percent on Wednesday on hopes the Canadian company could win a U.S. contract for its Ebola drug after the first case of the deadly infection was diagnosed in the United States.
Tekmira is one of several companies developing treatments or vaccines for Ebola. Last month, its experimental drug TKM-Ebola was used on an infected U.S. medical missionary who contracted the virus in Liberia. The man recovered after treatment with the drug and a “convalescent serum” made up of antibodies taken from the blood of a U.S. Ebola survivor.
Tekmira shares rose as much as 24 percent in Toronto and 25 percent on the Nasdaq, hitting their highest since March. The shares stood at C$28.13 and $25.11, respectively, easing off earlier gains.
Tekmira’s rise outpaced those of other companies developing Ebola drugs, including NewLink Genetics Corp, Sarepta Therapeutics Inc and BioCryst Pharmaceuticals Inc .
In a research note, RBC analyst Michael Yee said it was possible the U.S. Centers for Disease Control and Prevention (CDC) will use Tekmira’s drug to treat the patient diagnosed with Ebola in Dallas. The U.S. Food and Drug Administration has cleared it for use in Ebola patients.
A man who flew from Liberia to Texas became the first patient infected with Ebola virus to be diagnosed in the United States, health officials said on Tuesday, a sign the outbreak ravaging West Africa may spread globally.
To monetize the treatment, however, Tekmira would need a stockpile contract with the U.S. Defense Department, Yee said.
RBC does not include a potential stockpile order for the Ebola treatment in its valuation model for Tekmira, as such orders are “inherently unpredictable.”
The short position in Tekmira’s stock has more than quadrupled in the last two months. The stock itself has nearly tripled since mid-July.
The latest Nasdaq data from mid-September shows over 3.5 million shares were shorted, up from less than 700,000 in mid-July, putting short positions in the stock at record highs. Based on the data, some 17.5 percent of the company’s free float is now being shorted by traders.
Traders who sell securities short borrow shares then sell them in hopes the price will fall, so they can buy them back more cheaply, return them to the lender and pocket the difference.
Tekmira has some supply of the treatment for small studies, but would need months or a year to make enough to supply a potential order, Yee said. (Reporting by Rod Nickel in Winnipeg, Manitoba and Euan Rocha in Toronto; Editing by Jeffrey Benkoe)