Investors in Tekmira Pharmaceuticals Corporation (NASDAQ:TKMR) (TSE:TKM) might be greeted with a rude awakening Thursday morning, as the company missed its earnings estimates and badly whiffed on revenue. Shares of the stock were halted late in the afternoon pending the earnings announcement. In after hours trading, the stock is sharply lower, moving back to test support near the stock’s 200 day moving average, which is currently at $15.87.
Tekmira Pharmaceuticals reports second quarter losses
Tekmira Pharmaceuticals Corporation (NASDAQ:TKMR) (TSE:TKM) reported second quarter earnings per share with a loss of -$0.28, which was $0.02 worse than the analyst estimate loss of -$0.26. Revenue for the quarter took the steepest hit, coming in in at $1.8 million against the consensus estimate of $3.72 million.
The earnings miss comes as the stock was subject of unusual options trading indicating someone was expecting the stock to move lower, as traders grabbed 10,335 put options on the high-flying stock. For a stock that typically trades just 940 put options in a day, this is near a 1,000 percent increase. After closing at $14.37 on Thursday, the stock rocketed to $20.70 on Friday and $23.80 on Monday. It was on this drastic bump in the price Monday that option put buyers, betting the stock would move lower, emerged.
Nonetheless, don’t underestimate the hype that can be pumped into unprofitable stocks, particularly when a medical scare is afoot, and company officials did their best to emphasize medical breakthroughs that drive the stock price above earnings.
“We continue to monitor the tragic Ebola virus outbreak very closely. The current outbreak underscores the critical need for an effective therapeutic agent to treat the Ebola virus,” Dr. Mark J. Murray, Tekmira’s President and CEO, was quoted as saying.
During the second quarter which ended June 30, 2014, The company had cash, cash equivalents and investments of $129.5 million against 22.1 million common shares issued and outstanding, and 24.6 million shares on a fully diluted basis, the report noted.
Tekmira has been bandied about in several research reports, the consensus of which is a price target at a now lofty $26.63, according to a report. As previously reported in ValueWalk, currently only three research firms cover the stock. Maxim Group and Stifel both have buy rating on the stock, while RBC Capital Markets has an outperform rating.
Tekmira Pharmaceuticals’ TKM-Ebola program
Just this past July, as the Ebola outbreak was close to entering US shores, the company received notice from the U.S. Food & Drug Administration (FDA) that their TKM-Ebola program was on clinical hold, then as the crisis intensified the company got written notice from the FDA changing the clinical hold to a “partial clinical hold,” which allowed for the potential use of TKM-Ebola in individuals who have a confirmed or suspected Ebola infection.
The regulatory status of the drug remains on clinical hold as it relates to the multiple-ascending dose portion of the Phase I clinical study in healthy volunteers with TKM-Ebola, the report noted. The company expects this matter to be resolved by the fourth quarter of this year.
As reported in ValueWalk, in January, Tekmira launched a human clinical trial for its Ebola treatment in January, 2014, which was followed by the stock reaching a significant all-time high of $33 in March. But FDA put that trial on hold in July after some patients experienced problematic immune responses during clinical trials, but then the emergency use of the drug has proven successful.
Ebola isn’t the only drug the company focuses on
“We remain sharply focused on our clinical programs and the key milestones to be reached by year end. Importantly, our Hepatitis B program continues to advance, with the goal of filing an IND, or equivalent, for our TKM-HBV program in the second half of 2014,” Murray said, avoiding the earnings miss and focusing on treatments. “Within our TKM-PLK1 oncology platform, we expect to present Phase IIa interim data from our clinical trial with GI-NET and ACC patients before the end of this year, and we have begun enrollment in an additional Phase I/II trial targeting HCC patients.”