Tekmira Pharmaceuticals Corporation (NASDAQ:TKMR) shares shot up on Wednesday after reports of the very first Ebola virus case in the U.S. Many investors and some analysts see the company’s future as hanging on its Ebola treatment, which is currently in the testing phase.

Tekmira Pharmaceuticals Corporation Stock

Tekmira works to advance Ebola drug

In a report dated Sept. 30, 2014, RBC Capital Markets analysts Michael Yee and Adnan Butt and their associates explained what the first U.S. case of the Ebola virus means for Tekmira’s financial situation. They met with the company’s management last week. They discussed some scenarios for monetizing and advancing the company’s Ebola treatment, which is currently in Phase I testing.

The RBC team said that from those discussions, they believe Tekmira Pharmaceuticals will work with a consortium and probably the U.S. Food and Drug Administration to plan a controlled clinical trial. They think the company might test it in Africa where the Ebola outbreak is the worst, possibly with up to 40 patients.

The analysts said the trial could even start as early as this year, although Tekmira needs enough time to make enough of the drug for the trial. Data on that trial could be available next year. If it’s successful, they expect “some form of FDA approval” after that next year.

Possibilities for Tekmira’s drug

The RBC team also said that the U.S. Centers for Disease Control might use Tekmira Pharmaceuticals Corporation (NASDAQ:TKMR)’s drug to treat the one U.S. patient or possibly future patients. They believe the FDA has granted “potential use” for the Ebola treatment “for investigational use” in patients with Ebola who are in the U.S. They also point out that Tekmira has already treated some Ebola patients in the U.S.

The challenge that the company faces, however, is creating a U.S. “stockpile order” so that it can monetize the drug. After speaking with management and looking at historical precedent in U.S. defense contracts, there could be between $75 million and $100 million in recurring orders, depending on the budget.

Valuing Tekmira Pharmaceuticals

As a result, they say investors may put a low- to mid-single digit multiple of sales based on that amount. Dividing that by the 25 million outstanding shares, they get a $5 to $10 per share value for that order. They assign a 30% to 50% probability of success for Tekmira and have not included it in their valuation because the situation is “inherently unpredictable and typically not very recurring.”

That being said, their thesis is based solely on Tekmira’s Hepatitis B program, which is moving into the clinic next year, and the company’s Phase II cancer program and platform.

They maintained their Outperform rating on Tekmira Pharmaceuticals Corporation (NASDAQ:TKMR).