Tekmira Pharmaceuticals Corporation (NASDAQ:TKMR) continues to be a hot topic as media reports on the spread of the Ebola virus continue. The company has been working on a treatment for the deadly disease, although analysts at RBC Capital note that the small pharmaceutical company is also developing treatments for other health problems.
Tekmira Pharmaceuticals and Ebola
Shares of Tekmira have been bouncing up and down this week as investors consider the potential impacts of the Ebola virus on the company’s revenue. Implications that are under consideration right now are, of course, the company’s Ebola treatment, competitors that are also developing treatments and whether the company will be able to bring its treatment to market.
This year has been a record-breaking year for initial public offerings with companies going public via SPAC mergers, direct listings and standard IPOS. At Techlive this week, Jack Cassel of Nasdaq and A.J. Murphy of Standard Industries joined Willem Marx of The Wall Street Journal and Barron's Group to talk about companies and trends in Read More
In a report dated Aug. 4, 2014, analysts Michael J. Yee and his associate John Chung say they’ve liked Tekmira Pharmaceuticals for quite some time. In fact, they had an Outperform rating and $25 per share price target on the company’s stock since early July.
They see the company’s Ebola treatment program as being more than a long-term upside opportunity. They say it could become a treatment option for governments battling an outbreak of the disease. However, they think visibility is “very low” and say that predicting the future regarding government contracts and pandemics can by extremely risky.
Tekmira’s other treatments
In the long term, the RBC Capital team believes that Tekmira’s Ebola virus program may end up being a “periodic” $100 million per year product through safety stocking contracts with the U.S. Department of Defense. They also note that the U.S. Food and Drug Administration recently put the Ebola treatment program’s Phase I volunteer study on hold. The company must address problems with immune system response, although it believes that this will be a rather temporary issue. Nonetheless, the FDA may remove the hold on the treatment quickly because of the threat of an Ebola pandemic.
Instead of focusing on the Ebola treatment, the analysts are focusing on the drug maker’s hepatitis B program because it is more visible, it shows proof of concept, and it has a clearer path to clinical development. In addition, they say there is a “commercialization market opportunity evidenced by other recent anti-viral blockbusters.
How Ebola is affecting rubber glove manufacturers
There’s also another side to the story of Wall Street and the Ebola virus, and that is rubber glove manufacturers. Analysts at both JPMorgan and CIMB consider this aspect and note that investors have inflated shares of glove makers. In a report dated Aug. 4, 2014, JPMorgan analysts say share prices of glove makers have climbed by between 1% and 10% in the last week. They say if the outbreak becomes a pandemic, demand for rubber gloves could increase, just as it did during the 2009 H1N1 swine flu pandemic.
They add that Top Glove Corporation has been the biggest underperformer in the glove sector over the last 12 months and could end up being the main beneficiary if the problem gets worse. Nonetheless, they say Top Glove’s fundamentals and prospects “remain challenging” in the next six to 12 months because of pricing pressures. As a result, they are maintaining their Neutral rating on the Malaysian glove maker.
In a separate report also dated Aug. 4, 2014, CIMB analyst EING Kar Mei sees less of an impact on the glove making industry because of how Ebola spreads. Unlike H1N1 and SARS, the virus is not airborne and spreads only through contact through bodily tissues and fluid. However, she sees the impact as being only “minimal” for right now because it is still mostly confined to Africa.
She thinks there will only be a major increase in demand if the outbreak spreads around the globe, noting that demand for rubber gloves only surged during the H1N1 outbreak after the World Health Organization declared it a pandemic. However, the WHO has now said that it is worried about the Ebola Virus. Like the JPMorgan team, she sees Top Glove as being the largest beneficiary, although her topic pick in the industry is Kossan due to its product mix.