Byron’s Loe raises target on Tekmira by $5, to $12.50

Yesterday, Tekmira (TSX:TKM) announced that it had settled the ongoing litigiation between it and Alnylam Pharmaceuticals. The Burnaby-based company said it had signed a new licensing agreement that provides clarity on all intellectual property and licensing issues between the pair.

Tekmira says that as a result of the resolution it will receive $65-million within 10 days and is eligible to receive $10-million in near-term milestone payments, which it expects to recieve in 2013.

Byron Capital analyst Douglas Loe says the trade secret misappropriation case between the two companies was hanging over Tekmira and this resolution is “hugely positive” news. Loe says the cash payment is just one aspect of the win. The meatier part, he says, is that Tekmira now has a guaranteed piece of the siRNA pie. Tekmira, points out Loe, will retain ownership of all IP related to LNP lipid component MC3, which Alnylam had been claiming sole ownership of. In a research update to clients this morning, maintained his SPECULATIVE BUY rating on Tekmira, but raised his price target on the stock a full $5, to $12.50.

Burnaby based Tekmira, which was founded in 2005, is one of a handful of companies in the world developing therapies based on RNA interference, and the company is clearly an early leader in the space. RNA interference is a process that cells use to silence the activity of specific genes. The process works by blocking the molecular messengers of a a cell, rendering the cell useless. RNAi has already shown great potential with viruses such as HIV and Hepatitis C. Tekmira has three internal RNA interference product candidates; one to treat hypercholesterolemia, or elevated cholesterol, one for Ebola, and an anti-tumour drug in the treatment of cancer.

Loe says the agreement is a game-changer because it reduces the financial risk for Tekmira’s pipeline of products while firmly establishing its leadership role in LNP development. The Byron analyst says this may very well lead to future partnerships outside of Alnylam.

Shares of Tekmira on the TSX today closed up 9.8% to $5.61.

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