Brand New Tekmira News Reaffirms my $10 Price Target on the Name (TKMR)

If you didn’t read my piece yesterday, now’s a good time to go back and visit why I’m short Tekmira. Put simply, the company is losing money (like most biotechs), but it’s stock price is a classic case of the cart in front of the horse. The stock has rallied based on Ebola-based headlines and on zero fundamentals whatsoever. This morning, a woman in Berlin came down with a headache and Tekmira gapped up 5% at the open – ridiculous.

This is the kind of stock we’re dealing with.

However, three pieces of news came up today worth noting.

First, it was confirmed by WSJ that the woman sick in Berlin was unlike to have Ebola. So much for that 5% gap up.

h1Secondly, the closest thing Tekmira has to a competitor with regards to Ebola, Mapp Pharma, received even more good news about their test drug, ZMapp – as it seemed to have help out three people who took the drug. Counting the 2 Americans and the one Spanish priest that took the drug, that would make ZMapp an astounding 5/6 in improving conditions in humans thus far. Those are the kinds of results the FDA is likely to opine over and that’s the damn drug that I want if I get Ebola.

h2Third, the WHO is making some statements that smell of, “we’ve almost got this under control.” From the same article:

The WHO said it is seeing some encouraging signs in other parts of West Africa. In Guinea, people from villages that had previously rejected outside help were beginning to seek medical care, according to a WHO statement. The statement said the situation is “less alarming” in Guinea than in Liberia and Sierra Leone.

Although the outbreak began in Guinea, Liberia has now recorded the highest number of deaths and Sierra Leone the most cases.

The WHO also said there is “cautious optimism” that the spread of the virus in Nigeria can be stopped. So far, all recorded cases have been linked to one man, who flew from Liberia to Nigeria while infected.

No doubt that if the virus gets under control, or if ZMapp is pushed by the FDA, Tekmira stock is likely to return to the less-speculative $10 region, where it was before this mess.

The stock is thin when it trades and it moves quick, as investors saw today. As soon as today’s news was digested, the stock peeled well of its highs over $20 to close the day in the high $18 region.

I remain short via puts with a price target of $10.



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