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Ebola drug maker's stock soars

September 23, 2014: 1:26 PM ET
Several biotechs, including Canada's Tekmira, are working on a treatment for Ebola.

Several biotechs, including Canada's Tekmira, are working on a treatment for Ebola.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.

Sadly, there is still no cure for Ebola. But a promising drug from a publicly traded Canadian biotech firm is being used to treat the disease in West Africa. And Wall Street has taken notice.

Tekmira Pharmaceuticals (TKMR), which CNNMoney first wrote about last month, was up nearly 4% Tuesday following a 17% pop on Monday.

The reason for the surge? Tekmira said Monday that the U.S. Food and Drug Administration has set up a "framework" to allow Tekmira to give its TKM-Ebola drug to test subjects "with confirmed or suspected Ebola virus infections."

And on Tuesday, Tekmira added that it was now part of an international consortium conducting clinical trials in West Africa.

This is obviously good news. It goes without saying that anything that can be done to help those infected by Ebola is a positive.

Related: The fight against Ebola is grossly underfunded

But should investors rush into the stock? Not unless you are willing to tolerate a huge amount of risk.

Shares of Tekmira have been extremely volatile since the Ebola outbreak first started getting attention in late July. The stock is now back around the levels it was trading at just after the FDA approved the drug for limited use in early August.

The stock is also still more than 20% below its 52-week high -- which the stock hit in March after the FDA first announced that it was putting TKM-Ebola on so-called "fast track" status for development.

Like many smaller biotechs, the company is not expected to make money this year or next. The company does have a $140 million contract with a medical biodefense unit of the U.S. Department of Defense to develop TKM-Ebola.

But there are other companies trying to develop an Ebola treatment as well, ranging from small cap biotechs such as NewLink Genetics (NLNK) and BioCryst Pharmaceuticals (BCRX) to pharma giants such as GlaxoSmithKline (GSK).

Tekmira CEO Dr. Mark Murray acknowledged in Monday's news release that it's not the only company working on an Ebola drug. He added that investors have to remember how difficult it is to treat viral infections. They often mutate as they spread.

"These patients may be infected with a strain of Ebola virus which has emerged subsequent to the strain that our product is directed against, and physicians treating these patients may use more than one therapeutic intervention in an effort to achieve the best outcome," Dr. Murray said.

At the end of the day, we should all be rooting for a quick cure for Ebola. But trying to figure out which company will develop the vaccine seems incredibly speculative.

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