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Price $17.61

Implied Return 19.3%

Fiscal Year End 31-Dec

52 Week Range $8.86-$29.93

Shares Outstanding (MM)* 55.19

Market Cap. (MM)* $971.9

Float (MM Shares) na

Book Value/ Share* $1.60

Avg. Daily Volume (MM) 1.10

*pro-forma merger and financing

Rating: ACCUMULATE

Risk: Above Average

12 month Price Target: $21.00

2014A 2015E 2016E 2017E

Revenues (MM) $15.0 $24.2 $34.3 $39.4

Operating loss (MM) ($33.0) ($61.3) ($55.5) ($54.8)

Loss per share ($1.80) ($1.19) ($0.96) ($0.96)

Cash (MM) $112.2 $217.3 $168.8 $120.5

Research Initiation – Many Shots on Goal Bloom Burton is initiating research coverage of Tekmira Pharmaceuticals Corporation (NASDAQ: TKMR) with a rating of ACCUMULATE (ABOVE AVERAGE risk), and a 12-month target price of $21.00.

Highlights Following Tekmira’s merger with OnCore Biopharma earlier this year, the combined company has the largest and most comprehensive pipeline of novel drug candidates for the treatment of hepatitis B. Additionally, OnCore management has a strong track record of success in the hepatitis space, having developed hepatitis C drug, sofosbuvir (Sovaldi) at Pharmasset, now marketed by Gilead Sciences (NASDAQ: GILD; unrated). The hepatitis B viral lifecycle is more complex than hepatitis C, and it is difficult to handicap Tekmira’s programs clinically and competitively, since they are early stage, and a number of other companies are working on potentially competing therapies. Tekmira has been a leader in the delivery of small interfering RNA (siRNA), but post the OnCore merger, we expect that siRNA innovation will be less a focus going forward. Nevertheless, the company maintains a portfolio of development-stage siRNA products, including lead hepatitis candidate TKM-HBV, as well as TKM-PLK1 and TKM-Ebola. Tekmira also has an economic interest in Alnylam’s (NASDAQ: ALNY; unrated) drug patisiran (ALN-TTR02), which is currently in phase 3 development for treatment of transthyretin (TTR)-mediated amyloidosis (ATTR), and a small economic interest in Marqibo (liposomal vincristine), currently sold by Spectrum Pharmaceuticals (NASDAQ: SPPI; unrated). Despite a high valuation for a company with lead programs at the pre-clinical to phase 1/2 stage, Tekmira has many shots on goal, and a proven management team. We rate TKMR stock ACCUMULATE (ABOVE AVERAGE risk) with a target price of $21.00 based on sum-of-the-parts analysis. Trading of Tekmira shares has been very volatile over the previous 18 months due to the company’s exposure to the Ebola crisis, however, we encourage risk tolerant investors to accumulate TKMR on dips based on the longer term risk/reward profile. There are a number of key events expected for Tekmira over the next 12-18 months – in our opinion the most important will be TKM-HBV phase 2a results expected in 2016. If Tekmira reports a ≥1 log10 reduction of HBsAg, accompanied by safety, seroconversion and sustained viral response in a substantial proportion of patients, we anticipate that we would add $10.00 to $20.00 per share to our valuation, based on doubling to tripling the probability of success for the program. Conversely, a TKM-HBV phase 1/2 failure would likely result in material downside for TKMR stock, however, the extent would depend on progress of the company’s other HBV programs at the time. Expected 2015 events include: phase 1 TKM-HBV results in healthy volunteers; DoD’s decision regarding its option to continue funding the development of TKM-Ebola; TKM-Ebola clinical trial results; final TKM-PLK1 phase 1/2 results; initiation of phase 1 testing for OCB-030.

Tekmira Pharmaceuticals Corporation (NASDAQ:TKMR, $17.61) April 9, 2015

This report is priced as of prior trading day’s market close. All values in US$ unless otherwise noted.

David Martin PhD, MBA Analyst 416-642-8865 dmartin@bloomburton.com

Equity Research Biotechnology

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Company Overview Tekmira Pharmaceuticals Corporation is a Burnaby, British Columbia-based biopharmaceutical company focused on discovering, developing and commercializing a cure for patients suffering from chronic hepatitis B infection, through its development of drugs directed against multiple novel molecular targets. Additionally, the company is developing a small interfering RNA (siRNA) pipeline focused on oncology, anti-viral and metabolic programs using its proprietary lipid nanoparticle (LNP) delivery technology, which it has also licensed-out to numerous partners. Exhibit 1 shows Tekmira’s internal and partnered product pipeline. Exhibit 1 – Tekmira’s product and R&D portfolio including upcoming milestones (hepatitis programs highlighted). Source: Company documents, Bloom Burton estimates

Drug Indication Status Commercial Partner Upcoming Milestones (expected timing)

Marqibo ALL (relapsed) market Spectrum Pharmaceuticals phase 3 results in first line ALL (2017)

ALN-TTR02 TTR amyloidosis (FAP) phase 3 Alnylam Pharmaceuticals phase 3 results (2016-2017)

TKM-Ebola Ebola phase 1/2 U.S. DoD DoD option and phase 1/2 results (2015)

TKM-PLK1 cancer phase 1/2 unpartnered phase 1/2 final results (2015)

TKM-HBV hepatitis B (siRNA) phase 1 unpartnered phase 1 results (2015)

phase 2 results (2016)

OCB-030 hepatitis B (cyclophilin) pre-clinical unpartnered start phase 1 (H2-2015)

CYT003 hepatitis B (TLR9) pre-clinical unpartnered confirm utility in HBV (unknown)

capsid inhibitors hepatitis B (core protein) pre-clinical unpartnered file IND (unknown)

HBsAg secretion inhibitor hepatitis B (immune stim) pre-clinical unpartnered file IND (unknown)

cccDNA programs hepatitis B (cccDNA) pre-clinical unpartnered complete lead optimization (unknown)

STING agonists hepatitis B (immune stim) pre-clinical unpartnered complete screeing of compounds (unknown)

TKM-Marburg Marburg virus pre-clinical unpartnered complete pre-clinical (unknown)

TKM-ALDH severe alcohol abuse pre-clinical unpartnered partnership (unknown)

TKM-HTG hypertriglyceridemia pre-clinical unpartnered complete pre-clinical (unknown)

DCR-PH1 primary hyperoxaluria pre-clinical Dicerna Pharmaceuticals unknown On January 11, 2015, Tekmira announced that it would merge with OnCore Biopharma (closed March 4). OnCore was a private HBV asset roll-up company founded by former executives of Pharmasset, Inc. In 2012, Pharmasset was acquired by Gilead for $11 billion. At the time of the Gilead acquisition, Pharmasset was developing the current blockbuster hepatitis C drug, Sovaldi (sofosbuvir). The founders of OnCore include a number of scientific and commercial leaders from Pharmasset who have now joined the management team of Tekmira, including Michael Sofia, who is considered the principal inventor of Sovaldi. Prior to the merger, OnCore had in-licensed and acquired a portfolio of multiple early-stage drugs with different mechanisms of action targeting important steps in HBV replication and host immune response, including two programs directed against cccDNA. Subsequent to a recent financing which is expected to generate net proceeds of $164 MM if the overallotment is exercised, we estimate that Tekmira will hold approximately $260 MM in cash and investments. On the company’s 4Q-2014 conference call, management indicated that it expects to burn approximately $60 MM in 2015. Post the merger and financing, basic shares outstanding are expected to be 55.2 MM (plus 1.9 MM options; 0.4 MM warrants). At December 31, 2014, leading shareholders included Franklin Resources, Baker Brothers, Sigma Capital and Canadian Pension Plan, with institutions holding approximately 9%.

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Although the major driver of Tekmira’s risk/reward now resides in the company’s HBV program, siRNA remains an important part of the Tekmira story. The company’s most advanced HBV pipeline candidate, TKM-HBV, is a siRNA, and its non-HBV siRNA candidates provide diversification and downside protection as well as spin-out and monetization opportunities. It also seems like the tide is rising for siRNA. Alnylam has more than 10 siRNA drugs in its development pipeline, four having advanced to human trials — enough validation to prompt Sanofi (NYSE: SNY; unrated) to make a $700 MM investment in Alnylam in January 2014 (Sanofi has added to their position since). Across the industry, more than 20 siRNA products are in human clinical trials sponsored by 12 different biotechnology companies. In August 2014, Roche (VX: ROG; unrated), an early Alnylam supporter which had given up on RNAi, reversed its opinion of the technology, announcing a $450 MM deal to acquire the RNAi startup Santaris Pharma.

Gene Silencing Primer and Competitive Assessment The genomic revolution has produced a plethora of new disease targets, and biotech and pharma companies have responded by developing more and better drugs. However, conventional drug makers face a major hurdle as they endeavor to exploit vast portions of the human genome – “undruggable” targets. In fact, of the 6,000 human genes which have been linked to known disorders, only about 450 encode proteins with molecular “nooks and crannies” to which drugs can bind easily and with high affinity. The remaining proteins have flat, smooth surfaces - properties making them impervious to inhibition by conventional drug molecules. Enter nucleic acid-based therapies. Unlike “conventional drugs” which bind to and block activities of disease-related proteins, nucleic acid-based therapies act by controlling levels of target proteins – either by blocking production of an overexpressed or aberrantly active protein (eg., gene silencing), or by augmenting production of normal proteins which may be absent due to an inherited genetic disorder (eg., gene therapy). Some conventional drugs also modulate gene expression, the so called epigenetic or chromatin-modifying drugs (eg., azacitidine, vorinostat, fenofibrate), but control in this case is exerted at the transcriptional level. More importantly, these drugs do not block expression of one specific gene, and the effect may be to incrementally dial down the expression of some genes while increasing expression of others. Gene silencing, on the other hand, is highly selective and potent, and can be accomplished using two main nucleic acid-based approaches: antisense oligonucleotides (ASO), and small interfering RNA (siRNA). Regardless of the approach, expression of the target gene is effectively blocked as its messenger RNA (mRNA) molecules are made unstable or inaccessible, resulting in reduced synthesis of the encoded protein.

Small Interfering RNA (siRNA)

Historically, Tekmira has focused on siRNA therapeutics. siRNAs are short, synthetically made double-stranded RNA molecules designed to specifically hybridize or pair with a select gene’s mRNAs based on complimentary nucleic acid sequence. As shown in Exhibit 2, upon entry into cells, siRNA binds to a protein complex called RNA-induced silencing complex (RISC). At this point, one of the siRNA strands is destroyed, and the remaining “guide” strand, directs the RISC to target and cleave target RNA molecules. Because siRNAs are double-stranded, standalone they are more resistant to degradation inside cells than ASOs, and once incorporated into the RISC, the stability of the protein complex allows them to repeatedly attack mRNA targets and achieve prolonged gene silencing at very low concentrations. However, because siRNA molecules are larger than ASOs and carry a negative ionic charge, they do not cross cell membranes easily, necessitating specialized delivery technologies.

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Exhibit 2. siRNA directed mRNA cleavage. Source: Santa Cruz Biotechnology

Alnylam’s patisiran (ALN-TTR02) formulated with Tekmira’s LNP delivery technology, is the furthest advanced siRNA in clinical development (phase 3). The product employs a transthyretin (TTR)-targeting siRNA that knocks down both wild-type and mutant forms of TTR, and is in development for the treatment of TTR-mediated amyloidosis (ATTR), an inherited, progressively debilitating, and often fatal disease caused by mutations in the TTR gene. In phase 2 testing, Alnylam demonstrated that patisiran led to a ~80% sustained knockdown of TTR protein following multiple doses over a 6-9 month period. The ongoing phase 3 will determine if the knockdown leads to a clinical benefit (we think it will). Regardless, the phase 2 data have already de-risked the siRNA therapeutic paradigm, representing the strongest evidence to date that siRNA can effectively be used in humans to almost completely knock down expression of a selected gene.

Antisense Oligonucleotides (ASO)

Similar to siRNAs, ASOs interact with a specific gene’s mRNA based on complimentary base pairing. However, unlike siRNAs, ASOs do not incorporate into RISC complexes. Additionally, ASOs are single-stranded RNA molecules which makes them more prone to degradation inside cells. As a result, chemical modifications are used to stabilize the sugar phosphate backbone of ASO molecules. Since ASOs do not become part of the cell’s intrinsic gene silencing catalytic machinery, the ability of ASO to knockdown gene expression relies on building a sufficient concentration of ASO oligonucleotides over a prolonged period of time. This necessitates higher doses and more frequent administrations especially at the initiation of therapy, and may result in delayed and less robust gene knockdown. This likely played a role in Isis Pharmaceuticals’ (NASDAQ: ISIS; unrated) apparent decision to shelve a phase 1 HBV ASO candidate in 2014, indicating at the time that a newer delivery technology might be better.

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The binding of an ASO to mRNA may either interfere with initiation of translation of the encoded protein, or direct RNase H enzymatic cleavage of the target mRNA. The smaller size and chemical structure of ASOs allows them to be transported in cells and living tissues more efficiently than siRNAs.

Micro RNA (miRNA)

Similar to siRNA and ASO, miRNA are short chains of nucleotides which interact with mRNA molecules via base-pairing. Also analogous to siRNA and ASO, the binding of miRNA to mRNA may either prevent protein translation or lead to cleavage of the mRNA transcript. The unique feature of miRNA is that it interacts with many different mRNA sequences due to imperfect base pairing. Despite the promiscuity of miRNA molecules, they appear to be critical players in the normal regulation of gene expression. At least 500 different human miRNAs have been described to date, and it is predicted that thousands are produced. That a single miRNA may target 250-500 different mRNAs, presents both big challenges and big opportunities for drug developers. The central issue from a therapeutic perspective is to pick diseases in which a broad shift in phenotype is either a tolerable risk, or inherently beneficial (Mack 2007 Nature Biotechnology 25:631). Efforts to harness miRNA in human disease are nascent compared to siRNA and ASO, however, at least two companies, Mirna Therapeutics (private) and Regulus Therapeutics (NASDAQ: RGLS; unrated) which started as an Isis-Alnylam joint venture, are focused in this area. Last summer, Roche also gained exposure to miRNA via its acquisition of Danish company, Santaris. We view miRNA as having exciting potential, but with a lower level of proof-of-concept compared to siRNA and ASO. We also believe that miRNA is not a direct competitor to siRNA unlike ASO which is competing with siRNA on many of the same single gene knockdown targets.

siRNA vs ASO

Based on the current state of the technologies, each has advantages that are more or less relevant for different applications. siRNA has two major advantages inherent to its association in the RISC complex - siRNA is both more potent and longer acting, and as a result, patients’ exposure to exogenous nucleic acid can be magnitudes lower, and dosing less frequent. However, for different indications the best clinical outcome may not necessarily require extreme gene knockdown for extended periods, and the landscape is constantly changing:

Isis continues to investigate new ways of delivering ASO.

Although siRNA is more potent, antisense has advantages including subcutaneous administration and easier distribution throughout target tissues.

Alnylam appears to be well along the path to optimizing a subcutaneous siRNAs delivery platform. Work continues to mask the inherent immunogenicity of siRNA - based on recent pre-clinical and

clinical data, it appears that significant advances have been made on this front. While each technology has advantages and disadvantages, the challenges faced by siRNA appear more feasible to surmount – for the most part, requiring “tweaks” to drug delivery chemistries. ASO, on the other hand, has to overcome the absence of a stable catalytic complex. Exhibit 3 lists and summarizes technologies and pipelines of the leading developers of siRNA therapies.

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Exhibit 3. Leading companies involved in the development of siRNA therapeutics. Source: Company reports Company Ticker Payload Technolog(ies) Delivery Technolog(ies) Pipeline Summary

Alnylam Pharmaceuticals ALNY siRNA LNP, conjugates, GalNAc phase 3: TTR amyloidosis (Patisiran); other rare diseases

Arrowhead Research ARWR siRNA; DsiRNA Dynamic polyconjugates phase 2: hep B; preclinical: liver targets; extra-hepatic

Benitec Biopharma BLT ddRNAi phase 1: hep C; preclinical: hep B; cancer; AMD

Dicerna Pharmaceuticals DRNA DSiRNA LNP; conjugates pre-clin: liver targets; rare diseases and oncology

Marina Biotech MRNA UNA SMARTICLES, tkRNAi (oral); DILA2 phase 1: familial adenomatous polyposis (FAP); oncology

Quark Pharmaceuticals private dsRNA with blunt ends phase 2: AMD, acute kidney injury

Regulus Therapeutics RGLS microRNA - anti-miR GalNAc conjugate phase 1/2 HCV; Alport syndrome

RXI Pharmaceuticals RXII self-delivering RNAi phase 2: antiscarring; preclinical: PVR

Sarepta Therapeutics SRPT morpholino oligomers phase 2: Eteplirsen - DMD; rare and infectious diseases

Silence Therapeutics SLN AtuRNA LNP (older tech) phase 2: pancreatic cancer; preclinical: H&N, lung cancer

Tekmira Pharmaceuticals TKMR siRNA; UNA LNP phase 1/2: oncology (PLK); phase 1 Ebola; preclinical: HBV

Tekmira vs Alnylam

Although Tekmira’s positioning and focus appear to be shifting more to Hepatitis B, it is still worthwhile to compare Tekmira to Alnylam, since Alnylam is the pioneer and leader in the siRNA space; both companies have HBV programs; and Alnylam has licensed Tekmira’s LNP delivery technology for some of its products, but is developing its own alternative delivery technology, GalNAc. At this stage in the evolution of siRNA, differentiation is driven mainly by delivery technologies. Major advances have been made by Tekmira and others, in overcoming high biological and physiological hurdles including immune reaction and enzymatic destruction of double stranded RNA and the barrier presented by the cell membrane which prevents naked siRNA from entering cells. Two leading technologies emerged to overcome the challenges - one involves encasing siRNA in nanoparticle spheres of lipids which mimic the constituents of cell membranes and which are taken up by cells via endocytosis (eg., Tekmira’s LNP); the other involves attaching a molecule to the siRNA that cells will ingest via receptors (eg., Alnylam’s GalNAc). Technological leaps have been achieved with both approaches, but refinement continues as scientists advance efforts to dial-down undesired effects while also pursuing new ways to customize delivery for different applications. Both major delivery platforms result in molecules which are taken up most easily in the liver, and the majority of current siRNA clinical trials are focused on liver-associated diseases. Significant challenges exist with respect to achieving sufficient accumulation in other organs. Approaches for achieving knockdown in other tissues and tumors have included modulation of physical properties, such as particle size, or by taking advantage of specific targeting ligands (Lorenzer et al. 2015 J. Control Release 203C:1). Tekmira and Alnylam have reported siRNA activity outside of liver for cancer programs TKM-PLK1 and ALN-VSP, respectively, however, flagship programs for both companies target liver related diseases. Combining cationic or neutral lipid bilayers coated with diffusible PEG–lipid conjugates, Tekmira’s lipid nanoparticles (LNP) allow siRNAs to be taken up on the surface and released by endosomes into the interior of cells. With early versions of LNP-siRNA, premedication was required to suppress immunological response against double stranded RNA, however, with new payload chemistry modifications, and new versions of LNP driving higher potency and lower doses, significant progress has been made toward steroid-free LNP formulations. Tekmira’s LNP is the current gold standard for delivering siRNA, having been tested in more than 250 patients to date. However, Alnylam’s N-acetylgalactosamine (GalNAc)-conjugate technology may emerge as a leading contender. GalNAc-conjugated siRNAs are injected subcutaneously, which may be attractive, particularly as siRNA moves into less serious diseases. Moreover, Alnylam indicates that GalNAc-siRNAs do not require pre-medication with corticosteroids. GalNAc is not without risks and disadvantages. Phase 2 results for Alnylam’s lead GalNAc product,

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revusiran (ALN-TTRsc), reported in November 2014, revealed injection site reactions in 23% of patients and a 15% incidence of liver function test changes, including one patient whose liver transaminases increased 4-fold. The liver enzyme elevations are a red flag, however, likely not fatal because: a) revusiran uses early generation GalNAc and the lower doses enabled by Alnylam’s enhanced ESC-GalNAc technology should reduce the signal; b) liver enzyme elevations are likely acceptable in the treatment of serious conditions such as TTR-mediated amyloidosis especially if the spikes remain transient in larger populations. GalNAc-siRNAs, such as revusiran are administered frequently – in clinical trials, revusiran is administered daily for 5 days followed by once weekly dosing for 5 weeks. We believe these doses were not self-administered, requiring visits to a physician or health care professional. Lastly, GalNAc-siRNA’s are not as potent as LNP-siRNA’s due to the reduced bioavailability of subcutaneous injections. However, Alnylam has modified the GalNAc chemistry resulting in a 5 to 10-fold increase in potency, and has demonstrated that similar levels of TTR gene knockdown can be achieved with either GalNAc or LNP formulated siRNA in multi-dose clinical trials. Alnylam does appear to be shifting away from Tekmira’s LNP technology. Alnylam’s most advanced TTR therapy, patisiran (ALN-TTR02), for treatment of familial amyloidotic polyneuropathy (FAP) remains formulated with Tekmira’s LNP technology, however, as discussed above, revusiran, for the treatment of familial amyloidotic cardiomyopathy (FAC), uses GalNAc formulation (we are not certain whether the nucleic acid sequences of both products are identical, which could shorten the commercial life of patisiran). Additionally, Alnylam’s hypercholesterolemia program, partnered with The Medicines Company (NASDAQ: MDCO; unrated), which targets proprotein convertase subtilisin/kexin type 9 (PCSK9), appears to have been switched to ESC-GalNAc technology, after starting life as a LNP-formulated siRNA. The possibility that Alnylam will start to pull ahead of Tekmira in siRNA delivery, and Alnylam’s migration to GalNAc, are less relevant to the core investment thesis for Tekmira, now that Tekmira has shifted its main focus to hepatitis B. However, Alnylam is also running a hepatitis B program, and consequently, our assessment of Tekmira’s hepatitis B program also takes into consideration, Alnylam and its technologies.

Hepatitis B Primer and Competitive Assessment

Disease Background

Hepatitis B (HBV) vaccine has been available in western countries since 1982, and annual rates of acute infection (~19,000 in the U.S.), have dropped approximately 90% since 1990. Furthermore, most adults who are exposed to the virus are able to mount an effective immune response and achieve disease resolution with only 5% to 10% progressing to chronic disease. Regardless, an estimated 1.5 MM individuals in the United States are chronically infected with HBV. In these unlucky individuals, chronic HBV is one of the most perplexing and complex drugging challenges known to man. Most individuals with chronic HBV are asymptomatic for prolonged periods, and unaware of their disease. Unfortunately, when symptoms become evident, extensive liver damage has often already occurred. Of the estimated 1.5 MM individuals chronically infected with HBV in the United States, about 5,000 die from the HBV-related cirrhosis and liver cancer each year - the mortality rate, if untreated, is approximately 15% to 40%. Infants and children are less able to fight off initial HBV infections, and 90% develop chronic disease, often exposed to the virus at birth from an infected mother. However, infant and childhood HBV infection rates are also in decline in western countries due to the availability of HBV vaccine. In contrast, a much higher percentage of patients infected with hepatitis C (HCV) go on to chronic infection (75% to 80%), and consequently, more individuals live with chronic HCV in the United States (3 to 4 MM). The mortality rate with HCV is lower (5%-15% vs 15%-40% for HBV), but because there are many more individuals chronically infected with HCV, the number of deaths is higher (~15,000 each year vs. 5,000 for HBV). Additionally, more chronic HCV patients develop serious liver disorders (80% vs 20% for HBV), and it is estimated that the annual direct healthcare costs, excluding liver transplant, to treat hepatitis C patients in the United States is $9 billion compared to $360 MM annually to treat HBV.

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Because HBV is inactive in many infected individuals, only about 50,000 people per year in the United States are currently treated for the disease. Key questions when considering the North American commercial opportunity for new hepatitis B therapies therefore include: 1) will new therapies, and possibly a curative regimen raise awareness among consumers and the medical community to the extent that more patients will be tested for HBV infection even if no symptoms are present; 2) will the medical community start to treat all HBV positive individuals, or will physicians continue to monitor and treat only progressing patients? HBV is far more prevalent in developing countries where vaccination is not yet widespread. An estimated 300-400 MM people outside of North America are chronically infected with HBV including 14 MM in Western Europe. In parts of Africa and Asia, 1% to 4% of the population are infected. Prevalence considerations aside, chronic hepatitis B, for those who don’t resolve the initial infection, is an incredibly difficult disease to eradicate. Current therapies only control virus levels, with very few patients achieving permanent cures. Viral control is beneficial – liver damage is reduced if viral levels can be controlled, however, long term treatment is necessary, and the antiviral drugs used are associated with side effects and toxicities.

Hepatitis B Virus Background

The hepatitis B virus consists of an outer lipid envelope and a protein core, enclosing a relaxed circular (rc) partially double stranded DNA genome. There are four major serotypes (adr, adw, ayr, ayw) based on different envelope proteins, and eight genotypes (A-H) based on nucleotide sequence variation, each associated with different disease severities and treatment responsiveness. HBV binds to and is internalized by the sodium taurocholate cotransporting polypeptide (NTCP) receptor on hepatocytes. Once inside the hepatocyte, the viral rcDNA is deproteinized and transported into the nucleus where it is converted into covalently closed-circular DNA (cccDNA) by the host cell’s DNA repair machinery (Block et al. 2013 Antiviral Res 98:27). It is the HBV cccDNA, existing as a stable intranuclear form of the virus’s genome, which makes chronic infection extremely difficult to eradicate. By contrast, HCV is a RNA virus which completes its entire replication cycle in the cytoplasm of the hepatocyte. Lacking the cccDNA stable genome, high cure rates for HCV can be accomplished using interferon to stimulate the immune system, and by blocking specific steps in the virus’s replication cycle using RNA polymerase and protease inhibitors. Four overlapping RNAs are produced from the HBV cccDNA genome, the longest serving as a template (pgRNA) for making copies of the viral genome, and together including genes which encode four major viral proteins:

C which encodes HBV core protein which is cleaved to form HBeAg.

P which encodes viral polymerase.

S which encodes surface antigen (HBsAg). X which is associated with development of liver cancer.

Existing Drugs for Treatment of Chronic HBV Infection

Currently, there are seven drugs approved for treatment of chronic hepatitis B in the United States, including 5 nucleos(t)ide analogs (NUCs) and two interferons (IFNs). NUCs block HBV from reproducing itself (replication) by inhibiting reverse transcriptase activity of viral DNA polymerase. As a result, prolonged suppression of hepatitis B viral load in the blood can be achieved with long term NUC treatment, and this can prevent serious liver damage. However, NUCs have numerous drawbacks: 1) they are associated with toxicities (neuropathy, myopathy, nephrotoxicity, bone mineral density loss); 2) levels of cccDNA decline, but in most cases, the viral genome template persists in host hepatocytes; 3)

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translation of viral proteins continues; and 4) if NUCs are halted, hepatitis B virus levels typically rebound rapidly. Interferon is used front line in combination with NUCs (most commonly entecavir and tenofovir) to enhance host immunity against HBV infection. Seroconversion and sustained viral responses can be achieved with IFN + NUC treatment, but only in about 10% to 20% of patients, and IFN treatment is associated with severe side effects including flu like symptoms and bone marrow suppression (Chang et al. 2014 Acta Pharmaceutica Sinica B 4:248). Currently, the worldwide market for HBV drugs is $3.0-$3.5 billion (~20% U.S.), dominated by relatively inexpensive NUCs. Since sustained HBV-DNA suppression with NUCs is only possible if patients are treated continuously, an opportunity exists for HBV drugs which either induce long lasting viral control (functional cures) following a finite treatment course, or a permanent cure including elimination of the virus and viral cccDNA.

Drugs in Development for Treatment of Chronic HBV Infection

The rush into HBV has been fueled in large part by the success of Sovaldi/Harvoni, developed by Pharmasset and Gilead, for the curative treatment of Hepatitis C. We believe the HBV commercial opportunity is smaller in G7 markets and the disease, more challenging to treat, however, there is an opportunity for more effective and better tolerated HBV drugs and regimens. A number of companies are working on next generation interferons including Merck (NYSE: MRK; unrated) and Bristol-Myers Squibb (NYSE: BMY; unrated). Gilead is developing reverse transcriptase inhibitors tenofovir alafenamide fumarate (TAF; prodrug of tenofovir) and Truvada, for hepatitis B (currently approved for treatment of HIV infection), while ContraVir (NASDAQ: CTVR; unrated) is developing CMX157, a lipid acyclic nucleoside phosphonate that delivers high intracellular concentrations of tenofovir. Among novel HBV targets, significant attention is being paid to HBsAg and cccDNA, although other HBV targets are also being pursued (Exhibit 4). Exhibit 4. Novel target therapies in development for treatment of HBV Source: Company reports.

Company Ticker Drug Target Primary Mechanism Status

Alnylam Pharmaceuticals ALNY ALNY-HBV HBsAg + other viral proteins RNAi pre-clinical

Altavax (private) Vaccine HBV therapeutic vaccine pre-clinical

Arrowhead Research ARWR ARC-520 HBsAg + other viral proteins RNAi phase 2

Ciclofilin Pharmaceuticals (private) CPI-431-32 cyclophilin replication inhibitor pre-clinical

Dynavax Technologies Corp. DVAX HEPLISAV-B HBsAg preventatitive vaccine phase 3

Enanta Pharmaceuticals ENTA EDP-546 cyclophilin replication inhibitor pre-clinical

Gilead Sciences GILD GS-9620 TLR7 agonist immune stimulator phase 2

Gilead Sciences GILD GS-4774 Tarmogen T cell immunity stim immune stimulator phase 2

ISIS Pharmaceuticals ISIS ISIS-HBVRx HBsAg + other viral proteins antisense phase 1

Novira Therapeutics (private) NVR 3-778 HBV core protein capsid inhibitor phase 1

Novira Therapeutics (private) not disclosed cccDNA cccDNA inhibitor pre-clinical

Replicor (private) REP 9AC HBsAg HBsAg release inhibitor phase 2

Roche VX: ROG RG7795 TLR7 agonist immune stimulator phase 1

Scynexis Inc. SCYX SCY-635 cyclophilin replication inhibitor; immune stim phase 2

Tekmira Pharmaceuticals TKMR TKM-HBV HBsAg + other viral proteins RNAi phase 1

Tekmira Pharmaceuticals TKMR not disclosed HBsAg HBsAg secretion inhibitor pre-clinical

Tekmira Pharmaceuticals TKMR OCB-030 cyclophilin replication inhibitor; immune stim pre-clinical

Tekmira Pharmaceuticals TKMR CYT003 TLR9 agonist immune stimulator pre-clinical*

Tekmira Pharmaceuticals TKMR not disclosed cccDNA formation inhibitor pre-clinical

Tekmira Pharmaceuticals TKMR not disclosed cccDNA epigenetic modifier pre-clinical

Tekmira Pharmaceuticals TKMR not disclosed HBV core protein (2 candidates) capsid inhibitor pre-clinical

Tekmira Pharmaceuticals TKMR not disclosed STING agonist immune stimulator pre-clinical

* This compound has been tested in over 400 human subjects for a non-HBV indication

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HBsAg is a target because, released by infected hepatocytes into the blood, the molecule obstructs the host immune response - impeding dendritic cell, natural killer cell and T cell mediated attack on HBV virus and infected hepatocytes (Kondo et al. 2013 Gastroenterology 2013:1). By knocking down production or release of HBsAg, it is believed that the host antiviral immune response can be activated – producing anti-HBs antibodies and exerting general immune control of the disease potentially without the need for further medication. Indeed, correlative analysis supports that patients who achieve HBsAg clearance and seroconversion, enjoy dramatically improved long-term survival. Furthermore, the few patients who achieve functional cure following interferon therapy typically demonstrate HBsAg reductions between 70% and 90% (Fattovich et al. 1998 Am J Gastroenterol). cccDNA is a target because, even if HBsAg seroconversion and immune control are achieved in chronic HBV patients, the viral cccDNA genome generally persists, and viral reactivation may occur if patients experience severe immunosuppression. HBV core protein assembles to form the viral capsid and it associates with cccDNA - exerting epigenetic control over the cccDNA (Guo et al. 2011 Epigenetics 6:720) and mediating interferon induced degradation of cccDNA (Lucifora et al. 2014 Science 14:1221). Drugs targeting the core protein may therefore impact transcription of viral genes, capsid assembly, and cccDNA stability. It is very early innings for programs focused on novel targets making it difficult to handicap winners, however, we have some preliminary observations:

1. We believe that higher functional cure rates are attainable in HBV patients based on the emerging pathobiology of numerous viral targets.

2. We are less certain that higher permanent cure rates can be achieved due to the challenge posed by cccDNA, but from a clinical standpoint, functional cure may be effectively equivalent for many individuals.

3. siRNA is a compelling platform for the treatment of HBV because of its ability to knockdown multiple viral targets.

4. We speculate that TKM-HBV is likely the most potent HBV siRNA in development, however, it is uncertain whether this will necessarily translate into meaningfully better clinical outcomes and safety.

5. We have less visibility into the competitiveness of Tekmira’s OnCore programs. However, post the merger, Tekmira has more shots on goal in HBV than any of its competitors. The combined company is targeting the majority of the relevant new viral targets, and has a leading team in the area of hepatitis drug development.

TKM-HBV

Our speculation regarding superiority of TKM-HBV potency compared to competing siRNA-based programs is based on a number of data points, the first a proxy: Alnylam, using Tekmira’s LNP delivery technology and a single trigger HBV siRNA, reported mean 2.0 log10 reductions of HBsAg, and mean 2.9 log10 reductions of viral DNA following 0.125, 0.25 and 0.50 mg/kg iv doses in HBV-infected chimpanzees (Exhibit 5). Alnylam is currently testing subcutaneous GalNAc formulations of its HBV siRNA which may be more convenient, but will likely also be less potent; the company expects to file an investigational new drug (IND) application by YE-2015. Alnylam had obtained the HBV siRNA trigger when it acquired SIRNA assets from Merck in January 2014.

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Exhibit 5. Pre-clinical results for Alnylam’s HBV LNP-siRNA. Source: Alnylam

Tekmira’s lead HBV candidate, which is formulated using LNP technology, combines three RNAi molecules (triggers). One trigger is complementary to a sequence found in all four HBV transcripts, and two triggers target three of the HBV transcripts. Tekmira believes that use of multiple triggers will: 1) lead to more potent knockdown of viral proteins, especially HBsAg, 2) enable efficacy against all HBV genotypes, and 3) act as a higher hurdle against viral resistance, all of which make sense. The potential for increased potency is supported by pre-clinical studies in mice which showed that the three triggers combined, resulted in maximal knockdown of HBV DNA, HBsAg and HBeAg (Exhibit 6). Exhibit 6. Pre-clinical results for TKM-HBV three triggers in chimeric mouse model of chronic HBV. Source: Tekmira

In another mouse HBV model, NOD.CB17-Prkdcscid/J, injection of TKM-HBV led to almost complete, but transient, knockdown of serum HBsAg and serum HBV DNA. Alnylam’s single trigger HBV-siRNA is complimentary to two highly conserved regions of the viral genome - one region overlaps all HBV four transcripts, and the other region is located in three transcripts. At this point, there is not enough information to conclude whether Tekmira or Alnylam picked better

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sequences to target in the HBV genome. However, Tekmira has “more shots on goal” with 3 vs 2 targeted sequences, and Tekmira has a pharmacokinetic advantage vs ALN-HBV due to the intravenous dosing of TKM-HBV. One possible disadvantage of Tekmira’s product is that premedication with corticosteroid may be necessary to suppress immunological response to therapy. Last year, TKM-Ebola was put on temporary clinical hold, and Tekmira discontinued an earlier ApoB program due to side effects related to immune stimulation. However, the company has made substantial progress in this regard, and in our opinion, immune stimulation poses a low-to-moderate risk for Tekmira’s siRNA programs including TKM-HBV, mitigated by several factors:

Steroid premedication is likely acceptable for non-infectious indications - Alnylam’s lead siRNA, patisiran (ALN-TTR02), has advanced into phase 3 testing with acceptable safety and robust gene knockdown using steroid premedication prior to siRNA infusion.

Since HBV does not progress as rapidly as Ebola, and immunosuppression with steroid premedication is transient, we believe there is a good chance that benefit will outweigh risk even if TKM-HBV does require premedication (although it would be better if no premedication is required).

Tekmira has identified a “wet format” that causes substantially less immune stimulation of human whole blood compared to lyophilized, and has advanced a fourth generation LNP technology which is approximately 3-fold more potent than the TKM-Ebola 3rd generation LNP (Exhibit 7), which may further help reduce immune stimulation of Gen 4 LNP-siRNAs.

Exhibit 7. Potency of 3rd and 4th generation LNP technologies. Source: Tekmira

This January, Tekmira announced that it had dosed the first healthy subject in a phase 1 clinical trial of TKM-HBV. The company is testing both 3rd and 4th generation LNP formulations of the product in order to determine which formulation will be best to advance into chronically infected patients later this year. The trial is a randomized, single-blind, placebo-controlled study, involving single ascending doses of TKM-HBV. The study will assess the safety, tolerability and pharmacokinetics of intravenous administration of both formulations of TKM-HBV in healthy adult subjects. For each formulation, there are five planned cohorts for a total of 20 subjects (40 in total for both formulations). Four subjects will be enrolled per cohort with three subjects receiving TKM-HBV, and one receiving placebo. Following the single dose study, the company plans to quickly enter into a multiple ascending dose phase in chronic HBV patients currently receiving NUC therapy. In this study, it is anticipated that three doses will be tested with 8 patients (6 active, 2 placebo) in each cohort. Patients will be treated three times at one month intervals, with the possibility to extend the study to 6-12 months for patients who achieve

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substantial HBsAg decline. Endpoints will be safety, tolerability, depth and duration of HBsAg decline, and other viral markers.

Arrowhead ARC-520 Program

Arrowhead Research (NASDAQ: ARWR; not rated) is another siRNA competitor in the HBV space. The company reported that its product, ARC-520, in a chronically HBV infected chimpanzee, caused a 90% (1 log10) reduction of hepatitis e-antigen and s-antigen, and 95% reduction of circulating viral DNA using doses of 2 and 3 mg/kg. While comparisons across studies are not reliable, Arrowhead’s reported knockdown appears to be less than that achieved with 0.5 mg/kg of Alnylam’s LNP-formulated HBV siRNA: 2 log10 (99%) reduction of HBsAg and 2.9 log10 reduction of viral DNA in multiple chimpanzees. In an ongoing phase 2a clinical study, interim data presented at the American Association for the Study of Liver Diseases (AASLD) conference in October 2014 disappointed investors, with a single 2 mg/kg dose of ARC-520 causing a 51% reduction in HBsAg. Expectations were likely too high, and single dose escalation has continued to 3 mg/kg, and may go to 4 mg/kg depending on safety and knockdown at the lower doses, before the product moves into a multi-dose phase 2b. In summary, we believe there is a good probability that Tekmira’s TKM-HBV will prove to be the most potent HBV siRNA. While attractive, this would not necessarily translate into materially better clinical outcomes and product profile vs competing products.

REPLICor - Dark Horse HBsAg Secretion Inhibitor

At the same time that Arrowhead, Tekmira and Alnylam have been advancing HBsAg knockdown siRNA therapies, REPLICor, a private Montreal-based company, has demonstrated surprisingly robust HBsAg suppression, anti-HBs antibody stimulation, and sustained viral response (SVR) after treating chronic HBV patients with its amphipathic nucleic acid polymer (NAP) HBsAg secretion inhibitor, REP 9AC’ (REP 2139) both alone, and in combination with immunotherapy (Zadaxin or Pegasys). In the largest of three phase 2 clinical studies, treatment with REP 9AC’ resulted in 9 of 12 patients achieving HBsAg clearance (mean 6.1 log10 reduction; Exhibit 8) following 5 to 25 weeks of treatment. Exhibit 8. REPLICor clinical data showing HBsAg clearance in 9 of 12 patients treated with REP 9AC’. Source: REPLICor

After adding immunotherapy, HBV viral control was achieved in all 9 of the HBsAg responders during treatment, and in four patients, viral control was sustained long-term following cessation of the combination therapy (Exhibit 9). In a smaller phase 2 study in which patients were treated with both REP 9AC’ + Pegasys at the start of treatment, virus was controlled long term in 4 of 5 patients (80%) following cessation of treatment.

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Exhibit 9. REPLICor clinical data showing viral response following cessation of treatment with REP 9AC’ plus immunotherapy. Source: REPLICor

Although REPLICor’s early clinical data are encouraging, there are many questions remaining: 1) will the HBsAg clearance and SVR rates achieved in phase 2 be repeatable in larger clinical trials in North America; 2) will Tekmira, Alnylam and Arrowhead achieve the same level of HBsAg reduction with their siRNA therapies following multiple doses; 3) what level of HBsAg clearance is necessary for seroconversion and sustained viral control; and 4) how long will HBV be suppressed following cessation of therapy? Not all patients who achieved HBsAg clearance following treatment with REP 9AC’ maintained viral control after cessation of treatment, indicating that immune de-repression alone may not be sufficient to induce durable functional cures in some patients. This boosts the potential attractiveness of siRNA therapies which have the ability to knock down multiple HBV targets, which may confer additional benefit. A risk going forward with all HBsAg-targeted programs relates to the damage that may be induced by unleashing an immune attack on HBV-infected hepatocytes in patients whose livers may already be substantially damaged (we have not seen liver toxicity markers reported by REPLICor). Immune stimulation is enticing, but it may be less risky to achieve cures if the viral cccDNA genome can be eliminated, combined with suppression of the virus’s ability to replicate itself, which is currently accomplished with NUCs.

Tekmira OnCore HBV Programs On January 11, 2015 Tekmira announced that it would merge with Pennsylvania-based, OnCore Biopharma, Inc. (merger closed on March 4). OnCore was a private HBV asset roll-up company founded by former executives of Pharmasset, Inc. In 2012, Pharmasset was acquired by Gilead for $11 billion. At the time of the Gilead acquisition, Pharmasset was developing the current blockbuster hepatitis C drug, Sovaldi (sofosbuvir). The founders of OnCore include a number of scientific and business leaders from Pharmasset who have now joined the management team of Tekmira, including Michael Sofia, who is considered the principal inventor of Sovaldi. Prior to the merger, OnCore had in-licensed and acquired a portfolio of multiple early stage drugs with different mechanisms of action targeting important steps in the HBV replication process and host immune response, including two programs targeted against cccDNA (Exhibit 10).

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Exhibit 10. Tekmira HBV product pipeline following merger with OnCore. Source: Tekmira

OCB-030 (2nd generation cyclophilin inhibitor) OCB-030 was licensed from Neurovive Pharmaceutical AB (STO: NVP; unrated) in September 2014. OnCore paid an undisclosed initial upfront payment, and Tekmira may be required to pay additional development and sales milestones of up to $150 MM, in addition to royalty payments if OCB-030 is approved for commercial sale. Data was presented in April 2014 at the European Association for the Study of the Liver (EASL) which indicated that OCB-030/NVP108 directly inhibits several stages of hepatitis B viral replication in liver cells, and indirectly acts to strengthen the host immune response by inhibiting interaction between cyclophilin A and interferon regulatory factor 9 (IFN9). It has been validated that cyclophilins are host factors required for hepatitis C virus replication. Debiopharm’s (Switzerland) cyclosporine-based first generation cyclophilin inhibitor, alisporivir, demonstrated dramatic reduction in viral loads in HCV-infected patients, and led to viral cure (24 weeks after stopping treatment) in 76% of patients with chronic hepatitis C. However, in April 2012, the FDA put a clinical hold on alisporivir because of 3 cases of pancreatitis and a patient death. In January 2014, FDA modified the clinical hold to allow the resumption of clinical testing, but without peg-interferon. Despite this, in March 2015, Debiopharm’s partner, Novartis (NYSE: NVS; unrated) return rights to the drug. Scynexis Inc. (NASDAQ: SCYX; unrated), Enanta Pharmaceuticals (NASDAQ: ENTA; unrated) and Ciclofilin Pharmaceuticals (private) are developing cyclophilin inhibitors (phase 2, preclinical, preclinical, respectively) for treatment of viral diseases including hepatitis, although Scynexis and Enanta have other lead programs. OnCore management has commented that sangamide-based OCB-030/NVP018 has a well-differentiated preclinical profile. Tekmira anticipates advancing the drug into human clinical trials in 2H-2015.

CYT003 (TLR9 Agonist) Toll-like receptor (TLR) agonists are a new approach to immune stimulation in patients with chronic HBV. TLR9 is the receptor that detects the presence of microbial DNA and induces the immune system’s innate first line of defense against bacterial infection. It is predominantly expressed in plasmacytoid dendritic

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cells (pDCs) and B-cells in humans, and its activation induces the production of IFN-alpha. CYT003-activated pDCs are then postulated to inhibit type 2 helper T (Th2) cells. CYT-003, is in-licensed from Cytos Biotechnology Ltd. (Switzerland), where the compound was being developed in allergic asthma before failing in a phase 2 clinical trial in April 2014. OnCore has also licensed Cytos’ virus like particle (VLP) platform for the use in the treatment and prevention of hepatitis B viral infections. Gilead’s TLR7 agonist, GS-9620, is currently being evaluated in a Phase 2 study in patients with chronic hepatitis B, after demonstrating that it induces prolonged suppression of hepatitis B virus in chronically infected chimpanzees. Short-term oral administration of GS-9620 led to mean maximum reduction of viral DNA was 2.2 log10, which occurred within 1 week of the end of GS-9620 administration; reductions of >1 log persisted for months. Tekmira is currently evaluating the utility of CYT-003 in HBV and may be able to utilize Cytos’s existing safety database to expedite development if the program moves into the clinic.

Capsid Assembly Inhibitors Tekmira is developing two separate capsid assembly inhibitors. It is anticipated that by inhibiting assembly of the viral capsid, reverse transcription of pgRNA by HBV polymerase will be impaired, thereby blocking the ability of the hepatitis B virus to replicate itself. One inhibitor was obtained by OnCore through its acquisition of Doylestown, Pennsylvania-based private company, Enantigen Therapeutics Inc. on October 14, 2014. The other was licensed from the Baruch S. Blumberg Institute, research center of the Hepatitis B foundation, also located in Doylestown. Minimal information is available for Tekmira’s capsid assembly inhibitor programs, but proof of concept for the strategy has been established by other groups. As early as 2000, scientists at Bayer AG demonstrated that variants of heteraryldihydropyrimidine have anti-HBV activity in a cell culture-based screen, and act in a capsid protein-specific manner (WO patent; 2000 058302). Similar findings have been reported by numerous academic groups, but we are only aware of one clinical stage capsid inhibitor program funded by privately-held Novira Therapeutics for its lead compound, NVR 3-778 (phase 1). Tekmira expects to file an IND following additional preclinical development, including additional efforts to improve potency and optimize the drug-like properties of the lead compound series, as well as additional studies to assess efficacy and safety in animal models.

Surface Antigen Secretion Inhibitor Acquisition of Enantigen also brought to OnCore a surface antigen secretion inhibitor program. Again, very little has been disclosed, but the concept seems similar to REPLICor’s REP 9AC’, with some overlap of Tekmira’s own TKM-HBV. Tekmira expects to file an IND and commence clinical trials for the product after completing additional preclinical development. This includes additional efforts to improve potency and optimize the drug-like properties of the lead compound series, as well as additional studies to assess efficacy and safety in animal models.

cccDNA programs Prior to the acquisition, OnCore had licensed cccDNA formation inhibitor and cccDNA epigenetic modifier programs from the Blumberg Institute. Management believes that inhibition of cccDNA formation and/or transcriptional control, together with liver cell turnover, is central to HBV eradication. The cccDNA formation inhibitor program is currently at the lead optimization stage. Based on work conducted at the Blumberg Institute, we believe that the lead molecules are disubstituted-sulfonamides

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which block conversion of HBV rcDNA to cccDNA possibly by reducing the level of deproteinized rcDNA. The epigenetic modifier program is currently screening compound libraries to identify compounds that could potentially inhibit cccDNA transcription. At this early stage, we think the goal of cccDNA eradication is intriguing. One of the challenges in our view is that cccDNA may infect hepatic progenitor/stem cells, which may complicate a therapeutic strategy which relies on inhibition of formation of new cccDNA and depletion of the viral genome pool as the hepatocyte population turns over. A therapeutic strategy investigated by Lucifora et al. (2014 Science 343: 1221), may be more direct: activation of the lymphotoxin-B receptor which induces degradation of nuclear viral DNA without apparent hepatotoxicity. Novira Therapeutics is also developing a cccDNA inhibitor (preclinical) in parallel with its core/capsid inhibitor (phase 1).

STING Agonists STimulators of INterferon Genes, or STING agonists, are receptor activators that turn on endogenous expression of interferon. OnCore entered into a joint discovery program with the Blumberg Institute to identify potent, orally active small molecule human STING agonists that possess the desired characteristics to progress into human clinical studies. Research affiliated with the Blumberg Institute identified 5,6-dimethylxanthenone-4-acetic acid (DMXAA) as an agonist of the mouse stimulator of interferon (IFN) genes which induced a robust cytokine response in macrophages that efficiently suppressed HBV replication in mouse hepatocytes by reducing the amount of cytoplasmic viral nucleocapsids (Guo et al. 2014 Antimicrob. Agents Chemother. 59:1273). We expect that the joint discovery program will expand on this work.

Tekmira’s Non-HBV siRNA Products Tekmira’s portfolio contains a wide range of cancer, anti-viral and metabolic siRNA candidates which the company is developing in programs ranging from research/pre-clinical to phase 2 (Exhibit 11). Exhibit 11. Tekmira’s non-HBV siRNA portfolio. Source: Tekmira

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TKM-PLK1 Tekmira is testing its lead cancer siRNA, TKM-PLK1, in a number of oncology indications. TKM-PLK1 targets the serine/threonine-protein kinase enzyme PLK1 (polo-like kinase 1). PLK1 is a validated cancer target, but it has been difficult to drug with small-molecule inhibitors, making it an attractive target for RNAi. Tekmira engineered the LNP for TKM-PLK1 specifically to reduce uptake by the liver, giving the siRNA longer plasma half-life. Once TKM-PLK1 arrives at a tumor, it leaves the blood stream through the fenestrated tumor vasculature, and is taken up by cancer cells via LDL receptors which are overexpressed by many cancer cells. In early stages of cell proliferation, PLK1 associates with mitotic spindle poles where it phosphorylates and activates cdc25C, initiating a signaling pathway that culminates in cell division, while inhibiting apoptosis. Overexpression of PLK1 is often observed in tumor cells, and is correlated with poorer outcomes in patients. In a TKM-PLK1 dose-escalation trial (0.15mg/kg to 0.90mg/kg – dosed weekly in four-week cycles), among 26 patients with solid tumors, initial analysis revealed that the MTD was 0.75mg/kg, with DLTs including Grade 3 thrombocytopenia and Grade 3 hypoxia/dyspnea. Transient cytokine elevations were observed at 6 hours after dosing in 25% of patients at doses <0.90mg/kg. Regarding efficacy - 9 of 26 patients were dosed at ≥ 0.6mg/kg and were evaluable for response. One patient dosed originally with 0.9mg/kg, then dropped to 0.6mg/kg with gastrointestinal neuroendocrine tumor (GI-NET) achieved a partial response (ongoing >12 cycles). Another GI-NET patient achieved stable disease at 0.75mg/kg, and one adrenocortical carcinoma (ACC) and one hepatocellular carcinoma (HCC) patient achieved stable disease at 0.75mg/kg and 0.6mg/kg, respectively (SD lasting 2 to 6 cycles). Of the 8 patients treated at doses less than 0.6mg/kg, 3 were evaluable for response, none of which achieved clinical benefit. The trial was subsequently expanded to include additional GI-NET and ACC patients. One additional patient with ACC achieved stable disease, and one patient who had previously achieved stable disease, improved to partial response. In December 2014, Tekmira announced that it had completed enrolment of the trial. 55 patients, in the both the phase 1 and phase 1/2 stages, had been treated at doses of ≥ 0.6 mg/kg. Of these, 31 patients were treated for GI-NET or ACC. Continued evidence of anti-tumor activity was reported in some treated subjects, including one ACC patient with an almost complete resolution of their disease. Final data from the studies is expected in mid-2015. A phase 1/2 trial in patients with hepatocellular carcinoma was initiated in 2Q-2014, with data expected in 2015. Several small molecule PLK1 inhibitors are in development by other companies including CYC140, rigosertib and BI 6727 (volasertib). Boehringer Ingelheim’s volasertib is the most advanced of the group, moving into a phase 3 trial in combination with low dose cytarabine in early 2013 in elderly patients with previously untreated AML. In a phase 2 AML study, objective responses were observed in 31% of patients (13 of 42 patients) treated with the combination of volasertib plus low dose cytarabine compared to 13.3% of the patients (6 of 45 patients) treated with cytarabine alone (p = 0.0523). A trend for overall survival benefit was also observed (8.0 months for the volasertib combination compared to 5.2 months for cytarabine alone, p = 0.0996). Volasertib is also being investigated in other trials for non-small cell lung cancer (NSCLC), ovarian cancer, and myelodysplastic syndrome (MDS), and other solid tumors. Development of a number of small molecule PLK1 inhibitors has been halted, including an earlier generation of volasertib – hindered by side effects associated with low selectivity for PLK1. According to the U.S. SEER database, there are about 103,000 cases of neuroendocrine tumors in the U.S. (incidence ~16,000 per year), of which about 70% are gastrointestinal. GI-NET is a genetically diverse disease. The median duration of survival, for patients with metastatic disease, is 33 months for

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well-differentiated neuroendocrine tumors and only 5 months for poorly differentiated neuroendocrine tumors. Most patients are diagnosed once the tumor has metastasized so surgical treatment is not a cure. Drugs such as everolimus and sunitinib have demonstrated effects in pancreatic neuroendocrine tumors. ACC is a rare tumor affecting only about 0.72 persons per million, which equates to about 200 people diagnosed annually with the disease in the U.S. ACC is treated with regimens containing etoposide, doxorubicin, cisplatin, and mitotane, but have limited efficacy. Five-year survival for patients with stage IV tumors is less than 20%. HCC is one of the most common cancers in developing countries with ~630,000 patients worldwide diagnosed each year (~20,000 in the U.S.). Five-year survival rate after liver resection is 10%. Surgical resection may be feasible for small, local tumors, but only 10-15% of patients are suitable due to extensive disease, or poor liver function. Liver transplantation is also an option. Regimens including doxorubicin, cisplatin, fluorouracil, interferon, epirubicin, or taxol have not shown any survival benefit although a few isolated major responses allowed patients to undergo partial hepatectomy. Sorafanib, a receptor tyrosine kinase inhibitor, is approved for treatment of patients with advanced hepatocellular carcinoma, having demonstrated a 31% relative reduction in risk of death (Llovet et al. 2008 NEJM 359:378). Dicerna (NASDAQ: DRNA; unrated) and Mirna Therapeutics are also developing oligonucleotide-based therapies for HCC. Dicerna’s strategy is to knock down expression of the oncogene c-MYC (Dicerna), while Mirna is developing a microRNA mimic of the tumor suppressor miR-34. Even though TKM-PLK1 has only been tested in relatively few patients to date, we are encouraged on a number of fronts: 1) proof-of-concept for PLK1-targeting has been established by competing small molecule inhibitors; 2) Tekmira has confirmed target gene knockdown in non-hepatic tumor tissue supporting that LNPs can deliver siRNA payloads outside of the liver (Exhibit 12); and 3) early signs of efficacy have been reported in patients with ACC and GI-NET treated with TKM-PLK1. Exhibit 12. Image showing 476-bp cleavage product of PLK1 mRNA (↤) in biopsy tissue from patient with colon tumor after treatment with TKM-PLK1 (BT=before treatment; AT=after treatment). Source: Tekmira

BT AT ↤

TKM-Ebola In July 2010, Tekmira entered into an agreement with the U.S. Department of Defense (DoD), under their Transformational Medical Technologies (TMT) program to develop an RNAi therapeutic using LNP technology to treat Ebola virus infections. The original contract was for $34.7 MM to complete preclinical development, file an IND with the FDA and complete a human phase 1 safety trial. In May 2013, the collaboration was expanded to fund development of a new LNP technology which appears to be much more potent than the previous formulation and which uses a lyophilized (freeze-dried) formulation that is more suitable for use in tropical climates. As a result, funding for stage 1 was increased to $41.7 MM. The DoD has the option at the end of stage 1 to pay an additional $105.2 MM in order to extend the contract through to completion of clinical development and FDA approval.

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Tekmira presented preclinical data from the TKM-Ebola program using the new formulation in May 2013. At 0.5 mg/kg, non-human primates demonstrated 100% survival after receiving TKM-Ebola for 7 days. In November 2013, Tekmira announced that TKM-Ebola was effective even when administered up to 96 hours after infection with Ebola. A phase 1 study was started in January 2014. The trial was a randomized, single-blind, placebo-controlled study involving single ascending and multiple ascending doses of TKM-Ebola. The study was designed to assess safety, tolerability and pharmacokinetics of TKM-Ebola. There were four planned cohorts testing 16 subjects in the single ascending dose study and three planned cohorts testing 12 subjects in a multiple ascending dose study. In each cohort, three subjects received TKM-Ebola and one received placebo. In July 2014, Tekmira’s phase 1 TKM-Ebola program was put on full clinical hold when transient cytokine release was observed at higher doses in the single ascending dose part of the trial. Immune stimulation was always a risk with this trial, since it was the first to test an LNP product in humans without steroid premedication. In August, driven in part by the growing outbreak of the disease in West Africa, FDA modified the clinical hold to partial, which allowed for the potential use of TKM-Ebola in infected patients. In our opinion, cytokine release is a low to moderate risk for TKM-Ebola. Immunosuppressive pre-treatment is not feasible in this indication and it is not clear that TKM-Ebola will be effective at doses that do not stimulate an immune response. However, cytokine release is likely an acceptable side effect in this patient population. On February 27, the NIH announced the launch of a randomized trial in Liberia, which, if it completes, will include up to 200 patients infected with Ebola, in which TKM-Ebola will be tested along with a number of other experimental therapies. Mapp Biopharmaceutical’s (private) ZMAPP therapy, which contains three antibodies which target the main surface proteins of Ebola virus, will be first in a series of therapies compared against standard supportive care in Ebola-infected patients. Investigators will monitor the progression of patients. If one investigational treatment proves to be statistically more effective, it will then become the basis of the new standard of care against which additional investigational Ebola interventions could be tested and compared. Each experimental therapy will be examined in up to 100 participants per arm. If scientists are unable to establish a significant difference after enrolling 100 participants per arm, then that particular treatment will be declared ineffective and scientists will begin testing the next therapy. The additional treatments may also include the following:

TKM-Ebola.

Favipiravir from Toyama Chemical (private), based in Tokyo.

Convalescent or post-immunization plasma collected from recent Ebola infection survivors. It is possible that this category could potentially be expanded to include plasma donors who have participated in Phase 1 Ebola vaccine clinical trials and whose plasma shows high neutralizing activity against the virus.

BCX4430 from BioCryst Pharmaceuticals (NASDAQ: BCRX; unrated).

AVI-7537 from Sarepta Therapeutics (NASDAQ: SRPT; unrated). Positioning of TKM-Ebola behind ZMapp is not optimal as it raises the clinical hurdle for Tekmira’s therapy if ZMapp is effective, and it seems to signal that NIH believes ZMapp has the best drug profile based on pre-clinical and early clinical experience in Ebola patients. TKM-Ebola, however, should be easier and less expensive to produce, and human testing may reveal that TKM-Ebola is just as effective, in which case, we would not discount the possibility that TKM-Ebola and ZMapp would both be purchased for the DoD stockpile. Separately, Tekmira reported on March 11 that patient recruitment had been initiated in a single arm phase 2 trial called RAPIDE in which TKM-Ebola-Guinea will be evaluated for efficacy in Ebola virus infected patients in Sierra Leone, West Africa. Study results are expected in the second half of 2015.

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The University of Oxford, which is the representative of the International Severe Acute Respiratory and Emerging Infection Consortium (ISARIC) is responsible for conducting the Phase II study, with funding provided by the Wellcome Trust. We await the DoD’s decision regarding the option to provide the additional US$105 MM in development funding. Beyond this, if TKM-Ebola is added to the DoD stockpile, Tekmira could realize an ongoing revenue stream associated with filling and replenishing the stock of vaccine upon product expiry. This may occur following full approval of TKM-Ebola, potentially by 2018. An accelerated scenario may include a stockpile order for TKM-Ebola before FDA approval, due to the current outbreak. According to Tekmira management, the DoD signaled interest in maintaining a potential inventory size of 30-45,000 courses of TKM-Ebola once approved. DoD stockpile contracts typically range from $50 MM to $200 MM per year, over periods spanning 4 to 10 years. There may also be other customers for TKM-Ebola including NGOs such as WHO. Ebola infection rates have been declining since January, which may make it difficult to complete the clinical trials underway in Liberia and Sierra Leone. Reversion back to a standard path for approval of TKM-Ebola would include completion of phase 1, followed by a larger animal efficacy trial then a final safety study in humans.

TKM-Marburg Tekmira has performed a preclinical study in non-human primates showing 100% survival when administered the highly lethal Angola strain of the Marburg virus and subsequently treated with 0.5 mg/kg of TKM-Marburg once daily for seven days at 1, 24- or 48-hours after administration of the virus. The company is working with the University of Texas Medical Branch on this product. We believe development of this product could garner government funding and Tekmira may pursue contracts similar to those for TKM-Ebola if the program continues post acquisition of OnCore.

TKM-ALDH TKM-ALDH is designed to knockdown or silence the aldehyde dehydrogenase (ALDH) enzyme to induce long term acute sensitivity to ethanol, for use in severe alcohol use disorder. Aldehyde dehydrogenase is a key enzyme in ethanol metabolism. Inhibition of aldehyde dehydrogenase activity, through the silencing of ALDH results in the build-up of acetaldehyde leading to adverse physiological effects. Human proof of concept for ALDH inhibition already exists in the form of the approved drug disulfiram. However, disulfiram’s efficacy is compromised by poor compliance because it has to be taken daily. In the United States, approximately 18 MM people have an alcohol use disorder. Two million seek treatment each year, and approximately 350,000 patients receive pharmacotherapy for alcohol use disorder. Tekmira is exploring partnering or external funding opportunities to advance the program.

TKM-HTG TKM-HTG is a multi-trigger RNAi therapeutic that simultaneously targets two genes expressed in the liver, Apolipoprotein C3 (ApoC3) and Angiopoietin like protein 3 (ANGPTL3), which are known to play a significant role in triglyceride metabolism. Preclinical studies have demonstrated rapid, potent and sustained plasma triglyceride lowering, with the lowest effective dose at 0.03 mg/kg. Duration of gene silencing and TG lowering effects from a single administration of the ApoC3 RNAi trigger lasted for more than 2 weeks. Hypertriglyceridemia (HTG) is a type of dyslipidemia where there are high blood levels of triglycerides. Approximately 1 MM adults in the United States and 18 MM worldwide suffer from severe HTG. A specific patient group affected by HTG are those with familial chylomicronemia syndrome (FCS), which is a rare

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hereditary condition affecting an estimated 1 of every 1 MM people. Additionally, 35% of patients with type 2 diabetes (T2D) suffer from mixed hyperlipidemia which is a combination of elevated cholesterol and high triglycerides.

Partnered Products

ALN-TTR02 (patisiran) ALN-TTR02 targets transthyretin (TTR) and is in development by Alnylam for the treatment of TTR-mediated amyloidosis, an inherited, progressively debilitating, and often fatal disease. There are two types of TTR-mediated amyloidosis; one is familial amyloidotic polyneuropathy (FAP) accounting for about 10,000 cases globally, and one is familial amyloidotic cardiomyopathy (FAC) accounting for about 40,000 patients. ALN-TTR02 is being developed for FAP while ALNY is developing ALN-TTRsc (revusiran) using its own GalNAc subcutaneous delivery technology. In November 2013, ALNY announced data from the phase 2 ALN-TTR02 study testing the product at various doses. ALNY reported results for 29 patients showing that ALN-TTR02 administration resulted in statistically significant knockdown of serum TTR protein levels of up to 96%, with mean levels of TTR knockdown exceeding 85%. Knockdown of TTR was rapid, dose dependent and durable, according to the company with similar activity seen in both wild-type and mutation proteins. The drug was generally safe and well-tolerated in the study. There were no abnormalities seen in liver function tests, renal function, or hematologic parameters. The most common adverse event was a mild to moderate infusion-related reaction which occurred in 3 or 29 patients (10.3%). This was managed with prolonged infusion and did not result in any patient discontinuations. At the highest dose level of 0.3 mg/kg q3w, the investigators implemented a micro-dosing strategy given over 70 minutes. Of 12 patients in this dosing regimen, none reported an infusion-related reaction. Currently, ALNY is running an open-label extension (OLE) study for patients who completed the phase 2 study. OLE will treat patients for an additional two years (0.3mg/kg q3w) and evaluate long-term safety and tolerability. In addition, clinical endpoints including the modified Neuropathy Impairment Score plus 7 (mNIS+7) will also be measured to determine longer-term efficacy, however, without a placebo group, changes will be compared to historical data for untreated patients. mNIS+7 incorporates a scale which ranges from 0 (no neurological deficits) to 304 points (no detectable peripheral nerve function). On October 13, 2014, Alnylam reported 6-month data for the OLE study at the American Neurological Association's Annual Meeting. Results showed a mean 0.95 point decrease (improvement) in mNIS+7 at six months in 19 tested patients. According to management, this decrease in neuropathy progression compares favorably with the 7 to 10 point increase (worsening) in mNIS+7 at six months that can be estimated from historical data sets in untreated FAP patients with similar baseline characteristics (Adams et al., International Symposium on Amyloidosis, April 2014; Berk et al. 2013 JAMA 310: 2658-67; Tafamidis European Medicines Agency Assessment Report, 2011). This early OLE clinical outcome data is definitely encouraging, however, conclusive determination of clinical benefit will require completion and analysis of randomized phase 3 trials. The 6-month OLE data also showed that patients treated with patisiran achieved a sustained mean serum TTR knockdown at the 80% target level for over nine months, with an up to 89.6% knockdown achieved between doses. Patisiran was found to be generally well tolerated in this study out to one year of therapy, with no drug-related serious adverse events to date, and all 27 patients enrolled in the study continue to receive drug treatment. A phase 3 study has now started, called APOLLO. The trial, designed after consultation with regulators, is expected to enroll about 200 patients with FAP, stage 1 and stage 2. Patients will be randomized 2:1

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patisiran:placebo, with drug administered at 0.30 mg/kg once every three weeks for 18 months. The primary measurement is a modified NIS which includes examining nerve conductance. The endpoint will be a comparison of the change in NIS from baseline to end of study for ALN-TTR02-treated patients versus placebo (90% power to detect a 37.5% difference, 2-sided alpha of 0.05). Secondary endpoints include quality of life, motor function and autonomic function. ALNY expects final data either mid-2016 to mid-2017, depending on the rate of recruitment. ALN-TTR02 has been granted fast-track status by the FDA for FAP. If the phase 3 data are positive, we would expect ALNY to request a priority review of the NDA, and if one is granted, we could see the product launched in the 2017-2018 timeframe. If approved, Tekmira will receive low single-digit royalties on sales of ALN-TTR02.

Marqibo Marqibo is a liposomal formulation of vincristine. It is unrelated to Tekmira’s siRNA liposomal products. It is approved in the U.S. for the treatment of adult patients with Philadelphia chromosome negative (Ph-) acute lymphoblastic leukemia (ALL) in second or greater relapse or whose disease has progressed following two or more prior therapies. The product is licensed to Spectrum Pharmaceuticals (NASDAQ: SPPI; not rated) and was launched September 2013. The market size is small as Spectrum estimates there are only about 1,600 ALL patients in the U.S. who fit the criteria of Ph- ALL second or greater relapse. In terms of financial impact, based on the current approval, Tekmira’s annual royalty revenues in 2014 were $190,000 on net Marqibo sales of approximately $6.3 MM (3%). There are two ongoing phase 3 studies with Marqibo funded by Spectrum. One is a 348-patient trial in patients ≥ 60 years old who have newly-diagnosed ALL. Survival data are expected in 2017. The second is in first line aggressive non-Hodgkins’ Lymphoma (NHL). In addition to Marqibo, Tekmira also licensed liposomal vinorelbine and liposomal topotecan to Spectrum, although we are not aware of any ongoing studies.

DCR-PH1 In November 2014, Tekmira signed a licensing and collaboration agreement with Dicerna Pharmaceuticals allowing Dicerna to utilize Tekmira’s third-generation LNP delivery technology for Dicerna’s primary hyperoxaluria type 1 (PH1) development program. Under the agreement, Dicerna paid Tekmira a $2.5 MM upfront payment, with $22 MM in aggregate development milestones, plus a mid-single-digit royalty on future PH1 sales. PH1 is a rare, inherited liver disorder that often results in kidney failure. There are no approved therapies for this rare disease. Dicerna had been developing its own lipid nanoparticle and conjugate delivery technologies, and we take it as a vote of confidence that the company tapped Tekmira for its flagship program.

Sum-of-Parts Valuation

Commercial and near-commercial products We have generated financial forecasts for Tekmira extending to 2020. For Marqibo (market) and products with near-term commercial potential (TKM-Ebola and ALN-TTR02), we have integrated sales forecasts for these products (Exhibit 13) into our base model, and used DCF analysis to value the group (25% discount rate 2015-2020; 10% terminal discount rate; 40% growth 2020-2021; 3% terminal growth).

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Using this methodology, our valuation for Tekmira’s commercial and near-commercial products is $239 MM ($4.31 per share). Exhibit 13. Bloom Burton sales forecasts for TKM-Ebola, Marqibo and ALN-TTR02. Source: company documents; Bloom Burton estimates

FY2013A FY 2014A FY 2015A FY 2016E FY 2017E FY 2018E FY 2019E FY 2020E

TKM-Ebola

DoD development funding ($MM) 10.4$ 11.7$ 20.0$ 30.0$ 30.0$ 25.0$

Stockpiling revenues 75.0$ 75.0$ 75.0$

Marqibo

Product sales 1.3$ 6.3$ 7.6$ 9.1$ 10.4$ 12.0$ 13.2$ 14.5$

Tekmira royalty (3%) 0.0$ 0.2$ 0.2$ 0.3$ 0.3$ 0.4$ 0.4$ 0.4$

ALN-TTR02

Patients (worldwide) 9,000 9,270 9,548 9,835 10,130 10,433 10,746 11,069

penetration 5% 15% 30% 50%

Patients treated 506 1,565 3,224 5,534

Sales (@$200,000 per patient) 101.3$ 313.0$ 644.8$ 1,106.9$

Tekmira royalty (5%) 5.1$ 15.7$ 32.2$ 55.3$

TKM-PLK1 To value TKM-PLK1, we forecasted 5th year (peak) sales for the product in the current indications (GI-NET, ACC, HCC), assuming approval and launch in 2019, and that Tekmira will partner the product prior to phase 3, and will receive a 20% royalty on sales if approved and launched (Exhibit 14). Using a 6x multiple of forecast peak royalties of $188.4 MM, we estimated a value at launch for TKM-PLK1 would be $1.1 billion, which we discounted 3 years using a 10% cost of capital, then applied a 15% probability of approval. Using this methodology, we arrived at a probability-weighted-value for TKM-PLK1 of $127 MM ($2.30 per share).

Exhibit 14. Bloom Burton sales forecasts for TKM-PLK1 Source: Bloom Burton estimates

FY2013A FY 2014A FY 2015E FY 2016E FY 2017E FY 2018E FY 2019E FY 2020E FY 2021E FY2022E FY2023E

GI-NET + ACC patients (U.S.) 12,000 12,360 12,731 13,113 13,506 13,911 14,329 14,758 15,201 15,657 16,127

metastatic disease 7,164 7,379 7,601 7,829 8,063

penetration 10% 20% 25% 30% 30%

TKM-PLK1 patients treated 1,433 2,952 3,800 4,697 4,838

Sales ($MM @$60,000 per patient) 86.0$ 177.1$ 228.0$ 281.8$ 290.3$

HCC patients (U.S.) 20,000 20,600 21,218 21,855 22,510 23,185 23,881 24,597 25,335 26,095 26,878

penetration 5% 10% 12.5% 15% 15%

TKM-PLK1 patients treated 1194 2460 3167 3914 4032

Sales ($MM @$60,000 per patient) 71.6$ 147.6$ 190.0$ 234.9$ 241.9$

Total sales (U.S.) 157.6$ 324.7$ 418.0$ 516.7$ 532.2$

Total (ex-U.S.) 110.3$ 227.3$ 292.6$ 361.7$ 409.8$

Total sales (worldwide) 267.9$ 552.0$ 710.7$ 878.4$ 942.0$

Tekmira royalty on sales (@20%) 53.6$ 110.4$ 142.1$ 175.7$ 188.4$ Hepatitis B Program To value Tekmira’s hepatitis B program (2021 forecast launch if approved), we considered peak sales for two scenarios: 1) approval of a regimen that cures most patients (peak sales estimate: $2.2 billion); 2) approval of an improved regimen that moderately increases cure rate (peak sales estimate: $630 MM; Exhibit 15). We assume that at the time of approval, a curative regimen would be valued at 5x peak sales, while a moderately improved regimen would be valued at 4x peak sales. We then discounted the valuations for 5 years at 10%, and assumed a 20% overall probability of approval and launch (5% probability assigned to curative scenario; 15% probability assigned to moderately improved scenario). Using this methodology, we arrived at a probability-weighted-valuation for Tekmira’s HBV program of

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$581 MM ($10.48 per share).

Exhibit 15. Tekmira HBV program sales forecasts and valuation. Source: Bloom Burton estimates Scenario 1 - high cure rate 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

U.S.

Patients treated 50,000 51,500 53,045 54,636 56,275 57,964 72,455 65,209 52,493 39,239 27,075

TKMR penetration 25% 30% 35% 40% 50%

TKMR patients 18,114 19,563 18,373 15,696 13,537

Sales ($MM, @$60,000/course) 1,086.8 1,173.8 1,102.4 941.7 812.2

ex-U.S.

Sales ($MM) 543.4 880.3 1,102.4 1,177.2 1,421.4

Worldwide sales ($MM) 1,630.2 2,054.1 2,204.7 2,118.9 2,233.7

Peak sales multiple 5

Value at launch ($MM) $11,168.3

Discount (years) 5

Cost of capital 10%

PV $6,934.7

Probability 5%

PWV $346.7

Scenario 2 - improved treatment

U.S.

Patients treated 50,000 51,500 53,045 54,636 56,275 57,964 59,703 61,494 63,339 65,239 67,196

TKMR penetration 5% 10% 15% 20.0% 25%

TKMR patients 2,985 6,149 9,501 13,048 16,799

Sales ($MM, @$15,000/year) 44.8 92.2 142.5 195.7 252.0

ex-U.S.

Sales ($MM) 22.4 69.2 142.5 244.6 378.0

Worldwide sales ($MM) 67.2 161.4 285.0 440.4 630.0

Peak sales multiple 4

Value at launch ($MM) $2,519.8

Discount (years) 5

Cost of capital 10%

PV $1,564.6

Probability 15%

PWV ($MM) $234.69

In addition to the $4.31 per share that we attribute to Tekmira’s “near term products”, the $2.30 per share that we attribute to TKM-PLK1, and the $10.48 per share that we attribute to Tekmira’s hepatitis B program, we add $3.91 per share, forecast net cash (2015E), to arrive at a sum-of-the parts 12-month target valuation for TKMR of $21.00 per share. We have not attributed value to Tekmira’s earlier stage siRNA products, and any monetization of these assets would provide upside to our valuation.

A key upside driver to our valuation would be positive TKM-HBV phase 2 results (expected in 2016). We believe that if Tekmira reports a ≥1 log10 reduction in HBsAg, accompanied by safety, seroconversion and sustained viral response in a substantial proportion of patients, that such a result would add $10.00 to $20.00 per share to our valuation, based on doubling to tripling the probability of success for the program. Conversely, failure to report positive safety and efficacy results for TKM-HBV would likely result in material downside for TKMR stock, however, the extent would depend on progress of the company’s other HBV programs at the time.

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Exhibit 16. Valuations of comparable siRNA and HBV companies. Source: Bloomberg siRNA Ticker Price Market Cap ($MM) Enterprise Value ($MM)

Alnylam Pharmaceuticals ALNY $106.50 $8,920.4 $8,223.8

Arrowhead Research ARWR $7.99 $437.8 $311.2

Dicerna Pharmaceuticals DRNA $18.31 $326.3 $230.2

Regulus Therapeutics RGLS $17.94 $906.3 $770.0

RXI Pharmaceuticals RXII $0.73 $22.8 $12.7

Sarepta Therapeutics SRPT $14.23 $587.8 $383.8

Silence Therapeutics SLNCF $4.21 $198.1 $159.0

siRNA (average) $1,441.5

Development HBV (non-siRNA)

ContraVir Pharmaceuticals CTRV $3.17 $70.6 $61.8

Dynavax Technologies DVAX $23.09 $667.5 $554.4

Enanta Pharmaceuticals ENTA $36.38 $679.6 $575.7

Scynexis Inc. SCYX $9.35 $79.6 $45.5

HBV (average) $309.4

All (average) $1,029.8

All (average ex-high/low) $343.5

Tekmira Pharmaceuticals* TKMR $17.61 $971.9 $695.8

*proforma merger and financing

Financial Forecasts

Income Statement ($MM) FY2013A FY 2014A FY 2015E FY 2016E FY 2017E FY 2018E FY 2019E FY 2020E

Collaborations and Contracts 10.4 11.7 20.0 30.0 30.0 25.0 0.0 0.0

Product sales revenues 0.0 0.0 0.0 0.0 0.0 75.0 75.0 75.0

Royalty payments 0.0 0.2 0.2 0.3 5.4 16.0 32.6 55.8

Milestone payments 5.0 3.0 4.0 4.0 4.0 4.0 4.0 4.0

Total Revenues 15.5 15.0 24.2 34.3 39.4 120.0 111.6 134.8

COGS 0.0 0.0 0.0 0.0 0.0 7.5 7.5 7.5

Gross Income 15.5 15.0 24.2 34.3 39.4 112.5 104.1 127.3

G&A expense 5.5 8.7 20.0 21.0 22.1 23.2 24.3 25.5

Research & Development 21.5 38.7 65.0 68.3 71.7 75.2 67.7 60.9

Depreciation 0.6 0.5 0.5 0.5 0.5 0.5 0.5 0.5

Operating Income (loss) -12.1 -33.0 -61.3 -55.5 -54.8 13.6 11.6 40.3

Interest income (expense) 0.5 0.9 1.6 1.9 1.4 1.3 1.5 1.8

Foreign exchange gains (losses) 1.1 4.1 0.0 0.0 0.0 0.0 0.0 0.0

Change in fair value of warrant liability -3.5 -10.4 0.0 0.0 0.0 0.0 0.0 0.0

Acquisition cost -0.5 0.0 0.0 0.0 0.0 0.0 0.0

Pretax Income -14.1 -38.8 -59.6 -53.5 -53.4 14.9 13.1 42.1

Income Taxes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Net Income -14.1 -38.8 -59.6 -53.5 -53.4 14.9 13.1 42.1

EPS (basic) -0.92 -1.80 -1.19 -0.96 -0.96 0.27 0.23 0.75

EPS (diluted) -0.92 -1.80 -1.14 -0.93 -0.92 0.26 0.22 0.72

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Balance Sheet ($MM) FY2013A FY 2014A FY 2015E FY 2016E FY 2017E FY 2018E FY 2019E FY 2020E

Current Assets

Cash 68.7 72.2 217.3 168.8 120.5 140.7 159.1 206.8

Short-Term Investments 40.0 0.0 0.0 0.0 0.0 0.0 0.0

Short-Term Receivables 0.1 1.9 1.9 1.9 1.9 1.9 1.9 1.9

Prepaid expenses and other assets 1.5 2.4 2.4 2.4 2.4 2.4 2.4 2.4

Total current assets 70.3 116.4 221.6 173.1 124.8 145.0 163.4 211.1

Long-term Assets

Net Property, Plant & Equipment 1.4 1.8 1.8 1.8 1.8 1.8 1.8 1.8

Total Assets 71.7 118.2 223.4 174.9 126.6 146.8 165.2 212.9

Liabilities and Shareholders'Equity

Accounts Payable 3.7 9.3 10.3 11.3 12.4 13.7 15.0 16.5

Deferred revenue 3.5 5.8 5.8 5.8 5.8 5.8 5.8 5.8

Warrants 5.4 5.1 5.1 5.1 5.1 5.1 5.1 5.1

Total Current Liabilities 12.5 20.2 21.2 22.2 23.3 24.6 25.9 27.4

Deferred Revenue 0.0 9.9 9.9 9.9 9.9 9.9 9.9 9.9

Total Liabilities 12.5 30.1 31.1 32.1 33.2 34.5 35.8 37.3

Shareholders' Equity

Common shares 216.7 290.0 453.9 457.9 461.9 465.9 469.9 473.9

Additional paid in capital 25.3 26.2 26.2 26.2 26.2 26.2 26.2 26.2

Deficit -167.0 -205.9 -265.5 -319.0 -372.4 -357.5 -344.4 -302.3

Accumulated other comprehensive loss -15.8 -22.3 -22.3 -22.3 -22.3 -22.3 -22.3 -22.3

Total Shareholders' Equity 59.2 88.0 192.3 142.8 93.4 112.3 129.4 175.5

Total Liabilities & Shareholders' Equity 71.7 118.2 223.4 174.9 126.6 146.8 165.2 212.9

Statement of Cash Flow (US$MM) FY2013A FY 2014A FY 2015E FY 2016E FY 2017E FY 2018E FY 2019E FY 2020E

Operating Activities

Net Income -14.1 -38.8 -59.6 -53.5 -53.4 14.9 13.1 42.1

Net Operating Cash Flow -6.7 -12.4 -58.3 -51.9 -51.8 16.6 15.0 44.1

Investing Activities

Capital Expenditures -0.7 -1.1 -0.5 -0.5 -0.5 -0.5 -0.5 -0.5

Proceeds from sale of PP&E 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0

Purchase/Sale of Investments 0.0 -42.0 40.0 0.0 0.0 0.0 0.0 0.0

Net Investing Cash Flow -0.7 -43.0 39.5 -0.5 -0.5 -0.5 -0.5 -0.5

Financing Activities

Issuance of common shares 32.0 56.5 159.9 0.0 0.0 0.0 0.0 0.0

Proceeds from exercise of options, warrants 0.7 4.2 4.0 4.0 4.0 4.0 4.0 4.0

Net Financing Cash Flow 32.7 60.7 163.9 4.0 4.0 4.0 4.0 4.0

Effect of foreign exchange rate change -3.6 -1.8 0.0 0.0 0.0 0.0 0.0 0.0

Net Change in Cash 21.7 3.5 145.1 -48.4 -48.4 20.2 18.4 47.7

Cash and equivalents, beginning of period 47.0 68.7 72.2 217.3 168.8 120.5 140.7 159.1

Cash and equivalents, end of period 68.7 72.2 217.3 168.8 120.5 140.7 159.1 206.8

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Appendix A - Active Partnerships

Alnylam Tekmira and Alnylam have had a long relationship whereby Alnylam was an early user of TKM’s LNP technology with its siRNA products. However, in March 2011, Tekmira sued Alnylam for repeated misuse of trade secrets and confidential information. In November 2012, the parties settled all outstanding litigation and entered into a new licensing agreement. As a result, Tekmira received US$65 MM in cash, of which US$18.7 MM was paid to its legal counsel to satisfy the contingent obligation owed. The US$65 MM included US$30 MM associated with termination of the manufacturing agreement and US$35 MM associated with termination of previous license agreements. Alnylam transferred all patents and patent applications regarding LNP technology for systemic delivery of RNAi therapeutic products to Tekmira. Finally, Alnylam will pay Tekmira milestones and single-digit percentage royalties as Alnylam’s products using Tekmira technology are commercialized. In addition to eight existing InterfeRx licenses, Tekmira received five additional non-exclusive licenses to develop and commercialize RNAi therapeutics based on Alnylam's siRNA payload technology. Tekmira will pay Alnylam milestones and single digit royalties for these products.

Dicerna In November 2014, Tekmira signed a licensing and collaboration agreement with Dicerna Pharmaceuticals, Inc. to license Tekmira's LNP delivery technology for exclusive use in Dicerna's primary hyperoxaluria type 1 (PH1) development program. Dicerna will use Tekmira's third generation LNP technology to deliver DCR-PH1, for the treatment of PH1, a rare inherited liver disorder that often results in kidney failure and for which there are no approved therapies. Tekmira will provide clinical drug supply and regulatory support to advance DCR-PH1.

US Department of Defense's BioDefense Therapeutics In 2010, Tekmira signed a $140 MM contract with the US Department of Defense's (DoD) BioDefense Therapeutics (BDTX), a Joint Product Manager within the Medical Countermeasure Systems (JPM-MCS) Joint Project Management Office, to advance an RNAi therapeutic utilizing Tekmira’s LNP technology to treat Ebola virus infection. In 2013, the collaboration was expanded to include significant advances in LNP formulation technology, including a new LNP formulation that was more potent, the ability to be able to lyophilize (freeze-dry) LNP formulations. In 2014, Tekmira commenced TKM-Ebola Phase I clinical trial. Additionally, in 2014, the DoD exercised an option to scale up and GMP manufacture TKM-Ebola-Guinea.

Arcturus Therapeutics Inc. (Marina Biotech Inc.) In November 2012, Tekmira obtained a worldwide, non-exclusive license to a novel RNAi trigger technology called Unlocked Nucleobase Analog (UNA) from Marina Biotech (NASDAQ:MRNA; unrated) for the development of RNAi therapeutics. Under the license, Marina received initial payments of $0.5 MM, and can earn additional milestone payments of $3.2 MM plus royalties for each product developed using the UNA technology. Incorporated into RNAi drugs, UNAs have the potential to increase their stability and reduce off-target effects. In October of 2013, Marina assigned its rights and obligations for UNA technology to Arcturus, including Tekmira’s license. TKM-HBV is the first of Tekmira’s products to utilize UNA chemistry.

Option Agreement with Monsanto In January 2014, Tekmira signed a four-year option agreement with Monsanto (NYSE: MON; unrated) related to agricultural applications of its RNAi delivery technology. The total value of the deal could reach $86.2 MM if all milestones are completed successfully.

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Monsanto has previously conducted initial testing with Tekmira’s delivery technology in the field of agriculture. This agreement and research collaboration will focus on the development of new innovative biological solutions for farmers related to sustainable pest, virus and weed control. Over the four years of the agreement, Tekmira will provide lipid formulations to Monsanto and Monsanto will pay Tekmira certain amounts to retain its option rights. At any time, Monsanto can exercise its option to receive a worldwide, exclusive license on Tekmira’s technology in the area of agriculture. Tekmira retains rights to therapeutic uses of the products.

Spectrum Pharmaceuticals, Inc. In 2006, Tekmira licensed three liposomal chemotherapy products to Talon Therapeutics: Marqibo (liposomal formulation of the chemotherapy drug vincristine); Alocrest (liposomal formulation of the chemotherapy drug vinorelbine); and, Brakiva (liposomal formulation of the chemotherapy drug topotecan). In 2013, Spectrum Pharmaceuticals acquired Talon Therapeutics. Spectrum has launched Marqibo through its existing hematology sales force. Tekmira receives royalty payments based on Marqibo’s commercial sales.

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Important Disclosures This Research Report is issued and approved for distribution by Bloom Burton & Co. Limited (“Bloom Burton”), a member of the Investment Industry Regulatory Organization of Canada. This Research Report is provided for informational purposes only and is not an offer to sell or the solicitation of an offer to buy any of the securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. The securities mentioned in this Research Report may not be suitable for all types of investors. This Research Report does not take into account the investment objectives, financial situation or specific needs of any particular investor. Recipients of this Research Report should not rely solely on the investment recommendations contained herein and should contact their own professional advisors to determine if an investment is suitable for them. The information contained in this Research Report is prepared from sources believed to be reliable but Bloom Burton makes no representations or warranties, express or implied, with respect to the accuracy, correctness or completeness of such information. All opinions and estimates contained in this Research Report constitute Bloom Burton's judgment as of the date of this Research Report and are subject to change without notice. Past performance is not necessarily indicative of future results and no representation or warranty is made regarding future performance of the securities mentioned in this Research Report. Bloom Burton accepts no liability whatsoever for any direct or consequential loss arising from any use or reliance on this Research Report or the information contained herein. This Research Report may not be reproduced, distributed or published, in whole or in part, without the express permission of Bloom Burton. This Research Report is intended for distribution in the United States only to major U.S. institutional investors (as such term is defined in Rule 15a-6 of the U.S. Securities Exchange Commission) and is not intended for the distribution to or the use by any person or entity that is not a major U.S. institutional investor. Bloom Burton analysts are not registered and/or qualified as research analysts with FINRA and/or the New York Stock Exchange. Any U.S. Person wishing to effect transactions in any of the securities discussed herein should do so through a qualified salesperson at a U.S. registered broker-dealer. The research analyst(s) for this Research Report is compensated based in part on the overall revenues of Bloom Burton, a portion of which are generated by investment banking activities. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. Bloom Burton may have had, or seek to have, an investment banking relationship with companies mentioned in this report. In addition to 1% ownership positions in covered issuers which must be specifically disclosed, Bloom Burton, or its affiliates and their respective officers, directors and employees may from time to time acquire, hold or sell securities mentioned herein or have a position in options, futures or other derivative instruments based thereon. Although Bloom Burton makes every effort possible to avoid conflicts of interest, readers should assume that a conflict might exist, and therefore not rely solely on this Research Report when evaluating whether or not to buy or sell the securities of subject companies. Bloom Burton presently maintains an e-mail list of persons, who have previously expressed an interest in receiving our research, or whom Bloom Burton has identified as having a potential interest in investments relating to the healthcare industry. All research materials including updates and changes to previous rankings are disseminated to these parties and to third party news sources via e-mail. Staff is prohibited from calling or otherwise providing any person with advance notice of research materials. Bloom Burton's research dissemination policies and procedures are also available on its website at www.bloomburton.com. Each research analyst who authored this Research Report and whose name appears herein certifies that: (i) the recommendations and opinions expressed in this Research Report (including the rating assigned) accurately reflects his or her personal views about any and all of the securities or companies discussed

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herein; and (ii) no part of his or her compensation was, is or will be, directly or indirectly, related to the provision of specific recommendation or views expressed herein.

Company Specific Disclosures 1. Bloom Burton & Co. Ltd. has received compensation for investment banking related services within the past 12 months.

Recommendations and Risk Rankings Each company on which Bloom Burton provides research coverage is assigned a recommendation and risk ranking,as set out below: Recommendation Categories Buy – Expected to materially outperform the sector average over the next 12 months. Accumulate – Expected to outperform the sector average over the next 12 months or longer. Hold – Expected to perform similar to the sector average over the next 12 months. Sell – Expected to materially underperform the sector average over the next 12 months. Risk Rankings Average – Volatility and risk expected to be comparable to the broader market; revenue and earnings havepredictability; no significant cash flow and/or financing concerns over next 12 months. Above Average – Volatility and risk expected to be greater than for the broader market; below average revenue and earnings predictability; may have negative cash flow, low market cap or float. Stock may not be suitable for all classes of equity investors. Speculative – High volatility and risk expected; potential for balance sheet concerns, low public float. Stock may be suitable for only a small subset of equity investors willing to take on the risks of a high risk investment. Distribution of Ratings as of April 2015

Rating Number Percentage

BUY 4 50%

ACCUMULATE 3 37.5%

HOLD 1 12.5%

SELL 0 0%

Total 8 100%