Ms. Julie Rezler reports

TEKMIRA PROVIDES CORPORATE UPDATE AND ANNOUNCES SECOND QUARTER 2014 RESULTS

Tekmira Pharmaceuticals Corp. has released its financial and operating results for the second quarter ended June 30, 2014, and has provided a corporate update.

"We continue to monitor the tragic Ebola virus outbreak very closely. The current outbreak underscores the critical need for an effective therapeutic agent to treat the Ebola virus," said Dr. Mark J. Murray, Tekmira's president and chief executive officer.

"We remain sharply focused on our clinical programs and the key milestones to be reached by year-end. Importantly, our hepatitis B program continues to advance, with the goal of filing an IND, or equivalent, for our TKM-HBV program in the second half of 2014. Within our TKM-PLK1 oncology platform, we expect to present phase IIa interim data from our clinical trial with GI-NET and ACC patients before the end of this year, and we have begun enrolment in an additional phase I/II trial targeting HCC patients," stated Dr. Murray.

Corporate update

For the second quarter ended June 30, 2014, the company had cash, cash equivalents and investments of $129.5-million. The company has 22.1 million common shares issued and outstanding, and 24.6 million shares on a fully diluted basis.

The single ascending-dose portion of the TKM-Ebola phase I clinical trial has been completed in healthy human volunteers. As per the protocol, the maximum-tolerated dose was established to be 0.3 milligram per kilogram for healthy subjects without steroid premedication.

In July, the company received notice from the U.S. Food and Drug Administration that its TKM-Ebola program was on clinical hold. Subsequently, the company received written notice from the FDA modifying the clinical hold to a partial clinical hold, allowing for the potential use of TKM-Ebola in individuals who have a confirmed or suspected Ebola infection. The company remains on clinical hold as it relates to the multiple-ascending dose portion of the phase I clinical study in healthy volunteers with TKM-Ebola. The company expects this matter to be resolved by fourth quarter 2014.

The company's therapeutic, TKM-Ebola, is currently an unapproved agent, and the regulatory framework to support its use in Africa has not yet been established. Given the severity of the situation, the company is carefully evaluating options for use of its investigational drug within accepted clinical and regulatory protocols. This includes discussions with government agencies and NGOs, including the WHO, in various countries on the potential use of TKM-Ebola to treat Ebola-virus-infected individuals. There can be no assurance that an appropriate framework for the use of this product will be found. The company will continue to provide updates as necessary when clinical and regulatory pathways become confirmed.

Within the company's TKM-PLK1 clinical trial, targeting GI-NET and ACC patients, the company saw an additional Recist qualifying partial response, defined as a greater-than-30-per-cent reduction in target tumour lesions. This patient is continuing on therapy and has achieved a 44-per-cent reduction in target tumour mass, located outside of the liver. Furthermore, scans of the target tumour lesions demonstrate signs of necrosis, indicative of anti-tumour activity.

The company has initiated a phase I/II clinical study of TKM-PLK1 in patients with hepatocellular carcinoma.

The company intends to file an investigational new drug application, or equivalent, in the second half of 2014, to advance its TKM-HBV program into a phase I clinical study, with initial data available in 2015.

The company received an additional $1.5-million payment from Monsanto following completion of specified program developments.

Financial results

Net loss

The net loss for second quarter 2014 was $6.1-million (28 cents per common share) as compared with a net loss of $3.0-million (21 cents per common share) for second quarter 2013. This increased loss largely reflects expense increases of $5.3-million offset by other income gains of $3.1-million, relating to foreign exchange and warrant revaluation. The net loss for the first-half 2014 was $24.1-million ($1.15 per common share) as compared with a net loss of $5.6-million (39 cents per common share) for the first half of 2013. This increased loss largely reflects expense increases of $10.6-million and other income losses of $9.3-million relating to foreign exchange losses and warrant revaluation.

Revenue

Revenue was $1.8-million for second quarter 2014 as compared with $2.8-million for second quarter 2013. Under the DoD contract to develop TKM-Ebola, Tekmira is being reimbursed for costs incurred, including an allocation of overheads, and is being paid an incentive fee. For this contract, Tekmira recorded $900,000 in revenue in second quarter 2014 as compared with $2.5-million in second quarter 2013.

Tekmira also recorded revenue from Monsanto for research services and the use of the company's technology. In June, Tekmira received $1.5-million from Monsanto following the completion of specified program developments. Most of the revenue recorded under this contract is being amortized over the contract period, which was determined to be four years at inception. Monsanto revenue in second quarter was $900,000.

In addition, Tekmira recorded royalty revenue from Spectrum for the commercial sales of Marqibo during second quarter 2014.

Research, development, collaborations and contracts expenses

Research, development, collaborations and contracts expenses were $9.3-million in second quarter 2014 as compared with $4.9-million in second quarter 2013.

TKM-HBV expenses increased as Tekmira prepares to file an IND (or equivalent) in the second half of 2014, and TKM-PLK1 expenses increased with the expansion in the number of clinical trial sites and set-up for the HCC trial. In addition, Tekmira increased research activities related to the collaboration with Monsanto in the agricultural field.

General and administrative

General and administrative expenses were $1.8-million in second quarter 2014 as compared with $800,000 in second quarter 2013. The increase in general and administrative expense was due to an increase in compensation expense with the growth in employee base to support the expanded portfolio of product candidates.

Other income (losses)

In second quarter 2014, Tekmira recorded a foreign exchange loss of $2.7-million related to the depreciation in value of U.S.-dollar funds, as compared with a foreign exchange loss of $60,000 in second quarter 2013.

The decrease in value of Tekmira's common share purchase warrants was $5.8-million in second quarter 2014 as compared with an increase in the value of common share purchase warrants outstanding of $30,000 in second quarter 2013. The change in value is a direct result of the change in the company's share price between reporting periods.

Conference call information

Tekmira will hold a conference call and webcast Aug. 13, 2014, at 2 p.m. Pacific Time (5 p.m. Eastern Time) to provide a corporate update and report financial results for the second quarter ended June 30, 2014. A live webcast of the call can be accessed through the investor section of Tekmira's website. Or, alternatively, to access the conference call, please dial 914-495-8556 or 1-866-393-1607.

An archived webcast will be available on the Tekmira website approximately two hours after the event. Alternatively, you may access a replay of the conference call by calling 404-537-3406 or 1-855-859-2056 and referencing conference ID 76477548.

About RNAi and Tekmira's LNP

RNAi therapeutics have the potential to treat a broad number of human diseases by silencing disease-causing genes. The discoverers of RNAi, a gene-silencing mechanism used by all cells, were awarded the 2006 Nobel Prize for physiology or medicine. RNAi therapeutics, such as siRNAs, require delivery technology to be effective systemically. Tekmira believes its LNP technology represents the most widely adopted delivery technology for the systemic delivery of RNAi therapeutics. Tekmira's LNP platform is being utilized in multiple clinical trials by both Tekmira and its partners. Tekmira's LNP technology (formerly referred to as stable nucleic acid-lipid particles or SNALP) encapsulates siRNAs with high efficiency in uniform lipid nanoparticles that are effective in delivering RNAi therapeutics to disease sites in numerous preclinical models. Tekmira's LNP formulations are manufactured by a proprietary method, which is robust, scalable and highly reproducible, and LNP-based products have been reviewed by multiple FDA divisions for use in clinical trials. LNP formulations comprise several lipid components that can be adjusted to suit the specific application.

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