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Tekmira Pharmaceuticals Corp – ‘PREM14A’ for 1/23/15

On:  Friday, 1/23/15, at 5:19pm ET   ·   For:  1/23/15   ·   Accession #:  1193125-15-19047   ·   File #:  1-34949

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 1/23/15  Tekmira Pharmaceuticals Corp      PREM14A     1/23/15    1:4.2M                                   RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: PREM14A     Preliminary Proxy Solicitation Material -- Merger   HTML   2.84M 
                          or Acquisition                                         

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant  x                            Filed by a Party other than the Registrant  ¨

Check the appropriate box:

TEKMIRA PHARMACEUTICALS CORPORATION

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filling Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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TEKMIRA PHARMACEUTICALS CORPORATION

100-8900 Glenlyon Parkway

Burnaby, British Columbia, Canada, V5J 5J8

Dear Shareholder,

You are cordially invited to attend the special meeting of the shareholders of Tekmira Pharmaceuticals Corporation (“Tekmira”) to be held on [                    ] [                    ], 2015 at [                    ] (Pacific Time) at [                    ], Vancouver, British Columbia.

At the special meeting, our shareholders will be asked to:

(1) Approve (a) an Agreement and Plan of Merger, dated as of January 11, 2015 (the “Merger Agreement”), by and among Tekmira, TKM Acquisition Corporation, a wholly-owned subsidiary of Tekmira (“Merger Sub”), and OnCore Biopharma, Inc. (“OnCore”), pursuant to which Merger Sub will merge with and into OnCore, with OnCore surviving as a wholly owned subsidiary of Tekmira and the stockholders of OnCore receiving common shares of Tekmira and (b) the issuance of common shares of Tekmira pursuant to the terms of the Merger Agreement;

(2) Approve an amendment to Tekmira’s Articles to provide for certain governance matters after the closing of the merger;

(3) Adjourn the special meeting, if necessary and appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve any of the proposals; and

(4) Consider and act on such other matters that may properly come before the special meeting or any adjournment or postponement thereof, including any procedural matters incident to the conduct of the special meeting.

After careful consideration, the Tekmira Board has unanimously determined that the merger with OnCore is in the best interests of Tekmira and is fair to Tekmira’s shareholders and recommends that Tekmira shareholders vote “FOR” the proposals set forth above.

Upon completion of the merger, Tekmira security holders will own 50% of the outstanding equity of the combined company, and OnCore security holders will own 50% of the outstanding equity of the combined company, calculated immediately prior to the effective time of the merger on a fully-diluted and as-converted basis using the “treasury stock method”. Subject to obtaining regulatory approvals, securityholder approval, and satisfying certain other closing conditions, it is anticipated that the merger will be completed shortly following the special meeting. This proxy statement/circular provides you with detailed information about Tekmira, OnCore, the merger, the combined company and the Merger Agreement. Please give all of the information in this proxy statement/circular your careful attention. Please pay particular attention to the section entitled “RISK FACTORS” beginning on page 22 for a discussion of the risks related to the merger, the combined company following completion of the merger, and the business and operations of each of Tekmira and OnCore.

Tekmira’s common shares are listed on the NASDAQ Global Market and the Toronto Stock Exchange. On [                    ] [                    ], 2015, the last trading day before the date of this proxy statement/circular, the closing sales price per share of Tekmira’s common shares on the NASDAQ Global Market was US$[        ] per share and C$[        ] per share on the Toronto Stock Exchange. OnCore is a privately-held company, and there is currently no public market for its securities.

Thank you for your cooperation and continued support.

This proxy statement/circular is dated [                    ] [                    ], 2015

and is first being mailed or otherwise delivered to shareholders of Tekmira on or about [                    ] [                    ], 2015.

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PRELIMINARY PROXY MATERIALS — SUBJECT TO COMPLETION, DATED JANUARY 23, 2015

TEKMIRA PHARMACEUTICALS CORPORATION

100-8900 Glenlyon Parkway

Burnaby, British Columbia, Canada V5J 5J8

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To Be Held On [                    ] [                    ], 2015

Dear Shareholders of Tekmira Pharmaceuticals Corporation:

NOTICE IS HEREBY GIVEN that a special meeting of the shareholders of Tekmira Pharmaceuticals Corporation (“Tekmira”), will be held on [                    ] [                    ], 2015 at [                    ] (Pacific Time) at [                    ], Vancouver, British Columbia, for the following purposes:

Tekmira’s Board has fixed the close of business on [                    ] [                    ], 2015 as the record date for determining Tekmira shareholders entitled to receive notice of and to vote at the special meeting in person or by proxy or any adjournments or postponements of the Tekmira special meeting. Only holders of record of Tekmira common shares at the close of business on the record date are entitled to notice of and to vote at the Tekmira special meeting. At the close of business on the record date, Tekmira had [                    ] common shares outstanding and entitled to vote.

Tekmira’s Board, by unanimous vote, recommends that you vote “FOR” the Merger Agreement proposal, “FOR” the proposal to approve an amendment to Tekmira’s Articles, and “FOR” the proposal to adjourn or postpone the special meeting, if necessary, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve any of the proposals.

The recommendation of the Board is based on various factors, including the recommendation of its Strategic Committee and the opinion of Lazard Frères & Co. LLC, financial advisors to the Board, to the effect that, as of the date of its respective opinion and based on and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be paid by Tekmira in the transaction is fair, from a financial point of view, to Tekmira. A copy of the opinion is included as Annex B to the accompanying proxy statement/circular.

Even if you plan to attend the Tekmira special meeting in person, Tekmira requests that you complete, sign and return the enclosed proxy or otherwise provide your proxy and thus ensure that your shares will be represented at the Tekmira special meeting if you are unable to attend. If you sign, date and mail your proxy or otherwise provide your proxy without indicating how you wish to vote, your proxy will be counted as a vote in favor of the above proposals.

Your vote is important. The affirmative vote of the holders of a majority of the Tekmira common shares present in person or represented by proxy and entitled to vote at the special meeting, assuming a quorum is present, is required for the approval of the above proposals.

This proxy statement/circular is dated [                    ] [                    ], 2015

and is first being mailed or otherwise delivered to shareholders of Tekmira on or about [            ] [            ], 2015.

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QUESTIONS AND ANSWERS ABOUT THE MERGER

The following section provides answers to frequently asked questions about the merger and the effect of the merger on holders of Tekmira securities and the Tekmira special meeting of shareholders. This section, however, only provides summary information. Tekmira urges you to carefully read the remainder of this proxy statement/circular, including the annexes to this proxy statement/circular, because the information in this section does not provide all of the information that might be important to you regarding the merger and the other matters being considered at the Tekmira special meeting of shareholders.

As used in this proxy statement/circular, references to Tekmira refer to Tekmira Pharmaceuticals Corporation, a British Columbia corporation, references to OnCore refer to OnCore Biopharma, Inc., a Delaware corporation, references to Merger Sub refer to TKM Acquisition Corporation, a Delaware corporation, references to the combined company refer collectively to Tekmira and its subsidiaries following the proposed transaction described in this proxy statement/circular, references to the Merger Agreement refer to the Agreement and Plan of Merger dated January 11, 2015, by and among Tekmira, Merger Sub and OnCore, a copy of which is attached as Annex A to this proxy statement/circular, references to merger refer to the merger of Merger Sub with and into OnCore, with OnCore as the surviving, wholly owned subsidiary of Tekmira as contemplated under the Merger Agreement, and references to the Effective Time refer to the Effective Time of the merger as contemplated under the Merger Agreement.

Q: What is the merger?

A: Tekmira, Merger Sub, a wholly owned subsidiary of Tekmira, and OnCore have entered into the Merger Agreement that contains the terms and conditions of the proposed business combination of Tekmira and OnCore. Pursuant to the terms and conditions of the Merger Agreement, Merger Sub will merge with and into OnCore, with OnCore surviving the merger as a wholly owned subsidiary of Tekmira.

At the Effective Time, all outstanding shares of OnCore common stock and OnCore preferred stock will be converted into Tekmira common shares.

Q: Why am I receiving this proxy statement/circular?

A: You are receiving this proxy statement/circular because you have been identified as a shareholder of Tekmira. If you are a shareholder of record of Tekmira as of the record date, you are entitled to vote at Tekmira’s special meeting of shareholders. This document serves as a proxy statement/circular of Tekmira and is used to solicit proxies for Tekmira’s special meeting of shareholders. This document contains important information about the merger, OnCore, the combined company and the special meeting of Tekmira shareholders and should be read carefully in its entirety. The enclosed voting materials allow you to vote your shares without attending the special meeting. Your vote is important. We encourage you to vote as soon as possible.

Q: When and where is the Tekmira special meeting?

A: The special meeting of the shareholders of Tekmira will be held on [        ] [        ], 2015 at [            ] (Pacific Time) at [            ], in Vancouver, British Columbia.

Q: How will proxies be solicited and who is paying for this proxy solicitation?

A: The solicitation of proxies will be primarily by mail, but Tekmira’s directors, officers and regular employees may also solicit proxies personally or by telephone. Tekmira will bear the costs of the solicitation, including the preparation, assembly, printing and mailing of this proxy statement/circular, the proxy and any additional information furnished to Tekmira shareholders. Tekmira may also reimburse brokerage houses and other custodians, nominees and fiduciaries for their costs of forwarding proxy materials to beneficial owners of its common shares.

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Q: What is required to consummate the merger?

A: To consummate the merger, Tekmira shareholders must approve: (i) the Merger Agreement and the issuance of Tekmira common shares in the merger; and (ii) to approve an amendment to Tekmira’s Articles to provide for certain governance after the closing of the merger. Tekmira shareholders have also been asked to approve a proposal to adjourn the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of any of the proposals.

Certain stockholders of OnCore, representing approximately 97% of the issued and outstanding shares in the capital stock of OnCore, have approved the merger with Tekmira.

The affirmative vote of the holders of a majority of the Tekmira common shares present in person or represented by proxy and entitled to vote at the special meeting, assuming a quorum is present, is required for the approval of the above proposals. For more information, please see the sections entitled “MATTERS BEING SUBMITTED TO A VOTE OF TEKMIRA SHAREHOLDERS” and “THE TEKMIRA SPECIAL MEETING — Record Date, Quorum, Voting Requirements and Outstanding Shares”.

Concurrently and in connection with the execution of the Merger Agreement, Tekmira’s directors and executive officers, who beneficially owned approximately 3.6% of Tekmira’s common shares outstanding as of the date of the Merger Agreement, entered into voting agreements with OnCore, pursuant to which each such shareholder agreed to vote its Tekmira common shares in furtherance of the transactions contemplated by the Merger Agreement.

In addition to the requirement of obtaining such shareholder approvals and appropriate regulatory approvals, each of the other closing conditions set forth in the Merger Agreement must be satisfied or waived. For a more complete description of the closing conditions under the Merger Agreement, please see the section entitled “THE MERGER AGREEMENT – Conditions to Completion of the Merger.”

Q: When do Tekmira and OnCore expect to complete the merger?

A: Tekmira and OnCore are working to complete the merger during the first half of 2015, or as soon as reasonably possible. Tekmira and OnCore must first obtain the necessary approvals, including the approval of Tekmira’s shareholders, and satisfy the closing conditions described in the Merger Agreement. There can be no assurance as to whether all the conditions to the merger will be met, nor prediction of the exact timing of the completion of the merger. It is possible Tekmira and OnCore will not complete the merger.

Q: What are the material U.S. federal income tax consequences of the merger to me?

A: Tekmira shareholders will not exchange or surrender their common shares of Tekmira in the merger or receive any separate consideration in the merger. Accordingly, you will not recognize gain or loss as a result of the merger.

For more information, please see the section entitled “SUMMARY — Material U.S. Federal Income Tax Consequences of the Merger to Tekmira and Tekmira Shareholders.”

Q: What are the material Canadian federal income tax consequences of the merger to me?

A: Tekmira shareholders will not dispose of their common shares of Tekmira by virtue of the merger and will not receive any consideration as a consequence of the merger. Accordingly, you will not realize a capital gain (or incur a capital loss) in respect of your common shares in Tekmira as a result of the merger.

For more information, please see the section entitled “SUMMARY — Material Canadian Federal Income Tax Consequences of the Merger to Tekmira Shareholders.”

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Q: Who will be the directors of the combined company following the merger?

A: Pursuant to the terms of the Merger Agreement, there will be seven directors of the combined company. Vivek Ramaswamy will serve as Chairman of the Board, Daniel Kisner, MD, will serve as Vice Chairman of the Board, and Mark J. Murray, PhD and Keith Manchester will also serve on the Board. Two directors of the combined company will be appointed no later than five business days prior to the mailing of this proxy statement/circular, one will be designated by Tekmira, the other designated by OnCore. The final director will be agreed upon by Tekmira and OnCore not later than five business days prior to the mailing of this proxy statement/circular, if possible.

Q: Who will be the executive officers of the combined company following the merger?

A: Following the merger, the combined company’s management team will include Mark J. Murray, PhD, Chief Executive Officer; Patrick T. Higgins, President and Chief Operating Officer; Bruce Cousins, Executive Vice-President and Chief Financial Officer; Michael J. Sofia, PhD, Chief Scientific Officer; Mark Kowalski, MD, PhD, Senior Vice-President and Chief Medical Officer; and Michael J. Abrams, PhD, Executive Vice-President and Chief Discovery Officer. William T. Symonds, Pharm.D., who led the clinical development of sofosbuvir for the treatment of HCV infection at Pharmasset and later Gilead Sciences, Inc., will be Chief Development Officer and lead the clinical development of the portfolio.

Q: What risks should I consider in deciding whether to vote in favor of the proposals?

A: You should carefully review the section of this proxy statement/circular entitled “RISK FACTORS,” which sets forth certain risks and uncertainties related to the merger, risks and uncertainties to which the combined company’s business will be subject, and risks and uncertainties to which OnCore (prior to completion of the merger) is subject.

Q: Who can help answer my questions?

A: If you would like additional copies, without charge, of this proxy statement/circular or if you have questions about the merger, including the procedures for voting your shares, please direct your request to Bruce Cousins, Executive Vice-President and Chief Financial Officer of Tekmira at 100-8900 Glenlyon Parkway, Burnaby, British Columbia, Canada, V5J 5J8, Telephone: (604) 419-3200.

You may also obtain additional information about Tekmira in documents, Tekmira files with the U.S. Securities and Exchange Commission and the Canadian securities administrators. See the section entitled “ADDITIONAL INFORMATION.”

Q: What do Tekmira shareholders need to do now?

A: You should read this proxy statement/circular carefully, including its annexes, and consider how the merger affects you and then vote your shares either in person at the special meeting or by proxy.

Registered Shareholder: Common Shares Registered in Your Name

If you are a registered shareholder, you may vote in person at the special meeting or by proxy whether or not you attend the special meeting in person.

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If you wish to submit a proxy, whether by paper, telephone, email, fax or internet, you must complete and sign the proxy, and then return it to Tekmira’s transfer agent, CST Trust Company Inc.: PO Box 721, Agincourt, ON M1S 0A1 (mail) or 1600-1066 West Hastings St., Vancouver, BC V6E 3X1; facsimile: 1-866-781-3111 (toll free in North America) or 1-416-368-2502; in each case, no later than 48 hours (excluding Saturdays, Sundays and holidays) prior to the time of the special meeting, or adjournment or postponement thereof. The chair of the special meeting may waive the proxy cut-off without notice. If the proxy is not dated, it will be deemed to be dated seven calendar days after the date on which it was mailed to you (the Registered Shareholder).

Beneficial Shareholder: Common Shares Registered in the Name of an Intermediary such as a Brokerage Firm, Bank, Dealer or other Similar Organization

The following information is of significant importance to Tekmira shareholders who do not hold common shares of Tekmira in their own name. Beneficial shareholders should note that the only proxies that can be recognized and acted upon at the special meeting are those deposited by registered shareholders.

If your common shares are listed in an account statement provided to you by a broker, then in almost all cases your common shares will not be registered in your name on the records of Tekmira. In such circumstances your common shares will more likely be registered under the names of your broker or an agent of that broker. In the United States, the vast majority of such common shares of Tekmira are registered under the name of Cede & Co., as nominee for The Depository Trust Company (which acts as depositary for many U.S. brokerage firms and custodian banks), and in Canada, under the name of CDS & Co. (the registration name for CDS Clearing and Depository Services Inc., which acts as nominee for many Canadian brokerage firms).

Intermediaries are required to seek voting instructions from beneficial shareholders in advance of shareholders’ meetings. Every intermediary has its own mailing procedures and provides its own return instructions to clients.

This proxy statement/circular is being sent to both registered shareholders and beneficial shareholders. There are two kinds of beneficial shareholders — those who object to their names being made known to the issuers of securities which they own (called OBOs for objecting beneficial owners), and those who do not object (called NOBOs for non-objecting beneficial owners).

Tekmira is taking advantage of National Instrument 54-101 — Communications with Beneficial Owners of Securities of a Reporting Issuer, which permits it to deliver proxy-related materials indirectly to its NOBOs and OBOs. As a result, if you are a NOBO or OBO you can expect to receive meeting materials from your intermediary via Broadridge Financial Solutions Inc., or Broadridge, including a voting information form, or VIF. If you receive a VIF, you should follow the instructions in the VIF to ensure that your common shares are voted at the meeting. The VIF or form of proxy will name the same individuals as Tekmira’s proxy to represent you at the meeting. You have the right to appoint a person (who need not be a shareholder of Tekmira) other than the individuals designated in the VIF, to represent you at the meeting. To exercise this right, you should insert the name of your desired representative in the blank space provided in the VIF. The completed VIF must then be returned in accordance with the instructions in the VIF. Broadridge then tabulates the results of all instructions received and completed in accordance with the instructions provided in the VIF and provides appropriate instructions respecting the voting of common shares to be represented at the special meeting. If you receive a VIF from Broadridge, you cannot use it to vote common shares directly at the special meeting — the VIF must be completed and returned in accordance with its instructions, well in advance of the special meeting in order to have your common shares voted.

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Although as a beneficial shareholder you may not be recognized directly at the special meeting for the purposes of voting common shares registered in the name of your intermediary, you, or a person designated by you, may attend at the meeting as proxyholder for your intermediary and vote your common shares in that capacity. If you wish to attend the special meeting and indirectly vote your common shares as proxyholder for your intermediary, or to have a person designated by you do so, you should enter your own name, or the name of the person you wish to designate, in the blank space on the VIF provided to you and return the same in accordance with the instructions provided in the VIF, well in advance of the special meeting.

Alternatively, you can request in writing that your intermediary send you a legal proxy which would enable you to attend the meeting and vote your common shares.

These securityholder materials are being sent to both registered and beneficial shareholders. If you are a beneficial shareholder, and Tekmira or its agent has sent these materials to you, your name and address and information about your holdings of common shares have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding on your behalf. Tekmira has engaged Broadridge to send the NOBO list directly to Tekmira shareholders, and Tekmira intends to pay for an intermediary to deliver the meeting materials to OBOs.

Q: How does Tekmira’s Board recommend that I vote?

A: After careful consideration, the Board of Tekmira has unanimously determined that the merger with OnCore is in the best interests of Tekmira and is fair to Tekmira’s shareholders and recommends that shareholders vote FOR the resolutions approving the issuance of Tekmira common shares in the merger.

Q: What constitutes quorum at the Tekmira special meeting?

A: To transact business at the special meeting, a quorum of shareholders must be present at the commencement of the special meeting, either in person or by proxy. Under Tekmira’s Articles, the quorum for the transaction of business at the special meeting is at least two people who are, or who represent by proxy, one or more shareholders who, in the aggregate, hold at least 5% of the issued common shares of Tekmira. Tekmira has received a waiver of Rule 4350(f) from the NASDAQ Global Market, or the NASDAQ, which would otherwise require a quorum of holders of not less than 33 1/3% of Tekmira common shares.

Q: Who can vote at the special meeting?

A: Only shareholders who hold Tekmira common shares at the close of business on the record date, which is [        ] [        ], 2015, will be entitled to vote at the Tekmira special meeting.

Q: Can I revoke my proxy?

A: Yes. In addition to revocation in any other manner permitted by law, if you are a registered shareholder and you wish to revoke your proxy, you may do so by depositing a written instrument to that effect and delivering it to CST Trust Company PO Box 721, Agincourt, ON M1S 0A1, or by hand to 1600-1066 West Hastings St., Vancouver, BC V6E 3X1 (hand delivery) or to the address of the registered office of Tekmira at Farris, Vaughan, Wills & Murphy LLP, 25th Floor, 700 West Georgia Street, Vancouver, British Columbia, V7Y 1B3, attention: R. Hector MacKay-Dunn, Q.C., at any time up to and including the last business day preceding the day of the special meeting, or any adjournment thereof, or to the Chairman of the special meeting on the day of the special meeting before any vote in respect of which the proxy has been given has been taken.

If you are a registered shareholder and you wish to revoke your proxy by providing a written instrument to such effect, such written instrument must be executed in writing by you or your legal personal representative or trustee in bankruptcy, or, if you are a corporation that is a registered shareholder, by the corporation or a representative of the corporation appointed in accordance with Tekmira’s Articles.

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Beneficial shareholders who wish to change their vote must, in sufficient time in advance of the special meeting, arrange for their intermediaries to change the vote and, if necessary, revoke their proxy.

Q: Are materials for the special meeting being provided by way of notice-and-access?

A: No. Tekmira is not sending meeting materials for the special meeting to shareholders using the “notice and access” provisions of National Instrument 54-101 — Communication with Beneficial Owners of Securities of a Reporting Issuer, or pursuant to the rules and regulations of the SEC. However, the Notice of Special Meeting of Shareholders and the Proxy Statement for the Special Meeting of Shareholders are available at http://                    .

Q: How can I find out the results of the special meeting?

A: Preliminary voting results will be announced at the special meeting. Final voting results of the special meeting will be announced by Tekmira in a news release and filed on the SEC’s website at www.sec.gov and on SEDAR at www.sedar.com.

Q: What will happen to my Tekmira common shares in the merger?

A: Nothing. Each currently outstanding Tekmira common share held by you will remain outstanding as a Tekmira common share after the merger, and will continue to be listed on the NASDAQ and the Toronto Stock Exchange, or TSX.

Q: What will OnCore stockholders receive in the merger?

A: Tekmira has agreed to issue, and OnCore stockholders will have the right to receive, for each share of OnCore common stock they hold, that number of Tekmira common shares, as determined pursuant to the exchange ratio described in the Merger Agreement and in the section entitled “THE MERGER AGREEMENT — Merger Consideration.” If the merger is consummated, each share of OnCore common stock and OnCore preferred stock will convert into the right to receive that number of Tekmira common shares equal to the exchange ratio. The exchange ratio is a formula set forth in the Merger Agreement and described in this proxy statement/circular under the heading “THE MERGER AGREEMENT — Merger Consideration.”

Upon completion of the merger, Tekmira security holders will own 50% of the outstanding equity of the combined company, and OnCore security holders will own 50% of the outstanding equity of the combined company, calculated immediately prior to the effective time of the merger on a fully-diluted and as-converted basis using the “treasury stock method”.

The treasury stock method is a method used to determine the dilutive effect of options or warrants to purchase shares that have been issued by a company and which remain outstanding. It assumes that the proceeds that the company would receive from each outstanding “in-the-money” option or warrant (being an option or warrant with an exercise price less than the market price of the shares at the time of exercise), if exercised, would be used to repurchase shares at the market price. In other words, the number of issued and outstanding shares of a company that are deemed to be outstanding at any particular time is increased by the number of shares that would be issued on the exercise of all in-the-money options or warrants, then reduced by the number of shares that the company could purchase at the market price at that time using the aggregate gross proceeds from the exercise of such in-the-money options or warrants.

The exact number of Tekmira shares to be issued pursuant to the Merger Agreement will not be known until the Effective Time of the merger. However, assuming that the closing of the merger occurred on January 20, 2015, then, based on the closing price of Tekmira common shares on the NASDAQ and the number of outstanding securities of each of Tekmira and OnCore on December 31, 2014, Tekmira and OnCore security

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holders would own, following the closing of the merger, approximately (i) 48.4% and 51.6%, respectively, of the issued and outstanding common shares of Tekmira, calculated on a non-diluted basis, and (ii) 50% and 50%, respectively, of the issued and outstanding common shares of Tekmira, calculated on a fully-diluted and as-converted basis using the treasury stock method.

Q: How will the merger affect stock options for OnCore capital stock?

A: Tekmira will assume 237,570 options to purchase shares of OnCore common stock, which will become exercisable for Tekmira common shares with the same terms, exercisability, vesting schedule and other provisions, but with the number of shares and exercise price being appropriately adjusted to reflect the exchange ratio between Tekmira common shares and OnCore common stock determined in accordance with the Merger Agreement and described above.

Q: Will OnCore shareholders be able to trade the Tekmira common shares that they receive in the merger?

A: The Tekmira common shares issued to OnCore shareholders in the merger will be issued in a transaction exempt from registration under the Securities Act of 1933 in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder, and under Canadian exemptions from prospectus and registration requirements. Such shares have not been registered under the Securities Act of 1933 and may not be offered or sold by the OnCore shareholders in the United States absent registration or an applicable exemption from registration requirements and are subject to resale restrictions under Canadian securities laws. In connection with the merger, however, Tekmira has entered into a Registration Rights Agreement with OnCore shareholders agreeing to file with the SEC a registration statement on Form S-3 to register the Tekmira common shares they receive in the merger for resale in the public markets. Upon such registration statement being declared effective by the SEC, such shares shall become freely tradeable.

However, Roivant Sciences Ltd., or Roivant, and each director and executive officer of OnCore have all agreed to hold Tekmira shares received in the merger for a specified period of time with 25% released at 9 months, a further 10% released every 3 months thereafter, and the balance of 25% released at 27 months. See “OTHER AGREEMENTS” for more detail.

It is a condition to the completion of the merger that the Tekmira common shares to be issued pursuant to the Merger Agreement be approved for listing on the NASDAQ and TSX.

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RISK FACTORS

Shareholders should carefully consider the risks described below relating to the merger, the business of OnCore prior to the merger, and the combined company. The risks and uncertainties described below are not the only ones Tekmira and the combined company face. Additional risks and uncertainties not presently known to Tekmira or that Tekmira currently considers immaterial may also impair Tekmira’s, OnCore’s or the combined company’s operations. If any of the following risks actually occur, Tekmira’s business, financial conditions and/or results of operations could be materially adversely affected, the trading price of Tekmira’s or the combined company’s common shares could decline and a shareholder could lose all or part of his or her investment.

Risks Related to the Proposed Merger

The issuance of Tekmira common shares to OnCore stockholders in the merger will dilute substantially the voting power of current Tekmira shareholders.

Pursuant to the terms of the Merger Agreement, at the Effective Time, all outstanding shares of OnCore common stock will be converted into Tekmira common shares based on the exchange ratio. Upon completion of the merger, the Tekmira security holders will own 50% of the outstanding equity of the combined company, and OnCore security holders will own 50% of the outstanding equity of the combined company, in each case, on an as converted and fully diluted basis. The exact number of Tekmira shares to be issued pursuant to the Merger Agreement will not be known until the effective time of the merger. However, assuming that the closing of the merger occurred on January 20, 2015, then, based on the closing price of Tekmira common shares on the NASDAQ and the number of outstanding securities of each of Tekmira and OnCore on December 31, 2014, Tekmira and OnCore security holders would own, following the closing of the merger, approximately (i) 48.4% and 51.6%, respectively, of the issued and outstanding common shares of Tekmira, calculated on a non-diluted basis, and (ii) 50% and 50%, respectively, of the issued and outstanding common shares of Tekmira, calculated on a fully-diluted and as-converted basis using the treasury stock method.

Accordingly, the issuance of Tekmira common shares to OnCore stockholders in the merger will reduce significantly the relative voting power of each Tekmira common share held by current Tekmira shareholders. Consequently, Tekmira shareholders as a group will have significantly less influence over the management and policies of the combined company after the merger than prior to the merger.

There is no assurance when or even if the merger will be completed. Failure to obtain required approvals necessary to satisfy closing conditions may delay or prevent completion of the merger.

Completion of the merger is subject to the satisfaction or waiver of a number of conditions, including the requisite approvals by the shareholders of Tekmira. There can be no assurance that Tekmira will be able to satisfy the closing conditions or that closing conditions beyond its control will be satisfied or waived.

Because the lack of a public market for OnCore’s outstanding shares makes it difficult to evaluate the fairness of the merger, OnCore stockholders may receive consideration in the merger that is greater than or less than the fair market value of the OnCore shares.

The outstanding capital stock of OnCore is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of OnCore shares. Since the percentage of Tekmira’s equity to be issued to OnCore stockholders was determined based on negotiations between the parties, it is possible that the value of the Tekmira common shares to be issued in connection with the merger will be greater than the fair market value of OnCore shares. Alternatively, it is possible that the value of the Tekmira common shares to be issued in connection with the merger will be less than the fair market value of OnCore shares.

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Because the merger will be completed after the date of the Tekmira special meeting, at the time of the special meeting, you will not know the exact number of Tekmira common shares that the OnCore stockholders will receive upon completion of the merger.

Subject to the terms of the Merger Agreement, at the Effective Time, each share of OnCore common stock issued and outstanding immediately prior to the merger will be canceled and converted into the right to receive that number of Tekmira common shares as determined pursuant to the exchange ratio. The exchange ratio requires the closing price of Tekmira’s common shares immediately prior to closing. See the section entitled “THE MERGER AGREEMENT — Merger Consideration.” Accordingly, the exact number of Tekmira common shares that OnCore stockholders will receive upon completion of the merger will not be available at the time of the Tekmira special meeting. The exact number of Tekmira shares to be issued pursuant to the Merger Agreement will not be known until the effective time of the merger. However, assuming that the closing of the merger occurred on January 20, 2015, then, based on the closing price of Tekmira common shares on the NASDAQ and the number of outstanding securities of each of Tekmira and OnCore on December 31, 2014, Tekmira and OnCore security holders would own, following the closing of the merger, approximately (i) 48.4% and 51.6%, respectively, of the issued and outstanding common shares of Tekmira, calculated on a non-diluted basis, and (ii) 50% and 50%, respectively, of the issued and outstanding common shares of Tekmira, calculated on a fully-diluted and as-converted basis using the treasury stock method.

Tekmira executive officers and directors may have interests in the merger that are different from, or in addition to, those of Tekmira shareholders generally.

The executive officers and directors of Tekmira may have interests in the merger that are different from, or are in addition to, those of Tekmira shareholders generally.

The directors of the combined company will consist of two current directors from Tekmira’s Board, two current directors from OnCore’s Board of Directors, and two directors of the combined company will be appointed no later than 5 business days prior to the mailing of this proxy statement/circular, one will be designated by Tekmira, the other designated by OnCore. The final director will be agreed upon by Tekmira and OnCore not later than 5 business days prior to the mailing of this proxy statement/circular, if possible. OnCore’s executive officers will continue to serve as executive officers of the combined company. Certain Tekmira executive officers will continue to serve as executive officers of the combined company and those who resign or are terminated in connection with the merger may be eligible to receive change in control payments. In addition, the directors and executive officers of Tekmira and OnCore also have certain rights to indemnification following completion of the merger. See the sections entitled “THE MERGER — Interests of Tekmira’s Executive Officers and Directors in the Merger” and “THE MERGER — Interests of OnCore’s Directors and Executive Officers in the Merger.”

The pendency of the merger could have an adverse effect on the trading price of Tekmira common shares and the business, financial condition, results of operations or business prospects for Tekmira and the combined company.

While there have been no known significant adverse effects to date, the pendency of the merger could disrupt Tekmira’s or OnCore’s businesses in the following ways, including:

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Should they occur, any of these matters could adversely affect the trading price of Tekmira common shares or harm the financial condition, results of operations or business prospects of Tekmira, OnCore and/or the combined company.

During the pendency of the merger, Tekmira may be unable to enter into a business combination with another party because of restrictions in the Merger Agreement.

The Merger Agreement restricts the ability of Tekmira to make acquisitions or complete other transactions during the pendency of the merger. While the Merger Agreement is in effect, subject to limited exceptions, Tekmira is prohibited from soliciting, initiating, encouraging or taking actions designed to facilitate any inquiries or the making of any proposal or offer that could lead to Tekmira entering into certain extraordinary transactions with any third party, such as a sale of assets, an acquisition of equity interest, a tender offer for common shares or a merger or other business combination outside the ordinary course of business. Any such transactions could be favorable to Tekmira shareholders. See the sections entitled “THE MERGER AGREEMENT — No Solicitation,” “THE MERGER AGREEMENT — Tekmira Shareholders’ Meeting” and “THE MERGER AGREEMENT — Termination.”

In addition, concurrently and in connection with the execution of the Merger Agreement, Tekmira’s directors and executive officers, who beneficially owned approximately 3.6% of Tekmira’s common shares outstanding as of the date of the Merger Agreement, entered into voting agreements with OnCore, pursuant to which each such shareholder agreed to vote its Tekmira common shares in furtherance of the transactions contemplated by the Merger Agreement. See the section entitled “VOTING AGREEMENTS.”

These provisions might discourage an otherwise interested third party from considering or proposing an acquisition of Tekmira, even one that may be deemed of greater value than the merger to Tekmira shareholders.

The merger may be completed even though material adverse changes may result from the announcement of the merger, industry-wide changes or other causes.

In general, either party can refuse to complete the merger if there is a material adverse change affecting the other party between January 11, 2015, the date of the Merger Agreement, and the closing of the merger. However, some types of changes do not permit either party to refuse to complete the merger, even if such changes would have a material adverse effect on either of the parties. If adverse changes occur that affect either party but the parties are still required to complete the merger, the combined company’s stock price may suffer.

Section 7874 of the Code may limit OnCore’s and its U.S. affiliates ability to utilize certain U.S. tax attributes to offset certain U.S. taxable income, if any, generated by the merger or certain specified transactions for a period of time following the merger.

Following the acquisition of a U.S. corporation by a foreign corporation, Section 7874 of the Code may limit the ability of the acquired U.S. corporation and its U.S. affiliates to utilize certain U.S. tax attributes (including net operating losses and certain tax credits) to offset U.S. taxable income resulting from certain transactions. Specifically, if the shareholders of the acquired U.S. corporation hold at least 60% (but less than 80%), by either vote or value, of the shares of the non-U.S. acquiring corporation by reason of holding shares in the U.S. corporation, the taxable income of the U.S. corporation (and any person related to the U.S. corporation) for any given year, within a ten-year period beginning on the last date the U.S. corporation’s properties were acquired, will be no less than that person’s “inversion gain” for that taxable year. A person’s inversion gain includes gain from the transfer of shares or any other property (other than property held for sale to customers) and income from the license of any property that is either transferred or licensed as part of the acquisition, or, if after the acquisition, is transferred or licensed to a non-U.S. related person.

Furthermore, if the shareholders of the acquired U.S. corporation hold at least 80%, by either vote or value, of the shares of the non-U.S. acquiring corporation by reason of holding shares in the U.S. corporation, the non-U.S. acquiring corporation is then treated as a U.S. domestic corporation.

Pursuant to the Merger Agreement, the OnCore shareholders are expected to receive less than 60% of the vote and value of Tekmira common shares after the merger by reason of holding OnCore shares. As a result,

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under current law, OnCore is not expected to be subject to such limitations on the use of U.S. tax attributes and Tekmira is not expected to be treated as a U.S. domestic corporation. However, there can be no assurance that there will not exist in the future a subsequent change in the facts or in law which might cause OnCore to be subject to such limitations, including with retroactive effect. Further, there can be no assurance that the IRS will agree with the position that the 60% or 80% ownership requirement is not satisfied.

Future changes to U.S. and non-U.S. tax laws could materially affect Tekmira, including its status as a foreign entity for U.S. federal income tax purposes, and adversely affect its anticipated financial positions and results.

Changes to the rules in section 7874 of the Code or the Treasury Regulations promulgated thereunder, or other changes in law, could adversely affect Tekmira’s status as a non-U.S. entity for U.S. federal income tax purposes, its effective tax rate or future planning for the combined company that is based on current law, and any such changes could have prospective or retroactive application to Tekmira and its shareholders and affiliates, and/or the merger. For example, recent legislative proposals have aimed to expand the scope of section 7874 of the Code, or otherwise address certain perceived issues arising in connection with so-called inversion transactions. It is presently uncertain whether any of such legislative proposals will be enacted into law and, if so, what impact such legislation would have on Tekmira. In addition, the U.S. Treasury has indicated that it will issue regulations in connection with so-called inversion transactions occurring on or after September 22, 2014, pursuant to Notice 2014-52 (the “Notice”). The timing and substance of any such action is presently uncertain. Any such change of law or regulatory action could adversely impact Tekmira’s tax position as well as its financial position and results in a material manner. It is not expected that the promulgation of any of the Treasury Regulations described in the Notice will have any such material adverse impact, nor are they expected to change the U.S. federal income tax consequences of the transactions as described herein. However, the precise scope and application of the regulations that will implement the Notice will not be clear until such proposed, temporary and/or final Treasury Regulations are actually issued, and, accordingly, until such regulations are promulgated and fully understood, we cannot be certain that there will be no such impact. In any case, no such change of law or regulatory action would be grounds for terminating the transactions contemplated by Merger Agreement.

Moreover, the U.S. Congress, the Organization for Economic Co-operation and Development and other government agencies in jurisdictions where Tekmira and its affiliates do business have had an extended focus on issues related to the taxation of multinational corporations. In particular, specific attention has been paid to “base erosion and profit shifting”, where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the U.S. and other countries in which Tekmira and its affiliates do business could change on a prospective or retroactive basis, and any such change could adversely affect Tekmira.

The merger may result in limitations on the ability of OnCore to utilize its net operating losses and other tax attributes

OnCore has net operating loss carryovers, or NOLs, and other U.S. federal income tax attributes. Section 382 of the Code and related sections of the Code limit a corporation’s ability to utilize NOLs and other tax attributes following a Section 382 ownership change. OnCore may undergo a Section 382 ownership change as a result of the merger and as a result, the ability of OnCore to use NOLs and other tax attributes following the merger may be limited.

Tekmira has incurred and will continue to incur significant transaction costs in connection with the merger.

Tekmira has incurred and will continue to incur significant transaction costs in connection with the merger. If the total costs of the merger exceed Tekmira’s estimates, the ability of the combined company to achieve its business plan will be adversely affected.

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The anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected.

The merger involves the integration of two companies that have previously operated independently with principal offices in two distinct locations. Tekmira and OnCore are able to conduct only limited planning regarding the integration of the two companies prior to completion of the merger. Significant management attention and resources will be required to integrate the two companies. Delays in this process could adversely affect the combined company’s business, financial results, financial condition, and stock price following the merger. Even if the combined company were able to integrate the business operations successfully, there can be no assurance that this integration will result in the realization of the full benefits of synergies, innovation and operational efficiencies that may be possible from this integration and that these benefits will be achieved within a reasonable period of time.

Risks Related to the Combined Company Following the Merger

The trading price of the combined company’s common shares may be subject to significant fluctuations and volatility, and the shareholders of the combined company may be unable to resell their shares at a profit.

While Tekmira’s common shares have an observable trading history, Tekmira’s common shares, on a post merger basis, may be expected to trade as if there had never been a public market for the combined company’s common shares. The market price of the combined company’s common shares could be subject to significant fluctuation following the merger. Market prices for securities of early-stage pharmaceutical, medical device, biotechnology and other life science companies have historically been particularly volatile. Some of the factors that may cause the market price of the combined company’s common shares to fluctuate include:

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In addition, if securities class action litigation is initiated against the combined company, it would incur substantial costs and its management’s attention would be diverted from operations. All of these factors could cause the price of the combined company’s common shares to decline, and you may lose some or all of your investment.

Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of the combined company’s common shares.

Future results of the combined company may differ materially from the unaudited pro forma financial statements presented in this proxy statement/circular.

The future results of the combined company may be materially different from those shown in the unaudited pro forma condensed combined financial statements presented in this proxy statement/circular, which show only a combination of the historical results of Tekmira and OnCore. Tekmira and OnCore expect to incur significant costs associated with completion of the merger and combining the operations of the two companies. Furthermore, these costs may decrease the capital that the combined company could use for continued development of the combined company’s business in the future or may cause the combined company to seek to raise new capital sooner than expected.

The combined company plans to issue additional equity securities in the future, which may result in dilution to existing investors.

To the extent the combined company raises additional capital by issuing equity securities, the combined company’s shareholders may experience substantial dilution. The combined company may, from time to time, sell common shares in one or more transactions at prices and in a manner it determines. If the combined company sells common shares, existing shareholders may be materially diluted. In addition, new investors could gain rights superior to existing shareholders, such as liquidation and other preferences. In addition, the number of shares available for future grant under Tekmira’s equity compensation plans may be increased in the future. In addition, the combined company will also have warrants outstanding to purchase common shares. The combined company’s shareholders will incur dilution upon exercise of any outstanding stock options or warrants.

The concentration of the common shares ownership with insiders of the combined company will likely limit the ability of the other shareholders of the combined company to influence corporate matters.

Based on information available to Tekmira as of December 31, 2014, following the merger, the executive officers, directors, five percent or greater shareholders, and their respective affiliated entities of the combined company are expected to beneficially own, in the aggregate, approximately 44.0% of the combined company’s outstanding common shares. As a result, these shareholders, acting together, have significant influence over most matters that require approval by the combined company’s shareholders, including the election of directors and approval of significant corporate transactions. Corporate actions might be taken even if other shareholders oppose them. This concentration of ownership might also have the effect of delaying or preventing a corporate transaction that other shareholders may view as beneficial.

If securities analysts do not publish research or reports about the business of the combined company, or if they publish negative evaluations, the price of the combined company’s common shares could decline.

The trading market for the combined company’s common shares may be impacted by the availability or lack of research and reports that third-party industry or financial analysts publish about the combined company. There are many large, publicly traded companies active in the biopharmaceutical industry, which may mean it will be less likely that the combined company receives widespread analyst coverage. Furthermore, if one or more of the analysts who do cover the combined company downgrade its stock, its stock price would likely decline. If the

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combined company does not receive adequate coverage by reputable analysts that have an understanding of the combined company’s business and industry, it could fail to achieve visibility in the market, which in turn could cause its stock price to decline.

The failure to integrate successfully the businesses of Tekmira and OnCore in the expected timeframe would adversely affect the combined company’s future results following the completion of the merger.

The success of the merger will depend, in large part, on the ability of the combined company following the completion of the merger to realize the anticipated benefits, including operating synergies, from combining the businesses of Tekmira and OnCore. To realize these anticipated benefits, the combined company must successfully integrate the businesses of Tekmira and OnCore. This integration will be complex and time-consuming.

The failure to integrate successfully and to manage successfully the challenges presented by the integration process may result in the combined company’s failure to achieve some or all of the anticipated benefits of the merger.

Potential difficulties that may be encountered in the integration process include the following:

The combined company’s future results will suffer if the combined company does not effectively manage its expanded operations following the merger.

Following the merger, the size of the combined company’s business will be larger than the current businesses of Tekmira and OnCore. The combined company’s future success depends, in part, upon its ability to manage this expanded business, which will pose substantial challenges for the combined company’s management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. Tekmira can offer no assurance that the combined company will be successful or that the combined company will realize the benefits currently anticipated to result from the merger.

The merger will result in changes to Tekmira’s Board of Directors that may affect the combined company’s operations.

If the parties complete the merger, the composition of Tekmira’s Board will change. Pursuant to the terms of the Merger Agreement, there will be seven directors of the combined company. Vivek Ramaswamy will serve as Chairman of the Board, Daniel Kisner will serve as Vice Chairman of the Board, and Mark J. Murray, PhD and Keith Manchester will also serve on the Board. Two directors of the combined company will be appointed no later than five business days prior to the mailing of this proxy statement/circular, one will be designated by Tekmira, the other designated by OnCore. The final director will be agreed upon by Tekmira and OnCore not later than five business days prior to the mailing of this proxy statement/circular, if possible.

This new composition of the Board may affect the business strategy and operating decisions of the combined company upon completion of the merger.

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The loss of key personnel could have a material adverse effect on the combined company’s business, financial condition or results of operations.

The success of the merger will depend in part on the combined company’s ability to retain key Tekmira and OnCore employees who continue employment with the combined company after the merger is completed. It is possible that these employees might decide not to remain with the combined company after the merger is completed.

If these key employees terminate their employment, the combined company’s activities might be adversely affected, management’s attention might be diverted from successfully integrating OnCore’s operations to recruiting suitable replacements and the combined company’s business, financial condition or results of operations could be adversely affected. In addition, the combined company might not be able to locate suitable replacements for any such key employees who leave the combined company or offer employment to potential replacements on reasonable terms.

The success of the combined company will also depend on pre-existing relationships with third parties, which relationships may be affected by the merger. Any adverse changes in these relationships could adversely affect the combined company’s business, financial condition or results of operations.

The combined company’s success will be dependent on the ability to maintain and renew relationships with pre-existing third party relationships. There can be no assurance that the business of the combined company will be able to maintain pre-existing business relationships, or enter into or maintain new business relationships, on acceptable terms, if at all. The failure to maintain important pre-existing third party relationships could have a material adverse effect on the business, financial condition or results of operations of the combined company.

Other risks related to the combined company

In addition to the foregoing risks, Tekmira is, and will continue to be, and the combined company will be subject to the risks described in Tekmira’s Annual Report on Form 10-K for the year ended December 31, 2013 and all Quarterly Reports on Form 10-Q filed thereafter. All such reports are or will be filed with the SEC and are incorporated by reference into this proxy statement/circular. See the section entitled “ADDITIONAL INFORMATION”. The combined company will also be subject to the risks described below that are presently applicable to OnCore.

Risks Related to OnCore

Information Concerning OnCore

The information concerning OnCore Biopharma, Inc., or OnCore, contained in this “RISK FACTORS — Risks Related to OnCore” section and the section “ONCORE BIOPHARMA, INC.” has been provided by OnCore.

The risk factors described in this section relate to OnCore as it exists prior to and does not assume completion of the merger. Readers should refer to the section titled “RISK FACTORS — Risks Related to the Combined Company Following the Merger” for a discussion of the risk factors applicable to OnCore and the combined company on completion of the merger.

Unless the context otherwise requires, all references in this proxy statement/circular to “OnCore” means OnCore and any subsidiaries of OnCore, taken together. Unless the context otherwise requires, all reference in this “RISK FACTORS — Risks Related to OnCore” section to the terms “OnCore,” “we,” “us,” and “our,” refer to OnCore.

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Risks Related to the Business, Financial Position and Capital Requirements

We have a limited operating history.

We are a preclinical stage biopharmaceutical company with a limited operating history. We were formed in May 2012, and our operations to date have been limited to organizing and staffing our company, acquiring and developing product and technology rights and conducting preclinical development activities for our drug candidates and programs. We have not commenced any human clinical trials. We will need to complete our preclinical drug candidate evaluation process, select the most promising drug candidates for further preclinical development, obtain favorable results in our preclinical studies and eventually submit INDs to the FDA or comparable foreign regulatory authorities and obtain regulatory authorizations before clinical trials can commence. Further, if the FDA places a clinical hold on any of those INDs, we would be unable to commence clinical trials until the underlying issues are resolved, which could delay or prevent the initiation of clinical trials.

We do not expect to begin Phase 1 clinical trials for any of our drug candidates until the second half of 2015 at the earliest. For most of our programs, we do not expect to select one or more lead compounds for clinical development until 2015 at the earliest, and we do not expect clinical trials for any such programs to begin on these compounds until at least 2016. The likelihood of success of our business plan must be considered in light of the problems, substantial expenses, difficulties, complications and delays frequently encountered in connection with developing and expanding early stage pharmaceutical businesses and the regulatory and competitive environment in which we operate. Biopharmaceutical product development is a highly speculative undertaking, involves a substantial degree of risk and is a capital intensive business.

Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in the early stages of development, especially preclinical biopharmaceutical companies such as ours. You should carefully consider the risks and uncertainties that a company with a limited operating history will face. In particular, you should consider that we cannot assure you that we will be able to:

If we cannot successfully execute any one of the foregoing, our business may not succeed and your investment will be adversely affected.

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We have incurred losses since our inception. We expect to continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability.

We have had operating losses since our inception, and our net loss for the nine months ended September 30, 2014, which was the first period in which we conducted substantial operations, was $1.8 million. As of September 30, 2014, we had an accumulated deficit of $1.9 million. Substantially all of our losses have resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations. Our technologies and drug candidates are in early stages of development, and we are subject to the risks of failure inherent in the development of drug candidates based on novel technologies.

To date, we have financed our operations primarily through the sale of equity securities. To become and remain profitable, we must succeed in developing and eventually commercializing products with significant market potential. This will require us to be successful in a range of challenging activities, including hiring staff, acquiring and discovering drug candidates, completing preclinical testing and clinical trials of our drug candidates, obtaining regulatory approval for these drug candidates, and manufacturing, marketing and selling the products for which we may obtain regulatory approval. We are only in the preliminary stages of these activities.

We expect to continue to incur significant operating losses for the foreseeable future due to the cost of research and development, preclinical studies and clinical trials and the regulatory approval process for our drug candidates. Even if we are able to complete the regulatory approval processes for our drug candidates, we anticipate incurring significant costs associated with commercializing our drug candidates. The amount of future losses is uncertain, we may continue to incur significant losses in the future and we may not be able to achieve or maintain profitability.

Our independent registered public accounting firm has included an explanatory paragraph relating to our ability to continue as a going concern in its report on our audited financial statements.

Our report from our independent registered public accounting firm for the year ended December 31, 2013 includes an explanatory paragraph stating that our losses from operations since inception and negative cash flows from operating activities raise substantial doubt about our ability to continue as a going concern. While we believe that we will be able to raise the capital we need to continue our operations, there can be no assurances that we will be successful in these efforts or will be able to resolve our liquidity issues or eliminate our operating losses. If we are unable to obtain sufficient funding, our business, prospects, financial condition and results of operations will be materially and adversely affected and we may be unable to continue as a going concern. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our audited consolidated financial statements. Future reports from our independent registered public accounting firm may also contain statements expressing substantial doubt about our ability to continue as a going concern. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all.

If we are unable to successfully remediate the existing material weakness in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected.

In connection with the audit of our consolidated financial statements for the year ended December 31, 2013, our management and independent registered public accounting firm identified control deficiencies in our internal control over financial reporting that together constitute a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. Our management and independent registered public accounting

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firm did not perform an evaluation of our internal control over financial reporting as of December 31, 2013 in accordance with the provisions of the Sarbanes Oxley Act. Had we and our independent registered public accounting firm performed such an evaluation, additional control deficiencies may have been identified by management or our independent registered public accounting firm, and those control deficiencies could have also represented one or more material weaknesses.

Our management and independent registered public accounting firm identified material weaknesses in our control over financial reporting attributable to our lack of sufficient financial reporting and accounting personnel with appropriate training in generally accepted accounting principles in the United States, or GAAP, and SEC rules and regulations with respect to financial reporting, a lack of segregation of duties and certain limitations of our accounting systems. This contributed to our inability to maintain appropriate segregation of duties and effective review and supervision over the financial reporting process. As such, our controls over financial reporting were not designed or operating effectively.

In an effort to remediate our material weakness, we intend to hire additional finance and accounting personnel with appropriate training, build our financial management and reporting infrastructure, and further develop and document our accounting policies and financial reporting procedures. There can be no assurance that we will be successful in pursuing these measures or that these measures will significantly improve or remediate the material weakness described above in a timely manner, or at all. There is also no assurance that we have identified all of our material weaknesses or that we will not in the future have additional material weaknesses. If our efforts to remediate the material weakness identified are not successful, or if other material weaknesses or other deficiencies occur, our ability to accurately and timely report our financial position could be impaired.

Our ability to generate future revenue from product sales is uncertain and depends upon our ability to successfully develop, obtain regulatory approval for, and commercialize our drug candidates.

Our ability to generate revenue and achieve profitability depends on our ability, on our own or with collaborators, to successfully complete the development, obtain the necessary regulatory approvals for and commercialize our drug candidates. We do not anticipate generating revenue from sales of our drug candidates for the foreseeable future, if ever. Our ability to generate future revenue from product sales depends heavily on our success in:

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Conducting preclinical testing and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data required to initiate clinical trials, obtain regulatory approval and achieve product sales. Our anticipated development costs would likely increase if we do not obtain favorable results or if development of our drug candidates is delayed. For example, we are pursuing a number of different drug candidates as part of our approach to developing a combination therapy to cure HBV. To the extent that one of these drug candidates does not have favorable results, we will need to develop another drug candidate to address a similar aspect of HBV as the drug candidate that was not successful, which would require significant additional funds. In addition, we would likely incur higher costs than we currently anticipate if development of our drug candidates is delayed because we are required by the FDA to perform studies or trials in addition to those that we currently anticipate. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to predict the timing or amount of any increase in our anticipated development costs.

In addition, our drug candidates, if approved, may not achieve commercial success. Our commercial revenue, if any, will be derived from sales of drugs that we do not expect to be commercially available for several years, if at all. Even if one or more of our drug candidates is approved for commercial sale, we anticipate incurring significant costs in connection with commercialization. As a result, we cannot assure you that we will be able to generate revenue from sales of any approved drug candidates, or that we will achieve or maintain profitability even if we do generate sales.

We will require additional capital to fund our operations and if we fail to obtain necessary financing, we will not be able to complete the development and commercialization of our drug candidates.

We expect to spend substantial amounts to acquire additional drug candidates, to conduct further research and development and preclinical testing and clinical trials of our drug candidates, to seek regulatory approvals for our drug candidates and to launch and commercialize any drug candidates for which we receive regulatory approval. These expenditures will include costs associated with our and our subsidiary’s licensing agreements with Blumberg, or Drexel, and NeuroVive and Cytos. Under the terms of these agreements, we are obligated to make significant cash payments upon the achievement of specified development, regulatory and sales performance milestones, as well as royalty payments in connection with the sale of licensed products, to our licensors.

We will require additional capital for the further development and potential commercialization of our drug candidates. If we are unable to raise capital when needed or on acceptable terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.

Because the length of time and activities associated with successful development of our drug candidates is highly uncertain, we are unable to estimate the actual funds we will require for development and any approved marketing and commercialization activities. Our future funding requirements, both near and long term, will depend on many factors, including, but not limited to:

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We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the discovery, development or commercialization of one or more of our drugs or drug candidates or one or more of our other research and development initiatives.

Raising additional funds through lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights.

We expect that significant additional capital will be needed in the future to continue our planned operations. Until such time, if ever, as we can generate substantial revenue, we expect to finance our cash needs through a combination of debt financings, strategic alliances and license and development agreements in connection with any collaborations. We do not have any committed external source of funds, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates or grant licenses on terms that may not be favorable to us. Any debt financing we enter into may involve covenants that restrict our operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of our assets as well as prohibitions on our ability to create liens, pay dividends, redeem our stock or make investments. If we are unable to raise additional funds through debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise develop and market ourselves.

We are required to make significant deferred payments in connection with our acquisition of Enantigen, and our failure to make these payments may adversely affect our ability to progress certain of our drug development programs.

In connection with our acquisition of Enantigen, we paid $2.0 million in cash to Enantigen’s selling stockholders in October 2014 and an additional $1.0 million in cash in December 2014. We are obligated to pay an additional $2.0 million in cash by March 31, 2015. If we do not pay this amount as required, we would be required to return all shares of Enantigen to its former stockholders, and we would lose our rights to the HBV surface antigen secretion inhibitor and capsid assembly inhibitor programs that we acquired in the transaction through Enantigen’s continuing as a subsidiary of our company. The loss of these rights could materially and adversely affect our drug development efforts and our future financial performance.

We have in licensed critical portions of our intellectual property from Blumberg, Drexel and NeuroVive, and we are subject to significant obligations under those license agreements.

The rights we hold under our license agreements with Blumberg, Drexel and NeuroVive are important to our business. Our discovery and development platform is built, in part, around patents exclusively in licensed from these parties. For example, the elimination of cccDNA is the most critical element of our combination strategy to cure HBV, and our cccDNA formation inhibitor program is in licensed from Blumberg and Drexel.

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We have licenses with Blumberg and Drexel, both directly and through our acquisition of Enantigen, that grant us the exclusive (except in some cases as to know how that is not unique or specific to the licensed products or compound series, which are non exclusive and subject to retained rights for non commercial research use), worldwide license to make, have made, use, import, offer for sale and sell products incorporating one or more licensed compounds, which include cccDNA inhibitors, capsid assembly inhibitors, inhibitors of secretion of HBV antigens and hepatocellular carcinoma inhibitors, either for general use in humans or for use in the field of HBV research, diagnosis and treatment. Our license with NeuroVive grants us the exclusive, worldwide license under patents and know how controlled by NeuroVive to develop, manufacture and commercialize for the treatment of HBV, oral dosage form products, or licensed products, that incorporate sanglifehrin based cyclophilin inhibitors, including our drug candidate OCB 030. Our license with Cytos grants us the exclusive, worldwide, sublicensable (subject to certain restrictions with respect to licensed viral infections other than hepatitis) license, under patents and know-how controlled by Cytos, to research, develop, manufacture and commercialize, for the diagnosis, treatment or prevention of hepatitis viruses in humans, licensed products that incorporate Q beta-derived virus-like particles that are filled with TLR9, TLR7 or RIG-I agonists.

Under our agreements with Blumberg, Drexel, NeuroVive and Cytos, we are subject to significant obligations, including diligence obligations with respect to development and commercialization activities, payment obligations upon achievement of certain milestones and royalties on product sales, as well as other material obligations. Under our direct agreement with Blumberg and Drexel, we agreed to pay up to $3.5 million in development and regulatory milestones per licensed compound series, up to $92.5 million in sales performance milestones per licensed product, and royalties in the mid single digits in connection with the sale of licensed products. Under each of the three license agreements that our subsidiary Enantigen has with Blumberg and Drexel, Enantigen is obligated to pay up to $500,000 in development and regulatory milestones per licensed product and royalties in the low single digits in connection with the sale of licensed products. Under our agreement with NeuroVive we agreed to pay up to $47.0 million in clinical development and regulatory milestones per indication, up to $102.5 million in sales performance milestones per licensed product and indication, and tiered royalties in the mid single to low double digits in connection with the sale of licensed products; if we are acquired under certain circumstances, we will be obligated to pay certain development, regulatory and sales milestone payments a specified time after our acquisition even if they have not been achieved yet. Under our agreement with Cytos, we agreed to pay up to $67 million upon the achievement of specified development and regulatory milestones for hepatitis and each additional licensed viral infection, in each case for each of the six licensed compound series, up to $110 million upon the achievement of specified sales performance milestones, and tiered royalty payments at a royalty rate in the high-single to low double digits, based upon net sales of licensed products. If these payments become due under the terms of the agreements, we may not have sufficient funds available to meet our obligations.

If there is any conflict, dispute, disagreement or issue of non performance between us and Blumberg, Drexel or NeuroVive or Cytos regarding our rights or obligations under these license agreements, including any conflict, dispute or disagreement arising from our failure to satisfy diligence or payment obligations under such agreements, Blumberg and Drexel or NeuroVive or Cytos, as applicable, may have a right to terminate our license. The loss of any of these license agreements could materially and adversely affect our ability to use intellectual property that is critical to our drug discovery and development efforts, as well as our ability to enter into future collaboration, licensing and/or marketing agreements for one or more affected drug candidates or development programs.

We rely on and will incur additional expense in connection with our research collaboration with Blumberg.

In October 2014, we entered into an agreement with Blumberg under which we will provide annual funding for a three year period in the amount of $1.0 million per year and which is renewable for an additional three year period at our option, for Blumberg to conduct research projects in HBV and liver cancer pursuant to a research plan to be agreed upon by the parties. In exchange, we have the right to obtain an exclusive, royalty bearing, worldwide license to intellectual property generated by Blumberg in the course of the funded research and we

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believe that Blumberg’s HBV research platform will continue to be a source of potentially novel hepatitis B targets, drug candidates, assays and other HBV specific technologies. As a result, we are dependent, in part, upon the success of Blumberg in performing its responsibilities under our research collaboration. Blumberg may not cooperate with us or perform its obligations under our agreement. We cannot control the amount and timing of Blumberg’s resources that will be devoted to research and development activities related to our research collaboration. Further, development costs associated with our research projects may be difficult to anticipate and exceed our expectations. If our funding is unable to continue to financially support the collaboration, if we do not obtain exclusive licenses from Blumberg to the resulting intellectual property, or if we fail to comply with our obligations under those license agreements, our development efforts may be materially harmed.

Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel and consultants.

We are highly dependent on the expertise of our executive team, including Patrick T. Higgins, our Chief Executive Officer, Michael J. Sofia, Ph.D., our Chief Scientific Officer, Michael J. McElhaugh, our Chief Operating Officer, and Bryce A. Roberts, our Chief Legal Officer. Any of our executive officers may terminate their employment with us at any time. We do not maintain “key person” insurance for any of our executives or other employees.

As of December 31, 2014, we had eight employees. Recruiting and retaining a significant number of additional qualified scientific, clinical, regulatory, quality, manufacturing, business development, commercial and administrative personnel will be critical to our success, and is likely to be a lengthy process. In addition, the loss of the services of our executive officers or other key employees could impede the achievement of our research, development, partnering and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, partner, gain regulatory approval of and commercialize products. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel.

We rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating and carrying out our research, development, partnering and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality consultants and advisors, our ability to pursue our growth strategy will be limited.

Many of the other pharmaceutical companies that we compete against for qualified personnel and consultants have greater financial and other resources, different risk profiles and a longer history in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high quality candidates and consultants than what we have to offer. If we are unable to continue to attract and retain high quality personnel and consultants, the rate and success at which we can discover and develop drug candidates and our business will be limited.

We will need to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.

In the future, we expect to expand our employee base to increase our managerial, clinical, scientific and engineering, operational, sales and marketing teams. Future growth would impose significant additional responsibilities on our management, including the need to identify, recruit, maintain, motivate and integrate additional employees, consultants and contractors. Also, our management may need to divert a disproportionate amount of its attention away from our day to day activities and devote a substantial amount of time to managing

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these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of drug candidates. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate and/or grow revenue could be reduced, and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize our drug candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth.

Our employees, independent contractors, principal investigators, consultants, commercial collaborators, service providers and other vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business.

We are exposed to the risk of third party fraud or other misconduct. Such misconduct by our employees and contractors, such as principal investigators, consultants, commercial collaborators, service providers and other vendors, could include intentional failures to comply with FDA regulations, provide accurate information to the FDA, report financial information or data accurately or disclose unauthorized activities to us. Misconduct could also involve the improper use or misrepresentation of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter third party misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and financial results, including the imposition of significant fines or other sanctions.

Our business and operations would suffer in the event of system failures.

Despite our implementation of security measures, our internal computer systems and those of our contract research organizations, or CROs, and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs. For example, the loss of preclinical or clinical trial data from completed, ongoing or planned trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure of personal, confidential or proprietary information, we could incur liability and the further development of any of our drug candidates could be delayed.

Potential product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.

The use of our drug candidates in clinical trials and the sale of any products for which we obtain marketing approval exposes us to the risk of product liability claims. Product liability claims might be brought against us by consumers, health care providers, pharmaceutical companies or others selling or otherwise coming into contact with our products. On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated adverse effects. If we cannot successfully defend against product liability claims, we could incur substantial liability and costs. In addition, regardless of merit or eventual outcome, product liability claims may result in:

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We do not currently carry product liability insurance. Any product liability insurance coverage we acquire may not be sufficient to reimburse us for any expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive and in the future we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If and when we obtain marketing approval for our drug candidates, we intend to acquire insurance coverage to include the sale of commercial products; however, we may be unable to obtain product liability insurance on commercially reasonable terms or in adequate amounts. A successful product liability claim or series of claims brought against us could cause our stock price to decline and, if judgments exceed our insurance coverage, could adversely affect our results of operations and business.

Risks Related to Clinical Development, Regulatory Approval and Commercialization

Our approach to the treatment of HBV is unproven, and we do not know whether we will be able to develop any drugs of commercial value.

There is no known cure for HBV. Any compounds that we develop may not effectively address the three key factors driving HBV persistence that we believe should be targeted in order to cure HBV. Even if we are able to develop compounds that address one or more of these key factors, targeting these key factors has not been proven to cure HBV. Further, our focus on the elimination of cccDNA as the critical component of developing a cure for HBV may be misplaced in the event that the elimination of cccDNA does not prove to contribute to a cure for HBV. In addition, we may be unable to develop a drug that successfully eliminates cccDNA. We may be unable to acquire additional drug candidates on terms acceptable to us, or at all. Even if we are able to acquire or develop drug candidates that address one of these mechanisms of action in preclinical studies, we may not succeed in demonstrating safety and efficacy of the drug candidate in human clinical trials. If we are unable to identify suitable compounds for preclinical and clinical development, we will not succeed in realizing our goal of a cure for HBV.

All of our drug candidates are still in preclinical development for the treatment of HBV. We cannot be certain that we will be able to successfully initiate or complete the clinical development of, obtain regulatory approval for, or successfully commercialize any of our drug candidates.

All of our drug candidates are still in preclinical development for the treatment of HBV. We are still in the process of identifying lead compounds for our capsid assembly inhibitor, HBV surface antigen secretion inhibitor, cccDNA formation inhibitor, STING agonist and cccDNA epigenetic modifier drug development programs. None of our drug candidates have been approved for human clinical trials. Therefore, it will be at least several years before we are able to market, distribute or sell any of our products. Our business depends almost entirely on the successful clinical development, regulatory approval and commercialization of at least one of our drug candidates, which may never occur. In addition, while we intend to file an IND with the FDA, or an equivalent filing with foreign regulatory authorities, for our OCB 030 drug candidate in order to initiate Phase 1 clinical trials by the end of 2015, we may not be successful in developing or advancing that compound or any of our other compounds during that time, or at all. Several of our programs are still in the research stage, and we have not yet developed compounds for evaluation in preclinical studies and clinical trials and there can be no assurance that we will successfully develop a compound that can be tested as a drug candidate.

Further, the clinical trials and manufacturing and marketing of our drug candidates will be subject to extensive and rigorous review and regulation by numerous government authorities in the United States, the

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European Union and other jurisdictions where we intend to test and, if approved, market our drug candidates. Before obtaining regulatory approvals for the commercial sale of any drug candidate, we must demonstrate through preclinical studies and clinical trials that the drug candidate is safe and effective for use in each target indication, and potentially in specific patient populations. This process will take many years and may include post marketing studies and surveillance, which would require the expenditure of substantial resources. Of the large number of drugs in development for approval in the United States and the European Union, only a small percentage successfully complete FDA or EMA regulatory approval processes, as applicable, and are commercialized. Accordingly, even if we are able to obtain the requisite financing to continue to fund our research, development and clinical programs, we cannot assure you that our drug candidates will be successfully developed or commercialized.

Positive results from preclinical studies of our drug candidates are not necessarily predictive of the results of our planned clinical trials of our drug candidates.

Positive results from the preclinical studies of our drug candidates may not necessarily be predictive of the results from our planned clinical trials in humans. In addition, positive results in proof of concept studies of our drug candidates may not result in positive results in further clinical trials in humans. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical trials after achieving positive results in preclinical development or early stage clinical trials, and we cannot be certain that we will not face similar setbacks. These setbacks have been caused by, among other things, preclinical findings made while clinical trials were underway or safety or efficacy observations made in clinical trials, including adverse events. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that believed their drug candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain FDA, EMA or other regulatory authority approval. If we fail to produce positive results in our clinical trials of our drug candidates, the development timeline and regulatory approval and commercialization prospects for our leading drug candidate, and, correspondingly, our business and financial prospects would be negatively impacted.

We may expend our limited resources to pursue a particular drug candidate or indication and fail to capitalize on drug candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we intend to focus on developing drug candidates for specific indications that we identify as most likely to succeed, in terms of both their regulatory approval and commercialization. As a result, we may forego or delay pursuit of opportunities with other drug candidates or for other indications that may prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and drug candidates for specific indications may not yield any commercially viable drugs. If we do not accurately evaluate the commercial potential or target market for a particular drug candidate, we may relinquish valuable rights to that drug candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to the drug candidate.

We face significant competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively.

Drug development is highly competitive and subject to rapid and significant technological advancements. As a significant unmet medical need exists for HBV, there are several large and small pharmaceutical companies focused on delivering therapeutics for treatment of HBV. Further, it is likely that additional drugs will become available in the future for the treatment of HBV.

We are aware of several companies that are working to develop drugs that would compete against our drug candidates for HBV treatment. Many of our existing or potential competitors have substantially greater financial,

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technical and human resources than we do and significantly greater experience in the discovery and development of drug candidates, as well as in obtaining regulatory approvals of those drug candidates in the United States and in foreign countries. Our current and potential future competitors also have significantly more experience commercializing drugs that have been approved for marketing. Mergers and acquisitions in the pharmaceutical and biotechnology industries could result in even more resources being concentrated among a small number of our competitors.

Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our competitors may succeed in developing, acquiring or licensing, on an exclusive basis, drug candidates that are more effective or less costly than any drug candidate that we may develop.

We will face competition from other drugs currently approved or that will be approved in the future for the treatment of chronic hepatitis B. Therefore, our ability to compete successfully will depend largely on our ability to:

The availability of our competitors’ products could limit the demand, and the price we are able to charge, for any drug candidate we develop. The inability to compete with existing or subsequently introduced drug candidates would have a material adverse impact on our business, financial condition and prospects.

Established pharmaceutical companies may invest heavily to accelerate discovery and development of novel compounds or to in license novel compounds that could make our drug candidates less competitive. In addition, any new product that competes with an approved product must demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to overcome price competition and to be commercially successful. Accordingly, our competitors may succeed in obtaining patent protection, discovering, developing or receiving FDA approval for or commercializing medicines before we do, which would have a material adverse impact on our business.

Some of our licensors have retained rights to develop and commercialize certain of our drug candidates to treat diseases other than HBV and, as a result, our development and commercialization efforts may be negatively affected.

Our license agreements provide us with the rights to develop and commercialize our drug candidates for HBV; however, some of our licensors have retained rights to develop and commercialize certain of our drug candidates to treat diseases other than HBV, and to license those rights to other third parties. For example, NeuroVive has retained rights to the development of sanglifehrin based cyclophilin inhibitors, including those having the same active ingredient as OCB 030, and Cytos has retained all rights with respect to development of the licensed products for influenza, all non-viral infections and certain viral infections other than hepatitis. NeuroVive is currently performing preclinical studies on an intravenous formulation of one of these drug candidates with the intention of initiating clinical trials in cardiovascular disease and central nervous system

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conditions. Because NeuroVive’s drug candidate has the same active ingredient as OCB 030, our ability to successfully develop and commercialize OCB 030 could be negatively affected by data, including any adverse events, arising from NeuroVive’s clinical trials. If we obtain regulatory approval for OCB 030 or our TLR9 agonist for HBV and NeuroVive or Cytos, as the case may be, obtains regulatory approval for a drug candidate that has the same active ingredient as OCB 030 or our TLR9 agonist for another indication, and if each is available outside of a combination therapy, physicians may prescribe the NeuroVive or Cytos drug, instead of our drug, to patients with HBV if, for example, the cost of the NeuroVive or Cytos drug is less than our drug. In this case, we would not be receiving any payments on the account of such sales and our revenue would be adversely affected.

Failures or delays in the commencement or completion of clinical trials of our drug candidates could result in increased costs to us and could delay, prevent or limit our ability to generate revenue and continue our business.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials of our drug candidates may not be predictive of the results of later-stage clinical trials. Drug candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Our future clinical trial results may not be favorable or support safety or efficacy of our drug candidates.

We do not know whether our clinical trials will begin or be completed on schedule, if at all. For example, we may be delayed in commencing clinical trials for our TLR9 agonist drug candidate because we are evaluating it for a different indication than the one for which the IND was filed. Further, we may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our drug candidates, including:

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Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a drug candidate. Any marketing approval we ultimately obtain may be limited or subject to restrictions or post approval commitments, which may render the approved product not commercially viable.

Finally, even if we were to obtain approval, regulatory authorities may approve any of our drug candidates for fewer or more limited indications than we request, may grant approval contingent on the performance of costly post marketing clinical trials, may approve a drug candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that drug candidate, or may place restrictions on our marketing ability pursuant to a Risk Evaluation and Mitigation Strategy, or REMS. Any of these scenarios could compromise the commercial prospects for our drug candidates to assure safe use of the drug candidates, either as a condition of drug candidate approval or on the basis of new safety information.

If we are not able to obtain required regulatory approvals, we will not be able to commercialize our drug candidates, and our ability to generate revenue will be materially impaired.

Our drug candidates and the activities associated with their development and commercialization, including their design, research, testing, manufacture, safety, efficacy, recordkeeping, labeling, packaging, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by FDA and other regulatory agencies in the United States and by the EMA and similar regulatory authorities outside the United States. Failure to obtain marketing approval for a drug candidate will prevent us from commercializing the drug candidate.

We have not received approval from regulatory authorities to market any of our drug candidates in any jurisdiction, and it is possible that none of our existing drug candidates or any drug candidates we may seek to develop in the future will ever obtain the appropriate regulatory approvals necessary for us to commence product sales. Prior to submitting a new drug application, or NDA, to FDA, a marketing authorization application to the EMA, or an equivalent application to other foreign regulatory authorities for approval of our drug candidates to treat HBV, we will need to complete our ongoing preclinical and toxicology studies, as well as a Phase 1, Phase 2 and Phase 3 clinical trials. We are still conducting preclinical studies and have not yet commenced our clinical program or exposed any humans to our drug candidates.

We expect to rely on third party CROs and consultants to assist us in filing and supporting the applications necessary to gain marketing approvals. Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the drug candidate’s safety and efficacy for that indication. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities.

Our drug candidates may cause unexpected side effects or may have other properties that could delay or prevent their regulatory approval or limit the scope of any approved label or market acceptance.

Adverse events caused by our drug candidates could cause us, other reviewing entities, clinical trial sites or regulatory authorities to interrupt, delay or halt clinical trials and could result in the denial of regulatory approval. If an unacceptable frequency or severity of adverse events are reported in our clinical trials for our drug candidates, our ability to obtain regulatory approval for drug candidates may be negatively impacted.

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Furthermore, if any of our products are approved and then cause serious or unexpected side effects, a number of potentially significant negative consequences could result, including:

Any of these events could prevent us from achieving or maintaining market acceptance of the affected drug candidate and could substantially increase the costs of commercializing our drug candidates.

Even if we obtain FDA approval for any of our products in the United States, we may never obtain approval for or commercialize any of our products in any other jurisdiction, which would limit our ability to realize their full market potential.

In order to market any products in any particular foreign jurisdiction, we must establish and comply with numerous and varying regulatory requirements on a country by country basis regarding safety and efficacy. Approval by FDA in the United States does not ensure approval by regulatory authorities in other countries or jurisdictions. In addition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval in any other country. Approval processes vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatory approval could result in difficulties and costs for us and require additional preclinical studies or clinical trials which could be costly and time consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our products in those countries. We do not have any drug candidates approved for sale in any jurisdiction, including international markets, and we do not have experience in obtaining regulatory approval in international markets. If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of our products will be unrealized.

Even if we obtain regulatory approval for any of our drug candidates, we will still face extensive regulatory requirements and our products may face future development and regulatory difficulties.

Any drug candidate for which we obtain marketing approval, along with the manufacturing processes, post approval clinical data, labeling, packaging, distribution, adverse event reporting, storage, recordkeeping, export, import, advertising and promotional activities for such product, among other things, will be subject to extensive and ongoing requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safety and other post marketing information and reports, registration and listing requirements, continued compliance with current US Good Manufacturing Practice, or cGMP, requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping and current US Good Clinical Practice, or GCP, requirements for any clinical trials that we conduct post approval. Even if marketing approval of a drug candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to the conditions of approval, including any requirement to implement a REMS. If any of our drug candidates receives marketing approval, the accompanying label may limit the approved use of our drug, which could limit sales of the product. Because we are developing our drug candidates for HBV as a combination therapy, any limitations regarding the use of any one drug candidate may adversely impact sales of our other drug candidates.

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The FDA may also impose requirements for costly post marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product. The FDA closely regulates the post approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding off label use and if we do not market our products for their approved indications, we may be subject to enforcement action for off label marketing. Violations of the Federal Food, Drug, and Cosmetic Act, or FDCA, relating to the promotion of prescription drugs may lead to investigations alleging violations of US federal and state health care fraud and abuse laws, as well as state consumer protection laws.

In addition, later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:

The FDA’s policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our drug candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained.

Even if any of our drug candidates receives marketing approval, it may fail to achieve market acceptance by physicians, patients, third party payors or others in the medical community necessary for commercial success.

If any of our drug candidates receives marketing approval, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third party payors and others in the medical community. If our drug candidates do not achieve an adequate level of acceptance, we may not generate significant revenue and become profitable. The degree of market acceptance of our drug candidates, if approved for commercial sale, will depend on a number of factors, including but not limited to:

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For example, physicians may prescribe some of our drug candidates in combination with current standard of treatment, such as nucleosides or nucleotides, rather than all of the components of our combination therapy. This may result in lower sales of certain of our drug candidates. In addition, failure to prescribe our drug candidates as a combination therapy may result in reduced efficacy in the treatment of HBV, which could adversely impact the market perception of and demand for our drug candidates.

If we are unable to establish sales, marketing and distribution capabilities either on our own or in collaboration with partners, we may not be successful in commercializing our drug candidates if and when they are approved.

We do not have any infrastructure for the sales, marketing or distribution of our products, and the cost of establishing and maintaining such an organization may exceed the cost effectiveness of doing so. In order to market any products that may be approved, we must build our sales, distribution, marketing, managerial and other non technical capabilities or make arrangements with third parties to perform these services. To achieve commercial success for any product for which we have obtained marketing approval, we will need a sales and marketing organization.

In the future, we expect to build a focused sales, distribution and marketing infrastructure to market or co- promote some of our drug candidates in the United States and internationally, if they are approved. There are significant expenses and risks involved with establishing our own sales, marketing and distribution capabilities, including our ability to hire, retain and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, and effectively manage a geographically dispersed sales and marketing team. Any failure or delay in the development of our internal sales, marketing and distribution capabilities could delay any product launch, which would adversely impact the commercialization of these products. For example, if the commercial launch of a drug candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.

Factors that may inhibit our efforts to commercialize our products on our own include:

If we are unable to establish our own sales, marketing and distribution capabilities, or enter into arrangements with third parties to perform these services, our revenue and our profitability is likely to be adversely affected.

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If any of our drug candidates obtain approval for broader indications, we may choose to align ourselves with collaborators as part of our commercialization strategy, and such future collaboration partners, if any, may not dedicate sufficient resources to the commercialization of our drug candidates, or may otherwise fail in their commercialization due to factors beyond our control. If we are unable to establish effective collaborations to enable the sale of our drug candidates to healthcare professionals and in geographical regions, including the United States, that will not be covered by our own marketing and sales force, or if our potential future collaboration partners do not successfully commercialize our drug candidates, our ability to generate revenue from product sales will be adversely affected. In addition, we may not be successful in entering into such arrangements with third parties or may be unable to do so on terms that are favorable to us.

If we are unable to build our own sales force or negotiate a strategic partnership for the commercialization of our drug candidates, we may be forced to delay the potential commercialization of our drug candidates or reduce the scope of our sales or marketing activities for drug candidates that we are marketing. If we elect to increase our expenditures to fund commercialization activities ourselves, we will need to obtain additional capital, which may not be available to us on acceptable terms, or at all. If we do not have sufficient funds, we will not be able to bring our drug candidates to market or generate revenue. We could enter into arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be ideal and we may be required to relinquish rights to some of our technologies and drug candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.

If we are unable to establish adequate sales, marketing and distribution capabilities, either on our own or in collaboration with third parties, we will not be successful in commercializing our drug candidates and may not become profitable. We will be competing with many companies that currently have extensive and well funded marketing and sales operations. Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies.

If we obtain approval to commercialize any products outside of the United States, a variety of risks associated with international operations could materially adversely affect our business.

If our drug candidates are approved for commercialization, we may enter into agreements with third parties to market those drug candidates in select markets outside the United States. If we do enter into third party agreements, we expect that we will be subject to additional risks related to entering into international business relationships, including:

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We have no prior experience in these areas. In addition, there are complex regulatory, tax, labor and other legal requirements imposed by both the European Union and many of the individual countries in Europe with which we will need to comply. Many U.S. based biopharmaceutical companies have found the process of marketing their own products in Europe to be very challenging.

Our relationships with investigators, health care professionals, consultants, third party payors, and customers are subject to applicable healthcare regulatory laws, which could expose us to penalties.

Our business operations and arrangements with investigators, healthcare professionals, consultants, third party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations. These laws may constrain the business or financial arrangements and relationships through which we conduct our operations, including how we research, market, sell and distribute our products for which we obtain marketing approval. Such laws include, for example, anti kickback laws, false claims and civil monetary penalties laws, privacy and security laws, and transparency laws.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, agency guidance or case law involving applicable healthcare laws. If our operations are found to be in violation of any of these or any other health regulatory laws that may apply to us, we may be subject to significant penalties.

Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our drug candidates and affect the prices we may obtain.

In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could, among other things, prevent or delay marketing approval of our drug candidates, restrict or regulate post approval activities and affect our ability to profitably sell any products for which we obtain marketing approval.

For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care Education Reconciliation Act, or collectively the Affordable Care Act, was enacted to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for health care and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. Although it is too early to determine the effect of the Affordable Care Act, the new law appears likely to continue the downward pressure on pharmaceutical pricing, especially under the Medicare program, and may also increase our regulatory burdens and operating costs.

Moreover, the recently enacted Drug Supply Chain Security Act imposes new obligations on manufacturers of pharmaceutical products related to product and tracking and tracing. Legislative and regulatory proposals have been made to expand post approval requirements and restrict sales and promotional activities for pharmaceutical products. We are not sure whether additional legislative changes will be enacted, or whether the current regulations, guidance or interpretations will be changed, or what the impact of such changes on our business, if any, may be.

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Coverage and adequate reimbursement may not be available for our drug candidates, which could make it difficult for us to sell our products profitably.

Market acceptance and sales of any drug candidates that we develop, will depend in part on the extent to which reimbursement for these products and related treatments will be available from third party payors, including government health administration authorities and private health insurers. Third party payors decide which drugs they will pay for and establish reimbursement levels. Third party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. However, decisions regarding the extent of coverage and amount of reimbursement to be provided for each of our drug candidates will be made on a plan by plan basis. One payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage, and adequate reimbursement, for the product. Additionally, a third party payor’s decision to provide coverage for a drug does not imply that an adequate reimbursement rate will be approved. Each plan determines whether or not it will provide coverage for a drug, what amount it will pay the manufacturer for the drug, and on what tier of its formulary the drug will be placed. The position of a drug on a formulary generally determines the co payment that a patient will need to make to obtain the drug and can strongly influence the adoption of a drug by patients and physicians. Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products.

A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Third party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. We cannot be sure that coverage and reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Inadequate coverage and reimbursement may impact the demand for, or the price of, any product for which we obtain marketing approval. If coverage and adequate reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize any drug candidates that we develop.

Additionally, there have been a number of legislative and regulatory proposals to change the healthcare system in the United States and in some foreign jurisdictions that could affect our ability to sell any future drugs profitably. These legislative and regulatory changes may negatively impact the reimbursement for any future drugs, following approval.

Risks Related to Our Dependence on Third Parties

We do not currently have our own manufacturing capabilities and will rely on third parties to produce preclinical, clinical and commercial supplies of our drug candidates.

We do not currently own or operate facilities for product manufacturing, storage and distribution, or testing. We will rely on third party manufacturers for supply of our preclinical and clinical drug supplies, and expect that in the near future we will continue to rely on such manufacturers for drug supply that will be used in clinical trials of our drug candidates and for commercialization of any of our drug candidates that receive regulatory approval. We have not yet entered into any definitive supply agreements for supply of any of our drug candidates. If we are unable to enter into manufacturing and supply agreements with respect to our drug candidates when needed or on commercially reasonable terms, our business could be materially and adversely affected.

Further, our reliance on third party manufacturers entails risks to which we would not be subject if we manufactured our drug candidates ourselves, including:

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Any of these events could lead to clinical trial delays, result in failure to obtain regulatory approval or impact our ability to successfully commercialize our products. Some of these events could be the basis for FDA action, including injunction, recall, seizure, or total or partial suspension of production.

We intend to rely on third parties to conduct, supervise and monitor our preclinical studies and clinical trials, and if those third parties perform in an unsatisfactory manner, it may harm our business.

We intend to rely on CROs and clinical trial sites to ensure the proper and timely conduct of our preclinical studies and clinical trials, and we expect to have limited influence over their actual performance.

We intend to rely upon CROs to monitor and manage data for our future clinical programs for our drug candidates, as well as the execution of preclinical studies. We expect to control only certain aspects of our CROs’ activities. Nevertheless, we will be responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities.

We and our CROs will be required to comply with the Good Laboratory Practices, or GLPs, and GCPs, which are regulations and guidelines enforced by the FDA for any of our drug candidates that are in preclinical and clinical development. The FDA enforces GLPs and GCPs through periodic inspections of trial sponsors, principal investigators and clinical trial sites. If we or our CROs fail to comply with GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA may require us to perform additional clinical trials before approving our marketing applications. Accordingly, if our CROs fail to comply with these regulations or fail to recruit a sufficient number of subjects, we may be required to repeat clinical trials, which would delay the regulatory approval process.

Our CROs will not be our employees, and we will not control whether or not they devote sufficient time and resources to our future clinical and preclinical programs. These CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials, or other drug development activities which could harm our competitive position. We face the risk of potential unauthorized disclosure or misappropriation of our intellectual property by CROs, which may reduce our trade secret protection and allow our potential competitors to access and exploit our proprietary technology. If our

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CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for any other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize our drug candidates. As a result, our financial results and the commercial prospects for our drug candidates that we develop would be harmed, our costs could increase, and our ability to generate revenue could be delayed.

Risks Related to Our Intellectual Property

We license our intellectual property from third parties, and the limitations applicable to, or the loss of, our license rights could adversely impact our business.

We license our intellectual property from Blumberg and NeuroVive and Cytos. Our current technology licenses are critical to our business and we expect to enter into additional licenses in the future.

If we fail to comply with our obligations under these agreements or any future license agreements, we are subject to a bankruptcy, or if we grant a sublicense in the future and our sublicense does not comply with our obligations under these agreements or becomes subject to a bankruptcy, the licensor may have the right to terminate the license, in which event we would not be able to develop or market products covered by the license or may face other penalties under the agreements, which would have a materially adverse effect on our business. In addition, applicable laws involving bankruptcy or similar proceeding by licensors in some jurisdictions outside the United States may provide the trustee or receiver in such proceeding with the right to set aside or otherwise terminate or seek to modify the license. Any termination of these agreements or reduction or elimination of our rights under these agreements may result in our having to negotiate new or amended agreements with less favorable terms, or cause us to lose our rights under these agreements, including our rights to important intellectual property and technologies that form the basis of our technology, which may then be in licensed by one or more of our competitors.

If we are unable to obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets.

We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our drug development programs and drug candidates. Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our development programs and drug candidates. Because we have not identified lead candidates for many of our drug development programs, we may be unable to obtain patent coverage on the lead compounds we identify in the future. We seek to protect our proprietary position by filing patent applications in the United States and abroad related to our development programs and drug candidates.

The patent prosecution process is expensive and time consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. With respect to the drug candidates that we license from NeuroVive, NeuroVive has reserved the right to control the prosecution and maintenance of all licensed patents other than those that relate specifically to HBV. As a result, we are dependent, in part, on NeuroVive to file, prosecute and maintain the intellectual property subject to those licenses. If NeuroVive fails to file, prosecute and maintain the intellectual property, we will have the right to then take action with respect to such intellectual property under the terms of the license. However, we may be significantly disadvantaged with respect to the filing, prosecution and maintenance of such intellectual property by the time we have the right to take such actions.

It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. The patent applications that we own or in license may fail to result in issued patents with claims that cover our drug candidates in the United States or in other foreign countries.

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There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue and even if such patents cover our drug candidates, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed, invalidated, or held unenforceable. Any successful opposition to these patents or any other patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization of any drug candidates that we may develop. Further, if we encounter delays in regulatory approvals, the period of time during which we could market a drug candidate under patent protection could be reduced.

If the patent applications we hold or have in licensed with respect to our development programs and drug candidates fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for our drug candidates, it could dissuade companies from collaborating with us to develop drug candidates, and threaten our ability to commercialize future drugs. Any such outcome could have a materially adverse effect on our business.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. For example, European patent law restricts the patentability of methods of treatment of the human body more than United States law does. Publications of discoveries in scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.

Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. On September 16, 2011, the Leahy Smith America Invents Act, or the Leahy Smith Act, was signed into law. The Leahy Smith Act includes a number of significant changes to United States patent law. These include provisions that affect the way patent applications are prosecuted and may also affect patent litigation. The U.S. Patent and Trademark Office, or USPTO, recently developed new regulations and procedures to govern administration of the Leahy Smith Act, and many of the substantive changes to patent law associated with the Leahy Smith Act, and in particular, the first to file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy Smith Act will have on the operation of our business. However, the Leahy Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.

Moreover, we may be subject to a third party pre issuance submission of prior art to the USPTO or become involved in opposition, derivation, reexamination, inter partes review, post grant review or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future drug candidates.

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The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. Moreover, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Various extensions may be available; however, the life of a patent, and the protection it affords, is limited. Without patent protection for our current or future drug candidates, we may be open to competition from generic versions of such products. Given the amount of time required for the development, testing and regulatory review of new drug candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for noncompliance with these requirements.

Periodic maintenance fees on any issued patent are due to be paid to the USPTO and other foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign national or international patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of patent rights include, but are not limited to, failure to timely file national and regional stage patent applications based on our international patent application, failure to respond to official actions within prescribed time limits, non payment of fees and failure to properly legalize and submit formal documents. If we or our licensors fail to maintain the patents and patent applications covering our drug candidates, our competitors might be able to enter the market, which would have a material adverse effect on our business.

Third party claims or litigation alleging infringement of patents or other proprietary rights or seeking to invalidate patents or other proprietary rights, may delay or prevent the development and commercialization of our drug candidates.

Our commercial success depends in part on our avoiding infringement and other violations of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, derivation and administrative law proceedings, inter party review, and post grant review before the USPTO, as well as oppositions and similar processes in foreign jurisdictions. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we and our collaborators are developing drug candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued the risk increases that our drug candidates or other business activities may be subject to claims of infringement of the patent and other proprietary rights of third parties.

Third parties may assert that we are employing their proprietary technology without authorization. There may be third party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our drug candidates. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our drug candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third party patents were held by a court of

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competent jurisdiction to cover the manufacturing process of any of our drug candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such drug candidate unless we obtained a license under the applicable patents, or until such patents expire. Similarly, if any third party patent were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patent may be able to block our ability to develop and commercialize the applicable drug candidate unless we obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms or at all. In addition, we may be subject to claims that we are infringing other intellectual property rights, such as trademarks or copyrights, or misappropriating the trade secrets of others, and to the extent that our employees, consultants or contractors use intellectual property or proprietary information owned by others in their work for us, disputes may arise as to the rights in related or resulting know how and inventions.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our drug candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful infringement or other intellectual property claim against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our affected products, which may be impossible or require substantial time and monetary expenditure. We cannot predict whether any such license would be available on commercially reasonable terms or at all. Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research or allow commercialization of our drug candidates, and we have done so from time to time. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would be unable to further develop and commercialize one or more of our drug candidates, which could harm our business significantly. We cannot provide any assurances that third party patents do not exist which might be enforced against our drugs or drug candidates, resulting in either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties.

We may be involved in lawsuits to protect or enforce our patents, the patents of our licensors or our other intellectual property rights, which could be expensive, time consuming and unsuccessful.

Competitors may infringe or otherwise violate our patents, the patents of our licensors or our other intellectual property rights. To counter infringement or unauthorized use, we may be required to file legal claims, which can be expensive and time consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing. The initiation of a claim against a third party may also cause the third party to bring counterclaims against us such as claims asserting that our patents are invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, non enablement or lack of statutory subject matter. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant material information from the USPTO, or made a materially misleading statement, during prosecution. Third parties may also raise similar validity claims before the USPTO in post grant proceedings such as ex parte reexaminations, inter partes review, or post grant review, or oppositions or similar proceedings outside the United States, in parallel with litigation or even outside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. We cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. For the patents and patent applications that we have licensed, we may have limited or no right to participate in the defense of any licensed patents against challenge by a third party. If a defendant were to prevail

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on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of any future patent protection on our current or future drug candidates. Such a loss of patent protection could harm our business.

We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States. Our business could be harmed if in litigation the prevailing party does not offer us a license on commercially reasonable terms. Any litigation or other proceedings to enforce our intellectual property rights may fail, and even if successful, may result in substantial costs and distract our management and other employees.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. Any of these developments could negatively impact our business.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

The United States has recently enacted and implemented wide ranging patent reform legislation. The U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on actions by the U.S. Congress, the US federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce patents that we have licensed or that we might obtain in the future.

We may not be able to protect our intellectual property rights throughout the world, which could impair our business.

Filing, prosecuting and defending patents covering our drug candidates throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we may obtain patent protection, but where patent enforcement is not as strong as that in the United States. These products may compete with our products in jurisdictions where we do not have any issued or licensed patents and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.

Because we expect to rely on third parties to manufacture our drug candidates, and we expect to collaborate with third parties on the development of our drug candidates, we must, at times, share trade secrets with them. We also conduct joint research and development programs that may require us to share trade secrets under the terms of our research and development partnerships or similar agreements. We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements with our advisors, employees, third party contractors and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our confidential information, including our trade secrets. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these

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agreements. Given that our proprietary position is based, in part, on our know how and trade secrets, a competitor’s discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business.

In addition, these agreements typically restrict the ability of our advisors, employees, third party contractors and consultants to publish data potentially relating to our trade secrets, although our agreements may contain certain limited publication rights. Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of our agreements with third parties, independent development or publication of information by any of our third party collaborators. A competitor’s discovery of our trade secrets would impair our competitive position and have an adverse impact on our business.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of their former employers or other third parties.

We employ individuals who were previously employed at other biotechnology or pharmaceutical companies. Although we seek to protect our ownership of intellectual property rights by ensuring that our agreements with our employees, collaborators and other third parties with whom we do business include provisions requiring such parties to assign rights in inventions to us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of our employees’ former employers or other third parties. We may also be subject to claims that former employers or other third parties have an ownership interest in our patents. Litigation may be necessary to defend against these claims. There is no guarantee of success in defending these claims, and if we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Even if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/circular contains forward-looking statements and forward looking information within the meaning of applicable securities laws, collectively, forward-looking statements. Forward-looking statements in this proxy statement/circular include statements about the intended business and operations of Tekmira, OnCore, and the combined company; the proposed merger of Tekmira and OnCore; the goal of the combined company developing a curative regime for HBV and the eradication of HBV; the potential of the combined company creating near term catalysts with long term value creation; the combined company continuing to move forward oncology and anti-viral programs, including Ebola; the timing of expected clinical trials; the progression of additional combined company programs towards the clinic; potential benefits of the merger; the potential creation of value for shareholders; accelerated timelines for combined company clinical trials; competitive advantages of the combined company; value in Tekmira’s non-HBV assets and collaborations, and maximization of the value thereon; calling, holding and obtaining Tekmira shareholder approval for the merger; the anticipated closing of the merger, including receipt of all required regulatory approvals; plans to retain executives and board members from Tekmira and OnCore; the potential of TKM-HBV and combined company HBV product candidates; and the combined company’s strategy, future operations, clinical trials, prospects and plans.

With respect to the forward-looking statements contained in this proxy statement/circular, Tekmira has made numerous assumptions regarding, among other things: the ability to obtain required shareholder and regulatory approval for the merger and the timing thereof; the ability to satisfy all conditions for the closing of the merger, including receipt of required regulatory approvals; the subsequent integration of Tekmira and OnCore business and operations; and the effectiveness and commercial viability of the combined company’s products as a treatment for HBV. While Tekmira considers these assumptions to be reasonable, these assumptions are inherently subject to significant business, economic, competitive, market and social uncertainties and contingencies.

You should review the section of this proxy statement/circular entitled “Risk Factors” for a discussion of the factors that could cause actual results to differ materially from those discussed in the forward-looking statements, as well as the discussion of the risks and uncertainties facing Tekmira in Tekmira’s Annual Report on Form 10-K and Tekmira’s continuous disclosure filings, which are available at www.sedar.com or at www.sec.gov. All forward-looking statements herein are qualified in their entirety by this cautionary statement, and Tekmira disclaims any obligation to revise or update any such forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments, except as required by law.

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MARKET PRICE AND DIVIDEND INFORMATION

Tekmira

Tekmira’s common shares are listed on the NASDAQ under the symbol “TKMR” and the TSX under the symbol “TKM”. The following table sets for the range of high and low sales prices per share of Tekmira’s common shares on the NASDAQ and the TSX for the past three years.

On January 9, 2015, the last trading day prior to announcement of the merger, the last reported sale price of Tekmira common shares on the NASDAQ was $15.70 and on the TSX was C$18.83.

As of December 31, 2014, there were 22,438,169 Tekmira common shares outstanding, 389,250 Tekmira common shares issuable under outstanding Tekmira share purchase warrants, and 1,822,983 Tekmira common shares issuable under outstanding Tekmira options.

OnCore

OnCore is a privately-held company, and there is no established trading market for its securities. As of December 31, 2014, there were 6,839,672 shares of OnCore common stock outstanding, 13,061,224 shares of OnCore preferred stock outstanding and 237,570 shares of OnCore common stock issuable under outstanding OnCore stock options.

Dividends

Tekmira’s Board has discretion to declare dividends. Tekmira has not declared or paid any dividends on Tekmira common shares since the date of our incorporation.

OnCore has never declared or paid any cash dividends on its common stock nor does it intend to do so in the foreseeable future.

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NOTICE TO CANADIAN SECURITYHOLDERS

All references to $ or U.S. dollars in this proxy statement/circular are to the currency of the United States, and references to C$ in this proxy statement/circular are to the currency of Canada. On [                    ], 2015, the noon rate of exchange as reported by the Bank of Canada for the conversion of U.S. dollars into Canadian dollars was U.S.$1.0000 equals C$[        ] (C$1.0000 equals U.S.$ [        ]).

Unless otherwise indicated, the financial information of Tekmira and OnCore has been prepared in accordance with U.S. GAAP. Such financial information and financial statements have not been prepared in accordance with generally accepted accounting principles in Canada as set out in the CPA Canada Handbook — Accounting under Part I, which incorporates International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, and may not be comparable to financial information or statements prepared by Canadian issuers.

No securities commission or similar authority in Canada or the United States of America has in any way passed upon the merits of the securities to be issued under the arrangement and offered by this joint proxy statement/circular. Any representation to the contrary is a criminal offense.

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THE TEKMIRA SPECIAL MEETING

General

This proxy statement/circular is being furnished to Tekmira shareholders on or about February [    ], 2015. Tekmira is sending this proxy statement/circular to its shareholders in connection with the solicitation of proxies by Tekmira for use at the Tekmira special meeting and any adjournments or postponements of the meeting.

Date, Time and Place

The special meeting of the shareholders of Tekmira will be held on [            ] [            ], 2015 at [            ] (Pacific Time) at [            ], Vancouver, British Columbia.

Purposes of the Tekmira Special Meeting

Recommendations of the Tekmira Board of Directors

After careful consideration, the Tekmira Board has unanimously determined that the merger with OnCore is in the best interests of Tekmira and is fair to Tekmira’s shareholders. The Tekmira Board unanimously recommends that Tekmira shareholders vote:

Record Date, Quorum, Voting Requirements and Outstanding Shares

The record date for determining persons entitled to receive notice of and vote at the special meeting is [            ] [            ], 2015. Only shareholders as of the close of business on [            ] [            ], 2015 are entitled to receive notice of and vote at the special meeting, or any adjournment or postponement thereof, in the manner and subject to the procedures described in this proxy statement/circular. A quorum for the transaction of business at the special meeting is at least two people who are, or who represent by proxy, one or more shareholders who, in the aggregate, hold at least 5% of the issued common shares of Tekmira.

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Votes cast by proxy or in person at the special meeting will be tabulated by the election inspectors appointed for the special meeting and who will determine whether a quorum is present. The election inspectors will treat abstentions and broker non-votes (i.e., shares held by a broker or nominee that are represented at the special meeting, but with respect to which such broker or nominee is not instructed to vote on a particular proposal and does not have discretionary voting power) as shares that are present for purposes of determining the presence of a quorum. Abstentions will be counted towards the tabulations of votes cast on the proposals presented to the shareholders and will have the same effect as negative votes, whereas broker non-votes will not be counted for purposes of determining whether a proposal has been approved and will not have the effect of negative votes.

At the close of business on [            ] [            ], 2015, [            ] common shares of Tekmira were issued and outstanding.

Each shareholder is entitled to one vote per common share held on all matters to come before the special meeting. Common shares of Tekmira are the only securities of Tekmira which will have voting rights at the special meeting.

Principal Holders of Common Shares of Tekmira

To the knowledge of the directors and executive officers of Tekmira, no person or corporation owned, directly or indirectly, or exercised control or direction over, common shares carrying more than 10% of the voting rights attached to all outstanding common shares of Tekmira as at [            ] [            ], 2015.

Revocation of Proxies

In addition to revocation in any other manner permitted by law, a registered shareholder who has given a proxy may revoke it (a) by executing a proxy bearing a later date, (b) by executing a valid notice of revocation (where a new proxy is not also filed), or (c) personally attending the special meeting and voting the registered shareholder’s common shares of Tekmira.

A later dated proxy or notice of revocation must be executed by the registered shareholder or the registered shareholder’s authorized attorney in writing, or, if the registered shareholder is a corporation, under its corporate seal by an officer or attorney duly authorized, and delivered to the CST Trust Company PO Box 721, Agincourt, ON M1S 0A1, or by hand to 1600-1066 West Hastings St., Vancouver, BC V6E 3X1 (hand delivery) or to the address of the registered office of Tekmira at 700 West Georgia, 25th Floor, Vancouver, British Columbia, V7Y 1B3 (Attention of R. Hector MacKay-Dunn, Q.C.).

A later dated proxy must be received before 1:00 p.m. (Vancouver time) on [            ] [            ], 2015, or, if the special meeting is adjourned, the day that is two business days before any reconvening thereof at which the proxy is to be used, or to the chair of the special meeting on the day of the special meeting or any reconvening thereof, or in any other manner provided by law.

A notice of revocation must be received before 1:00pm (Vancouver time) on [            ] [            ], 2015, or, if the special meeting is adjourned, the last business day before any reconvening thereof at which the proxy is to be used, or to the chair of the special meeting on the day of the special meeting or any reconvening thereof, or in any other manner provided by law.

Only registered shareholders have the right to revoke a proxy. Beneficial shareholders who wish to change their vote must, in sufficient time in advance of the special meeting, arrange for their intermediaries to change the vote and, if necessary, revoke their proxy.

A revocation of a proxy will not affect a matter on which a vote is taken before the revocation.

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Solicitation of Proxies

The solicitation of proxies will be primarily by mail, but Tekmira’s directors, officers and regular employees may also solicit proxies personally or by telephone. Tekmira will bear all costs of the solicitation, including the printing, handling and mailing of the special meeting materials. Tekmira has arranged for intermediaries to forward the special meeting materials to beneficial owners of Tekmira held of record by those intermediaries and Tekmira may reimburse the intermediaries for their reasonable fees and disbursements in that regard.

Appointment of Proxyholders

The individuals named in the accompanying form of proxy are directors or officers of Tekmira. If you are a shareholder entitled to vote at the special meeting, you have the right to appoint an individual or company other than either of the individuals designated in the proxy, who need not be a shareholder, to attend and act for you and on your behalf at the special meeting. You may do so either by striking out the name of the persons named in the proxy and inserting the name desired of that other individual or company in the blank space provided in the proxy or by completing and delivering another suitable form of proxy.

The only methods by which you may appoint a person as proxy are submitting a proxy by mail, hand delivery, fax, email or online.

Voting by Proxyholder

If a shareholder specifies a choice for a matter in the proxy, and if the proxy is duly completed and delivered and has not been revoked, the individuals named in the proxy will vote, or withhold voting, the common shares of Tekmira represented thereby in accordance with the choice you specify on any ballot that may be called for. The proxy confers discretionary authority on the individuals named therein with respect to:

In respect of a matter for which a choice is not specified in the proxy, the individuals named in the proxy will vote common shares of Tekmira represented by the proxy for the approval of such matter.

Registered Shareholders

If you are a Registered Shareholder, you may wish to vote by proxy whether or not you attend the special meeting in person. If you wish to submit a proxy, you must complete, date and sign the proxy, and then return it to Tekmira’s transfer agent, CIBC Mellon Trust Company, by fax at 1-866-781-3111 (toll free in North America) or 416-368-2502, or by mail (via postage paid return envelope) at CIBC Mellon Trust Company, P.O. Box 721, Agincourt, Ontario, M1S 0A1 or by hand delivery at 320 Bay Street, Banking Hall Level, Toronto, Ontario, before 1:00pm (Vancouver time) on [            ] [            ], 2015, or by scan and email to proxy@canstockta.com or by casting your vote online at cstvotemyproxy.com, or, if the special meeting is adjourned or postponed, the day that is two business days before any reconvening thereof at which the proxy is to be used, or to the chair of the special meeting on the day of the special meeting or any reconvening thereof, or in any other manner provided by law. The Chairman of the special meeting may waive the proxy cut-off without notice.

Beneficial Shareholders

The following information is of significant importance to Tekmira shareholders who do not hold common shares of Tekmira in their own name. Beneficial shareholders should note that the only proxies that can be recognized and acted upon at the special meeting are those deposited by registered shareholders.

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If your common shares are listed in an account statement provided to you by a broker, then in almost all cases your common shares will not be registered in your name on the records of Tekmira. In such circumstances your common shares will more likely be registered under the names of your broker or an agent of that broker. In the United States, the vast majority of such common shares of Tekmira are registered under the name of Cede & Co., as nominee for The Depository Trust Company (which acts as depositary for many U.S. brokerage firms and custodian banks), and in Canada, under the name of CDS & Co. (the registration name for CDS Clearing and Depository Services Inc., which acts as nominee for many Canadian brokerage firms).

Intermediaries are required to seek voting instructions from beneficial shareholders in advance of shareholders’ meetings. Every intermediary has its own mailing procedures and provides its own return instructions to clients.

This proxy statement/circular is being sent to both registered shareholders and beneficial shareholders. There are two kinds of beneficial shareholders — those who object to their names being made known to the issuers of securities which they own (called OBOs for objecting beneficial owners), and those who do not object (called NOBOs for non-objecting beneficial owners).

Tekmira is taking advantage of National Instrument 54-101 — Communications with Beneficial Owners of Securities of a Reporting Issuer, which permits it to deliver proxy-related materials indirectly to its NOBOs and OBOs. As a result, if you are a NOBO or OBO you can expect to receive meeting materials from your intermediary via Broadridge Financial Solutions Inc., or Broadridge, including a voting information form, or VIF. If you receive a VIF, you should follow the instructions in the VIF to ensure that your common shares are voted at the meeting. The VIF or form of proxy will name the same individuals as Tekmira’s proxy to represent you at the meeting. You have the right to appoint a person (who need not be a shareholder of Tekmira) other than the individuals designated in the VIF, to represent you at the meeting. To exercise this right, you should insert the name of your desired representative in the blank space provided in the VIF. The completed VIF must then be returned in accordance with the instructions in the VIF. Broadridge then tabulates the results of all instructions received and completed in accordance with the instructions provided in the VIF and provides appropriate instructions respecting the voting of common shares to be represented at the meeting. If you receive a VIF from Broadridge, you cannot use it to vote common shares directly at the meeting — the VIF must be completed and returned in accordance with its instructions, well in advance of the meeting in order to have your common shares voted.

Although as a beneficial shareholder you may not be recognized directly at the meeting for the purposes of voting common shares registered in the name of your intermediary, you, or a person designated by you, may attend at the meeting as proxyholder for your intermediary and vote your common shares in that capacity. If you wish to attend the meeting and indirectly vote your common shares as proxyholder for your intermediary, or to have a person designated by you do so, you should enter your own name, or the name of the person you wish to designate, in the blank space on the VIF provided to you and return the same in accordance with the instructions provided in the VIF, well in advance of the meeting.

Alternatively, you can request in writing that your intermediary send you a legal proxy which would enable you to attend the meeting and vote your common shares.

These securityholder materials are being sent to both registered and beneficial shareholders. If you are a beneficial shareholder, and Tekmira or its agent has sent these materials to you, your name and address and information about your holdings of common shares have been obtained in accordance with applicable securities regulatory requirements from the Intermediary holding on your behalf.

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Other Matters

As of the date of this proxy statement/circular, the Tekmira Board does not know of any business to be presented at the special meeting other than as set forth in the notice accompanying this proxy statement/circular. If any other matters should properly come before the special meeting, or any adjournment or postponement of the special meeting, it is intended that the shares represented by proxies will be voted with respect to such matters in accordance with the best judgment of the person(s) voting the proxies, pursuant to the discretionary authority granted to such person(s).

Voting Securities and Principal Holders of Voting Securities

To the knowledge of the directors and executive officers of Tekmira, no person or corporation owned, directly or indirectly, or exercised control or direction over, common shares carrying more than 10% of the voting rights attached to all outstanding common shares of Tekmira as at March 26, 2014. See “Proposal No. 1 — Election of Directors — Information on Nominees for Directors” for information regarding the common shares held by our directors.

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MATTERS BEING SUBMITTED TO A VOTE

Proposal No. 1 — The Merger Agreement and the Issuance of Tekmira Shares in the Merger

At the special meeting, Tekmira shareholders will be asked to approve the Merger Agreement and the issuance of Tekmira common shares in the merger. Pursuant to the terms of the Merger Agreement, upon completion of the merger, OnCore stockholders will have the right to receive, for each share of OnCore common stock they hold, that number of Tekmira common shares, if any, as determined pursuant to the exchange ratio described in the Merger Agreement and in the section entitled “THE MERGER AGREEMENT — Merger Consideration.”

The exact number of Tekmira shares to be issued pursuant to the Merger Agreement will not be known until the effective time of the merger. However, assuming that the closing of the merger occurred on January 20, 2015, then, based on the closing price of Tekmira common shares on the NASDAQ and the number of outstanding securities of each of Tekmira and OnCore on such date, an aggregate of approximately 24.0 million Tekmira common shares would have been issuable to OnCore stockholders upon completion of the merger, not including 0.3 million Tekmira common shares issuable upon exercise of OnCore options assumed by Tekmira in the merger. Tekmira stockholder approval of this Proposal No. 1 is required as a condition to the merger; accordingly, even if Tekmira shareholders approve the other proposals, the merger will not be completed unless this Proposal No. 1 is also approved.

Under Rule 5635(a) of the NASDAQ Listing Rules, a company whose shares listed on the NASDAQ, such as us, is required to obtain stockholder approval prior to the issuance of common stock, or of securities convertible into or exercisable for common stock, in connection with the acquisition of another company if the number of shares of common stock to be issued is, or will be upon issuance, equal to or in excess of 20% of the number of shares of common stock outstanding before such issuance in connection with such proposed acquisition. In addition, under Rule 5635(b) of the NASDAQ Listing Rules, stockholder approval is required when the issuance of potential issuance of securities will result in a change of control of a listed company. Generally, a change of control is considered to occur when, as a result of the issuance, an investor or a group would own, or have the right to acquire, 20% or more of the outstanding shares of common stock or voting power and such ownership or voting power would be the largest ownership position. The maximum number of Tekmira shares to be issued in connection with the merger with OnCore exceeds 20% of the Tekmira’s outstanding shares before such issuance, and following the merger, Roivant will own more than 20% of the outstanding Tekmira shares. For these reasons, Tekmira must obtain the approval of its stockholders, in accordance with the NASDAQ Listing Rules, for the issuance of shares in connection with the Merger.

Tekmira’s Board believes that the Merger Agreement and the issuance of Tekmira common shares in the merger is in the best interests of Tekmira and its shareholders. If Tekmira’s shareholders do not approve this Proposal No. 1, the merger will not be completed.

The terms of, reasons for and other aspects of the Merger Agreement, the merger and the issuance of Tekmira common shares in the merger are described in detail in the other sections of this proxy statement/circular. The full text of the Merger Agreement is attached to this proxy statement/circular as Annex A.

When the merger becomes effective, the laws of British Columbia will continue to control the exercise of the corporate functions and business and the rights of shareholders. The business and management of OnCore will be incorporated within Tekmira’s operations, as a wholly owned subsidiary of Tekmira, and OnCore’s financial statements will be consolidated with those of Tekmira. The merger and the issuance of common shares of Tekmira to OnCore stockholders will reduce each Tekmira’s shareholder’s voting and equity interest by approximately one half.

Vote Required; Recommendation of the Tekmira Board of Directors

The affirmative vote of the holders of a majority of the Tekmira common shares present in person or represented by proxy and entitled to vote at the special meeting, assuming a quorum is present, is required for the approval of the Merger Agreement and the issuance of Tekmira shares in the merger.

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Accordingly, shareholders will be asked at the special meeting to vote on an ordinary resolution in the form set out below to approve the Merger Agreement and the issuance of Tekmira shares in the merger:

“BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT: