Tekmira Pharmaceuticals Releases 2007 Audited Operating Results

Vancouver, BC — Tekmira Pharmaceuticals Corporation ("Tekmira"; TSX:TKM) today released its 2007 audited operating results, including a summary of 2007 corporate and product development achievements and an update of objectives for 2008.

The Company said key achievements in 2007 included a corporate restructuring and an equity financing that strengthened the Company’s balance sheet; a product development partnership with Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY) for the development of RNA interference (RNAi) therapeutics; Alnylam providing access to Tekmira’s proprietary liposomal drug delivery technology to other alliance partners; and progress by partners and by Tekmira’s internal research and development team that advanced the product pipeline.

Timothy M. Ruane, President and CEO of Tekmira, said these 2007 achievements will form a strong foundation for Tekmira’s key 2008 objective, which is a business combination with Protiva Biotherapeutics Inc. announced in a separate news release earlier today.

"The combination with Protiva will provide Tekmira with significantly increased financial resources, strong management and scientific teams, a larger pipeline of products, and a leading position in the development of nucleic acid drugs, including RNAi therapeutics," said Ruane. "The new Tekmira will create more value for the shareholders of both Tekmira and Protiva than the companies could achieve independently."

Tekmira’s corporate highlights of 2007 included:

• The May 1, 2007 completion of the Plan of Arrangement, overwhelmingly approved by shareholders in 2006, under which Tekmira was spun out from Inex Pharmaceuticals Corporation with Inex’s entire biotechnology business, assets and intellectual property.

• Completion of a $16 million public equity financing.

Product development highlights of 2007 included:

• Signing of a partnership with Alnylam Pharmaceuticals under which the two companies will develop RNAi therapeutics utilizing Tekmira’s proprietary liposomal delivery technology and Tekmira will develop products based on Alnylam’s RNAi and RNA technology. Tekmira is eligible to receive milestone payments and royalties as products are commercialized.

• Initiation by Tekmira partner Hana Biosciences Inc. (Nasdaq: HNAB) of a Phase 2 clinical trial evaluating Marqibo® (vincristine sulfate injection, OPTISOME™) as a treatment for adult patients with relapsed acute lymphoblastic leukemia. Marqibo was one of three Tekmira targeted chemotherapy products licensed in 2006 to Hana for clinical development and commercialization.

• Alliances between Alnylam and other companies that included access to Tekmira’s technology. In July, Alnylam formed an alliance with Roche that gives Roche a non-exclusive license to develop drugs using Alnylam’s RNAi technology as well as access to Tekmira’s liposomal drug delivery technology. In September, Alnylam created Regulus Therapeutics, a joint venture between Alnylam and Isis Pharmaceuticals, Inc. (Nasdaq: ISIS) in the field of microRNA therapeutics and provided Regulus a non-exclusive license to Tekmira’s liposomal drug delivery technology. Tekmira is eligible to receive milestones plus royalties on sales of each product developed by Roche or Regulus that utilizes Tekmira’s technology.

• Progress toward clinical trials for Tekmira’s lead internal product TKM-0167 which uses DNA oligonucleotides to stimulate the immune system to treat cancer. Preclinical studies have demonstrated the capability of TKM-0167 to enhance natural killer cell activity and to dramatically improve the anti-tumor effectiveness of monoclonal antibodies when tested in lymphoma and breast cancer models.

FINANCIAL RESULTS

Transfer of Business to Tekmira

The Company did not carry on any active business until April 30, 2007 when the Company and Inex Pharmaceuticals Corporation ("Inex"), its parent company at that time, were reorganized under a Plan of Arrangement. Under the Plan of Arrangement, all of Inex’s business, assets and liabilities and contractual arrangements, including all cash and cash equivalents, all intellectual property, products, technology and partnership arrangements, were transferred to Tekmira, and all outstanding shares of Tekmira were distributed to Inex shareholders.

Inex’s management team and employees are now employed by Tekmira where they have assumed the same positions they occupied in Inex. Immediately before the reorganization, Inex’s common shares were consolidated on a basis of two current common shares for one new common share.

As a non-recurring related party transaction between Tekmira and Inex, companies under common control, the assets and liabilities of Inex were transferred at their carrying values using the continuity-of-interests method of accounting. For reporting purposes, Tekmira is considered to have continued Inex’s pharmaceutical business and will include the historical operating results of Inex to April 30, 2007. Accordingly, for the year ended December 31, 2007, the financial statements combine the financial results for the business carried on in Inex up to April 30, 2007 with those of Tekmira from May 1, 2007 to December 31, 2007.

References in this release to the Company’s business and operations that pre-date the April 30, 2007 restructuring are references to the business and operations of Inex, but are included on the basis that such historical business and operations have been continued by Tekmira.

RESULTS OF OPERATIONS

For the fiscal year ended December 31, 2007, Tekmira’s net loss was $2.6 million ($0.11 per common share, basic and fully diluted) as compared to net income of $21.1 million ($1.09 per common share, basic and fully diluted) for 2006.

There are a number of factors contributing to changes in results the largest of which is the 2006 gain on the purchase and settlement of the exchangeable and development notes of $26.0 million and the $5.2 million partial reversal of the gain in 2007 as a consequence of payments made to the holders of these notes (the "Former Noteholders"). Also, from 2006 to 2007 there was a considerable shift in Tekmira’s revenue streams away from Hana and towards Alnylam.

Revenue / Revenue from research and development collaborations, licensing fees and milestone payments was $15.8 million for 2007 as compared to $15.9 million for 2006.

Alnylam revenue / On March 25, 2006, Tekmira signed an exclusive research collaboration agreement with Alnylam to evaluate Alnylam’s RNAi therapeutics with the Company’s systemic lipid-based technology. On January 8, 2007, Tekmira entered into a licensing and expanded collaboration agreement with Alnylam giving Alnylam a worldwide exclusive license to the Company’s lipid-based delivery formulation technology for the discovery, development, and commercialization of RNAi therapeutics, and expanding the existing research and manufacturing alliance.

Tekmira has two sources of research and development collaboration revenue from Alnylam; research and development project funding and contract manufacturing services. In 2007 the Company recorded revenue of $2.9 million (2006 - $nil) in respect of batches manufactured for Alnylam. The balance of 2007 Alnylam research and development collaboration revenue of $3.0 million (2006 - $1.4 million) relates to materials consumed and time charged for scientific staff working on Alnylam research and development projects.

Under the January 8, 2007 license and expanded collaboration agreement with Alnylam, Tekmira received an up-front licensing payment of $9.4 million (US$8.0 million). This is being amortized to revenue on a straight-line basis over the period ending December 31, 2008 which is the period that the Company expects to provide research support under its collaboration with Alnylam. As a result, $4.7 million of the Alnylam up-front payment is included in licensing fees and milestone payments revenue in 2007.

Hana revenue / On May 6, 2006, Tekmira signed a number of agreements with Hana including the grant of worldwide licenses (the "Hana License Agreement") for Tekmira’s targeted chemotherapy products, Marqibo® (Optisomal Vincristine), AlocrestTM (formerly INX-0125, Optisomal Vinorelbine) and BrakivaTM (formerly INX-0076, Optisomal Topotecan). Under the Hana License Agreement, Hana paid a total of $15.5 million (US$14.0 million) in Hana Up-front Payments.

The Hana Up-front Payments were deferred and were initially being amortized on a straight line basis from April 3, 2006 to December 31, 2006, by which time Tekmira had expected to deliver substantially all of its services under the Service Agreement. After reviewing the delivery of services to Hana in the fourth quarter of 2006, the Company extended the amortization of the Hana Up-front Payments, effective October 1, 2006, to December 31, 2007. As a result, $4.1 million of the Hana Up-front Payments is included in licensing fees and milestone payments revenue in 2007 (2006 - $11.2 million).

Effective April 3, 2006, we signed a Service Agreement under which Hana is reimbursing us the Company expenses and time spent in maintaining and transferring the technology and product expertise related to the three targeted chemotherapy products. Revenue from the Service Agreement is recorded as research and development collaboration revenue and was $0.5 million for 2007 (2006 - $1.2 million).

Aradigm revenue / Tekmira entered into a licensing agreement with Aradigm on December 8, 2004 under which Aradigm licensed certain of the Company’s technology for delivery of ciprofloxacin. Under this agreement, Tekmira is eligible to receive up to US$4.75 million in milestone payments for each disease indication, to a maximum of two, pursued by Aradigm for ciprofloxacin as well as royalties on product revenue resulting from products utilizing the licensed technology.

In December 2007, Aradigm commenced a Phase 2 trial of inhaled liposomal ciprofloxacin and this triggered a milestone payment to Tekmira of $0.25 million.

Expenses / Research and development / Research and development expenses increased to $8.3 million in 2007 as compared to $5.3 million in 2006. The increase relates primarily to a build up in staff numbers, and therefore salary expense, and an increase in materials costs related to Alnylam research projects and batch manufacture. Tekmira’s internal research and development staff numbers have increased significantly to 39 at December 31, 2007 (total staff 50) as compared to 21 (total staff 30) at December 31, 2006.

General and administrative / General and administrative expenses were $4.4 million for 2007 as compared to $4.5 million for 2006. Legal and consulting fees were substantial in both 2006 and 2007 and relate to the Hana and Alnylam partnerships, litigation with the former majority noteholder (prior to settlement), litigation with Protiva and completion of the transfer of business from Inex to Tekmira.

Gain (Loss) on purchase and settlement of exchangeable and development notes / On June 20, 2006 Tekmira signed a Purchase and Settlement Agreement with the Former Noteholders. Under the Purchase and Settlement Agreement, the Hana Up-front Payments and the $1.1 million (US$1.0 million) milestone payment received in 2006, less a payment of $0.2 million (US$0.2 million) to the University of British Columbia, have been transferred to the Former Noteholders. The net gain on purchase and settlement of exchangeable and development notes for the year ended December 31, 2006 was $26.0 million.

As discussed earlier, on April 30, 2007, the Company completed a corporate reorganization and, as required under the Purchase and Settlement Agreement, paid $5.2 million (US$4.7 million) to the Former Noteholders. This payment was recorded as a loss on the purchase and settlement of the exchangeable and development notes.

The contingent obligation under the Purchase and Settlement Agreement of US$22.8 million will only change and will only be paid down with milestone and royalty payments if and when received from Hana.

Guidance on 2008 / The outcome of Tekmira’s business combination with Protiva and associated financing and collaboration discussions will have a significant impact on operations, revenues, expenses and capital resources. The Company’s management believes that it is not appropriate to provide guidance on revenues and expenses for 2008 until these transactions are completed.

LIQUIDITY AND CAPITAL RESOURCES

As at December 31, 2007, Tekmira had cash and cash equivalents of $20.9 million. The Company believes that its current funds on hand plus expected interest income and the expected further funds from its Alnylam partnership will be sufficient to continue product development for at least 18 months. If the planned business combination with Protiva and associated financing and new and amended collaboration agreements go ahead, the Company’s management would expect funds on hand to be sufficient to continue product development of the combined company until at least mid-2010.

About Tekmira
Tekmira Pharmaceuticals Corporation is a Canadian biopharmaceutical company developing and commercializing proprietary drugs and drug delivery systems to improve the treatment of cancer and other diseases. Further information about Tekmira and this news release can be found at www.tekmirapharm.com. Tekmira is based in Vancouver, B.C.

Forward Looking Statements
There are forward-looking statements and information contained herein that are not based on historical fact, including without limitation statements containing the words "believes," "may," "plans," "will," "estimate," "continue," "anticipates," "intends," "expects," and similar expressions, and the negative of such expressions. Such forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements and information. Such factors include, among others, Tekmira’s stage of development, lack of product revenues, additional capital requirements, risks associated with the completion of clinical trials and obtaining regulatory approval to market Tekmira’s products, the ability to protect its intellectual property, dependence on collaborative partners and risks associated with the announced business combination with Protiva Biotherapeutics Inc. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements or information. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements or information contained herein to reflect future results, events or developments, except as required by law.

Contact Information for Tekmira Pharmaceuticals Corporation

Investors
Ian Mortimer
Senior Vice President, Finance and Chief Financial Officer
Phone: 604-419-3200

Media
Karen Cook
James Hoggan & Associates Inc.
Phone: 604-739-7500
Email: kcook@hoggan.com

The common shares of Tekmira are traded on the Toronto Stock Exchange under the trading symbol "TKM".