Spending on Tekmira's internal research programs has been reduced as the Company focuses on TKM-Ebola, TKM-PLK1 as well as its litigation against Alnylam and AlCana.

General and administrative expenses

General and administrative expenses were $2.4 million in Q2 2012 as compared to $1.6 million in Q2 2011.

The increase in Q2 2012 largely relates to legal fees incurred in respect of Tekmira's lawsuit against Alnylam and AlCana. However, from March 2012 onwards, under a fixed monthly fee agreement with Tekmira's lead legal counsel for the lawsuit against Alnylam and AlCana, Tekmira will only be required to reimburse its lead counsel for expenses incurred but no further payments will be required for professional fees. If Tekmira is successful in this lawsuit, a fee will be paid to its lead counsel. At June 30, 2012, the contingent obligation was a minimum of $12.8 million (US$12.5 million).

Other income (losses) - change in fair value of warrant liability

In conjunction with equity and debt financing transactions in 2011 and an equity private placement that closed on February 29, 2012, Tekmira has issued common share purchase warrants. Under Tekmira's accounting policy, at each balance sheet date, the warrants are revalued using the Black-Scholes model and the change in value is recorded in the consolidated statement of operations and comprehensive loss. The aggregate decrease in value of Tekmira's common share purchase warrants in Q2 2012 was $0.6 million. The decrease is largely a result of the decrease in the Company's share price from the previous balance sheet date of March 31, 2012.

Financial guidance

As disclosed in the Company's 2011 year end MD&A, Tekmira believes that current funds on hand, plus expected income, including funds from collaborative partners and the U.S. Government and access to a US$3.0 million loan facility from Silicon Valley Bank, will be sufficient to continue product development into the second half of 2013.

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