Eiger BioPharmaceuticals (EIGR): The Results Are In – The CEO And The CFO Are Out

This is my first look at Eiger (NASDAQ:EIGR) an interesting Biotech that is sailing in stormy seas.

Eiger reported its much anticipated phase 3 results right on time.

Then CEO Cory opened its Q3, 2022 earnings call (the “Call“) on 11/03/2022 with bold statements about its advanced pipeline. He enthused about multiple late stage breakthrough therapy designated programs. At the apex, within weeks, Eiger was on target to report topline data from the Phase 3 D-LIVR study of two different Lonafarnib based regimens for the treatment of HDV.

He described the study’s large scale, the largest HDV study ever. It included 400 patients enrolled across 100 sites in over 20 countries. The impending readout would be a notable milestone for both Eiger and patients suffering from HDV.

He characterized HDV as the most severe form of viral hepatitis. It impacts 12 million people globally and there is no FDA approved therapy. Of course when one hears “hepatitis”, Gilead (GILD) the company that conquered HCV comes to mind.

Its recent BLA for its HDV therapy, bulevirtide, received a 10/2022 CRL. The CRL cited concerns regarding the manufacture and delivery of bulevirtide. It did not require any new study on safety or efficacy.

Gilead certainly has the resources and the knowledge to snap to attention on correcting any deficiencies. However this issue was not mentioned in any of the following recent Gilead reports, its:

1. Q4 2022 Earnings Call Transcript;
2. Q4 2022 Earnings Call Presentation; or
3. 02/14/23 participation in SVB Securities Global Biopharma Conference.

HDV is a big deal for Eiger; for Gilead its bulevirtide CRL does not appear to be a priority issue. Notably, bulevirtide is conditionally authorized under the trade name Hepcludex in the European Economic Area and the United Kingdom.

Getting back to Eiger and its phase 3 data, it issued its promised data in the early hours of 12/08/2022. The release was headlined “Eiger Announces Both Lonafarnib-based Treatments in Pivotal Phase 3 D-LIVR Trial in Hepatitis Delta Virus (HDV) Achieved Statistical Significance Against Placebo in Composite Primary Endpoint.”

The market reacted violently as shown below:

In a news item released just a few hours following Eiger’s data release, Seeking Alpha bruited the market’s verdict with the headline:

Eiger plunges 70% after late-stage data for chronic hepatitis candidate

The article that followed focused on safety concerns. It noted the study included two arms, lonafarnib in combination with:

1. protease inhibitor ritonavir alone (oral therapy) and
2. interferon peginterferon alfa (combination therapy).

In addition to the two study arms there were two comparator arms, a placebo arm and an arm that just received peginterferon alfa. The news report highlighted:

… 8% and 14% of patients in oral and combination therapy arms reported treatment-emergent severe adverse events, compared to 10% and 4% in the peginterferon alfa and placebo groups, respectively.

Notably, there were two deaths in the study: One in the lonafarnib/ritonavir arm, which was unrelated to the study drug, and another in the peginterferon alfa group.

As is common when a company issues important data, Eiger also released an explanatory webcast, called “Phase 3 D-LIVR Study Results/December 08, 2022”. The webcast provides a ~56 minute presentation, ~half reporting results with a 27 slide deck (the “Deck”), the balance responding to questions.

The Deck includes the following slide with the underlying safety data that was so troublesome:

It will be interesting to see how the FDA reacts to Eiger’s planned submission. The several arms make the data difficult to interpret. In the webcast discussion of slide 16, management characterizes the therapy as well tolerated. The market seems to disagree; the FDA will be the deciding referee.

Management upheaval coinciding with data release invites speculation.

In addition to roiling its stock, Eiger’s data release seems to have confounded the underlying management structure at the company. The release, which CEO Cory had anticipated during the Call with such optimism, preceded his abrupt resignation just a scant few days later on 12/15/2023.

As far as retail investors knew there were no preliminaries. One day the issue was the trial results pure and simple, then the next came a release headlined

President and CEO David A. Cory resigns from the company effective immediately

The company appointed an Eiger veteran and experienced pharma executive as interim CEO and began its search for a new CEO. With the ink barely dry on the CEO’s resignation, on 01/03/2023 reports of CFO Ryali’s impending resignation hit the wire.

The Ryali move had better optics than Cory’s. Ryali gave two+ weeks’ notice and moved right in as CFO of Codexis (CDXS). The timing was unfortunate for Ryali to have left Eiger in the middle of its trial tribulations. It looks to me as more likely just a career move, than a CFO trying to escape difficult issues.

Eiger itself seems to take the position that the less said the better. It issued an 8-K announcing the resignation, but no press release announcing either the resignation or the appointment of a new CFO. Its website doesn’t list anyone in the CFO role. In response to a search for the word “financial”, it returned a 12/2018 release announcing Ryali’s appointment as CFO.

The Presentation slide 2 included the following as the final bullet point on recent developments:

• CFO departure – Voluntary, amicable departure; smooth transition with continuity in finance leadership – Michelle Maynard, Sr VP Finance, is Acting Principal Accounting Officer

New England Journal Of Medicine article gave Eiger’s stock an upward jolt.

On 02/09/2023 the New England Journal Of Medicine published an article titled, “Early Treatment with Pegylated Interferon Lambda for Covid-19”. the article closed with the following conclusion:

Among predominantly vaccinated outpatients with Covid-19, the incidence of hospitalization or an emergency department visit (observation for >6 hours) was significantly lower among those who received a single dose of pegylated interferon lambda than among those who received placebo.

Eiger’s stock reacted to the article with a quick upward run to a high of $2.98 after opening at $2.14. It closed the day at $2.52. It has since drifted down closing on 02/16/2023 at $2.20.

The publication included a nice affirmation of pegylated interferon lambda’s antiviral effect, beyond that it may have little impact on Eiger’s COVID-19 strategy as set out in its latest 10-Q (p. 23) of evaluating:

… next steps for this program in the U.S., as well as ex-U.S. emergency use authorization pathways, and strategic options for the continued development of peginterferon lambda for COVID-19 and other respiratory viral infections.

Eiger’s 11/03/2022 Q3, reports provide the latest available financial information.

Until its next earnings report expected on 03/10/2023, shareholders will have to rely on reports from Q3, 2022 prepared by the now absent Cory/Ryali. New CEO Appian will get to test his management skills in overseeing Eiger’s 2022 year end reports with Acting Principal Accounting Officer Maynard rather than an experienced CFO at his side.

As for its Q3, 2022 earnings release, Eiger reported what it characterized as a strong cash position of $121.0 million in cash, cash equivalents, and total investments. Its combined R&D plus SG&A expenses totaled $29.2 million of which $4 million were non cash.

It generated $4 million in revenues from sale of its first approved therapy Zokinvy as described in its latest 10-Q (p. 9). According to Eiger’s Q4, 2021 earnings call it has identified ~20 patients in the US it is targeting for this therapy; so even at several hundred thousand dollars for its annual cost its revenue potential is limited.

According to a recent article analysts have cut their annual Zokinvy target for 2023 from $26 million to 20 million. Eiger offers no guidance as a helping hand on either revenues or expenses. Its Q3, 2022 10-Q (p. 4) reported aggregate quarterly net loss of ~$27 million. Based on its Q3, 2022 report, until it can get a new source of revenue, it will generate annual net losses ~north of $100 million .

Conclusion

Eiger is having a tough go. Its shareholders are paying a steep price. I have rated it as a hold. However I am looking forward to its ability to right the ship. While its management shakeup was unfortunate, I expect it will soon be forgotten.

I have not focused on its pipeline but it has late stage therapies (Presentation slide 3) that it is developing. With its current <$100 million market cap, an argument can certainly be made that it is approaching bargain territory,

A bull thesis for Eiger would emphasize its:

1. solid liquidity,
2. potential near term NDA for HDV,
3. late stage pipeline.

It is right near a tipping point, as illustrated by its quicksilver reaction to the journal article. Eiger is a trader’s delight. As an investor, I am taking a conservative position and holding back for the time being.

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.