Eiger BioPharmaceuticals: Undervalued Biotech Stock (NASDAQ:EIGR)

Eiger BioPharmaceuticals (NASDAQ:EIGR) is a great speculative biotech play to look into. That’s because it has a major catalyst for investors to look forward to at the end of 2022. This would be the readout of the phase 3 D-LIVR study, which is using Lonafarnib for the treatment of patients with Hepatitis Delta Virus (HDV). There is potential here to eventually possibly obtain approval for two combinations. These combinations include Lonafarnib and ritonavir and in combination with peginterferon alfa. In addition, this biotech had already received European approval for its treatment Zokinvy (Lonafarnib) for the treatment of patients with progeria. It is the first and only treatment approved in Europe for this specific indication. In addition, another possible catalyst would be Emergency Use Authorization (EUA) for Peginterferon Lambda for Covid-19 infection. The company is engaging with the FDA and intends to submit an EUA application along with the full set of results from the TOGETHER study. It was done in a predominantly vaccinated patient population, so it remains to be seen how well it does if it is ultimately approved. Regardless, I believe EUA could act as a trade opportunity. These are the reasons why I believe that Eiger BioPharmaceuticals is a great speculative biotech play to look into.

Lonafarnib Catalyst Expected End Of 2022

Lonafarnib is in clinical development for the treatment of patients with Hepatitis Delta Virus. Hepatitis Delta Virus (HDV) or Hepatitis D is a very small circular RNA virus. It is one of the smallest types of virus that infects humans. However, right off the bat I will tell you that it is rare. Why is it rare? That’s because in order for the HDV to infect someone, they also have to be carrying Hepatitis B (HBV). That’s right, HDV needs HBV in order to infect a person. That’s the only way HDV can replicate in liver cells. Those who may be at risk of getting HDV are those who have gone through many blood transfusions and those who are intravenous types of drug abusers. Symptoms of those who have this virus are as follows:

• Abdominal type pain
• Nausea
• Fatigue

Being rare, there are roughly only about less than 200,000 people in the United States who have it. Eiger estimates that an HDV product could be about a >$1 billion per year market opportunity.

The good news is that this program is already ongoing and still enrolling patients. This is known as the phase 3 D-LIVR study, which is estimated to enroll about 400 patients total. At least 300 patients will be treated with Lonafarnib. There are going to be two arms in the study as follows:

1. All oral arm of LNF (lonafarnib) boosted with RTV (ritonavir)
2. LNF boosted with RTV combined with pegylated interferon-alfa (PEG IFN-alfa)

Each of the 2 arms above are going to be compared to placebo. That means in order for this study to be successful, it just needs to meet the primary endpoint compared to placebo. The composite primary endpoint is twofold as follows:

• Compare composite virologic and biochemical response rate at end of treatment (EOT) in patients who receive 50 mg Lonafarnib/100 mg BID Ritonavir versus patients who receive placebo (over 48 weeks)
• Compare composite virologic and biochemical response rate at end of EOT in patients who receive 50 mg Lonafarnib/100 mg BID Ritonavir and 180 mcg QW PEG IFN-alfa-2a (over 48 weeks)

If Lonafarnib shows superiority with respect to these composite primary endpoints, then it should be able to possibly file for FDA approval of the drug for this specific population as well. As far as a catalyst opportunity that investors can look forward to, that would be the topline results from the phase 3 D-LIVR study, using Lonafarnib combinations for patients with HDV, expected by the end of 2022.

Financials

According to the 10-Q SEC Filing, Eiger BioPharmaceuticals had cash, cash equivalents and total investments of $132.7 million as of March 31, 2022. A big reason for the amount of cash on hand which it has is because it received $20.8 million in additional net proceeds from the sale of common stock under the Company’s at-the-market agreement. This was an Open Market Sale Agreement with Jefferies established on March 25, 2022. In the quarter ending March 31, 2022 it did not issue any shares under this 2022 ATM Facility. However, in April of 2022 it completed offerings from the 2022 ATM Facility for a total of 2,686,288 shares of its common stock resulting in net proceeds of the $20.8 million noted above after deducting expenses. There is some good news with respect to this agreement and that is, there was the ability to sell up to a maximum of $50 million of its common stock. That means, Eiger has about $28.7 million remaining under the 2022 ATM Facility it can use for future issuance. Not only that, but in June of 2022 it entered into another financial deal to raise cash. Eiger entered into a term loan agreement with affiliate of Innovatus Capital Partners, LLC (Innovatus) for up to $75 million and a stock purchase agreement for Innovatus to purchase $5 million of the company’s stock. Overall, Eiger obtained $11 million in net proceeds. That’s because with the $40 million it drew at closing, it used $33.5 million to retire its existing debt facility from Oxford Finance. It still has up to $35 million in two tranches for which it can draw upon. However, one important item to note is that it can only draw upon these two tranches if it achieved pre-determine regulatory and clinical milestones. With the most recent cash it has raised, it believe it has enough to fund its operations into Q4 of 2024.

Additional Pipeline Progress

Eiger announced on July 20, 2022 that it had received European approval for Zokinvy for the treatment of patients with progeria, which is a rare progressive genetic disorder that causes accelerated aging. Why is this an important approval? That’s because this is an important condition whereby life expectancy is minimal. Consider that the average age life expectancy for someone who has progeria is 14.5 years. As of 2020, there is one person with progeria who is believed to be the oldest survivor at age 43. It is rare to see this kind of survival, although some are believed to reach age 20. Zokinvy was approved for progeria in the European Union for all 27 member states as well as Iceland, Liechtenstein and Norway. European approval was based on the drug’s ability to extend the average life span of children with HGPS by one third. Additional pipeline progress being made is for Eiger to engage with the FDA so that it can file an Emergency Use Authorization (EUA) application for PEGinterferon Lambda for Covid-19. It is in the process of submitting the EUA application and publishing the full dataset from the phase 3 TOGETHER study. It announced topline data in March of 2022 showing that a single dose of peginterferon Lambda for Covid-19, reduced risk of hospitalization or ER visits greater than 6 hours by 50% in a predominantly vaccinated population. Most patients had already received at least 1 vaccine dose prior to treatment with peginterferon Lambda. It remains to be seen how well this will do once it reaches the market, in light of all the vaccines/treatments currently available for Covid-19. However, I believe that EUA approval being given may act as a good trade opportunity with positive investor sentiment.

Risks To Business

There are a few risks that investors should be aware of. The biggest risk of all would be the upcoming data readout of the phase 3 D-LIVR study, which is using Lonafarnib for the treatment of patients with HDV. Results from this study are expected to be released by the end of 2022. There is no guarantee that this phase 3 study will be successful. As such, I believe a failure in this trial could cause the stock to trade lower by 50% or more. The second risk relates to the EUA for which Eiger hopes it can achieve for peginterferon Lambda for Covid-19. With so many approved vaccines/therapies, it might be harder to make a case for EUA in my opinion. Not only that, but even if peginterferon Lambda is given the green light for Covid-19, then it will face a lot of competition that currently exists out there. In essence, it’s possible it may not make as much as expected for this indication. Zokinvy remains another risk factor for investors to be aware of. Especially since it received European approval just the other week. It remains to be seen how well the drug does in that specific territory.

Conclusion

I believe that Eiger BioPharmaceuticals is a great speculative biotech play to look into. That’s because it has several drugs in the pipeline it is advancing. Zokinvy has already been approved for progeria and it is working hard to get Lonafarnib for the treatment of patients with Hepatitis Delta Virus (HDV) approved by the FDA. Whether or not it receives regulatory approval for marketing in the United States largely depends if it succeeds in the ongoing phase 3 D-LIVR study. Again, topline results from this study are expected by the end of 2022 and I believe that this will be a major catalyst for investors to look forward to. Besides this Zokinvy has already been approved and there is potential for an EUA of peginterferon Lambda for Covid-19. Not only that, but this biotech had also already established proof of concept with another drug in its pipeline known as Avexitide for the treatment of hyperinsulinism. It intends to start a phase 3 study for this drug for this specific indication in 2022. With so much potential in terms of catalysts, plus a growing pipeline, these are the reasons why I believe that Eiger BioPharmaceuticals is a great speculative biotech play to look into.