Eiger Pharmaceuticals: Good Data but the stock hasn’t followed

I bought Eiger Pharmaceuticals back in February at $11.  As the chart below shows, its been a painful slide since then.

It is one ugly looking chart.  However Eiger is not alone.  Among the biotech stocks I follow there were a number that fell into a similar malaise in March or April.   While the IBB (the biotech index) has held up and recently rallied hard, the smaller biotechs that are not part of the index have not done as well.  However I’m seeing signs of this sentiment changing, which hopefully bodes better for the future.

Eiger’s Post-Bariatric Hypoglycemia Data

While the stock has declined, I remain of the opinion that the data Eiger has presented has been pretty good.  I already discussed their Phase 2 result on lonafarnib in this April blog post.  Last week they released more Phase 2 results for another drug called Exendin 9-39.  Again I thought the results were positive.

Exendin 9-39 is targeting patients with post-bariatric hypoglycemia.  This is a condition that occurs in some people that have undergone bariatric surgery, which is a surgery performed for weight loss.  Some post-op patients become hypoglycemic after eating.  That means their glucose level drops too low.  Depending how severe this is it can cause all sorts of terrible outcomes, with the worst being unconsciousness and seizures.

Exendin 9-39 decreases insulin secretion.  It is expected therefore that introducing Exendin 9-39 will dampen the instances of hypoglycemia in patients at risk.  In December Eiger presented initial Phase 2 results, which looked at a single-dose subcutaneous (SC) injection.  Those results showed that Exendin 9-39 produced the desired effect.

The results released in June were an extension of the December results (I also have a copy of the poster and will send it to anyone who emails me for it).  The new data looked at two variations of the first set of results: a multiple ascending dose of the SC injection, and a multiple ascending dose of a liquid formulation of Exendin 9-39.   The charts below show 3 hour glucose levels following a meal of the SC injection (left) and liquid formulation (right). These levels are compared to a baseline patient group that received nothing.

In the 60, 90 and 120 minute intervals, the patients on Exendin 9-39 had significantly better glucose levels, which is what you want to see.

After the stock reacted poorly to the data it was postulated by Daniel Ward on twitter that maybe the market didn’t like the 150-180 minute data.  You can see how during this time period the baseline and Exendin arms converged to similar glucose levels.  But I point out that in an earlier key opinion leaders (KOL) presentation by Eiger, the following chart (slide 28 from this presentation) shows the glucose responses of 3 patient groups: symptomatic post-bariatric hypoglycemia patients (so those that get hypoglycemic), asymptomatic post-bariatric hypoglycemia patients (those that don’t get hypoglycemic), and control persons (I believe these are just regular people that have not had a surgery).  You can see that in the 150-180 minute data of the two post-bariatric patient cohorts, neither of which are on Exendin 9-39 or any other drug, the glucose levels converge in a similar fashion to what was seen in the Exendin 9-39 results.

I believe there is one other important inference that can be drawn from the above chart.  Again, focusing on the red and white groups of patients who have undergone  post-bariatric surgery, I can’t help but notice that the difference between a symptomatic and asymptomatic patient is really not that big.

I have to wonder how much of the market response was due to this.  Folks looked at the delta in the response between the Exendin 9-39 and control group and were unimpressed with the visual difference between the two groups. What the above chart is telling you is that the expectation should not be so high.  The difference between a symptomatic and asymptomatic post-bariatric patient is simply not that big.  That Exendin 9-39 is producing results that appear close (maybe better?) to that of a healthy post-bariatric patient is quite positive in my opinion.

Summing it up

The stock is cheap but it’s admittedly its not the perfect set-up.  At $7 the market capitalization is about $60 million.  Eiger had $48 million of cash on their balance sheet at the end of the first quarter and $15 million of credit line debt.  They have another $10 million more they can borrow under the credit line.  Eiger burned through $11 million in the first quarter and $12 million in the fourth quarter.  Before that their cash burn was in the mid-single digit millions.  So bottom line they are going to have to raise cash here at some point, probably before year end.

I originally reduced my position in Eiger as it seemed to be in free fall.  However after thinking about the results and drawing the conclusions above, I decided to add that stock back.  This isn’t the sort of position that I am going to double down on or anything, but I think the price is succumbing to a weak market for micro-cap biotechs and lack of liquidity in the shares (it only takes a couple thousand shares to send the stock up or down 5%), not poor data, and I hate to get shaken out for that reason.  The company has a bunch more data coming out before year end, though most of it will likely be in the fourth quarter.  I will wait until those readouts and then reassess.