The back story: Eiger BioPharmaceuticals Inc. (EIGR) has caught my eye again. In August, I saw a nice opportunity for a runup: it was down to $8 from its high of $18, with two data reports coming up. Now, we have the first data release and some new information in the form of a stock offering.
How I played it: I took a 1,000-share position Aug. 17 at $7.96 and sold at $9.33 on Sept. 5. I revisited EIGR Oct. 12 to suggest investors take profits, as the stock had run way past my $10 target. Sure enough, it peaked at $13.85 the next day.
The first catalyst: On Oct. 23, EIGR announced positive interim results for its Phase 2 study of pegylated interferon lambda (Lambda) in hepatitis delta virus. The market wasn’t super impressed – EIGR pulled back below $11 on 10/24 and closed at $11.60 on Friday, the same day it priced the stock offering at $10 per share.
The second catalyst: Now that the first play is out of the way and the offering is priced, we can think about how to play EIGR in advance of a Phase 2 data release on Ubenimex in pulmonary arterial hypertension. That will be released at the J.P. Morgan Healthcare Conference Jan. 8-11, an important conference that typically has a lot of market-moving news.
The upshot: I’m watching EIGR for a pullback, and I think that when it hits the $10 offering price, I will want to be a buyer.
Kyle Dennis runs Kyle Dennis’ Biotech Breakouts (biotechbreakouts.com). He is an event-based trader, who prefers low-priced and small-cap biotech stocks. He has no stocks, options or open orders in EIGR, having traded it earlier this year, as described above.