Eiger BioPharmaceuticals
Annual Report 2018

Plain-text annual report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 or For the transition period from to . Commission file number 001-36183 Eiger BioPharmaceuticals, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 2155 Park Boulevard, Palo Alto, CA (Address of principal executive offices) 33-0971591 (I.R.S. Employer Identification No.) 94306 (Zip Code) (650) 272 6138 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, par value $0.001 per share Name of each exchange on which registered The NASDAQ Global Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act: Large accelerated filer Non-accelerated filer Emerging growth company    Accelerated filer Smaller reporting company   If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ The aggregate market value of voting and non-voting common stock held by non-affiliates of the registrant as of June 30, 2018 totaled approximately $122,624,067 based on the closing price of $12.20 as reported by the NASDAQ Global Market. The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of March 11, 2019 was 19,260,443. Part III incorporates certain information by reference from the registrant’s proxy statement for the 2019 Annual Meeting of Shareholders. Such proxy statement will be filed no later than 120 days after the close of the registrant’s fiscal year ended December 31, 2018. DOCUMENTS INCORPORATED BY REFERENCE 1 2 35 65 65 65 65 66 66 66 67 80 80 108 108 108 109 109 109 109 109 109 110 110 Eiger BioPharmaceuticals, Inc. Form 10-K For the Fiscal Year Ended December 31, 2018 TABLE OF CONTENTS PART I Business ITEM 1. ITEM 1A. Risk Factors ITEM 1B. Unresolved Staff Comments ITEM 2. ITEM 3. ITEM 4 Properties Legal Proceedings Mine Safety Disclosures PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management’s Discussion and Analysis of Financial Condition and Results of Operations ITEM 6. ITEM 7. ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data ITEM 8. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ITEM 9A. Controls and Procedures ITEM 9B. Other Information PART III ITEM 10. Directors, Executive Officers and Corporate Governance ITEM 11. Executive Compensation ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ITEM 13. Certain Relationships and Related Party Transactions, and Director Independence ITEM 14. Principal Accounting Fees and Services PART IV ITEM 15. Exhibits and Financial Statement Schedules i PART I Forward-Looking Statements This Annual Report on Form 10-K, including the sections entitled “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may contain “forward-looking statements.” We may, in some cases, use words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes, to identify these forward-looking statements. Any statements contained herein that are not statements of historical facts may be deemed to be forward- looking statements. Forward-looking statements in this Annual Report include, but are not limited to, statements about:                the success, cost and timing of our product development activities and clinical trials; our ability and the time required to obtain and maintain regulatory approval for lonafarnib, lonafarnib boosted with ritonavir, peginterferon lambda (Lambda), and avexitide (formerly known as exendin 9- 39), and any of our future product candidates, and any related restrictions, limitations, and/or warnings in the label of an approved product candidate; our ability to obtain funding for our operations, including funding necessary to file a new drug application or NDA, file a marketing authorization application or MAA, and complete all clinical trials that may potentially be required to file for regulatory approval, for any of our product candidates; the commercialization of our product candidates, if approved, including whether commercializing lonafarnib for use in the progeria and progeroid laminopathies indications would result in receipt of a priority review voucher or otherwise be cash flow positive as a program for us; our plans to research, develop and commercialize our product candidates; our ability to attract collaborators with development, regulatory and commercialization expertise; the size and growth potential of the markets for our product candidates, and our ability to serve those markets; our ability to obtain favorable reimbursement and pricing and the rate and degree of market acceptance of our product candidates; our ability to manufacture product necessary to support regulatory approvals and timely meet commercial requirements; regulatory developments in the United States and foreign countries; the performance of our third-party suppliers and manufacturers; the success of competing therapies that are or may become available; our ability to attract and retain key scientific or management personnel; the accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing; and our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates. These forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates and assumptions as of the filing date of this Annual Report and are subject to risks and uncertainties. We discuss many of these risks in greater detail under “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to publicly update any forward- looking statements, whether as a result of new information, future events or otherwise. 1 ITEM 1. Business Merger of Celladon Corporation and Eiger BioPharmaceuticals, Inc. On March 22, 2016, Celladon Corporation, or Celladon, and privately-held Eiger BioPharmaceuticals, Inc., or Private Eiger, completed a business combination in accordance with the terms of the Agreement and Plan of Merger and Reorganization, or the Merger Agreement, dated as of November 18, 2015, by and among Celladon, Celladon Merger Sub, Inc., a wholly-owned subsidiary of Celladon, or Merger Sub, and Private Eiger, pursuant to which Merger Sub merged with and into Private Eiger, with Private Eiger surviving as a wholly-owned subsidiary of Celladon. This transaction is referred to herein as “the Merger.” Immediately following the Merger, Celladon changed its name to “Eiger BioPharmaceuticals, Inc.” In connection with the closing of the Merger, our common stock began trading on The NASDAQ Global Market under the ticker symbol “EIGR” on March 23, 2016. Overview Eiger is a late-stage biopharmaceutical company focused on the development and commercialization of well- characterized drugs for life-threatening, rare and ultra-rare diseases with high unmet medical needs and no approved therapies. Eiger has reported positive proof-of-concept clinical results in four programs: lonafarnib boosted with ritonavir, peginterferon, lambda, avexitide, and lonafarnib monotherapy, all with first-in-class drugs, now advancing into submission for regulatory approvals or Phase 3 clinical development. Eiger’s lead program is in Phase 3, developing lonafarnib, a first-in-class prenylation inhibitor for the treatment of Hepatitis Delta Virus (HDV) infection. The company is also preparing an NDA and MAA with plans to submit in 2019 for lonafarnib in the treatment of Hutchinson-Gilford Progeria Syndrome (HGPS or Progeria) and Progeroid Laminopathies. In addition, we recently announced positive Phase 2 data with peginterferon lambda for HDV infection and avexitide for post-bariatric hypoglycemia (PBH). Our programs have several aspects in common: the disease targets represent conditions of high unmet medical need with no approved therapies; the therapeutic approaches are supported by an understanding of disease biology and mechanism as elucidated by our academic research relationships; prior clinical experience with the product candidates guides an understanding of safety; and the development paths leverage the experience and capabilities of our experienced, commercially-focused management team. 2 Our pipeline overview is illustrated below. As discussed above, prior clinical experience by our licensors with the product candidates has supported and guided our understanding of safety in advancing these products in our clinical development programs. Specifically, we in-licensed lonafarnib from Merck Sharp & Dohme Corp, or Merck, in 2010 and licensed peginterferon lambda from Bristol-Myers Squibb, or BMS, in April 2016. We have relied upon Merck’s and BMS’ prior Phase 1/2/3 clinical data, manufacturing and experience with these two molecules to proceed directly into Phase 2 clinical trials following authorization by the U.S. Food and Drug Administration, or FDA, and will rely on that data and information to support potentially pivotal clinical trials and any filings for regulatory approvals. Note: All dates represent our current expectations. Actual timing may vary. Our product candidate pipeline includes four programs, all advancing toward Phase 3 or regulatory submissions for approval: 1. Lonafarnib (LNF) in Hepatitis Delta Virus (HDV) Lonafarnib, or LNF, is a well-characterized, orally bioavailable, first-in-class farnesylation inhibitor in Phase 3 clinical trials for HDV infection and is our most advanced program. HDV is the most severe form of viral hepatitis for which there is currently no approved therapy. Chronic HDV infection can lead to a rapid progression to liver cirrhosis, a greater likelihood of developing liver cancer, and has the highest fatality rate of all the chronic hepatitis infections. We in-licensed LNF from Merck in 2010. LNF is a small molecule that blocks the production of HDV virus particles by inhibiting a key step, called farnesylation, in the virus life cycle. We have completed Phase 2 studies in 129 HDV-infected patients dosed with LNF across five international clinical trials. LNF has demonstrated dose- related activity in reducing HDV viral load both as a monotherapy and in combination with other agents. Phase 2 studies have identified two lonafarnib-based regimens that can achieve clinically meaningful composite endpoints of HDV RNA decline ≥ 2 logs from baseline and normalized alanine aminotransferase, or ALT, a key liver enzyme, at Week 24: all-oral regimen of LNF 50 mg boosted with ritonavir (RTV) twice daily and combination regimen of LNF boosted with RTV combined with PEG IFN-alfa-2a. Predominantly grade 1 gastrointestinal (GI) adverse events (AE) were observed in Phase 2 amongst per-protocol treated patients. Forty-eight-week dosing will be explored in Phase 3 and is expected to improve outcomes. 3 Our Phase 3 study is a single, pivotal, international trial called D-LIVR that is designed to support U.S. regulatory approval. D-LIVR has the potential to generate data for two lonafarnib-based ritonavir-boosted regimens for approval. An all-oral arm of LNF boosted with RTV and a combination arm of LNF boosted with RTV combined with PEG IFN-alfa-2a will each be compared to placebo in the Phase 3 D-LIVR study. The first site was initiated in December 2018, and we plan to complete enrollment (n=400) in 2019. LNF for the treatment of HDV infection has been granted Orphan Drug designation by the FDA, and European Medicines Agency, or EMA, Fast Track and Breakthrough Therapy designation by FDA and PRIME designation by EMA. The potential market for HDV therapies in the United States and Western Europe is growing due to increased migration from regions where the disease is endemic, primarily from Eastern Europe, the Middle East and Asia. 2. Peginterferon Lambda (Lambda) in HDV Peginterferon lambda, or Lambda, is our second program treating HDV. Lambda is a well-characterized, late-stage, first in class, type III interferon, or IFN, that stimulates immune responses that are critical for the development of host protection during viral infections. Lambda targets type III IFN receptors which are distinct from the type I IFN, receptors targeted by IFN-alfa. These type III receptors are highly expressed on hepatocytes with limited expression on hematopoietic and central nervous system cells, which has been demonstrated to reduce the off-target effects associated with other IFNs and improve the tolerability of Lambda. Although Lambda does not use the IFN-alfa receptor, signaling through either the IFN-lambda or IFN-alfa receptor complexes results in the activation of the same Jak-STAT signal transduction cascade. We licensed worldwide rights to Lambda from BMS in April 2016. Lambda has been administered in clinical trials involving over 3,000 patients infected with the Hepatitis B Virus, or HBV, or Hepatitis C Virus, or HCV. Lambda has not been approved for any indication. We plan to develop Lambda as a monotherapy and /or in a combination therapy with LNF + RTV. We completed a Phase 2 Lambda monotherapy study in 33 HDV-infected patients at four international sites and reported end of treatment data in October 2018. End of study data will be reported in April 2019. In August 2018, we initiated enrollment of a Phase 2 Lambda combination study with LNF boosted with RTV at the National Institutes of Health’s National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK) (n=26). End of treatment data is expected in the fourth quarter of 2019. In July 2017, the FDA granted Fast Track designation for Lambda as a potential treatment for HDV infection, and in September 2017, the FDA granted Orphan Drug designation for Lambda for the treatment of HDV infection. 3. Lonafarnib (LNF) in Progeria and Progeroid Laminopathies (PL) We are also developing lonafarnib for treatment of progeria and progeroid laminopathies, with plans to submit an NDA and MAA in 2019. Progeria, also known as Hutchinson-Gilford Progeria Syndrome (HGPS), is an ultra-rare and rapidly fatal genetic condition of accelerated aging in children. Progeria is caused by a point mutation in the LMNA gene, encoding the lamin A protein, yielding the farnesylated aberrant protein, progerin. Lamin A protein is part of the structural scaffolding that holds the nucleus together. Researchers now believe that progerin may make the nucleus unstable, and that cellular instability may lead to the process of premature aging in Progeria. Children with Progeria die of the same heart disease that affects millions of normally aging adults (arteriosclerosis), but at an average age of 14.5 years. Disease manifestations include severe failure to thrive, scleroderma-like skin, global lipodystrophy, alopecia, joint contractures, skeletal dysplasia, global accelerated atherosclerosis with cardiovascular decline, and debilitating strokes. It is estimated that 400 children worldwide have Progeria. Progeroid laminopathies are genetic conditions of accelerated aging caused by a constellation of mutations in the lamin A and/or Zmpste24 genes yielding farnesylated proteins that are distinct from progerin. While non-progerin producing, these genetic mutations result in disease manifestations with phenotypes that have overlap with, but are distinct from Progeria. Collectively, worldwide prevalence of progeroid laminopathies is likely greater than Progeria. In May 2018, the Company entered into an amendment to the license agreement with Merck Sharp & Dohme Corp. which provides for expansion of the existing exclusively licensed field of use under the license agreement with Merck to include all uses of lonafarnib related to the treatment of Progeria and progeroid laminopathies. 4 In August 2018, Eiger and the FDA engaged in a collaborative discussion regarding the survival data that was published in April 2018 Journal of the American Medical Association (JAMA) as potential support for submission of an NDA submission. This clinical study, which compared children with Progeria who received lonafarnib monotherapy with matched untreated children with Progeria, reported a primary outcome of significantly improved mortality. The study found that children taking lonafarnib monotherapy (n=63) experienced a 77 percent reduction in the risk of mortality compared to a natural history, matched-control cohort of untreated children (n=63) after two years of study. Eiger plans to submit a 505(b)(2) NDA and MAA based on this published study in 2019. Lonafarnib has been granted Orphan Drug designation for Progeria by the FDA and EMA. In October 2018, lonafarnib was granted Rare Pediatric Disease (RPD) and Breakthrough Therapy designation by the FDA for both Progeria and progeroid laminopathies. 4. Avexitide in Post-Bariatric Hypoglycemia (PBH) Avexitide (formerly known as exendin 9-39) is a well-characterized peptide that we are developing as a treatment for PBH. PBH is a debilitating and potentially life-threatening condition for which there is currently no approved therapy. This disorder occurs often in a subset of bariatric surgeries called Roux-en-Y gastric bypass, or RYGB, where affected patients experience frequent symptomatic hypoglycemia, with blood glucose concentrations often low enough to cause seizures, altered mental status, loss of consciousness and even death. Gastric bypass procedures are widely performed and are increasing in frequency for medically complicated obesity. We have completed four clinical studies demonstrating clinical proof of concept in 54 patients suffering from severe, refractory PBH indicating that avexitide can prevent post-prandial hypoglycemia in affected patients. Avexitide is a glucagon-like peptide-1, or GLP-1, receptor antagonist that competes with endogenous GLP-1 and prevents the excessive post-prandial insulin release that characterizes this disorder. These Phase 2 data were generated using both intravenous and subcutaneous, or SC, formulation delivery. Pharmacokinetics from these Phase 2 SC studies indicate that the SC formulation could enable once or twice a day pre-prandial dosing. We developed a proprietary SC liquid formulation and completed a Phase 1 dose-ranging pharmacokinetics trial in healthy humans. In October 2018, we reported positive topline data from PREVENT, a multi-center, placebo- controlled study investigating the safety and durability of effect of 28-day dosing of SC avexitide in post-bariatric surgical patients. The primary efficacy endpoint of improved postprandial glucose nadir during mixed meal tolerance testing (MMTT) was achieved with statistical significance with fewer participants requiring glycemic rescue during each of the active dosing regimens than during placebo dosing. The secondary endpoint of reduced postprandial insulin peak during MMTT was also statistically significant. Avexitide for the treatment of hyperinsulinemic hypoglycemia has been granted Orphan Drug designation by the FDA and for the treatment of non-insulinoma pancreatogenous hypoglycemia syndrome (NIPHS) by the EMA. NIPHS describes a spectrum of acquired metabolic disorders characterized by inappropriately high insulin levels (hyperinsulinemia) and low blood glucose levels (hypoglycemia), which includes PBH. 5. Ubenimex Ubenimex is a well-characterized, oral, small-molecule inhibitor of leukotriene A4 hydrolase, or LTA4H, the enzyme responsible for converting the inflammatory mediator leukotriene A4, or LTA4, to leukotriene B4, or LTB4. In October 2018, topline results for the Phase 2 ULTRA study results in primary and secondary lymphedema were announced. No improvement of ubenimex over placebo in the primary endpoint of skin thickness and secondary endpoints of limb volume and bioimpedance was observed. No safety signals attributed to ubenimex were identified. Eiger has discontinued development of ubenimex in lymphedema based on these results. In January 2018, Phase 2 LIBERTY study results in PAH demonstrated no improvement overall or in key subgroups for both the primary efficacy endpoint of pulmonary vascular resistance (PVR) and the secondary endpoint of 6- minute walk distance (6MWD). No safety signals attributed to ubenimex were identified in the preliminary analysis. Eiger has discontinued development of ubenimex in PAH based on these results. 5 Business Model and Management Team We believe that our approach to clinical development enables achievement of early clinical signals of efficacy and safety in our Phase 2 programs and potentially reduces clinical risks and costs inherent in the drug discovery and development process. We have a highly experienced management team whose members have, in the course of their prior employment, participated in bringing more than 20 product candidates through regulatory approval and into commercialization. We plan to leverage our management team’s breadth and depth of experience in clinical and regulatory drug development as well as market development and commercialization to identify potentially promising product candidates to address unmet medical needs. Our current product candidate pipeline has been obtained by in-licensing from pharmaceutical companies and academic institutions. With our focus on rare and ultra-rare diseases, our strategy is to acquire and retain some or all commercialization rights to our products in significant territories to diversify risk, identify a rapid regulatory pathway to approval and minimize the development investment in order to maximize long-term value for our stockholders. Over time, depending upon the data and potential market opportunity, we expect to establish a commercial organization, which we believe can be targeted and cost effective for selected, promising orphan disease designated programs. We plan to balance these interests with opportunities to out-license assets from our portfolio enhance stockholder value through partnerships and other strategic relationships. We plan to continue evaluating in-licensing opportunities in order to enhance our pipeline and leverage our business development, clinical development, regulatory and commercial expertise. We believe our management team has the capability and experience to continue to execute this model. Our management team has worked in other private and public biotechnology companies such as Prestwick Pharmaceuticals, New River Pharmaceuticals, Clinical Data Inc., CoTherix and InterMune, each of which was acquired by a larger pharmaceutical industry company. Our management also has previous work experience, in some cases working together, at pharmaceutical companies, including The Upjohn Company, Glaxo, Glaxo Wellcome, Glaxo Smith Kline, Bristol-Meyers Squibb, Halozyme, Clinical Data Inc., New River Pharmaceuticals, Achillion Pharmaceuticals, Schering-Plough, Globe-Immune, Amylin, Zeneca, Aimmune Therapeutics, Jazz Pharmaceuticals, Onyx and Amgen. Our Strategy Our mission is to identify, develop, and, directly or through collaborations, bring to market novel products for the treatment of rare and ultra-rare diseases or conditions. We currently have a diverse portfolio of well-characterized product candidates with the potential to address life-threatening diseases for which the unmet medical need is high and, for which there is no approved therapy. Our goal is to be a leader in the development and commercialization of novel therapeutics for serious unmet medical needs in rare and ultra-rare diseases. Our focus to achieve this goal will be to utilize our experience and capabilities to:  Advance our existing product candidates through late-stage clinical trials, generating meaningful clinical results;  Work with U.S. and international regulatory authorities for expeditious, efficient development pathways toward registration; Prepare for commercialization of each program; Use our industry relationships and experience to source, evaluate and in-license well-characterized product candidates to continue pipeline development; and Identify potential commercial or distribution partners for our products in relevant territories.    6 Our Product Candidates Lonafarnib (LNF) in HDV Lonafarnib, or LNF, is a well-characterized, late-stage, first in class, farnesylation inhibitor that we in-licensed from Merck in 2010 for the treatment of HDV infection. LNF is a well-characterized, orally active, small molecule inhibitor of farnesyl transferase, an enzyme involved in modification of proteins through a process called farnesylation. HDV uses this farnesylation process inside host liver cells to complete a key step in its life cycle. LNF inhibits the farnesylation step of HDV replication inside liver cells and blocks the virus life cycle at the stage of assembly. Since farnesylation carried out by a host enzyme, there is a higher barrier to develop viral resistance mutations to LNF therapy. We are in Phase 3 with a single, pivotal, international trial called D-LIVR. D-LIVR has the potential to generate data for two LNF-based RTV-boosted regimens for approval. An all-oral arm of LNF boosted with RTV and a combination arm of LNF boosted with RTV combined with PEG IFN-alfa-2a will each be compared to placebo in the D-LIVR study. First site was initiated in December 2018, and we plan to complete enrollment (n=400) in 2019. Peginterferon Lambda (Lambda) in HDV Peginterferon Lambda (Lambda) is a well-characterized, late-stage, first in class, type III interferon, or IFN, that we in-licensed from BMS in April 2016 for the treatment of HDV infection. Lambda stimulates immune responses that are critical for the development of host protection during viral infections. Lambda targets type III IFN receptors which are distinct from the type I IFN receptors targeted by IFN-alfa. These type III receptors are highly expressed on hepatocytes with limited expression on hematopoietic and central nervous system cells, which in BMS’s clinical trials reduced the off-target effects associated with other IFNs and improved the tolerability of Lambda. Although Lambda does not use the IFN-alfa receptor, signaling through either the lambda or IFN-alfa receptor complexes results in the activation of the same Jak-STAT signal transduction cascade. Lambda has not been approved for any indication. We are developing Lambda as both a monotherapy and a combination therapy with lonafarnib. We have completed dosing in the Phase 2 LIMT Lambda monotherapy study (n=33) and reported topline data in November 2018 demonstrating comparable antiviral activity to peginterferon alfa with better tolerability. End of follow-up data will be reported at EASL 2019 where a 36% durable virologic response was demonstrated. We have also initiated enrollment of the Phase 2 LIFT combo study of Lambda in combination with LNF boosted with RTV at the NIH (n=26). Topline data from this 24-week dosing trial is expected in the fourth quarter of 2019. Hepatitis Delta Virus Overview About Hepatitis Delta Virus Hepatitis delta infection is caused by HDV, a small circular ribonucleic acid, or RNA, that expresses only one protein, the hepatitis delta antigen, or HDAg. There are two forms of HDAg; small and large. Together, these two forms of HDAg and the single-stranded RNA genome are surrounded by a lipid envelope, which is embedded with Hepatitis B Virus, or HBV surface antigen, or HBsAg, proteins. HDV does not encode its own envelope proteins and must acquire them from HBV during the final steps of replication. Hence, natural HDV infections always occur in the presence of a co-existing HBV infection. HBsAg is the only element of HBV relied upon by HDV. HDV replication can occur independently of HBV replication. HDV is the most severe form of viral hepatitis. HDV can be acquired either by co-infection (a simultaneous co- infection with HDV and HBV) or by super-infection (HDV infection of someone already harboring a chronic HBV infection). Both co-infection and super-infection with HDV result in more severe complications compared to infection with HBV alone. These complications include a greater likelihood of experiencing liver failure in acute infections and a rapid progression to liver cirrhosis, with an increased chance of developing liver cancer in chronic infections. HDV has the highest fatality rate of all the hepatitis infections at up to 20%. Although HDV/HBV simultaneous co-infection in adults usually resolves completely, in some cases it can become fulminant hepatitis, which carries a very high mortality rate. In the case of super-infections, the predominant form of HDV, HDV super- infection leads to a more severe form of disease than chronic HBV mono-infection. In a study published in 1987 in 7 the Journal of Infectious Diseases (Fattovich, G. et al. “Influence of Hepatitis Delta Virus Infection on Progression to Cirrhosis in Chronic Hepatitis Type B,” J Infect Dis, 1987; 155:931), histological liver deterioration was observed in 77% of HBV patients co-infected with HDV over a 15-year follow-up period, versus 30% of patients infected with HBV alone (p<0.01). In a 2013 study of chronic HBV patients published in the Journal of Gastroenterology and Hepatology (Gish, R. et al. “Coinfection with hepatitis B and D: epidemiology, prevalence and disease in patients in Northern California,” J Gastroenterol Hepatol, 2013; 28(9):1521), cirrhosis was present in 73% of HBV patients co-infected with HDV, compared to only 22% of those infected with HBV alone. Patients co-infected with HDV are more than twice-as-likely to develop liver-related complications, cirrhosis, or require liver transplants than matched patients infected with HBV alone. HDV is generally spread through exchange of body fluids either sexually or through contact with infected blood. Globally, it is estimated that between 4.3% and 5.7% of the 240 million worldwide chronic HBV population, or 15 to 20 million people, are infected with HDV. The prevalence of HDV in patients infected with chronic HBV is even higher in certain regions, including certain parts of Mongolia, China, Russia, Central Asia, Pakistan, Turkey, Africa and South America, with an HDV prevalence as high as 60% being reported in HBV-infected patients in Mongolia and Pakistan. The prevalence of HDV has recently begun to increase in Western Europe and the United States due to migration from countries with high infection rates. The Role of HDV Screening in Identifying Patients Who May Benefit from LNF and/or Lambda There are diagnostic tests in use today in clinical laboratories to detect anti-HDV antibodies in serum. These tests are currently able to detect acute HDV infections after four weeks, but they are poor tests for active HDV infections. Active HDV infections are best detected by reverse transcriptase-polymerase chain reaction, or RT-PCR, assays for genomic RNA. These assays yield a quantitative assessment of the number of viral particles, or viral load, in serum. A commercial assay for quantitative HDV RNA has been available in Europe (Robogene®) since 2015. Quest Diagnostics and ARUP Laboratories offer commercial assays for quantitative HDV RNA testing in the United States. Both of these assays are calibrated using the World Health Organization HDV standard provided by the Paul Erhlich Institute in Germany. Our initial discussions with payors have indicated that they would be willing to reimburse healthcare providers for HDV RNA quantitative assays that are carried out following a positive HBsAg test for HBV. A commercially available assay will increase the number of assays performed and increase the number of identified patients who can potentially benefit from an HDV therapy such as LNF. Current Therapy for HDV Currently, there is no approved therapy for hepatitis delta virus infection. The American Association for the Study of Liver Diseases, or the AASLD, guidelines suggest treatment of chronic hepatitis delta infections with IFN-alfa. In clinical trials of IFN-alfa or PEG IFN-alfa, between 25% and 33% of HDV infected patients were able to achieve PCR HDV RNA negativity after a minimum of 48 weeks of therapy, with some requiring two years of therapy. However, long-term therapy with IFN-alfa is known to be associated with numerous adverse events and tolerability is a significant problem for some of these patients. In addition, rebound of HDV RNA occurs in greater than 50% of patients. HBV nucleoside analogs that suppress HBV DNA are ineffective against HDV since they are ineffective in suppressing the expression HBsAg. Current development programs targeting HBV functional cures are not expected to eliminate extra-hepatic reservoirs of HBsAg. Given that HDV only requires small amounts of HBsAg for viron assembly, functional cures, if achieved, will not eradicate HDV. HDV Replication and Farnesylation After HDV enters a target cell hepatocyte, the genome is translocated to the nucleus where genome replication occurs and the two forms of HDAg small delta antigen, or SHDAg, and large delta antigen, or LHDAg, are produced. The newly formed HDV genome and the small and large delta antigen must acquire a lipid envelope from HBV to complete the assembly process. An important interaction between HDV and HBV proteins has been shown to depend on the presence of the last four amino acids of the large delta antigen, comprising a CXXX box motif, where C represents cysteine and X denotes any other amino acid. This amino acid sequence is required for LHDAg to be farnesylated by a host enzyme which covalently attaches a 15-carbon prenyl lipid (farnesyl-moiety) to the 8 cysteine of the CXXX box. Farnesylation of the large delta antigen renders it more lipophilic, promotes its association with HBsAg and is essential for initiating the HDV particle formation process. Our approach involves targeting this host process called farnesylation, or protein farnesylation, which has been shown to be essential for the last steps in HDV replication, the assembly and release of new virus progeny. In the 1980s farnesyltransferase inhibitors were developed by multiple pharmaceutical companies for oncology indications. Addition of a farnesyl or prenyl lipid group to the Ras protein, or Ras, a well-known and important regulator of cellular proliferation, allows for membrane association. Once membrane bound, Ras may then be activated. The importance of activated Ras in tumor development was demonstrated by sequence analyses of tumors from patients where up to 30% have mutations involving Ras. Several farnesylation inhibitors were developed in oncology and taken into the clinic and in some cases through late-stage clinical development. However, these programs did not lead to approvals, due to a lack of compelling efficacy. The class-related, dose-limiting toxicity has been gastrointestinal side effects including nausea, vomiting, diarrhea and weight loss. Published studies demonstrate that farnesyltransferase inhibitors block HDV viral production both in cellular experiments and in HDV transgenic mice. Targeting farnesylation or farnesyl transferase, a host target, significantly reduces the likelihood of HDV developing resistance to escape effects of antiviral therapy. Viruses mutate quickly and there is a higher rate of mutations in viral replication compared to mammalian cell division. However, no matter how much HDV may mutate, these changes are unlikely to alter the host process of farnesylation which HDV requires to complete packaging. Thus, targeting a host farnesylation process provides what we believe to be a higher barrier to resistance. Identification of clinic-ready farnesylation inhibitors has allowed us to move rapidly into proof- of-concept studies in humans. Our Lead HDV Opportunity: LNF LNF is a well-characterized, orally active inhibitor of farnesyl transferase. LNF inhibits the farnesylation step of HDV replication inside liver cells and blocks the ability of the virus to multiply. Since farnesylation is a host process, not under control of HDV, and LNF inhibits farnesylation, we believe that there is also a potentially higher barrier to resistance with LNF therapy. LNF for the treatment of HDV infection has been granted Orphan Drug designation in Europe and the United States, and LNF in combination with RTV has been granted Fast Track and Breakthrough Therapy designation from FDA for the treatment of chronic HDV infections. In the United States, we have an issued patent, U.S. Patent No. 10,076,512, entitled “Treatment of Hepatitis Delta Virus Infection.” The issued claims cover a broad range of RTV-boosted LNF doses and durations. The European Patent Office and the Japan Patent Office have also both issued decisions to grant patents with claims covering a broad range of lonafarnib boosted with RTV dosing regimens for the treatment of HDV infection. With the grant of these new European and Japanese patents, LNF boosted with RTV has now obtained patent protection with claims covering treatment with LNF boosted with RTV in key major pharmaceutical markets including the U.S., Europe, and Japan. We are in Phase 3 with a single, pivotal, international trial called D-LIVR, with first site initiated in December 2018. This is a 48-week study with planned enrollment of 400 patients across 20 countries and over 100 sites. LNF has never been approved or commercialized for any indication. LNF Phase 2 Clinical Data We in-licensed LNF from Merck in 2010, and have relied upon Merck’s prior Phase 1, 2 and 3 clinical experience with LNF in over 2000 patients to understand safety and pharmacokinetics. We have completed five Phase 2 trials (POC, LOWR-1, LOWR-2, LOWR-3, LOWR-4) with LNF in 129 HDV- infected patients. The Phase 2 LOWR HDV (Lonafarnib With Ritonavir in HDV) Program identified dose(s) and regimen(s) for registration.      POC Study (Placebo-controlled LNF monotherapy) (n=14) LOWR-1 Study (Combination: LNF with RTV or PEG IFN-alfa-2a) (n=21) LOWR-2 Study (Dose Finding: LNF + RTV ± PEG IFN-alfa-2a) (n=58) LOWR-3 Study (QD Dosing: LNF + RTV) (n=21) LOWR-4 Study (Dose-Escalation: LNF + RTV) (n=15) 9 The Phase 2 NIH proof-of-concept study demonstrated statistically significant decreases in HDV RNA viral load with two LNF active groups versus placebo for 28-days. A statistically significant correlation between increasing LNF serum levels and decreasing HDV RNA viral loads was also observed, demonstrating that higher serum levels resulted in greater decline in HDV RNA. The Phase 2 LOWR studies demonstrated benefits of twice daily RTV-boosting of LNF for up to 24 weeks of dosing. RTV is a pharmacokinetic, or PK, enhancer known to inhibit the metabolism of LNF, allowing lower doses of LNF to be administered, while resulting in higher systemic concentrations of LNF. The Phase 2 LOWR HDV studies identified two LNF-based regimens that can achieve clinically meaningful composite endpoints of HDV RNA decline ≥ 2 logs from baseline and normalized ALT at Week 24: All-oral regimen of LNF 50 mg BID boosted with RTV twice daily and combination regimen of LNF 50 or 25 mg BID boosted with RTV combined with PEG IFN-alfa-2a (see figures below). These dosing regimens were associated with predominantly grade 1 GI AEs amongst per-protocol treated patient. 10 Phase 3 D-LIVR Study D-LIVR (Delta Liver Improvement and Virologic Response in HDV) is an international, multi-center, Phase 3 study of approximately 300 LNF-treated patients (total N=400 patients including controls) to evaluate an all-oral arm of LNF boosted with RTV and a combination arm of LNF boosted with RTV combined with pegylated interferon-alfa- 2a (PEG IFN-alfa-2a), with each arm to be compared to a placebo arm (background HBV nucleos(t)ide only), in HDV-infected patients. A PEG IFN-alfa-2a alone arm will be dosed to demonstrate contribution of effect only. The LNF containing arms will not be required to demonstrate superiority over PEG IFN-alfa-2a alone. A combined primary endpoint of ≥ 2 log10 decline in HDV RNA and ALT normalization at end of 48 weeks of treatment will be used to assess activity of LNF-based regimens versus placebo in the D-LIVR study. First D-LIVR site initiated in December 2018. This is a 48-week study has planned enrollment of 400 patients across 20 countries and over 100 sites. Our Second HDV Therapeutic Approach: Lambda for HDV Lambda is a well-characterized, late-stage, first in class, type III interferon, or IFN, that we in-licensed from Bristol- Myers Squibb in April 2016 for the treatment of HDV infection. Lambda stimulates immune responses that are critical for the development of host protection during viral infections. Lambda targets type III IFN receptors which are distinct from the type I IFN receptors targeted by IFN-alfa. These type III receptors are highly expressed on hepatocytes with limited expression on hematopoietic and central nervous system cells, which has been demonstrated to reduce the off-target effects associated with other IFNs and improve the tolerability of Lambda (Chan 2016). Although Lambda does not use the IFN-alfa receptor, signaling through either the IFN-lambda or IFN- alfa receptor complexes results in the activation of the same Jak-STAT signal transduction cascade. In clinical trials of IFN-alfa or PEG IFN-alfa-2a, between 25% and 33% of HDV-infected patients were able to clear their infections, or SVR24, after a minimum of 48 weeks of therapy, with some requiring two years of therapy. However, long-term therapy with IFN-alfa is known to be associated with numerous adverse events and tolerability is a significant problem for some of these patients. We believe Lambda will be a safer and better tolerated pegylated interferon compared to PEG IFN-alfa-2a. We plan to develop Lambda as a monotherapy and in a combination therapy with LNF. We completed the Phase 2 LIMT monotherapy study using Lambda to treat HDV in 33 patients at four international sites and reported end of treatment data in October 2018. 24 week follow-up data will be reported in April 2019 at EASL where 36% durable virologic response was observed at 24 weeks post-treatment. In August 2018, we initiated enrollment of the Phase 2 LIFT combination study of Lambda combined with LNF 11 boosted with RTV at the NIH (n=26). End of treatment data is expected in the fourth quarter of 2019. Lambda has never been approved or commercialized for any indication. Lambda Clinical Data LIMT HDV Monotherapy Phase 2 Clinical Trial The LIMT HDV was a 1:1 randomized, open-label Phase 2 study of Lambda 120 or 180 microgram subcutaneous injections administered weekly for 48 weeks in 33 patients with chronic HDV. End of treatment will be followed by a treatment-free 24-week observation period. The primary objective of the Phase 2 study was to evaluate the safety, tolerability, and efficacy of treatment with two dose levels of Lambda monotherapy in patients with chronic HDV infection. All patients were administered an anti-HBV nucleos(t)ide analog throughout the study. The trial is being conducted at four international sites in New Zealand, Israel and Pakistan. End of treatment Week 48 data was presented during AASLD 2018 in San Francisco. At Week 48, patients in the 180 μg Lambda treated group experienced a -2.4 log10 mean decline in HDV-RNA, with 6 of 10 (60%) experiencing ≥ 2 log10 decline, 4 of 10 (40%) patients were HDV-RNA negative at end of treatment. At Week 48, patients in the 120 μg Lambda treated group experienced a -1.5 log10 mean decline in HDV RNA, with 6 of 14 (42.9%) experiencing ≥ 2 log10 decline, 2 of 14 (14.3%) patients were HDV-RNA negative at end of treatment. The most commonly reported AEs were moderate headache, pyrexia, fatigue, and myalgia. ALT flares are due to vigorous antiviral immunological response to treatment, not due to direct hepatotoxicity. End of 24-week follow-up demonstrated a 36% durable virologic response which will be presented at EASL 2019. Lambda is a promising agent for mono or combination treatment (i.e. with lonafarnib) development in the treatment of HDV. LIFT HDV Combotherapy Phase 2 Clinical Trial LIFT (Lambda Interferon combo-Therapy) is an open-label, Phase 2 study evaluating Lambda + Lonafarnib + Ritonavir in 26 HDV-infected patients. Patients will be dosed for 24 weeks + undergo follow up for 24 weeks. Primary endpoint will be ≥ 2 log decline in HDV RNA at end of treatment. Secondary endpoints will include histology (> 2 point improvement in histological activity index and no progression in fibrosis) at end of treatment. LIFT is being conducted within the National Institutes of Health (NIH) at the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK). LIFT plans to complete enrollment with 26 patients in the first quarter of 2019, and end of treatment data is expected in the fourth quarter of 2019. Potential for Registration in HDV for LNF and Lambda Our current goal in developing LNF and Lambda is to suppress the virus and reduce liver inflammation. Therefore, we have defined a primary endpoint for D-LIVR as a 2 log reduction in HDV RNA and ALT normalization. Our long term goal in developing LNF and Lambda is to reduce viral load in such a manner as to achieve durable suppression of the virus to below the level of quantification (

Continue reading text version or see original annual report in PDF format above