Eiger BioPharmaceuticals: Rare Disease Biotech Liquidation Yields Equity Payout

Eiger BioPharmaceuticals, Inc., a Palo Alto based commercial-stage biopharmaceutical company focused on rare diseases, filed chapter 11 on April 1, 2024 in the U.S. Bankruptcy Court for the Northern District of Texas. The filing listed about $38.8 million in assets and $53.1 million in liabilities and came after a difficult stretch of clinical and regulatory setbacks that limited the company's access to fresh capital. The restructuring was not designed to preserve a standalone operating company; it was built around converting key drug assets to cash through court supervised sales, including Zokinvy and avexitide. Eiger's stock traded on Nasdaq under the EIGR ticker, and the bankruptcy process became the company's exit path from public markets.

The case ultimately produced an uncommon liquidation outcome. Competitive bidding for Zokinvy generated a net $45.2 million purchase price after 35 rounds of bidding, and Amylyx later acquired avexitide for about $35.1 million. The Fifth Amended Joint Plan of Liquidation was confirmed on September 5, 2024 through a confirmation order that followed multiple asset sales and cash collateral orders. A September 30, 2024 effective date closed the process and canceled outstanding equity, even as the plan documentation indicated unusually favorable recoveries for secured and unsecured creditors and even distributions to equity holders as described in counsel's confirmation summary.

Debtor	Eiger BioPharmaceuticals, Inc. (and affiliated debtors)
Court	United States Bankruptcy Court for the Northern District of Texas, Dallas Division
Case Number	24-80040 (SGJ) — Voluntary Petition
Judge	Hon. Stacey G. C. Jernigan — Voluntary Petition
Petition Date	April 1, 2024
Plan Type	Joint plan of liquidation
Confirmation Date	September 5, 2024
Effective Date	September 30, 2024
Claims Agent	Kurtzman Carson Consultants LLC
Assets / Liabilities	$38.8 million assets / $53.1 million liabilities
Secured Debt (Innovatus)	~$41.685 million outstanding — First Day Declaration
Zokinvy Sale	Net $45.2 million to Sentynl
Avexitide Sale	$35.1 million to Amylyx

Restructuring Overview

Eiger entered chapter 11 with a clear objective: run a structured sale process for its drug portfolio while preserving patient access and stabilizing liquidity. The voluntary petition and first day declaration positioned the cases as an orderly liquidation rather than a reorganization, and the debtors sought to keep operations funded long enough to conclude a competitive auction process. Cash was tight, and Innovatus held first priority liens on substantially all assets. The final cash collateral order granted adequate protection through replacement liens and superpriority claims and imposed a budget with variance testing, which allowed the estate to continue operations during the sale process while protecting the secured lender.

Asset sales then moved in rapid succession. The court approved the Zokinvy transaction in late April 2024 through a sale order that authorized a transfer free and clear of liens and facilitated closing in early May. That was followed by the avexitide sale under a June 27, 2024 order and a revised order on August 21, 2024 covering the lonafarnib and peginterferon lambda assets. These approvals transformed the estate from an operating biotech into a post sale liquidation vehicle.

Plan confirmation followed in early September 2024. The confirmation order approved an amended disclosure statement and confirmed the Fifth Amended Joint Plan of Liquidation, which established the distribution framework for remaining value. The plan later became effective on September 30, 2024. External reporting described the outcome as highly favorable to stakeholders, with secured and unsecured creditors paid in full and equity holders receiving distributions, a rare result in biotech bankruptcies as noted in Sidley's summary.

Case trajectory and sale strategy. The case used a controlled auction timeline to maximize value, with early filings emphasizing that patient access to Zokinvy would continue during the process. That operational continuity mattered because the most valuable asset was a commercial orphan drug that required stable supply, patient services, and regulatory handoffs. The use of cash collateral provided a bridge for these activities while marketing efforts proceeded. By structuring separate sales for Zokinvy, avexitide, and the remaining virology assets, the debtors avoided a forced portfolio sale and allowed strategic buyers to bid on assets aligned with their therapeutic focus. That segmentation also supported a faster confirmation timeline once the major cash generating sales closed.

Sale sequencing and creditor leverage. The confirmation timeline shows the estate prioritized transactions that generated immediate cash, which reduced dispute risk with the secured lender and kept the focus on value realization. Each sale order provided clarity on lien releases and assumption and assignment mechanics, ensuring that proceeds could flow to the estate without protracted litigation. That sequencing allowed the plan to move quickly once the major assets were monetized while preserving flexibility for the remaining virology assets. For a company with limited operating runway, this approach minimized administrative burn and kept the case centered on monetization rather than extended operational restructuring.

Company Overview and Product Portfolio

Eiger was a commercial-stage biopharmaceutical company that focused on rare diseases and complex, underserved patient populations. The company was headquartered in Palo Alto, California and was positioned as a rare disease specialist with a mix of approved and development-stage assets. Its public profile emphasized rare metabolic conditions and infectious diseases, and the company tracked its roots and growth trajectory on Crunchbase. In the first day declaration, the debtors also emphasized tax attributes, including net operating losses and research credits, as part of the value preserved through the chapter 11 process.

The most commercially significant asset was Zokinvy (lonafarnib). Zokinvy received FDA approval in November 2020 as the first and only treatment approved for Hutchinson-Gilford progeria syndrome, with U.S. commercial availability in January 2021. It later gained approvals in Europe, Great Britain, and Japan. The disease has a very small patient population, with about 400 children worldwide, but the clinical significance is outsized. Clinical data showed Zokinvy could reduce mortality risk by 72 percent and extend average life by 4.3 years, which created durable strategic value for acquirers even in a liquidation.

Avexitide was Eiger's other key value driver. The program is a first in class GLP-1 receptor antagonist with Breakthrough Therapy Designation for post-bariatric hypoglycemia and was also studied in congenital hyperinsulinism. The asset had been evaluated in five clinical trials, and Amylyx highlighted its plan to complete recruitment for a pivotal study within months of the sale. For a distressed biotech, a Phase III ready asset with multiple regulatory designations can attract competitive interest because it offers a clear regulatory path and a relatively near term value inflection point.

The broader portfolio included lonafarnib for hepatitis delta virus and peginterferon lambda for viral indications, which were positioned as development stage assets. These programs came with high regulatory risk and extensive clinical costs, but they still carried value in a competitive auction because they represented differentiated approaches in niche markets. Eiger had previously licensed lonafarnib from Merck and maintained multiple development programs that could be carved out to different strategic buyers. That separation strategy is apparent in the multiple sale orders entered during the case, which treated Zokinvy, avexitide, and the remaining virology assets as distinct transactions rather than a single portfolio sale.

Zokinvy's commercial trajectory helps explain why it was the anchor of the sale process. Orphan drug markets are small but can support premium pricing when a therapy is the only approved option, and progeria is a fatal genetic condition with an average life expectancy of about 14.5 years. The drug's approvals and global footprint created a durable revenue base even with a tiny patient population, and the asset was tied to a license from Merck, which needed to be transferred cleanly to a buyer. Those factors made Zokinvy a natural target for a competitive auction rather than a distressed fire sale.

Events Leading to the Filing

Eiger's bankruptcy did not begin with a liquidity shock alone; it was the culmination of compounding clinical and regulatory setbacks that reduced revenue prospects and investor confidence. A key blow landed in September 2022 when the FDA rejected an emergency use authorization request for peginterferon lambda as a COVID-19 treatment. That decision undermined a near term commercialization path and narrowed the company's ability to raise capital based on late stage virology assets.

The most damaging setback came in September 2023, when the Phase III LIMT-2 trial of peginterferon lambda for chronic hepatitis delta was discontinued after safety concerns. The trial enrolled 158 patients across 48 sites in 12 countries, and four patients experienced hepatobiliary events with liver decompensation. The decision to stop the trial was reported as a decisive safety driven outcome, and market reaction was swift, with shares dropping 36 percent in after hours trading. For a company already dependent on a small number of clinical assets, that development limited strategic options.

Financial pressure accelerated the march toward court protection. Eiger implemented a 25 percent workforce reduction in June 2023, and reports indicated the board explored equity financing options before filing. With assets below liabilities and a secured debt balance dominated by Innovatus, the company faced a narrowing runway. Public coverage noted a sharp stock decline tied to bankruptcy reports, reinforcing that the market expected a wind down rather than a capital raise or merger as the likely end state.

Market signals reinforced that assessment. The company had explored equity financing before filing, but its shares fell as much as 51 percent after bankruptcy reports, indicating limited investor appetite for a dilutive recapitalization. Bloomberg coverage of the filing emphasized the Dallas venue and market reaction, which underscored how quickly the narrative moved from turnaround prospects to liquidation and asset monetization.

Capital Structure and Liquidity

Eiger's prepetition capital structure was anchored by an Innovatus term loan facility. In June 2022 the company entered into a term loan agreement of up to $75 million, including a $40 million initial draw and additional tranches tied to regulatory and clinical milestones. The facility carried a floating rate and was secured by a first priority interest in substantially all assets, including intellectual property. The same transaction included a $5 million common stock purchase, a structure that underscored Innovatus' role as both lender and strategic financier during Eiger's late stage development push.

Interest and amortization profile. The facility was back loaded, with a 60 month interest-only period and a total term of 63 months, and the agreement permitted a portion of interest to be paid in kind in the early years. The first day declaration reported an effective rate of 13.84 percent as of December 31, 2023, reflecting a floating rate structure tied to the greater of prime or a base rate plus margin. This profile reduced near term cash drain but increased reliance on collateral value, which becomes critical when clinical setbacks reduce the expected cash flows from the portfolio.

By the petition date, the debtors reported approximately $41.685 million outstanding under the Innovatus facility. That position effectively dictated the restructuring path, since the secured lender's liens covered the assets that would be sold. The secured debt, combined with limited unrestricted cash, meant the chapter 11 process required structured cash collateral relief to fund operations and meet the costs of a rapid sale process.

The final cash collateral order authorized the debtors to use cash collateral subject to a budget and a variance threshold. The order provided adequate protection through replacement liens on postpetition collateral and superpriority administrative claims, preserving Innovatus' position while enabling a sale process. In a liquidation oriented case, these terms matter because they set the guardrails for marketing activities, professional fees, and the timeline for asset sales. The budget variance test, in particular, forced tight alignment between the debtors' projections and actual spending during the most active portion of the auction process.

Asset Sales and Auction Outcomes

The Zokinvy sale was the anchor transaction. Before filing, Eiger announced a stalking horse deal with Sentynl Therapeutics with a price of up to $26 million. The bankruptcy process opened the asset to competitive bidding, and the auction reportedly ran through 35 rounds before Sentynl emerged with a higher bid. Sentynl's press release described a base price of $46.1 million with a $0.9 million termination fee credit, resulting in a net $45.2 million purchase price. The court approved the transaction through a Zokinvy sale order, and the sale closed on May 3, 2024, with Sentynl, a subsidiary of Zydus, acquiring worldwide rights.

The avexitide transaction followed a similar court supervised path. The debtors obtained authority to sell the program under a June 27, 2024 sale order, and Amylyx announced a July 9, 2024 closing. The price was $35.1 million plus cure costs and assumed liabilities, and Amylyx highlighted the asset's Breakthrough Therapy Designation and its plan to advance a Phase III program. Industry reporting framed the acquisition as a pivot into the GLP-1 space with topline data targeted for 2026 and potential commercialization in 2027.

Operational continuity and patient services. The sale process was structured to preserve continuity for rare disease patients. At the outset of the case, the company stated that patient access to Zokinvy would continue without interruption, which required maintaining distribution channels and support programs while the auction ran. Sentynl's acquisition announcement framed the transaction as a global rights transfer and identified Sentynl as a subsidiary of Zydus, signaling the buyer's ability to support international supply and regulatory obligations. The competitive auction that increased the price from the stalking horse offer to the final bid illustrates how even a distressed biotech can extract strategic value when an asset has differentiated clinical data and orphan drug exclusivity.

Eiger also pursued a sale of lonafarnib and peginterferon lambda assets. The court entered a revised sale order on August 21, 2024 authorizing the transaction, but the reviewed excerpts did not disclose the buyer or consideration. The timing indicates that the debtors aimed to complete the remaining asset sales before plan confirmation, ensuring the liquidation plan could be funded by realized proceeds rather than contingent future value.

Taken together, the sales process illustrates how a distressed biotech can maximize recoveries by separating assets with different clinical risk profiles. Zokinvy, a commercial product with proven clinical benefits, drew the strongest pricing, while avexitide captured strategic value as a Phase III ready asset. The remaining virology assets, while less proven, still justified a discrete sale process and a dedicated order.

Plan of Liquidation and Distributions

The joint plan of liquidation established the framework for winding down Eiger and distributing proceeds from the asset sales. The plan organized claims into multiple classes, including secured claims, priority claims, general unsecured claims, intercompany claims, and equity interests. Rather than pursuing a standalone emergence, the plan consolidated remaining assets into a liquidation structure designed to finalize sales, resolve claims, and make distributions based on priority rules.

The confirmation order approved an amended disclosure statement and confirmed the Fifth Amended Joint Plan of Liquidation. Public summaries of the confirmation outcome described a rare distribution profile for a biotech bankruptcy: secured creditors were paid in full, unsecured creditors received full payment with interest, and equity holders received distributions. The same summary highlighted opt out third party releases and full releases for officers and directors, indicating the plan incorporated customary release structures alongside the liquidation mechanics.

Post-effective reporting changes. The effective date announcement stated that the company would file a Form 15 and cease periodic SEC reporting, including the cessation of Forms 10-K, 10-Q, and 8-K. That step typically marks the shift from a public reporting company to a wind down posture, with remaining administration focused on claim reconciliation and final distributions rather than ongoing operations.

The plan became effective on September 30, 2024, at which point the company reported that all shares of common stock were cancelled and it would stop filing periodic SEC reports. That end state reflects a liquidation outcome even in a scenario where recoveries were sufficient to distribute value down the capital stack. It also shows how asset sales can deliver positive creditor outcomes even when the operating business does not survive.

Key Parties and Professionals

Eiger's restructuring relied on a set of advisors experienced in distressed healthcare transactions. The company retained Sidley Austin as counsel, Alvarez and Marsal as financial advisor, and SSG Capital Advisors as investment banker, as identified in the company's chapter 11 announcement. The court authorized the retention of Kurtzman Carson Consultants LLC as claims, noticing, and solicitation agent, giving the claims agent responsibility for maintaining the official claims register and distributing case notices.

The secured capital structure was dominated by Innovatus Life Sciences Lending Fund I, LP, which served as collateral agent for the term loan facility and set the cash collateral framework. Innovatus' position explains why the case focused on a structured sale process with tight budget oversight. The combination of a single secured lender, a small set of monetizable assets, and a defined auction path is a common pattern in biotech liquidations where the most valuable assets are the drug candidates and related intellectual property.

Beyond the core advisors, the case required tight coordination between counsel, financial advisors, and the claims agent to manage notice, ballot, and auction logistics. The claims agent role is especially important in cases with multiple asset sales because each transaction requires service on contract counterparties, creditors, and regulators, and the agent maintains the official register used to reconcile distributions. The early retention of Kurtzman Carson Consultants LLC as claims, noticing, and solicitation agent provided a centralized platform for noticing and solicitation, which is often critical when the case involves multiple auctions and plan solicitations. That infrastructure helped support the compressed timeline from filing to confirmation.

Frequently Asked Questions

What did Eiger BioPharmaceuticals do?

Eiger was a commercial-stage biotech focused on rare diseases, with Zokinvy as its flagship product and additional pipeline assets such as avexitide and lonafarnib. The company is described as a rare disease specialist in its chapter 11 announcement and on Crunchbase, and it traded publicly on Nasdaq under the EIGR ticker.

Why did Eiger file for chapter 11?

The company faced a series of clinical and regulatory setbacks that undermined its growth prospects. The FDA rejected emergency use authorization for peginterferon lambda in September 2022, and the Phase III LIMT-2 study was discontinued for safety reasons in September 2023. Those events, combined with a balance sheet showing liabilities above assets, narrowed the company's financing options and led to a court supervised sale process.

What was Zokinvy and why was it valuable?

Zokinvy (lonafarnib) is the first and only approved treatment for Hutchinson-Gilford progeria syndrome. It received FDA approval in 2020 and later approvals in Europe, Great Britain, and Japan. Clinical data indicated a significant survival benefit, and the drug addressed a very small but urgent patient population of roughly 400 children worldwide, which made it attractive to strategic buyers even in a liquidation.

Who bought Zokinvy and for how much?

Sentynl Therapeutics, a subsidiary of Zydus, acquired Zokinvy after an auction that resulted in a base price of $46.1 million and a $0.9 million termination fee credit, for a net $45.2 million. The court approved the transfer under the Zokinvy sale order, and the sale closed on May 3, 2024.

What is avexitide and who acquired it?

Avexitide is a GLP-1 receptor antagonist with Breakthrough Therapy Designation for post-bariatric hypoglycemia and studies in congenital hyperinsulinism. Amylyx acquired the program for about $35.1 million under a June 27, 2024 sale order, and the buyer described plans to advance a Phase III program with data expected in 2026.

What happened to the peginterferon lambda program?

The Phase III LIMT-2 trial in chronic hepatitis delta was discontinued in September 2023 after a safety review found hepatobiliary events with liver decompensation in four patients. The discontinuation was a major setback that contributed to the bankruptcy filing and reduced the value of the virology portfolio.

What was the Innovatus term loan and how much was outstanding?

Eiger entered a term loan facility of up to $75 million in June 2022. By the petition date, court filings showed about $41.685 million outstanding, with Innovatus holding first priority liens on substantially all assets.

Did creditors and shareholders recover anything?

Yes. The confirmation summary reported that secured creditors were paid in full, unsecured creditors received full payment with interest, and equity holders received distributions. That outcome is unusual for a biotech liquidation and reflected the strong prices achieved in the asset sales.

When did the plan become effective and what happened to the stock?

The plan became effective on September 30, 2024. On the effective date, all shares of common stock were cancelled and the company indicated it would stop filing periodic SEC reports, effectively ending its public reporting status.

Who is the claims agent for Eiger BioPharmaceuticals?

Kurtzman Carson Consultants LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

For more bankruptcy case analyses and restructuring insights, visit ElevenFlo's bankruptcy blog.