Sector News

Third Rock’s Eleven plots turnaround–or investor exit–via Roche deal

August 12, 2016
Life sciences

Preclinical micro-cap Eleven Biotherapeutics is working to regain some momentum after its lead dry eye disease candidate failed in Phase III testing early this year. It hopes to press the reset button by refocusing on a Roche deal that could continue to offer infusions of cash.

But it’s still keeping all its options open, considering a partnership, merger or divestiture of non-Roche-related assets. Simply distributing any Roche partnership payments to shareholders is also on the table if no transactions along those lines result.

The Cambridge, MA-based biotech disclosed the Roche partnership this June and stands to receive an upfront of $7.5 million. Then in July, it said it stands to receive a $22.5 million milestone payment from the pharma as the IND became effective for a Phase I study of the partnered ocular disease candidate EBI-031, a humanized monoclonal antibody that binds interleukin-6 and inhibits IL-6 cytokine signaling.

All this will be considered at an upcoming Aug. 15 shareholder meeting, including a final ratification of the Roche partnership. Eleven shares gained more than 10% in early trading on Aug. 12 to hit a meager market cap of about $90 million.

“We look forward to closing our licensing deal with Roche, contingent upon the approval of our stockholders at our upcoming stockholder meeting,” said Eleven CEO Abbie Celniker in a statement.

The EBI-031 IND covers Phase I clinical trials in diabetic macular edema (DME) and uveitis. Roche can buy out rights to the drug at a couple of points in its development, paying $135 million after a Phase II trial start but before Phase III, or $265 million before a regulatory filing is accepted for review.

If Roche doesn’t buy EBI-031 from Eleven but continues with the partnership instead, the biotech stands to receive a total of $262.5 million in milestone payments along the way including $20 million on a Phase II start, $30 million on a Phase III start, $25 million on a U.S. regulatory filing, and $40 million on a U.S. launch. Eleven also stands to get 7.5% to 15% on net sales of any products containing EBI-031, a rate that escalates annually over a four-year period.

Eleven was founded in 2010 by Flagship Ventures and Third Rock Ventures as an ambitious effort to engineer protein therapeutics to address a wide variety of disorders including inflammatory conditions and coagulation disorders. It raised $55 million in venture capital.

Six years later, Third Rock and Flagship are still the main shareholders in the company, even after a mediocre IPO in 2014 that raised $50 million. Third Rock held 24.2% at June 30, while Flagship held 16.8%.

By Stacy Lawrence

Source: Fierce Biotech

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