Zombie biotech Eleven Bio seeks resurrection with merger deal

Eleven Bio ($EBIO) is looking to come back to life after being on life support for much of 2016 with a merger deal combining it with private Canadian company Viventia, which will take over at the top of the biotech.

This comes after the Cambridge, MA-based biotech looked to be winding down its ops after cutting 14 positions in the company--or 70% of its total remaining staff--back in June.

Its shares have taken a battering in recent months: In May 2015, its late-stage drug EBI-005 (isunakinra)--an IL-1 receptor inhibitor--flunked a Phase III study for dry eye disease.

Then in January, a follow-up Phase III trial to study the drug's impact on allergic conjunctivitis also flopped, putting serious strain on the company's dwindling cash supplies.

Things got worse in March when it was threatened to be booted off the Nasdaq after falling into penny stock territory and failing to comply with its strict equity rules on trading. It was given 180 days to get its act together.

The Third Rock alumni also announced that it was to outlicense its second preclinical IL-6 ocular disease drug, EBI-031, in its limited pipeline to Roche ($RHHBY) for some much-needed financing.

It appeared to be a walking dead biotech, but it has come back to life with this merger. Under the agreement, Eleven purchased all of the outstanding capital stock of Viventia in exchange for the issuance of just over 4 million newly issued shares of Eleven common stock.

This sees the biotech gain access to Viventia’s lead product candidates, Vicinium, a Phase III med for high-grade non-muscle invasive bladder cancer, and Proxinium, a soon-to-be-midstage and now orphan candidate for advanced squamous cell carcinoma of the head and neck.

The combined new company will continue to do business as Eleven Biotherapeutics and trade under its $EBIO ticker on the Nasdaq. Viventia CEO Stephen Hurly will serve as president and chief exec of the company, while Eleven President and CEO Abbie Celniker will remain a director.

Eleven’s pipeline has also been boosted now by Viventia’s earlier stage pipeline of next-gen TPT candidates designed for cancer targets.  

Hurly said in a release: “We are excited to join with Eleven to create a company with extensive experience in engineering and developing novel protein therapeutics for local delivery that we believe may maximize efficacy and reduce toxicity. Our TPTs combine specific tumor targeting with a protein based tumor killing payload, and will be developed to serve cancer patients in areas of high unmet need. Together we have a strong Board of Directors, management team, product pipeline and technology platform, and the capital needed to support the company’s development plans into 2018."

Celniker added: "As previously announced, Eleven performed an extensive review of our strategic alternatives, and our Board of Directors believes that the acquisition of Viventia offers Eleven shareholders a compelling opportunity for enhancing long-term value. Our combined company will continue to support Roche as they develop EBI-031, and will benefit from the capital contributed by this partnership, which provides the necessary funding to enable further development of Vicinium and Proxinium.”

Eleven was up nearly 13% premarket on the news, having finished up yesterday by over 3.5%, but with a market cap of less than $60 million.