Eleven Bio faces cash crunch as lead drug flunks another PhIII

A last-ditch effort by Eleven Biotherapeutics to mine positive late-stage data from its only clinical asset has ended in failure, sending its shares crashing back downward and leaving company execs to ponder how to survive a cash crunch.

Cambridge, MA-based Eleven ($EBIO) experienced its first train wreck when EBI-005 (isunakinra)--an IL-1 receptor inhibitor--flunked a Phase III study for dry eye disease back in May of last year. But the biotech managed to rally investors for another charge into a separate Phase III trial to study the drug's impact on allergic conjunctivitis.

The drug is now 0 for 2, with no statistically significant difference seen with the control group. And Eleven's shares plunged 55% in after-market trading on Friday, barely managing to keep its price above the $1 mark.

Chief Medical Officer Michael Goldstein says that researchers now plan to assess patient subsets among high IL-1 producers. And there's a preclinical asset that can be moved forward toward Phase I.

But cash is limited, with only enough money to get into the fourth quarter. The company has $36 million in cash but will have to pay Silicon Valley Bank $15 million to cover a loan.

"Our efforts will be focused on submitting an investigational new drug application for EBI-031 in diabetic macular edema in the first half of 2016," noted CEO Abbie Celniker in a statement. "In addition, we plan to provide an update on our corporate strategy later this quarter during our 2015 year-end financial results conference call."

Eleven is a Third Rock alumni, part of a wave of biotechs the venture group steered toward a hot public market. Third Rock co-founder Mark Levin launched the company with Flagship's assistance, with plans to build the company around a protein engineering platform.

- here's the release