Third Rock's Eleven Bio flunks a Phase III dry eye study

Eleven Bio CEO Abbie Celniker

Eleven Biotherapeutics' ($EBIO) top pipeline prospect bombed a late-stage study in dry eye disease, failing to beat out placebo and forcing the Third Rock Ventures-founded biotech to pivot its focus.

The drug, EBI-005, is a topical treatment designed to block the interleukin-1 receptor and tamp down ocular inflammation. Eleven Bio recruited 669 patients with dry eye disease, testing how well the drug could prevent corneal damage and improve patient-reported ocular pain over 12 weeks. But at the final tally, EBI-005 failed to meet either of its primary goals, the company said, charting no statistically significant benefit over placebo.

With the failure, Eleven Bio is nixing its earlier plans to launch a second Phase III study in dry eye later this year, abandoning the indication altogether and shifting its gaze to another disease. Last year, EBI-005 demonstrated a statistically significant improvement in the symptoms of allergic conjunctivitis in a Phase II study, and Eleven Bio is planning to kick off a late-stage study in that indication in the second half of this year.

The dry eye results sent Eleven Bio's shares down more than 75% in premarket trading on Monday, an all-time low for a biotech that raised $50 million in an IPO early last year.

EBI-005's Phase III failure may come as little surprise considering the drug's performance in an Phase Ib/II trial. That study, primarily designed to assess safety, found no statistically significant difference between EBI-005 and placebo. But, noting that the trial wasn't powered to determine efficacy, the biotech pressed on into Phase III, believing that the results, combined with historical data on IL-1 blockade, provided enough evidence for future success.

Eleven Bio is now sitting on about $59 million in cash and equivalents, the company said, enough to keep things moving into the second half of 2016.

"We have sufficient capital to continue to invest in our promising pipeline and remain confident in the potential for our novel protein therapeutic drug candidates for ocular disease," CEO Abbie Celniker said in a statement. "Our team continues to be committed to moving forward with our upcoming plans, including advancing EBI-005 into a pivotal study for allergic conjunctivitis and continuing to progress EBI-031 for diabetic macular edema."

- read the statement