UPDATED: Nearing the brink, Eleven Bio bets on another PhIII eye study and shares soar

Eleven Bio CEO Abbie Celniker

Less than three months after seeing its share price get crushed in the panic following a late-stage failure of its lead drug, Cambridge, MA-based Eleven Biotherapeutics ($EBIO) is rolling the dice in a last-ditch effort to produce approval-worthy Phase III data.

Back in May, the company profoundly disappointed its investors with the news that EBI-005 failed to hit either of the primary endpoints in a Phase III study for dry eye. But holding on to some positive data from a mid-stage study of allergic conjunctivitis, it's now heading straight back into the clinic and beginning dosing patients. And it has enough cash to get the data ready for reporting in Q1 2016 with time to raise more money before its burn rate consumes the rest of the cash sometime after it enters the second half.

Make no mistake, Eleven CEO Abbie Celniker is beginning this gamble focused squarely on success. A positive outcome in this study would give the team at Eleven a chance to execute a second late-stage study to confirm the results and head to the FDA with a BLA and plans to launch a product.

Investors responded warmly to the strategy, cheering Eleven and pushing its shares up a whopping 158% in early trading Wednesday.

"We do have sufficient cash to get into the second half of 2016," says Celniker, who's seen her market cap melt down to $44.5 million before today's spike. "And I think in the case of a positive readout we feel very confident we'd have the ability to raise additional funds." Some of that money could also be used to advance a novel IL-6 into the clinic in the first half of 2016.

Investigators will recruit 250 subjects with moderate to severe allergic conjunctivitis who are refractory to standard of care for the Phase III study. They'll be exposed to the allergen during the allergy season, with a cohort tested with a direct challenge to confirm what they saw in Phase II. And if they can get to the market later, says the CEO, there's a small enough group of physicians involved to make it a realistic commercial prospect.

Behind door B, in the event of another setback, the prospects are distinctly less appealing. A failure would leave it without a credible clinical-stage prospect, pushing Eleven to the brink of its resources. CFO Gregory Perry resigned soon after the Phase III failure.

Eleven Bio was named a Fierce 15 company back in 2010, when Mark Levin at Third Rock helmed the startup.

"We were very disappointed to see the stock behave the way that it did," notes an upbeat Celniker, who's holding on tightly to her belief that a near-term success could cure what ails Eleven. She's asking investors to hold on to their belief in the company as well, for just a few more months.

Special Report: FierceBiotech's Fierce 15 - Eleven Biotherapeutics