UPDATED June 13, 2016.

@Roche to Acquire EBI-031 License By Eleven Bio $EBIO For Up To $270M


Cambridge, Mass.-based biopharmaceutical company Eleven Biotherapeutics Inc. (NASDAQ: EBIO) is reviewing a range of strategic alternatives and is actively working with an investment bank in this process. The company is backed by leading healthcare venture capital firms Third Rock Ventures, Flagship Ventures and Japan’s JAFCO Co. Ltd. (TYO: 8595), which in turn is backed by Nomura TYO: 8604)(NYSE: NMR).

Potential strategic alternatives being explored include the sale of the company, a strategic partnership with one or more parties, or the licensing, sale or divestiture of some of the company’s proprietary technologies.

EBIO shares closed today at $0.96 (less than 10% of its IPO price) bringing the company’s current market capitalization to $19.09 million.

Last year, after seeing its stock price rise to $13.47 per share on May 4, the company announced on May 18 that its “first pivotal Phase 3 study of its lead drug candidate, EBI-005, in moderate to severe dry eye disease,” failed to prevent “ocular pain and discomfort” in comparison to a control group. As a result of failing these two co-primary endpoints, on May 18, 2015 EBIO shares fell precipitously to $3 and have been unable to recover. However, encouraged by “a favorable tolerability profile for EBI-005” the company decided to continue developing EBI-005 “into a pivotal study for allergic conjunctivitis.”

Subsequently, on January 15, 2016 after obtaining “results from the Phase 3 clinical trial of its lead drug candidate, isunakinra (EBI-005), for the treatment of severe allergic conjunctivitis,” the company said it “failed to meet its primary endpoint and based on these overall results we see no immediate path forward in allergic conjunctivitis.”

On February 11, 2014, the company had closed its NASDAQ IPO at a price of $10.00 per share, raising approximately $50 million. After the IPO, on November 25, 2014, Eleven Bio raised an additional $20 million in a private placement of common stock at $11.47 per share, bringing the company’s aggregate pre-and post-IPO funding to over $125 million.

From the company’s inception in 2010 to the date of its IPO in 2014, Third Rock Ventures invested in the aggregate $19.66 million, and Flagship Ventures, invested $13.16 million in the company’s Series A funding round. In May 2012, Japanese venture capital and private equity firm JAFCO Co. Ltd invested $10 million as part of the Series A funding round.

In December 2103, Eleven Bio raised an additional $12.6 million from its existing VC investors and a new investor, bringing its total pre-IPO funding to $55.4 million.

JAFCO Super V3 Investment LP, an affiliate of JAFCO Co. Ltd currently holds a nearly 10% stake in Elleven Bio’s common stock. Flagship Ventures holds a 7.38% stake, and Fidelity Investments (FMR) holds a 14.4% stake. Third Rock’s current stake cannot be directly ascertained from the company’s SEC filings, but Eleven Bio is still shown as the VC firm’s portfolio company on its website.

“We are sufficiently funded to continue operational activities as we engage in a careful, ongoing review of external strategic alternatives designed to maximize shareholder value,” said the company’s president and CEO, Abbie Celniker, PhD.

Dr. Celniker has more than 20 years of proven expertise in leading protein therapeutic discovery and development companies. Prior to joining Eleven, she was CEO of Taligen Therapeutics, a biotechnology company acquired by Alexion Pharmaceuticals in 2011. She previously served as global head of biologics at Novartis. she also hels senior management positions at Millennium Pharmaceuticals, Wyeth BioPharma (Genetics Institute) and Genentech. Dr. Celniker holds a Ph.D. in Molecular Biology from the University of Arizona and a B.A. in Biology from the University of California, San Diego.

“Pending any decision to undertake any strategic alternative, we are continuing our development activities in accordance with our existing business strategy while managing our cash position,” the company stated.

Eleven Biotherapeutics, Inc. is a preclinical-stage biopharmaceutical company with a proprietary protein engineering platform, called AMP-Rx, that it applies to the discovery and development of protein therapeutics to treat diseases of the eye. Eleven’s therapeutic approach is based on the role of cytokines in diseases of the eye, the company’s understanding of the structural biology of cytokines and its ability to rationally design and engineer proteins to modulate the effects of cytokines. Cytokines are cell signaling molecules found in the body that can have important inflammatory effects.

The company is also developing EBI-031 that is in preclinical development to treat diabetic macular edema; and a product candidate as an intravitreal injection for the treatment of certain retinal diseases, such as wet age-related macular degeneration. Eleven Biotherapeutics, Inc. has a collaboration and license agreement with ThromboGenics N.V. to identify protein or peptide therapeutics that directly modulate any of a specified set of targets in a novel pathway in retinal disease.

Eleven Biotherapeutics was founded in 2010 by life science investors Flagship Ventures and Third Rock Ventures and world-renowned scientific experts Reza Dana, MD, MPH, MSc (Harvard), K. Christopher Garcia, PhD. (Stanford), Gregory Verdine, PhD. (Harvard), Casey Weaver, MD (University of Alabama), and K. Dane Wittrup, PhD (MIT).

Flagship Ventures has launched 30 companies while investing in another 50. Flagship manages $1.4 billion in capital and is active in three principal sectors: therapeutics, health technologies, and sustainability. Flagship’s current portfolio includes Acceleron (NASDAQ: XLRN), Agios (NASDAQ: AGIO), BIND Therapeutics (NASDAQ: BIND), Concert Pharmaceuticals (NASDAQ: CNCE), Eleven Biotherapeutics (NASDAQ: EBIO), T2 Biosystems (NASDAQ: TTOO), as well as several private companies: Editas Medicine, Pronutria Biosciences, Seres Therapeutics and Moderna Therapeutics. The firm was founded in 2000 and is based in Cambridge, Mass.

Third Rock Ventures is a leading healthcare venture firm focused on disruptive areas of science and medicine to discover, launch and build companies that make a dramatic difference in people’s lives. The firm has $1.3 billion under management, and 37 portfolio companies. Third Rock is headquartered in Boston, Mass. and has an office in San Francisco, Calif.

JAFCO Co. Ltd. (TYO: 8595), a pioneer in the Japanese VC industry, aims to identify high-potential companies in the start-up and early stages and provides proactive growth support from both a business and management perspective. The firm build business strategies with entrepreneurs in the growth sectors and support their business startup over the medium to long term. Regarding buyout investment, the firm aims to capture buyout needs stemming from business succession, restructuring and revitalization issues and acquires promising deals. JAFCO invests in Japanese and US life science companies, and is listed on the first section of the Tokyo Stock Exchange.

Japanese keiretsu and global financial services company Nomura (TYO: 8604)(NYSE: NMR) holds a stake of nearly 25% in JAFCO.

Founded in 1973, JAFCO has managed a cumulative total of over 90 investment funds through its offices in Japan, the US, China, South Korea, Taiwan and Singapore. About 900 portfolio companies have made IPO. JAFCO’s life-science investments in the US focus on biopharmaceutical ventures and create significant value for portfolio companies by facilitating alliances in Japan and Asia with JAFCO’s extensive worldwide network of leading pharmaceutical companies.

Photo: Abbie Celniker, PhD, CEO at Eleven Biotherapeutics Inc.

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