EBIO Eleven Biotherapeutics

Here’s Our Revised Thesis On Eleven Biotherapeutics Inc (NASDAQ:EBIO)

Back in May, we looked at Eleven Biotherapeutics Inc (NASDAQ:EBIO) here. At the time, the company had just put out first quarter 2017 financials and management was about to hold a conference call outlining the results. We highlighted a couple of things as being key to look out for from the call itself and also put forward a number of catalysts that we would be watching as the year matured as potentially getting the stock moving near term.

EBIO Daily Chart

EBIO Daily Chart

Fast-forward to September and the company just put out second-quarter financials and, alongside the numbers, gave markets an update as to how things are developing fundamentally. As part of this update, we got word that Eleven was refining its operational focus and this warrants us taking a second look at the company and reformulating our thesis based on the new information.

Here goes.

For those not familiar with Eleven Biotherapeutics, the company is a healthcare stock that has created a couple of drugs, both of which can be used to target different types of cancer. Back when we looked at this one in May, the company was advancing both drugs along their respective development pathways – the first called Vicinium, which is indicated as the bladder cancer treatment and the second called Proxinium, which is targeting Squamous Cell Carcinoma of the Head and Neck (SCCHN).

So what’s new?

In August, we learned that an independent data monitoring committee had conducted the first of a preplanned efficacy analysis of the above mentioned Vicinium, rooted in an ongoing phase 3 investigation in the bladder cancer indication. We had already seen a safety evaluation (and a subsequent recommendation for continuation) but that the committee came to the same conclusion as regards to efficacy suggests that the drug is performing well.

Management also detailed an effort by the National Cancer Institute, or NCI, to identify whether the drug can work better when combined with a checkpoint inhibitor, namely Imfinzi, also known as durvalumab and marketed by AstraZeneca plc (ADR)(NYSE:AZN), in, again, a bladder cancer indication.

In addition to this, we also found out with the latest conference call that the company had around $15 million cash on hand, down on the $23 million recorded a quarter earlier.

Taking these three fresh bits of information in conjunction with one another, it’s clear that the company’s cash balance is declining pretty quickly and that the lead program, that which is investigating Vicinium both as a monotherapy and a combination therapy with AstraZeneca’s durvalumab, is ramping up to the point where it is going to be consuming far more of the company’s available resources than was the case this time last year.

it would make sense to us, then, that management would shift focus towards Vicinium, at least from a time and capital resources perspective, in order to try and maximize shareholder value.

So we were looking for a move like this ahead of the most recent conference call and that’s exactly what we got.

Take a look at this quote, pulled directly from the Q2 earnings call:

“…we have decided to prioritize and — our resources to focus on the rapid development of our Phase III registration trial of Vicinium. Therefore, we are temporarily pausing ongoing development of our earlier-stage assets, Proxinium, for the treatment of squamous cell carcinoma of the head and neck, and VB6-845d, our lead systemically administered compound.”

So what comes next?

The ongoing phase 3 trial has two individual topline readout targets.

The first is based on three-month data and the second is based on 12-month data; both from the same investigation. The major catalysts associated with this program are enrollment completion, which is slated for the first quarter 2018, the three-month topline readout, which should hit press mid-2018 and the subsequent 12-month readout, targeted for first quarter 2019.

Dilution remains a long-term risk but, with the capital resource reallocation in place, there is plenty of runway to carry the company through to at least mid next year.

Here’s our previous coverage of this stock.

We will be updating our subscribers as soon as we know more. For the latest updates on EBIO, sign up below!

Image courtesy of nathanmac87 via Flickr

Disclosure: We have no position in EBIO and have not been compensated for this article.

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Here’s Our Revised Thesis On Eleven Biotherapeutics Inc (NASDAQ:EBIO)
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