Can Eleven Biotherapeutics Keep Climbing With This Roche Deal?

By Chris Lange Updated Jan 13, 4:34AM EST · Published Aug 16, 9:05AM EDT

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Can Eleven Biotherapeutics Keep Climbing With This Roche Deal? — © Thinkstock

Eleven Biotherapeutics Inc. (NASDAQ: EBIO) has been on an absolute rampage in 2016. In just the past quarter alone the stock has practically quadrupled. For an idea of how much Eleven Bio has gained this year, consider that the stock hit a low this spring of $0.25 per share, and since then has risen as high as nearly $6 per share. Even this week the stock is continuing to rise after the company announced the effectiveness of the exclusive licensing deal with Roche. This deal has the potential to keep pushing Eleven Bio higher.

The long and short of the matter is that Eleven Bio has granted Roche an exclusive, worldwide license to develop and commercialize EBI-031 and all other interleukin-6 (IL-6) antagonist antibody technology owned by the company. Eleven Bio is entitled to receive $30 million in payments from Roche, including a $7.5 million upfront payment in connection with the effectiveness of the license agreement, and a $22.5 million milestone payment based on the Investigational New Drug application (IND) for EBI-031 becoming effective.

Keep in mind that Eleven Bio has a total market cap of $107 million, so the relative size of this deal is huge for this company.

Also under the terms of the agreement, the company could receive up to an additional $240 million upon the achievement of certain future regulatory, development and commercialization milestones. Additionally, Eleven Bio could receive royalties for net sales of potential future products containing EBI-031 or any other potential future products containing other Eleven IL-6 compounds.

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For some background: EBI-031 is a humanized monoclonal antibody that potently binds IL-6 and inhibits all known forms of IL-6 cytokine signaling. EBI-031 is currently in development for the treatment of ocular diseases.

Abbie Celniker, Ph.D., president and CEO of Eleven Bio, commented:

With the completion of this licensing deal and the IND being effective, we look forward to the future clinical advancement of EBI-031 by Roche as they explore its potential use for ocular diseases, including diabetic macular edema.

Shares of Eleven Bio closed Monday up 13.6% at $5.35, with a consensus analyst price target of $12.00 and a 52-week trading range of $0.25 to $5.77. Following the announcement, the stock was up about 6% at $5.67 in early trading indications on Tuesday.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.