2 Fallen Biotech Stocks Worth Chasing
July 7, 2016
By Alex Keown, BioSpace.com Breaking News Staff
If you’re looking to bolster your biotech portfolio, there are numerous stocks out there, but some may only yield minimal growth. Zerg Watch’s Albert Farrington selected two stocks that have taken a recent beating, but have the potential for a turnaround—XBiotech and Eleven Biotherapeutics.
XBiotech
Shares of XBiotech have been on a rollercoaster ride this month, dropping about 46 percent this week following a critical analysis of its experimental colorectal cancer drug Xilonix. On Sunday, Texas-based XBiotech said Xilonix was reason for a 2.7-fold increase in overall survival in patients, about 11.5 months. However, in the same breath the company noted the same response was also seen in the placebo arms of patients as well. This was enough to send The Street’s Adam Feuerstein into a tizzy. Feuerstein called XBiotech’s claims “clinically meaningless sleight of hand.” The stock plunged to $13.63 per share. Still, XBiotech does expect the European Medicines Agency to rule on Xilonix in the fourth quarter of this year, which if it does get approved, is likely to send the stock on an upward surge.
Shares of XBiotech are down this morning, trading at $14.35 as of 10:47 a.m. In January, the stock was trading at a 52-week low of $6.99 per share.
Eleven Biotherapeutics
Embattled Eleven Biotherapeutics recently terminated 70 percent of its workforce, about 14 people, on the heels of a $270 million deal with pharma giant Roche. Eleven Biotherapeutics said the job eliminations were part of a restructuring deal focused on keeping its eye therapies moving forward.
Farrington touts the Roche deal as the basis for his belief in Eleven’s potential stock surge. Under the agreement, Eleven will be entitled to an upfront payment of $7.5 million, along with potential future milestone payments of up to $262.5 million. The first potential future milestone payment of $22.5 million, is subject to the effectiveness of an investigational new drug application for EBI-031, according to a statement issued by Eleven Biotherapeutics. The payment is time-related. If the IND becomes effective before Sept. 15, the company will receive the $22 million, but Eleven will lose $2 million if the IND becomes effective after Sept. 15, the company said. Eleven Biotherapeutics submitted the IND to the U.S. Food and Drug Administration on June 13.
Eleven Biotherapeutics shares are well below its 52-week high of $5 per share back in August 2015. Shares are currently trading at $1.92 as of 10:55 a.m.
For the past year, Eleven Biotherapeutics has struggled with the failure of two experimental therapies. On Jan. 10, the company announced that its Phase III clinical trial of EBI-005 (isunakinra) for severe allergic conjunctivitis did not meet its primary endpoint. That was the second time EBI-005 failed to live up to expectations. In May 2015, the company reported that EBI-005, this time being studied for the treatment of moderate to severe dry eye disease, failed to prevent damage to the cornea or reduce eye pain in comparison to the control group.