Tough Market and Clinical Failures Beat Up Two Massachusetts Biotechs
February 12, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Early-stage biotech drug development has always been a high-risk gamble, and the current volatility in the stock market is upping the ante for at least two Cambridge, Mass.-based biotech companies.
Eleven Biotherapeutics
Eleven Biotherapeutics (EBIO) focuses on drugs for diseases of the eye utilizing its AMP-Rx protein engineering platform. Over an eight-month period, the company lost 95 percent of its market value, largely related to the failure of two late-stage clinical trials.
In May 2015, the company announced that EBI-005 (isunakinra), part of the OASIS study, a pivotal Phase III trial in moderate to severe dry eye disease, failed to meet its primary endpoints. The drug was well tolerated, but didn’t show efficacy by decreasing pain and discomfort related to the disease.
In May 2014, the same drug failed to show efficacy in dry eye disease in a different trial.
Eleven Biotherapeutics has taken a battering as a result. Shares traded on May 12, 2015 for $13.56, plunged to $2.94 on May 20, popped up briefly on Aug. 13 to $5 per share before dropping to $3.16 on Aug. 20. Shares dropped to $0.52 on Jan. 19, 2016, and are currently trading for $0.27.
On Jan. 26 the company announced it had sold its proprietary Supermin albumin variant assets to Copenhagen, Denmark-based Albumedix (DK A/S) for an undisclosed figure.
Synta Pharmaceuticals Corp
Synta Pharmaceuticals Corp (SNTA), also based in Cambridge, has had its stock value fall 92 percent in the last year. The biggest problem the company faced recently was in October 2015, when it announced that it had ended its Phase III GALAXY-2 clinical trial of ganetespib and docetaxel as a second-line treatment for advanced non-small cell lung adenocarcinoma. The study’s Independent Data Monitoring Committee (IDMC) decided that the combination therapy was unlikely to show a statistically significant improvement in overall survival.
A short time later, in its third-quarter financial statements, the company indicated it was cutting its workforce by about 60 percent to 33 full-time employees. No revenues were reported in the third quarter of 2015 or 2014. Its research and development expenses in the third quarter 2015 were $14.4 million, compared to $16.2 million in the same quarter in 2014. General and administrative expenses for the third quarter 2015 were $3.0 million, down slightly from $3.2 million in the same quarter in 2014.
The company reported that at the end of September 2015, it had about $88.3 million, which it felt was enough to continue operations through the first half of 2017, barring any new partnership deals, financing rounds or sales.
Synta traded for $3.03 on April 16, 2015, dropped to $2.02 on Oct. 19, then plunged to $0.74 on Oct. 21. Shares are currently trading for $0.19.
At the close of markets yesterday, Eleven Bio’s market cap was $5.3 million, compared to its $46.4 million reported on Sept. 30, 2015. Synta closed yesterday with a market value of $26 million, below the $45.5 million in cash and $43 million in marketable securities it had at the end of September.
Don Seiffert, writing for the Boston Business Journal, notes that bad news for the companies came at the same time as a decline in the stock market. “Assuming both companies still have most of that cash on hand four months later,” he wrote, “(which, looking at their cash burn, appears a reasonable assumption), that means that in theory, someone could buy either of those companies at their current market price and instantly make a profit by draining their bank accounts and selling off all their assets.”
A complicating factor is the lack of detail about the companies’ debts. Both owe money, but how much isn’t clear. Seiffert writes, “But the unusual phenomenon underscores an extremely bad market for early-stage drug developers, in which investors are more wary than anytime in the past few years of biotechs with no clear path forward.”