Eleven Biotherapeutics Inc., which saw its shares (NASDAQ:EBIO) crushed after lead candidate EBI-005 eye drops failed a phase III trial in dry eye disease earlier this year, dosed the first patients in a new phase III study testing the same drug for the treatment of moderate to severe allergic conjunctivitis (AC), sending shares up $1.75, or 74.8 percent, to close at $4.09 on Wednesday, just ahead of its second quarter earnings announcement Thursday. (See BioWorld Today, May 19, 2015.)

If successful, the Cambridge, Mass.-based company hopes to market the drug to as many as 5.8 million people, including what it estimates is the core market of 1.8 million people with the most severe forms of the condition – that could generate sales of as much as $200 million annually.

About 10.6 million shares traded hands Wednesday, 26 times the stock's 90-day average volume, as investors greeted news of the trial, which is expected to yield top-line data in the first quarter of 2016. If the results are favorable, Eleven will start a matching phase III study in the second half of 2016. The trials will cost an estimated $6 million each.

Comparing AC to dry eye, Eleven's CEO Abbie Celniker told BioWorld Today that "the very simple, single, allergen provocation of ocular surface inflammation is a much more predictable patient population." Taken together with earlier positive phase II data in the indication and progress in understanding the biology of the condition to date, she said, the company is optimistic.

The phase III trial is a multicenter, double-masked, randomized, vehicle-controlled study. It's designed to evaluate the safety and efficacy of EBI-005 for up to four weeks in patients with moderate to severe AC provoked by everyday environmental exposures during ragweed pollen season. Morning ocular itching diary scores are the primary endpoint, while late afternoon and evening itching scores will also be evaluated as secondary endpoints. About 250 patients will be randomized 1-to-1 to receive treatment with EBI-005 or a placebo vehicle.

Eleven first reported positive data in AC in October 2014, following a phase II trial that tested EBI-005, also known as isunakinra, in patients who had not responded adequately to antihistamines and mast cell stabilizers. Participants were evaluated following exposure to allergens in two modified versions of controlled exposure models commonly used to assess allergy medications: a modified direct conjunctival allergen challenge model (CAPT) and a modified environmental exposure chamber model (EEC) in which patients were challenged multiple times to better assess the drug's capabilities.

Patients treated with EBI-005 in the CAPT arm demonstrated statistically significant improvements on the secondary and exploratory endpoints of ocular itching, tearing and nasal symptoms in their late-phase allergy response to an allergen challenge vs. those treated with vehicle control. But there was no statistically significant difference between the treatment and control groups on the primary endpoint of improvement in ocular itching in subjects assigned to the EEC arm of the trial.

The CAPT model, which has been widely validated as translating well to real-world environmental exposures, is the one that matters for U.S. approval. It has been used for the approval of most of the marketed allergy drugs, the company said. The EEC model, in which patients confined to a room are exposed to high levels of allergen over multiple hours, has never been used for the development or approval of an ocular allergy drug, but the company wanted to try it just in case.

Eleven, which has mostly settled its approach to a new drug application in the U.S., may still need to run a longer study in Europe to satisfy regulators there. But whether that requirement would materialize will be more clear after it has consulted with EMA regulators following conclusion of the first phase III.

Characterized by ocular itching, swelling, and discharge, AC is thought to affect between 15 percent and 40 percent of the general population in the U.S. Though topical antihistamines work for about half of the 11 million people thought to suffer AC overall, the other half often develop a late-phase response in which interleukin-1 (IL-1) plays a significant role in driving moderate or severe AC. For those patients, antihistamines can either fall short of adequately addressing symptoms or fail to address symptoms at all. Patients with severe responses are sometimes treated with topical glucocorticoids, which can carry risks such as cataract formation, elevated intraocular pressure, glaucoma and secondary infections. Some "soft" steroids such as Alrex (loteprednol, Bausch & Lomb Inc.) and Vexol (rimexolone, Novartis AG.), however, are known to minimize those risks.

In addition to EBI-005, Eleven is also developing an interleukin-6 ligand inhibitor, called EBI-031, for diabetic macular edema. Pharmacokinetic studies for EBI-031, which has been optimized for intravitreal administration using Eleven's AMP-Rx technology, confirmed it to inhibit IL-1 signaling and extend vitreal retention compared to existing therapies. The company plans to file an investigational new drug application with the FDA in the first half of 2016.