Feds Slap AVEO Oncology with $4 Million Fine for Misleading Investors About Cancer Drug
March 30, 2016
By Alex Keown, BioSpace.com Breaking News Staff
CAMBRIDGE, Mass. – AVEO Oncology has been hit with a $4 million fine to settle complaints the company misled investors about concerns raised by U.S. regulatory bodies about the company’s kidney cancer drug, Reuters reported this morning.
On Tuesday the U.S. Securities and Exchange Commission said Aveo concealed investors from concerns raised by the U.S. Food and Drug Administration (FDA) about its kidney drug Tivozanib. The FDA requested a secondary trial to address concerns about patient death rates during the first trial, according to the SEC. The company never conducted a second trial and the FDA declined to approve Tivozanib.
Tivozanib is an oral selective inhibitor of vascular endothelial growth factor (VEGH).
“We allege that AVEO and its executives hid from investors the reality of their communications with the FDA on Tivozanib while suggesting they had identified a simpler route to FDA approval,” Paul Levenson, director of the SEC’s Boston Regional Office, said in a statement. “Companies must be forthcoming about their communications with regulators so investors can make informed investment decisions while knowing what challenges may lay ahead.”
The SEC said Aveo raised $53 million in it stock’s initial public offering in January 2013, despite the FDA’s 2012 recommendation for an additional trial. The SEC said Aveo understood the FDA concerns and went so far as to “design a second trial and present trial designs to the FDA”—a trial that was never conducted. The SEC also noted in its complaint that Aveo intended to present new analyses of the data that had been gathered in the previous clinical trial. The SEC also said the company’s top executives, including Tuan Ha-Ngoc approved a press release that failed to disclose the FDA staff’s recommendation.
“In doing so, Aveo concealed the FDA staff’s level of concern about Tivozanib’s impact on patient survival and the recommendation that AVEO conduct a second clinical trial,” the SEC said in its complaint.
Aveo did not provide comment on the complaint, Reuters said. There is no mention of the settlement agreement on the company’s website this morning.
While the company is taking a hit from the SEC, earlier this month Aveo struck a $134 million deal with CANbridge Life Sciences to develop AV-203, AVEO’s clinical-stage ErbB3 (HER3) inhibitory antibody candidate. Under the agreement CANbridge was granted worldwide rights to the drug, excluding the U.S., Canada and Mexico. CANbridge plans to develop AV-203 first in esophageal squamous cell cancer, the most prevalent form of esophageal cancer.
Aveo’s stock is trading at 95 cents per share this morning, up from its Tuesday close of 91 cents per share. Since May 2015, Aveo’s stock has been on a steady decline from a high of $2.49 per share. In December 2014, the company received a warning from NASDAQ that its stock price was too low to continue to be listed on the exchange. A NASDAQ rule requires that a company’s stock price cannot sell for less than $1 for 30 consecutive days.
Over the course of 2015, Aveo has undergone a streamlining of its organization, which saw a shift in executive officers as well as the termination of approximately two-thirds of its workforce. The company also moved to a smaller headquarters. The restructuring occurred, in part, due to its pipeline, including AV-380, a first-in-class GDF-15 inhibitor, having gone past the research stage.