Nearly-Dead AVEO Oncology's Stock Jumps on Positive European Regulatory Promises

Published: Jun 05, 2015

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June 4, 2015
By Riley McDermid, Breaking News Sr. Editor

Cambridge, Mass.-based AVEO Oncology announced yesterday that it had received written support from European regulatory organizations for the filing of a Marketing Authorization Application (MAA) for its drug, tivozanib. The company, whose stock has been in the doldrums, spiked at the news.

In 2013, the company, then called Aveo Pharmaceuticals, was hit hard when the U.S. Food and Drug Administration (FDA) rejected tivozanib for the treatment of kidney cancer. Speaking at an advisory committee meeting, Amna Ibrahim, deputy director of the FDA’s division of oncology products, said that the clinical trial results for tivozanib showed “a concerning increase in the risk of death.”

The FDA also criticized the trial design and data interpretation. The FDA voted 13-to1 against recommending the drug. Tivozanib is a small molecule vascular endothelial growth factor (VEGF) tyrosine kinase inhibitor.

Fast-forward two years and the company reanalyzed its existing dataset and apparently further clarified their study design. They then submitted it to European authorities, indicating that the drug showed a significant improvement in the treatment of RCC over sorafenib in the study’s primary endpoint of progression free survival. They showed that the problem in the early trial, “discordance in overall survival (OS), the secondary endpoint of the study, was very likely attributable to the crossover design of the study.”

The company received support from the Rapporteur and co-Rapporteur, from Portugal and the U.K., respectively, both members of the Committee for Medical Products for Human Use (CHMP). If Aveo then submits the MAA, those two members would lead the evaluation.

“We are pleased that both the Rapporteur and Co-Rapporteur were supportive of an MAA filing for tivozanib in RCC using TIVO-1 as the pivotal study,” said Michael Bailey, president and chief executive officer of Aveo in a statement. “We believe tivozanib may provide an important addition to the clinical armamentarium in the treatment of this disease. Based on our assessment of the economic and infrastructure requirements associated with filing an MAA and subsequently launching tivozanib in Europe, we are evaluating partnership opportunities to take tivozanib forward in this important market as we continue to prepare for a filing.”

Aveo stock went from $1.97 on June 1 to $2.55 per share on June 2 upon news of the announcement. Although that would seem to be a positive sign for investors, James Brumley writes in the Small Cap Network that it’s probably time to sell.

“A month and a half ago, yours truly here suggested AVEO Pharmaceuticals, Inc. was a buy-worthy name…. at least as a near-term trade. Today I’m reversing that call,” wrote Brumley. “If you happened to wade into AVEO on my advice from April 17 when it was trading at $1.90, I now suggest you lock in 42 percent gain and sell it at the current price of $2.71.”

Aveo has three other products in its pipeline, including ficlatuzumab, AV-203 and AV-380. Ficlatuzumab (formerly AV-299) is being studied for the treatment of NSCLC in combination with BDX001, a serum protein test commercially available by Biodesix, Inc. AV-203 is a clinical-stage ErbB3 inhibitory antibody candidates being studied in tumors of the breast, head and neck, lung, and ovarian and pancreatic cancers. AV-380 is being studied for the treatment of multiple cancer cachexia models. Cancer cachexia is a progressive weight loss, anorexia and erosion of the body cell mass in certain cancers.

Last week Aveo said it has relocated its offices in Cambridge as part of a cost containing plan during the company’s restructuring plans announced in January, which saw a shift in executive officers as well as the termination of approximately two-thirds of its workforce.

In addition to the smaller space in Cambridge, AVEO also unveiled a new corporate logo.

The new site in Cambridge is considerably smaller than the company’s previous facility, a 90 percent reduction in facilities from the company’s prior Cambridge location at 650 E. Kendall Square. The site, at One Broadway, includes 5,000 square feet of office space under flexible lease terms, with no laboratory or vivarium space.

AVEO is now a streamlined organization with its resources squarely focused on the execution of a strategy aimed at leveraging biomarker insights and exploring partnership opportunities to advance our pipeline. We look forward to making progress toward our goals in the near future, and to outlining a path forward for the new AVEO,” Michael Bailey, AVEO’s president and chief executive officer, said in a statement.

The company chopped two-thirds of its workforce earlier this winter. Prior to January’s restructuring, Bailey served as the company’s chief business officer, but in January he took over the company’s top spot. He replaced Tuan Ha-Ngoc, who became chairman of the board of directors. Henri Termeer, who previously served as chairman, became lead outside director. Additionally the company slashed about 40 employees, which included elimination of the AVEO’s internal research function.

There have been some bright spots for the company, however few and far between. In mid-November 2014, Aveo entered into a research and option agreement with Ophthotech Corporation that will give Opthotech exclusive rights outside of Asia to investigate tivozanib, which has the potential to treat non-oncologic diseases of the eye.

Under the terms of the deal, Ophthotech paid AVEO an upfront option fee of $500,000, and if it elects to continue development of the ocular formulation of tivozanib during the option term, it will pay AVEO up to $8 million in milestone payments.

If Opthotech decides to obtain additional development and commercialization rights to tivozanib and products containing tivozanib for non-oncologic eye indications in territories outside Asia, AVEO would receive an option exercise fee of $2 million and could also receive clinical and regulatory-based milestone payments of up to $50 million, as well as sales-based milestone payments of up to $45 million and royalties.

A percentage of all upfront, milestone and royalty payments received by AVEO are due to Kyowa Hakko Kirin as a sublicensing fee. AVEO executives were delighted by the deal at the time.

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