AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) reported financial results for the third quarter ended September 30, 2015 and provided a business update.
“We completed partnerships for two of AVEO’s lead programs in the third quarter in addition to making progress toward our proposed plans to submit a European Marketing Authorization Application (MAA) for tivozanib in renal cancer and initiate a pivotal study in this indication in the U.S.,” said Michael Bailey, president and chief executive officer. “As we work through recently initiated discussions with the SEC, we remain focused on executing against our goals through the balance of the year, including exploring potential partnership opportunities for tivozanib in Europe, while maintaining our very lean organization.”
Prior to the submission of an MAA filing with the European Medicines Agency, the Company is seeking to complete a partnership agreement for tivozanib in Europe. If a partnership is completed, in order to provide a potential partner with the opportunity to submit the application on its own behalf, AVEO now anticipates that a submission would take place in the first quarter of 2016. Furthermore, assuming the availability of financial resources from this or other activities, the Company also now expects to initiate its Phase 3 U.S. pivotal study of tivozanib in patients with renal cancer early in the first quarter of 2016.
AVEO also announced today that the staff of the Securities and Exchange Commission and the Company recently entered into discussions for the settlement of potential claims that the Commission may bring against the Company asserting that the Company previously violated federal securities laws by omitting to disclose to investors a recommendation made to the Company by the U.S. Food and Drug Administration in May 2012. While the Company has commenced such discussions, it cannot predict their outcome, nor can it provide assurance that the Company will be able to resolve any potential claims of the Commission or that any potential settlement will not have a material adverse impact on the Company’s proposed plans or its financial position or results of operations.
- Announced Exclusive Worldwide License Agreement for the Development and Commercialization of AV-380 and Related Antibodies. In August, AVEO announced an exclusive, worldwide license agreement with Novartis for the development and commercialization of AVEO’s first-in-class, potent, humanized inhibitory antibody targeting growth differentiation factor 15 (GDF15), AV-380, and related antibodies, including modified or derivative forms of any such antibody (the “Product”). Under terms of the agreement, AVEO has received an upfront payment of $15 million. Additionally, AVEO is eligible to receive $3.45 million in inventory reimbursement, and clinical, regulatory and sales-based milestone payments totaling $308 million, assuming successful advancement of the Product. AVEO will also be eligible to receive tiered royalties on product sales ranging from high single digits to a low double-digit. Novartis is responsible for all clinical development, manufacturing and commercialization activities and costs associated with the Product.
- Announced Exclusive Licensing Agreement with Pharmstandard for Tivozanib inRussia, Ukraine and CIS. In August, AVEO announced that it had entered into an exclusive license agreement with a subsidiary of Pharmstandard Group for the development, manufacturing and commercialization of tivozanib in the territories of Russia,Ukraine and the Commonwealth of Independent States, for all indications excluding non-oncology ocular conditions. Under the terms of the agreement, AVEO has received $1 million in an upfront payment and Pharmstandard is obligated to pay AVEO an additional$0.5 million upon the registration of the agreement with Federal Services for Intellectual Property in Russia. AVEO is also eligible to receive up to $7.5 million in connection with the first marketing authorization of tivozanib in Russia, $3.0 million for each additional approved indication thereafter and a high single-digit royalty on net sales in the above mentioned territories. Pharmstandard will be responsible for all activities and costs associated with the further development, regulatory filings, health services and commercialization of tivozanib in the specified territories. A percentage of all upfront, milestone and royalty payments received by AVEO are due to Kyowa Hakko Kirin as a sublicensing fee.
Third Quarter 2015 Financial Highlights
- AVEO ended Q3 2015 with $37.2 million in cash, cash equivalents and marketable securities.
- Total collaboration revenue was approximately $15.2 million compared with $0.9 million for Q3 2014. The increase was primarily due to $15.0 million in revenue recognized in connection with the Company’s out-licensing agreement with Novartis, which was executed in August 2015.
- Research and development (R&D) expense was $4.5 million compared with $8.5 millionfor Q3 2014. The decrease in R&D expense was primarily due to a reduction in personnel-related expenses following AVEO’s January 2015 strategic restructuring, the reduction of the Company’s leased facilities, as well as a decrease in external clinical trial and consulting costs associated with decreased clinical development activity and AV-380 preclinical development activity. This is offset by a $1.5 million increase in in-licensing expense associated with a milestone payment incurred upon signing the Company’s agreement with Novartis.
- General and administrative (G&A) expense was $2.2 million compared with $5.1 million for Q3 2014. The decrease in G&A expense was primarily due to a reduction in external legal costs associated with various ongoing legal matters and a decrease in employee compensation, facilities and IT costs following the Company’s January 2015 restructuring and the reduction of its leased facilities.
- Restructuring and lease exit expense was $0 for Q3 2015 compared with $1.4 million for Q3 2014. The expense incurred during Q3 2014 related to charges incurred following the partial termination of the Company’s 650 E. Kendall Street facility lease.
- Net income for Q3 2015 was $7.9 million, or $0.14 per basic and diluted share compared with a net loss of $14.4 million or $0.28 per basic and diluted share for Q3 2014.
Updated Financial Guidance
AVEO believes that its cash resources would allow the Company to fund current operations through the fourth quarter of 2017. This estimate does not include payment of potential licensing milestones or the costs of conducting any contemplated clinical trials and assumes no milestone payments from the Company’s partners, additional funding from new partnership agreements, equity financings, debt financings or accelerated repayment thereof or further sales of equity under the Company’s ATM. In addition, AVEO cannot estimate the impact on its cash resources of a settlement of claims with the SEC. The timing and nature of activities contemplated for 2015 and thereafter will be conducted subject to the availability of sufficient financial resources. (Original Source)
Shares of AVEO Pharmaceuticals closed last Friday at $1.23. AVEO has a 1-year high of $3.50 and a 1-year low of $0.61. The stock’s 50-day moving average is $1.24 and its 200-day moving average is $1.54.
AVEO Pharmaceuticals Inc is a biopharmaceutical company. It is involved in discovering, developing and commercializing novel cancer therapeutics.