AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) reported financial results for the second quarter ended June 30, 2017, and provided a business update.

“The second quarter was marked by validating events in each of the three pillars of our global tivozanib strategy: a recommendation for approval of tivozanib in advanced renal cell carcinoma (RCC) by the CHMP, reaching our enrollment target for the Phase 3 TIVO-3 trial in RCC, and the successful advancement to Phase 2, at full dose, of the TiNivo trial, our Opdivo® combination trial in RCC,” said Michael Bailey, president and chief executive officer of AVEO. “We look forward to several key milestones in the coming quarters, including a final determination from the European Commission (EC) on marketing authorization for tivozanib for RCC, as well as the expected presentation of TiNivo Phase 1 study results this fall and the anticipated readout of TIVO-3 in the first quarter of 2018. We believe that we now have the balance sheet to take AVEO beyond these milestones and into the fourth quarter of 2018. This runway could be extended by additional potential payments of up to $16 million by our European tivozanib partner, EUSA Pharma, related to European regulatory and reimbursement approvals, and double-digit royalty payments on net sales for tivozanib in Europe if the EC grants marketing approval for tivozanib.”

Mr. Bailey added: “We also look forward to progress in our earlier pipeline programs, including the initiation of an investigator-sponsored, randomized Phase 2 trial of ficlatuzumab, our potent HGF inhibitory antibody, in combination with cetuximab in patients with cetuximab-resistant, metastatic head and neck squamous cell carcinoma (HNSCC). As presented at the ASCO annual meeting this past quarter, this combination demonstrated prolonged progression free and overall survival compared to historical controls in Phase 1.”

Recent Updates

  • Enrollment Target Reached for Pivotal Phase 3 TIVO-3 Study of Tivozanib in RCC. In June 2017, AVEO announced that the Company’s pivotal TIVO-3 trial, a randomized, controlled, multi-center, open-label study to compare tivozanib to sorafenib in subjects with refractory RCC, reached its enrollment target of 322 patients, more than two months ahead of the Company’s initial guidance. A pre-planned futility analysis of the TIVO-3 trial is expected around midyear 2017, with topline data expected in the first quarter of 2018. The TIVO-3 trial, together with the previously completed TIVO-1 trial of tivozanib in the first line treatment of RCC, is designed to support an application seeking regulatory approval of tivozanib in the U.S. as a first and third line treatment for RCC.
  • $14M in Aggregate Gross Proceeds Secured from Credit Facility and At-the-Market Stock Offerings. In June 2017, AVEO announced that it secured gross proceeds of $14 million through two financing facilities: $5 million through a drawdown of its credit facility with Hercules Capital, Inc. and $9 million from the sale of common stock under its at-the-market issuance sales agreement with FBR & Co, effectively exhausting the balance of that facility.
  • Positive CHMP Opinion for Tivozanib as a Treatment of Advanced RCC. On June 23, 2017, AVEO announced that the Committee for Medicinal Products for Human Use(CHMP), the scientific committee of the European Medicines Agency (EMA), recommended tivozanib for approval as a treatment for patients with advanced RCC. The CHMP’s recommendation was referred to the EC, which is expected to make its final decision about 67 days from the date of the CHMP’s recommendation. If approved by the EC, marketing authorization for tivozanib will be granted in all 28 countries of the European Union, Norway, Iceland and Liechtenstein. Approval would trigger a $4 millionresearch and development reimbursement payment to AVEO from EUSA Pharma, the European licensee for tivozanib, and AVEO would also be eligible for up to $12 million in additional milestones based on reimbursement approvals.
  • Phase 1/2 TiNivo Trial of Tivozanib and Opdivo® (nivolumab) in RCC Successfully Advanced to Phase 2 Portion. In June 2017, AVEO announced that its Phase 1/2 AVEO-sponsored TiNivo trial evaluating tivozanib in combination with Bristol-Myers Squibb’s anti-PD-1 therapy, Opdivo® (nivolumab), in subjects with advanced RCC progressed to the Phase 2 portion of the trial, following completion of the Phase 1 portion, which saw no dose limiting toxicities, a good tolerability profile and promising early signs of activity. The full dose tivozanib regimen of 1.5 mg daily for 21 days, followed by a 7-day rest period, was selected as the recommended Phase 2 dose (RP2D) for the expansion portion of the trial, which is expected to enroll an additional 20 subjects.
  • Results from Two Investigator-Sponsored Phase 1 Studies of HGF Targeted Antibody Ficlatuzumab Presented at the 2017 ASCO Annual Meeting. In June 2017, AVEO announced the presentation of results from two investigator-sponsored Phase 1 studies of ficlatuzumab, a potent hepatocyte growth factor (HGF) inhibitory antibody that binds to the HGF ligand with high affinity and specificity to inhibit HGF/c-Met biological activities, at the 2017 American Society of Clinical Oncology (ASCO) Annual Meeting. The first was a study of ficlatuzumab in combination with the EGFR inhibitor cetuximab in patients with cetuximab-resistant, metastatic HNSCC, which demonstrated a disease control rate, prolonged progression free and overall survival that compared favorably to historical controls, in addition to being well tolerated. The Company announced that a randomized, Phase 2, multicenter, investigator-initiated trial to confirm these findings is expected to initiate in the second half of 2017. The second, ongoing study explored ficlatuzumab in combination with high-dose cytarabine in patients with high risk relapsed or refractory AML, demonstrating early signs of tolerability and activity, including a 50% complete response rate.
  • Matthew Dallas Appointed Chief Financial Officer. In June 2017, Matthew Dallas joined AVEO as its chief financial officer. In this role, Mr. Dallas is responsible for the Company’s financial strategy and management, and serves on the executive leadership team that governs corporate strategy at AVEO. Mr. Dallas succeeds Keith Ehrlich, who retired from the Company.
  • Receipt of USPTO Notice of Allowance Related to AV-353. In May 2017, AVEOannounced receipt of a Notice of Allowance from the United States Patent and Trademark Office (USPTO) for U.S. patent application number 14/653,684, entitled “notch binding agents and antagonists and methods of use thereof.” Allowed under the application are composition of matter and method of use claims related to the Company’s humanized anti-Notch 3 antibodies, including AV-353, a potent inhibitory antibody specific to Notch 3. The Notch 3 pathway is implicated in multiple diseases, including Pulmonary Arterial Hypertension. The U.S. patent scheduled to issue from this application will expire December 19, 2032, with the potential for extension to December 19, 2037.

Second Quarter 2017 Financial Highlights

  • AVEO ended Q2 2017 with $40.1 million in cash, cash equivalents and marketable securities as compared with $23.3 million at December 31, 2016.
  • Total collaboration revenue was approximately $0.4 million in Q2 2017 compared with $0.2 million for Q2 2016.
  • Research and development expense was $6.9 million in Q2 2017 compared with $5.6 million for Q2 2016.
  • General and administrative expense was $2.3 million in Q2 2017 compared with $1.7 million for Q2 2016.
  • Net loss for Q2 2017 was $33.3 million, or a loss of $0.30 per basic and diluted share, compared with a net loss of $8.6 million, or a loss of $0.13 per basic and diluted share for Q2 2016. An approximate $23.9 million non-cash loss attributable to the increase in the fair value of the warrant liability was recorded in Q2 2017 that principally resulted from the increase in the stock price that occurred within the quarter. In Q2 2016 the non-cash loss attributable to fair value of the warrant liability was $1.0 million.

Updated Financial Guidance

We believe that our $40.1 million in cash resources would allow us to fund our planned operations into the fourth quarter of 2018. This estimate assumes no receipt of milestone payments from our partners or related payment of potential licensing milestones to third parties, no additional funding from new partnership agreements, no additional equity financings, no debt financings and no further sales of equity under our Sales Agreement with FBR. This estimate also assumes no acceleration in repayment of the term loan by Hercules in the event of non-compliance with the $10.0 million financial covenant.

Shares of AVEO Pharmaceuticals are currently trading at $2.64, down $0.11 or -4.00%. AVEO has a 1-year high of $3.19 and a 1-year low of $0.50. The stock’s 50-day moving average is $2.30 and its 200-day moving average is $1.10.

On the ratings front, AVEO has been the subject of a number of recent research reports. In a report issued on June 30, FBR analyst Vernon Bernardino reiterated a Buy rating on AVEO, with a price target of $3, which represents a potential upside of 9% from where the stock is currently trading. Separately, on June 23, Piper Jaffray’s Edward Tenthoff maintained a Buy rating on the stock and has a price target of $2.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Vernon Bernardino and Edward Tenthoff have a yearly average loss of -4.2% and a return of 3.9% respectively. Bernardino has a success rate of 31% and is ranked #4390 out of 4628 analysts, while Tenthoff has a success rate of 43% and is ranked #1313.

AVEO Pharmaceuticals, Inc. operates as a biopharmaceutical company, which engages in the advancement of therapeutics for oncology and other areas of unmet medical need. Its products include Tivozanib, Ficlatuzmab, AV-203, AV-380, and AV-353. It focuses on the development of its lead candidate, Tivozanib, in North America as a treatment for renal cell carcinoma and other cancers.