Here Is What Just Happened With Aveo Pharmaceuticals

AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) is attracting a substantial amount of attention in the biotechnology space early morning out of Europe this week, with the company moving on and update related to one of its lead development assets in the sector.

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Here is a look at what happened and why it is important for AVEO and its shareholders.

So, as mentioned, the update is rooted in a development stage drug and, specifically, a drug called tivozanib. The asset is what is called an oral, once-daily, vascular endothelial growth factor (VEGF) tyrosine kinase inhibitor (TKI) and it is under investigation as a potential treatment for patients with cancer.

The most advanced program is the one that is in focus here and it is a phase 3 program set up to investigate the safety and the efficacy of the asset when used as a treatment for patients with refractory advanced renal cell carcinoma (RCC). For anybody not familiar with this cancer type, it is also called hypernephroma, renal adenocarcinoma, or renal or kidney cancer and it’s the most common kind of kidney cancer found in adults.

As things stand, and especially as relates to the more advanced stages of this type of cancer, very few treatment options exist and those that do are often limited in efficacy both from a pure mechanism of action (MOA) perspective and from a tolerability/toxicity perspective (in the sense that the drugs used as treatment can only be used sparingly because they are so toxic for the patient and, by proxy, can end up doing more harm than good.

So, where does tivozanib come into the equation?

Well, the asset is designed to optimize VEGF blockade while minimizing off-target toxicities, potentially resulting in improved efficacy and minimal dose modifications, which means that it maintains the efficacy side of certain current types of treatment for this and other cancers while also potentially limiting the toxicity level associated with therapy. As such, it could be both more effective for RCC patients while also being less damaging from a toxicity point of view.

That’s the theory, at least. And the trial that has caused markets to move this week is the one with which AVEO set out to prove this theory.

So, what happened?

Well, in a nutshell, it’s not great news. In a release that hit press on Tuesday, the company noted that the number of progression free survival (PFS) events required to trigger data analysis from its Phase 3 TIVO-3 trial have not been reached.

The implications of this are that topline data from the study, which were initially slated to hit press at some point during the second quarter of this year, will be delayed until the third quarter of 2018. This delay comes on the back of another delay which saw the second quarter target put in place on the back of an initial first quarter 2018 target, which the company reported late last year.

On the back of the announcement, AVEO shares have dropped close to 10% and the company currently trades for a market capitalization of a little over $342 million. Chances are we will see a continuation of this weakness as we move into the second half of the week and markets absorb the news.

And what’s next?

Well, there are a couple of ways of looking at this.

That the data is delayed is a bit disappointing, of course, and it is going to have cash flow implications for the company near term. On the other hand, however, that PFS events have not been reached suggests potentially that the drug is working and, in turn, that it might be worth using the current date to pick up an exposure to the program at a discount in anticipation of positive results hitting press as and when the numbers come in during the third quarter of this year.

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