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AVEO Pharmaceuticals (AVEO) Q2 Loss Narrower than Expected

Zacks

AVEO Pharmaceuticals, Inc. AVEO reported second-quarter 2017 adjusted loss of 8 cents per share (excluding change in fair value of warrant liability), narrower than the Zacks Consensus Estimate of 10 cents as well as the year-ago loss of 11 cents. However, reported loss for the quarter was 30 cents per share.

Shares of the company rose more than 3.6% on Wednesday. In fact, AVEO’s share price movement shows that the stock has significantly outperformed the industry year to date. AVEO has surged 427.8% during this period, compared with the industry’s gain of 8.7% during this period.

AVEO does not have any approved products in its portfolio. The company’s top line mainly comprises of collaboration revenues, milestone and other payments. Total collaboration revenues in the second quarter were approximately $0.35 million compared with $0.2 million in the year-ago quarter.


Quarterly Highlights

Research & development expenses were up 22.8% to about $6.9 million. However, general and administrative expenses increased 33% year over year to $2.3 million.

Pipeline Updates

AVEO has made significant progress with its lead pipeline candidate, tivozanib. It is currently under review in the EU for the first-line treatment of advanced RCC. In Jun 2017, the Committee for Medicinal Products for Human Use (CHMP) recommended the approval of the candidate. A final response on the approval status of the candidate is expected in the third quarter of 2017.

The company also announced achievement of enrollment target in a phase III study, TIVO-3, evaluating tivozanib, in June, ahead of its prior deadline of Aug 2017. Top-line data is expected in the first quarter of 2018. The study will compare tivozanib with Bayer’s BAYRY Nexavar in patients with refractory advanced renal cell carcinoma (RCC).

The data from this study along with previously completed TIVO-1 study will support the regulatory application for approval of tivozanib in the U.S. as a first- and third-line treatment for RCC.

AVEO Pharmaceuticals announced in June that the phase I/II study TiNivo evaluating Tivozanib in combination with Bristol-Myers Squibb’s BMY Opdivo in patients with advanced RCC has been advanced to phase II study. The successful completion of phase I/II study established a tivozanib regimen of 1.5 mg daily for 21 days followed by a rest period of one week.

2017 Guidance

AVEO expects that its present cash resources of $40.1 million will allow the company to fund its planned operations into the second quarter of 2018.

Our Take

The positive CHMP recommendation for tivozanib was encouraging. We expect investor focus to remain on the TIVO-3 trial for the third-line treatment of patients with refractory RCC. The trial is being conducted to address the overall survival concerns from the TIVO-1 trial identified by the FDA.

However, AVEO is heavily dependent on partnerships for pipeline development. Ophthotech Corporation OPHT terminated its agreement to develop tivozanib in Apr 2017. Any hiccups in the partnership or development and regulatory process of lead candidate tivozanib will pull down the stock significantly.

AVEO Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

AVEO Pharmaceuticals, Inc. Price, Consensus and EPS Surprise | AVEO Pharmaceuticals, Inc. Quote

Zacks Rank

AVEO Pharma carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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