November 5, 2014
AVEO Oncology Reports Third Quarter 2014 Financial Results
CAMBRIDGE, Mass.–(BUSINESS WIRE)–Nov. 5, 2014– AVEO Oncology (NASDAQ:AVEO) today reported its third quarter 2014 financial results and provided an overview of its progress toward achieving its strategic plan.
“At AVEO, we continue to execute on all aspects of our strategic plan. We are focused on the progression of AV-380 in cancer cachexia toward an IND application filing next year, while remaining opportunistic to leveraging partner resources with the rest of our pipeline,” said Tuan Ha-Ngoc, president and chief executive officer of AVEO. “We have made significant progress thus far in 2014, and we are confident that the advancements we are making will better position the Company for future success.”
Recent Program Highlights
- AV-380 – At the 2ndCancer Cachexia Conference in September, AVEO presented results from four preclinical studies of AV-380, the Company’s potent, humanized inhibitory antibody targeting growth differentiation factor 15 (GDF15), in various in vivo cachexia models and in vitro assays. In addition to the poster presentations, the Company’s research was selected for presentation in an oral session titled “Targeting GDF15 with the inhibitory antibody AV-380 for the treatment of Cancer Cachexia.” The studies demonstrate that elevated levels of circulating GDF15 drive the development of cancer cachexia in tumor bearing mice, and that its inhibition, with AV-380, completely reversed body weight loss and restored normal body composition, including fat, muscle and organ size. They also demonstrate that the combination of AV-380, a potential anti-cachexia agent, with an anti-cancer treatment, dramatically prolonged survival compared to mice treated with anti-cancer therapy alone. AVEO is progressing AV-380 toward clinical study, which is expected to begin in the second half of 2015. The Company is also actively pursuing partnerships to realize the full potential of AV-380 within and beyond cancer cachexia.
- Ficlatuzumab – At the European Society for Medical Oncology (ESMO) 2014 Congress, AVEO and Biodesix presented results from a retrospective exploratory analysis using VeriStrat®, a commercially available serum protein test, to identify patients most likely to benefit from the addition of ficlatuzumab, AVEO’s potent hepatocyte growth factor (HGF) inhibitory antibody, to gefitinib (IRESSA®), an EGFR TKI therapy, in a randomized Phase 2 study in previously untreated Asian subjects with NSCLC. The results suggested that VeriStrat may be used to more precisely classify the response of a subset of NSCLC patients who, based on EGFR mutation status, should be candidates for an EGFR inhibitor yet appear not to respond to the erlotinib mono-therapy without the addition of ficlatuzumab. AVEO and Biodesix plan to conduct a confirmatory Phase 2 study using a Biodesix VeriStrat “Poor” classification as a selective biomarker for the combination of ficlatuzumab and an EGFR TKI, versus an EGFR TKI alone, in previously untreated, EGFR mutation-positive patients with NSCLC. The study is expected to be initiated before year-end.
- Tivozanib – At the ESMO 2014 Congress, AVEO presented posters highlighting results from two Phase 2 clinical studies of tivozanib, the Company’s inhibitor of vascular endothelial growth factor (VEGF) 1, 2, and 3 receptors, in patients with advanced colorectal and kidney cancers. In the first poster, titled “BATON-CRC: a phase 2 randomized trial comparing tivozanib (tivo) + mFOLFOX6 with bevacizumab (bev) + mFOLFOX6 in stage IV metastatic colorectal cancer (mCRC),” interim study results suggested that the combination of tivozanib plus mFOLFOX6 is comparable to bevacizumab plus mFOLFOX6 in the intent-to-treat population, with an acceptable safety profile. The study was discontinued following a prespecified interim futility analysis for superiority.
In a second poster, titled “Phase 2 clinical evaluation of preclinically defined biomarkers for vascular endothelial growth factor (VEGF) tyrosine kinase inhibitor (TKI) tivozanib in renal cell carcinoma (RCC),” study results suggested a low myeloid signature score in RCC patients may predict a positive clinical response when treated with tivozanib, including significantly increased progression free survival.
AVEO remains encouraged by the clinical outcomes from its Phase 2 studies and believes these data suggest potential avenues for the development of tivozanib as an oral, potent, and selective VEGF inhibitor. The Company is actively pursuing partnerships to advance the development of tivozanib.
- AV-203 – At the American Society of Clinical Oncology (ASCO) 2014 Annual Meeting, AVEO presented results from a first-in-human Phase 1 study of AV-203, the Company’s potent, high-affinity ErbB3 (HER3) monoclonal antibody, in patients with metastatic or advanced solid tumors. The study established a recommended Phase 2 dose of AV-203, demonstrated good tolerability and reached the maximum planned dose of AV-203 monotherapy. The data also showed promising early signs of activity and provide a rationale for further investigation of AV-203 as novel anti-cancer therapy. AVEO is actively pursuing partnerships to further advance the development of AV-203.
Third Quarter 2014 Financial Highlights
- At the end of the third quarter, AVEO announced that, as part of its plan to decrease operational expenses, the Company entered into a termination agreement with respect to the lease for its headquarters in Cambridge, Massachusetts, reducing the Company’s existing lease obligations by $110 million in exchange for a termination fee of approximately $7.8 million due upon execution of the agreement, and $7.8 million payable over the subsequent nine months. In addition, the Company announced an amendment to its debt financing facility with Hercules Technology Growth Capital (HTGC) to include a new $10 million loan.
- Ended Q3 2014 with $63.4 million in cash, cash equivalents and marketable securities.
- Total collaboration revenue was approximately $0.9 million for Q3 2014 compared with $0.3 million for Q3 2013. The increase was due to revenue recognized in connection with the change in the estimated period of performance associated with the termination of the Company’s collaboration with Astellas.
- Research and development (R&D) expense was $8.5 million for Q3 2014 compared with $19.4 million for Q3 2013. The reduction in R&D expense was primarily due to a decrease in manufacturing costs related to the completion of ficlatuzumab manufacturing in Q3 2013, a decrease in tivozanib clinical trial costs associated with the wind down of the development program, and a reduction in personnel-related expenses following AVEO’s June 2013 strategic restructuring.
- General and administrative (G&A) expense was $5.1 million for Q3 2014 compared with $4.4 million for Q3 2013. The increase in G&A expense was primarily due to additional legal fees related to the Company’s ongoing shareholder litigation and a reduction in expense reimbursements provided to AVEO from Astellas as a result of a decrease in shared tivozanib costs.
- Restructuring and lease exit expense was $1.4 million for Q3 2014 compared with $0.1 million for Q3 2013. The expense incurred during Q3 2014 relates to space that the Company ceased using during 2014, while the Q3 2013 expense relates to severance and employee benefits incurred as part of the June 2013 strategic restructuring.
- Net loss for Q3 2014 was $14.4 million, or $0.28 per basic and diluted net loss per share, compared with net loss of $24.3 million, or $0.47 per basic and diluted net loss per share, for Q3 2013.
Financial Comparison of Second and Third Quarters 2014
- The Company had net cash outflows of approximately $1.5 million in Q3 2014, compared to $23 million in Q2 2014.
- Significant cash inflows included the following:
- Proceeds of $10 million in new debt financing
- $14.7 million of reimbursement of construction-related capital expenditures in accordance with AVEO’s lease arrangement for its headquarters at 650 E. Kendall St., Cambridge, Massachusetts that were received from AVEO’s landlord.
- Significant cash outflows included the following:
- $7.8 million of lease termination fees as 50% of the termination fee was paid upon execution. The remaining 50% is payable on a monthly basis through June 2015.
- The Company made payments toward loan principal and interest in Q3 2014 of $3.1 million compared to $4.3 million in Q2 2014. The decrease relates to a $1.2 million deferred charge paid in June per the terms of original loan agreement.
- The Company did not incur construction related capital expenditures in Q3 2014 as construction had already been completed on the Company’s headquarters prior to the beginning of Q3 2014. Construction related costs were $4.0 million in Q2 2014.
- R&D expense was $8.5 million for Q3 2014 compared to $9.3 million in Q2 2014. The decrease in R&D expenses was primarily due to a reduction in tivozanib development and clinical study costs related to the wind down of the studies. The components of R&D expense are as follows:
| Research & Development Expense | Q3 2014 | Q2 2014 | $∆ | ||||||||||||
| Headcount and Programs | $ | 7,044 | $ | 8,251 | $ | (1,207 | ) | ||||||||
| Reimbursable Partnership Expenses | $ | (1,461 | ) | $ | (1,218 | ) | $ | (243 | ) | ||||||
| Allocated Overhead | $ | 1,636 | $ | 1,411 | $ | 225 | |||||||||
| Depreciation | $ | 860 | $ | 659 | $ | 201 | |||||||||
| Stock-Based Compensation Expense | $ | 406 | $ | 197 | $ | 209 | |||||||||
| Sub Total Non-Program R&D Expense | $ | 2,902 | $ | 2,267 | $ | 635 | |||||||||
| Total R&D Expense | $ | 8,485 | $ | 9,300 | $ | (815 | ) | ||||||||
- G&A expense was $5.1 million for Q3 2014 compared to $4.8 million for Q2 2014. The increase in G&A expense was primarily due to an increase in professional fees.
Financial Guidance
Based on its current operating plan, the Company expects to remain on target to end 2014 with approximately $50 – $55 million in cash, cash equivalents and marketable securities. The Company believes that its existing cash, cash equivalents and marketable securities will allow it to fund its operating plan into the fourth quarter of 2015. This guidance does not contemplate any potential partnerships or other strategic or operational transactions.
About AVEO
AVEO Oncology (NASDAQ:AVEO) is a biopharmaceutical company committed to discovering and developing targeted therapies designed to provide substantial impact in the lives of people with cancer by addressing unmet medical needs. AVEO’s proprietary Human Response Platform™ provides the company unique insights into cancer and related disease biology and is being leveraged in the discovery and clinical development of its therapeutic candidates. For more information, please visit the company’s website at www.aveooncology.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements of AVEO within the meaning of The Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this press release are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “target,” “potential,” “could,” “should,” “seek,” or the negative of these terms or other similar expressions, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among others, statements about AVEO’s advancement of its business strategy, including its plans to leverage partner resources to advance AV-380, tivozanib and AV-203; AVEO’s plans to initiate clinical trials of AV-380 in the second half of 2015; AVEO’s plans to initiate a Phase 2 study of ficlatuzumab in 2014; and AVEO’s estimates for its 2014 year-end cash balance and its ability to fund its operating plan into the fourth quarter of 2015. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that AVEO makes due to a number of important factors, including risks relating to: AVEO’s ability to execute on its business strategy and enter into and maintain new strategic partnerships and collaboration agreements; AVEO’s ability to successfully enroll and complete clinical trials and preclinical studies of its product candidates; AVEO’s ability to demonstrate to the satisfaction of the FDA, or equivalent foreign regulatory agencies, the safety, efficacy and clinically meaningful benefit of its product candidates; AVEO’s ability to achieve and maintain compliance with all regulatory requirements applicable to its product candidates; AVEO’s ability to obtain and maintain adequate protection for intellectual property rights relating to its product candidates and technologies; developments and expenses related to AVEO’s ongoing shareholder litigation and SEC inquiry; AVEO’s ability to raise the substantial additional funds required to achieve its goals; unplanned capital requirements; adverse general economic and industry conditions; competitive factors; and those risks discussed in the section titled “Risk Factors” included in AVEO’s most recent Quarterly Report on Form 10-Q and in its other filings with the SEC. The forward-looking statements in this press release represent AVEO’s views as of the date of this press release. AVEO anticipates that subsequent events and developments will cause its views to change. However, while AVEO may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. You should, therefore, not rely on these forward-looking statements as representing AVEO’s views as of any date subsequent to the date of this press release.
| Condensed Consolidated Statements of Operations(In thousands, except per share amounts)(Unaudited) | ||||||||||||||||||||||
| For the Three Months | For the Nine Months | |||||||||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
| Collaboration revenue | $ | 873 | $ | 323 | $ | 18,007 | $ | 970 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||||||
| Research and development | 8,485 | 19,414 | 29,552 | 56,579 | ||||||||||||||||||
| General and administrative | 5,084 | 4,440 | 15,485 | 24,213 | ||||||||||||||||||
| Restructuring and lease exit | 1,403 | 77 | 10,426 | 8,013 | ||||||||||||||||||
| 14,972 | 23,931 | 55,463 | 88,805 | |||||||||||||||||||
| Loss from operations | (14,099 | ) | (23,608 | ) | (37,456 | ) | (87,835 | ) | ||||||||||||||
| Other income and expense: | ||||||||||||||||||||||
| Other income (expense), net | 98 | 32 | 103 | (120 | ) | |||||||||||||||||
| Interest expense | (439 | ) | (756 | ) | (1,522 | ) | (2,451 | ) | ||||||||||||||
| Interest income | 4 | 26 | 30 | 102 | ||||||||||||||||||
| Other expense, net | (337 | ) | (698 | ) | (1,389 | ) | (2,469 | ) | ||||||||||||||
| Net loss | (14,436 | ) | (24,306 | ) | (38,845 | ) | (90,304 | ) | ||||||||||||||
| Net loss per share – basic and diluted | $ | (0.28 | ) | $ | (0.47 | ) | $ | (0.75 | ) | $ | (1.78 | ) | ||||||||||
| Weighted average number of common shares outstanding | 51,771 | 51,443 | 51,690 | 50,719 | ||||||||||||||||||
| Consolidated Balance Sheet Data | ||||||||||
| (In thousands) | ||||||||||
| (Unaudited) | ||||||||||
| September 30, | December 31, | |||||||||
| 2014 | 2013 | |||||||||
| Assets | ||||||||||
| Cash, cash equivalents and marketable securities | $ | 63,393 | $ | 118,506 | ||||||
| Accounts receivable | 1,658 | 984 | ||||||||
| Prepaid expenses and other current assets | 6,452 | 9,429 | ||||||||
| Property and equipment, net | 14,685 | 14,140 | ||||||||
| Other assets | 45 | 3,287 | ||||||||
| Total assets | $ | 86,233 | $ | 146,346 | ||||||
| Liabilities and stockholders’ equity | ||||||||||
| Accounts payable and accrued expenses | $ | 16,554 | $ | 17,501 | ||||||
| Total loans payable | 20,445 | 19,205 | ||||||||
| Total deferred revenue | 383 | 18,392 | ||||||||
| Total deferred rent | 14,041 | 20,072 | ||||||||
| Other liabilities | 540 | 1,238 | ||||||||
| Stockholder’s equity | 34,270 | 69,938 | ||||||||
| Total liabilities and stockholders’ equity | $ | 86,233 | $ | 146,346 | ||||||
Source: AVEO Oncology
Argot Partners
David Pitts, 212-600-1902
aveo@argotpartners.com
