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AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO)

Q4 2012 Earnings Call

February 13, 2013 10:00 am ET

Executives

Monique Allaire – Director of Investor Relations

Tuan Ha-Ngoc – President and Chief Executive Officer

William Slichenmyer – Chief Medical Officer

David Johnston – Chief Financial Officer

Analysts

Geoff Meacham – J.P. Morgan Securities Inc.

John Sonnier – William Blair & Co.

Adnan Butt – RBC Capital Markets, LLC

Salveen Richter – Canaccord Genuity Inc.

Thomas Wei – Jefferies & Company, Inc.

Marshall Urist – Morgan Stanley & Co. LLC

James Birchenough – BMO Capital Markets Corp.

Brian Klein – Stifel, Nicolaus & Company, Incorporated.

Operator

Good day, ladies and gentleman, and thank you for holding for your AVEO Oncology’s Year End 2012 Financial Results Conference Call. The company has asked me to inform you that they will be using slides to accompany today’s discussion. These are accessible via the webcast of this Co. in Investors section of the Company’s website at investorsaveooncology.com.

At this time, all participants are on a listen-only mode. Following the formal report AVEO management will open the lines for a question-and-answer period. Please be advised that this call is being taped at the Company’s request and will be archived on the Company’s website for two weeks from today.

At this time, I would like to introduce Ms. Monique Allaire, Director of Investor Relations. Please go ahead, Monique.

Monique Allaire

Thank you, Cathy, and good morning everyone. Today, we would be talking about our 2012 financial results, detailed TIVO-1 findings and key recent developments. With me are Tuan Ha-Ngoc, our President and CEO; and Bill Slichenmyer, our Chief Medical Officer; David Johnston, our Chief Financial Officer is joining us from Italy; and Michael Bailey, our Chief Commercial Officer will join us for Q&A. The press releases issued yesterday evening and earlier today, detail our results and are available on our website at aveooncology.com.

In addition, we will be using slides during today’s call, which were filed as an 8-K with the SEC earlier this morning. You can access the webcast with those slides by going to the investor page of our website.

During this call, we may make forward-looking statements including statements in the slides, all within the meaning of the Private Securities Litigation Reform Act of 1995.

These include statements about AVEO’s future expectations and plans, clinical development and regulatory timeline, the anticipated launch of tivozanib, the potential success of our product candidates, and our financial projections. These statements involve risks and uncertainties, which are described in the Risk Factors section of our Form 8-K filed with the SEC on January 16, 2013, and available online at sec.gov.

While these forward-looking statements represent our views as of today, they should not be relied upon as representing our views in the future. We may update these statements in the future, but we are not taking on an obligation to do so.

With that, let me pass the call over to Tuan.

Tuan Ha-Ngoc

Thank you, Monique, and thank you all for joining us this morning. We are pleased with the progress we made in 2012, and stand ready for what will be an important year for AVEO.

Of our achievements last year, our focus on the most significant, the FDA’s acceptance of our new drug application for tivozanib for the treatment of patients with advanced RCC. The PDUFA date is targeted for July 28. This was a key milestone for AVEO, marking the development of tivozanib through clinical trials over the last five years, and now into regulatory review for approval. I am very proud of the work we’ve done in executing on our plan, and getting us to this point in the company’s evolution.

We are confident in the full NDA package that was submitted to the FDA last September. This covered data from 18 clinical trials with tivozanib including the efficacy and safety results on TIVO-1, our registration study in advanced RCC. In addition, we included the final overall survival results, which we’ll talk about a bit on this call today.

The final OS results and additional data are scheduled to be represented this Saturday February 16, at the Annual ASCO GU Symposium. Some of these data were provided in abstracts that came out last night as well as in our press release.

I’m now going to pass the call over to Bill to review those data. After that, Dave will review our financial results and guidance; then we can move to Q&A. Bill?

William Slichenmyer

Thank you, Tuan. Last night, ASCO released the abstracts for ASCO GU, and lifted its embargo on the data from the posters. For AVEO’s drug tivozanib, there are five posters that will be presented, and this morning, we like to share some of those data with you. The posters will be available on the website as of Saturday, 16 which is the day that will be presented at the meeting. Before I get into the new data, I’ll take just a moment to review four quick slides to show some of the high points of what we have previously disclosed.

This slide shows the design of our pivotal study called TIVO-1. To be eligible for this study, patients were required to have advanced clear cell RCC, good performance status and have undergone prior nephrectomy. Patients were allowed to have had up to one prior systemic therapy, but not VEGF or mTOR-targeted therapies, which were prohibited.

The patients were randomized to receive either tivozanib or sorafenib in their standard doses. The study included an optional one-way crossover for patients in the control arm if they had radiographic evidence of disease progression.

The primary endpoint of the TIVO-1 study was progression-free survival or PFS. This is the endpoint that has been the basis for approval of one of the targeted drugs approved for use in RCC. The TIVO-1 study demonstrated superiority of tivozanib over sorafenib for PFS in both the ITC population shown on the left, and in the prospectively defined treatment naïve sub-population, which constituted 70% of the study population and is shown on the right. The PFS data were mature when released last year, so there is no new update on these.

In addition to meeting its efficacy end point, tivozanib has demonstrated a favorable safety profile. Hypertension, a known on-target affect is the most common AE. Tivozanib has shown low rates of other common side effects including hand-foot syndrome, diarrhea and fatigue. The safety of tivozanib is further demonstrated by low rates of dose reductions, 12% and interruptions, 18%.

We have previously reported data from an interim analyses on overall survival, which was a secondary end point in the trial. When those data were released last year, the study had not yet reached the medians for overall survival. We disclosed the survival rates at one year, and observed that the OS results appear to be tracking favorably relative to historical studies, and that we had seen a non-significant trend in which the OS experience in the control arm appeared to be slightly better than the tivozanib arm.

We also recognized that the one-way crossover in this study had led to a higher rate of utilization of active next line therapy in the control arm, which we believe is contributing to the OS results. Overall survival is one of the end points we will be updating at ASCO GU, and will be the first of the posters I will discuss.

Before I get into that one poster, I’d like to just lay out for you what are the five posters to be presented. The first of these is on the protocol-specified final analyses of overall survival for TIVO-1; Abstract #350, which will be presented by the study’s lead investigator Dr. Robert Motzer. This poster also includes updated data on the use of next line therapy after the TIVO-1 study, and its likely impact on the OS results.

The second poster I’ll review is a summary of the data on tivozanib as crossover therapy in the TIVO-1 trial, Abstract #364. This two will be presented on Saturday by Dr. Motzer. The third tivozanib poster looks at subset analyses from TIVO-1, Abstract #354, which will be presented by Dr. Tom Hutson. There is a poster on Quality of Life results from TIVO-1. This is Abstract #355. The lead author on this poster is Dr. David Cella.

The fifth tivozanib related poster ASCO GU focuses on the application of Microarray and Bioinformatics approaches to develop a potential biomarker. This is a nine gene signature that measures expression of genes related to hypoxia. I don’t plan to get into these data on today’s call. At ASCO GU, the poster will be presented by Dr. Murray Robison.

Turning now to the overall survival data. What’s shown here are the protocol specified final OS results, which are being presented publicly for the first time today. The language in the protocol specify that the final OS analyses was to be conducted at the time that all patients in this study have been followed up for at least two years following randomization. That time corresponded to the date of August 27, 2012; and we broadened the data to that point.

This analyses was included in the NDA, which was submitted in September. We expect these results to be a subject of discussion at a future ODAC meeting for which we are preparing. The median overall survival in the tivozanib arm is 28.8 months compared with 29.3 months for the control arm. The hazard ratio is 1.25, and there is a non-significant p-value of 0.105. The OS medians in both arms 28.8 and 29.3 are among the longest ever reported from other trials, including the recent data from the comparison study.

There are two features of these data I’d like to point out to you. First, note that the curves are super imposed for the first six months before they start to separate. That said around the time that we see an increasing portion of the patients in the control arm switch over to tivozanib.

The numbers shown below the X axis indicate the proportion of patients who have crossed over to TIVO. You can see that at one year, it is 37% and by two years, it is up to 61%. We believe that the high rate of utilization of tivozanib at these later time points helps to explain the very good OS results that have been observed.

The other feature I’d like to point out are the tick marks on the curves, which indicate the time points at which patients were censored. Their preponderance of these are far-out in the tail, and represent patients who are still alive and being followed. Given that many of these are right after the two year time point, and lead up to the time that curves reach their median, there is a fair bit of variability around the median estimates.

On the next slide, I’ll walk you through the updated data on the use of next line therapy. What’s shown here are four pie charts pertaining to the use of next line therapy after tivozanib shown in the top half of the slide or in the control arm in the bottom half.

The two pies on the left show the number of patients who have either continued or discontinued their randomized therapy. Consistent with the longer PFS of tivozanib, there were more patients still on tivozanib 71, more than twice the number still on sorafenib.

For the patients who discontinued therapy, their next line treatments are shown in the smaller pies at the right. The number two received next-line VEGF or mTOR-targeted therapy some other treatment or no therapy at all are shown in the figure legends at the far right.

The pies illustrate the big difference that’s observed. Look at the white slices of pie. These are patients who received no next-line therapy. The large white slice in the upper pie shows that there were many more on the TIVO arm who received no subsequent therapy relative to the control arm. There is an even bigger difference in the numbers who received next-line VEGF targeted therapy. The difference is more than eight fold in favor of the control arm. This is almost entirely due to the crossover onto next-line tivozanib.

The reason this is important is that there are emerging data in RCC and other tumor types to suggest the continuing anti-VEGF therapy after initial progression may allow for continued inhibition of tumor growth.

We believe that the differential utilization of second-line therapy in the two arms of TIVO-1 is impacting the relative performance of the two arms in the overall survival endpoint.

Utilization of second-line therapy is better balanced in the U.S. and western EU regions due to ready access to targeted therapies in these regions relative to other parts of the world. What we see as shown in this slide is that this better balance between the two-arms is associated with numerically better OS for the tivozanib arm than the comparator arm, the opposite of what is seen in the ITT population.

Although this subgroup is relatively small, 40 patients, it is pertinent because geographic region was a pre-specified stratification factor in this study. The difference between the arms is not statistically significant. You can see this visually illustrated on this slide by the 95% confidence intervals at the 24 month time point which are largely overlapping.

This next display is similar to what you saw a minute ago, accepted as restricted to the patients from the U.S. and Western Europe. Compared to the ITT population, you saw two slides ago, in the subset of patients illustrated here; you can see the white and blue slices in the pies on the right are better balanced between the two arms. This is consistent with the hypothesis that utilization of next line targeted therapy is associated with overall survival outcomes.

Over the past few months when we have discussed the impact of next line therapy with investors or clinicians, we have often been asked about the results of quote “Apples to Apples” comparisons of patients in the two arms who received comparable next line therapy.

I’m going to show you three slides of Kaplan-Meier curves to address this. Before showing them though, I want to provide some caveats about this approach. First, these are exploratory post hoc analyses. Second, they are not comparisons as randomized, rather their comparison is based on decisions made by the doctor and patient after completion of their randomized therapy, and may therefore be subject to bias.

Third, certain of these subsets are pretty small, which means that they have imprecise survival estimates attached to them. Because of these limitations, the posters at ASCO GU will show the Kaplan-Meier curves with 95% confidence intervals, but will not include the hazard ratios and p-value. However, we are sharing all of these parameters with the investment community today in response to past requests and in the spirit of full disclosure.

What’s shown here are the Kaplan-Meier curves for the subset of patients who received no post protocol therapy. In other words, they received the tivozanib or sorafenib as they were randomized, but did not receive any subsequent anti-cancer therapy. The medians have not been reached in either arm. The hazard ratio is 0.917 and the p-value is not significant. You can see that the 95% confidence intervals at the 24 month time point overlap.

This slide shows the subset of patients who received next line VEGF targeted therapy. Notice the number of patients in each arm; only 18 patients in the tivozanib arm went on to receive next-line anti-VEGF therapy.

This small sample size means that there is considerable variability around the estimate. This is reflected in the very wide 95% confidence interval has shown. Contrast that with the 158 in the control arm of whom 156 were on tivozanib as crossover therapy, the median’s hazard ratio and non-significant p-value are shown.

This slide shows the curves for the subset of patients who received any next line therapy. So this includes the patients shown on the prior slide, plus others who may have received mTOR inhibitors, interferon or other treatments.

These other treatments included agents that are considered relatively ineffective, such as cytotoxic chemotherapy or hormonal therapy. Unlike the prior slide, which showed VEGF versus VEGF next line, in this slide you are seeing essentially a comparison of second line tivozanib versus a mix of agents including some with very little efficacy.

Okay, I’m going to shift gears now and discuss the poster that accompanies Abstract #364. These are the data on tivozanib as second line therapy, as crossover in the TIVO 1 trial. This is a study that is still ongoing and still enrolling patients as patients on the sorafenib arm of the pivotal trial experienced tumor progression, and then crossover to tivozanib.

Back in the fall, when the abstracts were prepared, we submitted the preliminary data that were available to us at that time. Since then we have collected more mature efficacy data though these are still not final. These data are included in the poster, and in the slides that you’ll see next.

The first is the waterfall slide, which indicates that 74% of the patients had evidence of tumor regression on tivozanib. Remember that this is in patients who all had radiographic evidence of tumor progression on sorafenib before crossing over to receive tivozanib.

The slide shows the overall confirmed response rate of 13%. There are nine additional patients who’ve had a scan that might resist criteria for tumor shrinkage, and are considered unconfirmed responses because they have not yet have their confirmatory scans.

Adding together the unconfirmed and confirmed responses, it is an overall response rate of 19%. We expect that with longer follow-up, the confirmed response rate will probably increase modestly.

This slide shows two Kaplan-Meier plots. The top one is PFS, and the bottom one is overall survival since the time of starting tivozanib. Looking at the PFS curve, we see that the median is 8.4 months with the confidence interval shown.

Just as we have seen a long PFS for tivozanib in the fist-line setting, we are now seeing that this 8.4 month median is the longest PFS median that’s been reported for any agent as second-line therapy and RCC following another TKI. The overall survival median of 19.6 months also compares favorably to other available data in the post TKI setting.

In the interest of time, I’m not showing the safety data from this poster or from this study. There have been no new safety signals from this study, and the details are included in the poster. And if you want to see them, you can find them there.

This next abstract is about subgroup analyses from the TIVO-1 trial. Back when Dr. Motzer presented the top line data at ASCO last year, he showed the forest plot and briefly addressed sub-groups. Now at ASCO GU we are presenting these in more detail.

The forest plot as shown here displays the PFS hazard ratios. The dots are the point estimates, and the horizontal whiskers are the confidence intervals. Values less than one indicate that the tivozanib PFS is longer than the sorafenib arm. In the upper portion of the figure are the pre-specified sub-groups.

Analyses that were not pre-specified and are therefore considered exploratory are shown in the lower portion of the figure. The key point here is the consistency of benefits across various subgroups, and the absence of any groups who clearly derive less benefit from tivozanib than sorafenib. In the next few slides, I will go very quickly through some Kaplan-Meier plots of some of these key subgroups.

Here we have the displays by prior therapy. The treatment naive subgroup, a population highly relevant for the U.S. has been previously presented. In this group, the difference between tivozanib and sorafenib arms was statistically significant.

The median PFS in the tivozanib arm was 12.7 months versus 9.1 in the sorafenib arm. In the subset who had prior systemic therapy, you could see the TIVO arm is numerically better than the sorafenib arm, but this did not reach statistical significance.

When we look at the analyses by geographic region, we see that despite the small size of the U.S. and western EU subgroup, the difference between tivozanib and sorafenib reached statistical significance. In central and eastern Europe, the difference between arms was less marked, but still favored tivozanib.

Looking at ECOG performance status, we see that in ECOG 0 patients, the difference between arms reaches statistical significance with medians of 14.8 and 9.1 months on the two arms. In the ECOG one patient, the difference between arms is smaller. For MSKCC favorable and intermediate, again both groups favored the tivozanib arm with a p-value of 0.018 in the favorable group.

Here, we provide information about blood pressure and PFS. This is a bit different from the displays I’ve shown previously, because the previous four slides were all subgroups characterized by base line characteristic.

The display shown here is not about blood pressure at base line, but instead is based on the highest blood pressures recorded while patients were on study. I think most of you know that one of the effects of blocking the VEGF pathway is to raise blood pressure. It’s been previously reported that patients who develop hypertension while on VEGF receptor kinase inhibitors have better efficacy outcomes than patients who do not develop hypertension while on therapy.

The data on this slide show, for example, that in the tivozanib arm, patients who had a maximum reading of their systolic blood pressure, abbreviated SBP on this slide, systolic less than 140 had a median PFS of 9.0 months compared that to the patients with SBP over 140, 16.7 months. You can see the correlation of blood pressure with PFS, that holds for diastolic blood pressure abbreviated DBP 2 with the median PFS over 18 months for the patients with diastolic over 90. The relationship also holds for sorafenib, but the magnitude of PFS prolongation is greater on tivozanib than on sorafenib.

The last set of data that I’ll review is about the quality of life results from TIVO-1, Abstract #355. Our study measured Quality of Life using a couple of different instruments. I’ll be showing you some data from a standard instrument called the FACT-G that is widely used in oncology trials.

We have a lot of data in this poster, and in the interest of time, I’ll just show you one of the more interesting findings. And this is my last data slide. Here we see the FACT-G total and its sub scale.

There are lot abbreviations here. PWB is physical wellbeing, FWB is functional wellbeing. There is also emotional and social wellbeing shown here as well as results from a different instrument called the (inaudible).

The Y axis on the graph indicates the proportion of patients who got an improvement in quality of life above a minimum threshold relative to their baseline reading. Across all the sub scales except one, there is a trend for more patients to improve on tivozanib than on sorafenib. The one scale that does not show more improvement on tivozanib is social wellbeing, which does not directly measure drug effects.

For one scale, the difference between arms was statistically significant. This is the physical wellbeing scale, which tends to associate with symptoms of adverse events. The poster will show lots of additional data on Quality of Life including results across various subgroups of patients that reinforce the consistency of the findings that you see depicted here.

I’ll now wrap up some of what you’ve heard from me over the past 20 minutes or so.

In the TIVO-1 trial, tivozanib demonstrated superiority over sorafenib for the primary end point of PFS. We’ve reported on the protocol specified final analyses of overall survival with medians of 28.8 and 29.3 months in the tivozanib and sorafenib arms respectively. The hazard ratio was 1.25 and p-value of 0.105.

The numerically longer overall survival and the control arm was associated with a higher rate of utilization of effective next line agents predominantly tivozanib. In those patients who received tivozanib as next line treatment after sorafenib, the median PFS was 8.4 months, the confirmed response rate was 13%.

The PFS benefit of tivozanib over sorafenib was consistently seen across various subgroups. More patients experienced an improvement in Quality of Life scores on tivozanib than on sorafenib.

Based on the totality of the data in the NDA, we feel optimistic about the benefit risk profile of tivozanib and look forward to working with FDA and other regulatory authorities in an effort to get the drug approved and made available for patients with renal cell carcinoma.

Now, I will pass the call to Dave for our financial results. Dave?

David Johnston

Thanks, Bill, and good morning, everyone. Since we issued a press release this morning outlining our detailed full year 2012 financial results, let me just review some of the highlights, and then I’ll speak to our cash balance and guidance.

In terms of 2012 financial results, total collaboration revenues were approximately $19.3 million. Research and development spending was $91.4 million. G&A expense was $36.9 million and we had a net loss of $114.4 million or basic and diluted net lost per share of $2.64. AVEO concluded 2012 with cash and marketable securities of $160.6 million.

We recognize that with a number of upcoming milestones and an anticipated launch later this year, we want to be in the strongest financial position possible. This last month AVEO completed the financing resulting in $53.8 million in net proceeds of the company.

These additional funds further strengthen our balance sheet and give us additional confidence that we have the appropriate resources to proceed full speed ahead with our pre-commercial activities at the launch of tivozanib.

Looking ahead, we’re providing financial guidance that based upon our current capital position and our operating plan; we expect to end 2013 with approximately $60 million in cash and marketable securities. We anticipate that this capital is sufficient to fund our operations into the second quarter of 2014. Importantly, it should give us roughly a year’s worth of cash at the anticipated time of our ODAC review putting us in a position of financial strength with a number of options to strengthen our balance sheet even further should we choose to do so going into product launch.

So with that, I’ll open the call up to questions. Operator?

Question-and-Answer Session

Operator

Thank you very much. (Operator Instructions) And your first question comes from Geoff Meacham from JPMorgan. Go ahead, Geoff.

Geoff Meacham – JPMorgan

Hey, guys. Thanks for taking my question. You guys have expressed a lot of confidence in tivozanib yet, and when you look at your valuation, it literally is almost the cash, on the surface you have a child that has an OS trend that goes against you, I guess the subtlety with the downstream therapy. So what do you think that we’re missing?

Tuan Ha-Ngoc

Good morning, Geoff, this is Tuan. I think the data that Bill presented to you today is really the foundation of our confidence of the approvability, and the market positioning of tivozanib once it is approved.

And so I cannot speculate what’s missing. The data is complex, and I think that once we have the opportunity to fully understand old data, the FDA will have the opportunity to do that, and when we get to ODAC, we’ll have opportunity to present that again. I think that people will be convinced that tivozanib has shown superiority in efficacy as well as a safety profile that provide the base tolerability to the patient that would appreciate very much as well as the physician that prescribed it.

Geoff Meacham – J.P. Morgan Securities Inc.

Okay. That’s helpful. And then on OS, when you guys designed TIVO-1, maybe you walk us to that conversation with FDA; was there any contemplation of overall survival? And then when you have the Eastern European geographic sort of bias and you know the limited availability whether meds is there, was this something that you guys could have anticipated when you look at the design of this – either on its own or when you look at other renal cell agents in these same geographies? Thanks.

William Slichenmyer

Yeah. Geoff, Bill here. And at that time, as I said it was being designed. There had been precedence with other Phase 3 trials conducted in the same parts of the world that include one way crossovers, and in general overall survival benefit has not been proven and the reason is the FDA and other health authorities U.S. PFS has an endpoint for registration in RCCs because of the recognized impact of compounding with second and subsequent lines of therapy.

And I think the one thing that we may be, did not anticipate as fully as we might have looking back now in onsite that the enrollment rate into our trial was much faster in Central and Eastern Europe then it was in other parts of the world. And we had actually initially modeled that we would have a larger proportion of patients from North America and Western Europe then we wanted up having in the end. And so, we think that had a bigger impact then we might have anticipated back at the time the study was designed.

Geoff Meacham – J.P. Morgan Securities Inc.

Okay. That’s helpful. Thanks.

Operator

Thank you for your question. And your next question comes form Mr. John Sonnier from William Blair. Please go ahead.

John Sonnier – William Blair & Co.

Hey, thanks for taking the questions. Just maybe get Bill’s interpretation on questions that I know I am going to receive today, and maybe I’ll start with how do we interpret Bill the hazard ratio of 1.25 in a non-inferiority studies, I think there will be some confusion about that?

William Slichenmyer

So, this trial was designed as a superiority study for the PFS endpoint. That was the primary endpoint of that trial. And in terms of the interpretation of the 1.25 hazard ratio in overall survival, that’s really a good question because of the complexities of the confounding by subsequent anti-cancer therapy here. It really is going to require expert clinical judgment to understand how to interpret that, and interpret what is the benefit risk profile for tivozanib in that context.

I can tell you that when we’ve spoken with experts in kidney cancer about these data and gone through them in quite great detail with many of them, they come around to the conclusion that what we’ve presented to you today is a good explanation for that hazard ratio, and they believe that the benefit risk profile is favorable and we anticipate that this will be a topic for discussion by a panel of experts at ODAC, and if we look forward to hearing their clinical judgment about that as well.

John Sonnier – William Blair & Co.

And to be clear that the powering in the study was actually for superiority for the secondary endpoint as well for overall survival?

William Slichenmyer

No, not at all.

John Sonnier – William Blair & Co.

It was not. Okay, it was only powered for superiority against PFS.

William Slichenmyer

The primary endpoint. That’s right.

John Sonnier – William Blair & Co.

Okay. The confidence intervals you haven’t given the upper bound and I assume that’s because you – they haven’t been reached yet. How do we interpret the idea that’s the median where sorafenib is sitting right on top of what looks like I guess will be the lower bound?

William Slichenmyer

Yeah. So this is kind of an unusual situation.

John Sonnier – William Blair & Co.

I’ve never actually seen that by the way.

William Slichenmyer

Yeah. We’re the lower bound does equal the point estimate. Our statisticians have explained to me that this is an observation that can occur in the circumstances where the median is reached at the same time point that correspondence to the end of the follow-up period. So...

John Sonnier – William Blair & Co.

So, two years in this case, right?

William Slichenmyer

That’s right, yeah. So the coincidence of factors leaving to that in our arm study.

John Sonnier – William Blair & Co.

Okay. And at some point you will disclose the upper bound. I guess the analysis then will be the 22 point estimate at the lower bound in tivozanib and then whatever the upper end is in sorafenib. I think that will be the discussion at the FDA, is that fare?

William Slichenmyer

Well, what we’ve presented to you today and what was included in the NDA are the protocol-specified final analysis for overall survival. And so, at this point, we don’t have any specific plans for additional analysis of the overall survival endpoint.

John Sonnier – William Blair & Co.

Okay. And just one – one quick one for either you or Tuan. I know you’ve talked a lot about the benefits of the safety and tolerability profile of tivozanib. It was therefore maybe a bit odd that the PFS between tivozanib and Nexavar favor tivozanib more and ECOG 0. Relative to ECOG 1 it seemed like that might have been the other way around, and I’ll jump back in the queue. Thanks.

William Slichenmyer

So this observation of stronger treatment effect in ECOG 0 relative to ECOG 1 patients is a fairly common observation across randomized Phase 2 trails in RCC, and has been observed with sunitinib, observed with Axitinib, and I believe the same was true for Votrient as well, although I haven’t checked that number for a while.

Monique Allaire

Operator, we’ll take the next call.

Operator

Okay. Thank you. And your next question comes from Adnan Butt. Please go ahead.

Adnan Butt – RBC Capital Markets, LLC

Guys, thanks for sharing so much detail today. The first question is in terms of OS trends whether on a percent basis or month basis? Can you put that into context of what it looks like for other proved drugs or does that data not exist? My impression is that most drugs have not had static differences on OS.

William Slichenmyer

So, I think the key takeaway here is that have been seen here the 28.8 and 29.3 are among the longest that are being reported in any studies in RCC. The only one that is comparable really is the compares trial in which sunitinib reported a 29.3 month median overall survival and pazopanib 28.4.

If you look at some of the older pivotal studies, for sunitinib it was 26.4 months median for pazopanib had reported overall survival median of 22.9 months. So these data stack up very well in that context and maybe what’s especially noteworthy is that tivozanib result the 28.8 given that relatively low rate utilization of next line effective next line therapy.

Adnan Butt – RBC Capital Markets, LLC

Changing the discussion a bit to the review process, have you received any notification of an ODAC yet and what about the standard stuff that the FDA, does such as approval inspection other admin type of stuff is that ongoing on track?

William Slichenmyer

Those activities are ongoing and on track. And we have been informed that we will have an advisory committee meeting about tivozanib.

Adnan Butt – RBC Capital Markets, LLC

But you haven’t been given an exact date yet?

William Slichenmyer

That’s correct.

Adnan Butt – RBC Capital Markets, LLC

Just a question for I guess, Dave, in terms of guidance for 2013, does that imply an increase in SG&A and R&D and what kind of launch assumptions are you making in there for guidance?

David Johnston

Yeah, so in terms of exact spending, we’re not providing that level of detail, but I’ll tell you that the overall assumptions are on the R&D spend. It’s relatively flat compared to 2012 as SG&A. The only real significant question, spend will be towards mid year and beyond as we ramp-up the sales force. And I think as we said before what we’ve been doing is we have a commercial, we have the foundation of a commercial team in place. We’re hiring a Head of ODAC, the sales leadership team and like the, legal managers and such. But the sales force itself, the sale specialists will not be brought on board until post ODAC. So with the PDUFA date of July 28, I think what you’ll see is a ramp-up in the second half of the year assuming a positive ODAC an approval.

Adnan Butt – RBC Capital Markets, LLC

Dave, I didn’t ask the question, right. Do you expect guidance to change depending upon whether the decision is favorable or not?

David Johnston

Actually it’s interesting. No, its very interesting because we’ve actually modeled it both ways and so do they was that a coincidence or have you, the two offsetting items would be that you wouldn’t hire the sales force and you make some adjustments in the worse case scenario and you wouldn’t receive your milestones from Astellas and they are pretty much offset. So, the look we have right now to year end cash assuming that, with the current level of capitalization is about the same under either scenario.

Those differences actually that the – is that the runway is actually longer under a bad scenario because you don’t have the run-up of the salesforce, but you know that would be a problem I wouldn’t want to have.

Adnan Butt – RBC Capital Markets, LLC

Okay. Thanks. I’ll get back in line.

David Johnston

Thanks Adnan.

Operator

Thank you for your question. And your next question comes from Salveen Richter from Canaccord. Please go ahead.

Salveen Richter – Canaccord Genuity Inc.

Thanks for taking my question. Can you remind us exactly what the FDA was looking for in the additional analysis they requested to understand the overall survival curves?

William Slichenmyer

So, I think the key thing to note is that we remain confident in the data that we’ve submitted in the NDA, and that we are working with the FDA to address lots of questions there sending to us. It’s difficult at this phase in review process for them to ask for lots of additional analysis. Overall, we are feeling very optimistic that things are going to continue to go well, and I should just may be add that as a general point of company policy we don’t disclose details of our discussions with the health authorities.

Salveen Richter – Canaccord Genuity Inc.

Sure.

Tuan Ha-Ngoc

Salveen, let me add one thing is that although the data that we just went through with you today, just we met public, right they have all been included at the NDA – in our NDA submitted and so the FDA’s had an opportunity to review that and led to the acceptance and ongoing discussions with us.

Salveen Richter – Canaccord Genuity Inc.

Okay. Thanks Tuan. And then just wondering with the upcoming FDA panel what questions are you expecting and then how are you preparing for this panel.

William Slichenmyer

So, our preparations involve anticipating questions that could come on any topic pertaining to our submission. And so that covers everything from non-clinical toxicology studies to questions about the manufacturing, all the way through very specific details about the statistical analysis of our pivotal trial.

I think there is a little doubt that the overall survival results will be a focal point of some of the discussions, but at this point we can’t really predict what else might be on the agenda.

Salveen Richter – Canaccord Genuity Inc.

Thanks.

Operator

Thank you. Your next question comes from Thomas Wei from Jefferies. Please go ahead.

Thomas Wei – Jefferies & Company, Inc.

Hi, thanks. And I had a couple of questions on these overall survival data that you are showing. Thanks for all the details. I guess I am curious I still want to hear I guess you explain why I shouldn’t be uncomfortable with this data on the two versus two analyses and patients who received a second-line therapy. So, both of the analyses that you show have hazard ratios that are well above one and the biggest of the analyses actually has p-value less than 0.05, its 0.027 and it’s favorable against TIVO, and so I don’t know that I believe this, but does the data had also just that TIVO is somehow impairing second line response?

And assuming that the FDA does all of these same analyses and comes to the same p-values and hazard ratios that you are, how are you going to – how are you going to make them feel comfortable? Is it really just to see argument of lack of balance in these second line treatments, and those analysis are basically uninterpretable?

William Slichenmyer

The lack of balance is a key factor here. And we have several patients who are on the tivozanib arm who has their second line therapy received relatively ineffective agent, such as cytotoxic chemotherapy or hormonal therapy, unfortunately reflecting the limited access that’s available to patients to their healthcare systems in some of the countries where we conducted the study. And so this is exactly the sort of thing that I think an expert panel at ODAC will be looking at as they interpret these results. Again I think it’s not so much – what do the numbers show or rather how are they interpreted in the context of these additional details.

Thomas Wei – Jefferies & Company, Inc.

And so is that’s one of the key arguments, what about looking at it Q versus Q analysis where you take patients who are treated with a second line VEGF or an mTOR inhibitor, have you looked at that? And can you say whether or not the hazard ratio there is maybe much closer to one?

William Slichenmyer

So we have looked at the mTOR inhibitors and the results are comparable to what we’ve seen with the next line of antagonist as well.

Thomas Wei – Jefferies & Company, Inc.

So, okay...

William Slichenmyer

But again I think the fundamental issue that we face here is that we are talking about very small numbers in these subsets on the TIVO arm as well. Only 18 patients got the VEGF antagonist that was approximately an equal number that I got an mTOR inhibitor, and so we are talking about tremendous uncertainty around the estimates of survival for these groups.

Thomas Wei – Jefferies & Company, Inc.

Okay. And then I had wanted to derive some comfort from the North America and Western European overall survival analysis. So those show actually that its maybe favorable for TIVO, but it also looks like they are separating immediately right at the start, and so I guess I wanted to understand from you, do you think that that’s actually like a real drug affect between the two drugs or is that more an imbalance in demographics that and have you looked at the demographics in that particular sub group analysis to see whether or not there are differences that would explain that immediate separation in overall survival?

William Slichenmyer

So we have taken a look at the demographics in these groups. We don’t see anything here that clearly explains what’s being observed and even though this was a pre specified sub group it is relatively small and so it is a data point that we think it helps to reinforce the argument about the importance of next line therapy.

There is no one single analysis here that is absolutely definitive, proof of the argument that we are making. It’s really about the weight of evidence. I’ve shown you several analyses today there are even more that we’ve submitted to the agency and when you put it together in aggregate and again we are looking to the experts to weigh in on this. The most plausible explanation for what’s been observed here is that second-line therapy is really what’s driving these OS results.

Thomas Wei – Jefferies & Company, Inc.

Thank you.

Operator

Thank you for your question. And your next question comes from Marshall Urist from Morgan Stanley. Please go ahead.

Marshall Urist – Morgan Stanley & Co. LLC

Yeah. Hey guys, good morning and thanks for taking the question. So, excuse me, first one from me just on the – actually a PFS question, so wanted to get your thoughts on the North America, Europe versus Central Eastern Europe PFS analysis. I mean it obviously it losses statistical significance by taking out a relatively modest number of patients. So just trying to understand the thoughts around that, your perspective from a regulatory perspective and I know geographic differences in treatment patterns have been an issue in prior trials so just wanted to get a little – some more thoughts from you and how that’s likely to be interpret as well seeing as it was obviously a superiority study on PFS.

And then second, on OS, I know this cuts out before, but just trying to understand, so when you look at the one-line, one-line or two-plus-two analyses, is it – to get to the demographics question when you look at the performance status mix or MSKCC status of those patients, how comparable are the two arms when you get into some of those – when you get into the subsequent lines of therapy because it seems like that could also biased does analysis as well and make them – to this point of making them difficult – sort of difficult to interpret.

William Slichenmyer

Yeah, so we – at this point have not really done an exhaustive look at the characteristics of the patients in those various kinds of subgroups. They certainly are though prone to bias because we don’t really know what drove the decision for these patients. Which ones got a next line VEGF antagonist versus which ones did not? And that’s not the sort of thing that we measure in a trial, and so that is where the potential for buyers really sneaks in.

Regarding the geographic regions, we do still see a consistent treatment effect in the central and eastern European group. You’re right it did not reach the standard p-value for statistical significance. But in the context of how do the regulators view that, we think they are more likely to focus on the ITT results for the PFS. That was the prospectively described primary endpoint. And it’s not unusual when doing subset analysis that some turn out to be statistically significant, others not. So it’s just the random play of chance. I think the key thing with the subgroups is that there is a consistency of the benefit for tivozanib over sorafenib with multiple different ways of looking at the data.

Marshall Urist – Morgan Stanley & Co. LLC

Thanks for the questions.

Operator

Thank you. And your next question comes from Jim Birchenough from BMO Capital.

James Birchenough – BMO Capital Markets Corp.

Yeah. Hi guys. Thanks again for providing all the detail. I’ll start from an optimistic scenario and assuming you get approval, do you guys have a sense at what level of sales tivozanib would be a profitable product? And how will we see that reported? Will it be a separate JV structure, or can you give us some detail and then I’ve got a couple of follow-ups.

David Johnston

Yeah. Jim, this is Dave. Let me answer the how we’re going to be reporting that. It’s not going to be reported as a separate JV. North American revenue is going to be recorded by AVEO. So, you’ll see dollar-for-dollar on our P&L, exactly when that takes place.

What we’re thinking of and haven’t come to conclusion on, is providing a pro-forma TIVO in a shadow of P&L much like some other partnerships have done that are in JV structure just to help the analyst and the investment community understand. And what we are looking at is, is a several examples about to try to find the best way to do that.

Certainly, sharing expenses and sharing profit can be a little bit tricky to explain when it’s baked into a company’s P&L. So trying to make this clear as possible, as I think is going to be our goal.

In terms of what level of sales are going to drive our profitability, certainly it’s a question that we look at internally and its also there are lots of variable there to make it – I am not trying to punch you off skate here, but for example we have true fairly large Phase I trials going on with TIVO right now, one in colorectal and one in breast cancer. And should one or both of them play out favorably that would then move us into a Phase III scenario, which well would be great news for patients and ultimately for the company. In the short term might push profitability out EBIT, so it’s I think it’s a tricky question to answer at this point. And I am not going to really – I think it would be probably actually misleading so that’s where we are.

James Birchenough – BMO Capital Markets Corp.

And then just on the data that you shared today and the thesis that post progression therapy is really driving the overall survival imbalance here, when you look at the mortality events then to support that are you getting more patients in the TIVO arm that don’t get post progression therapy dying of progressive disease and have you ruled out but there isn’t some other imbalance contributing to this overall survival result.

William Slichenmyer

So in general, we get detailed information about causes of death for patients while they are on study which means up through the, I am therapy plus 30 days of additional follow-up. Most of the death that we’re seeing in the overall survival analysis come much later than that and so we don’t have the same kind of rich detail about causes of death further out. And so what we've shared is the information about overall survival, and at this point, these patients are largely getting telephone follow-up on their survival status.

James Birchenough – BMO Capital Markets Corp.

And just one final question, I guess it’s more philosophical, but if you look at this data, you’d say the tivozanib looks like a great drug used after Nexavar. And I guess how do you address that because often when you get a front-line study that shows a PFS benefit confounded by something subsequently the question becomes well, shouldn’t you study tivozanib followed by second-line therapy versus tivozanib second-line. It was the question that was asked around the SATURN study for Tarceva. How do you address that this data may position you for after Nexavar?

William Slichenmyer

Yeah, the data definitely make one think that tivozanib is active in the second line certainly the response data and PFS that we reported today look good, but today they look even better in the first line setting, where we’ve got level 1 evidence. Now, you know, from a randomized control trial, statistically significant improvement on the primary end point of PFS and the – I think the really key thing here in terms of first line usage is the very good tolerability profile for tivozanib.

You know if I was a practicing Doc, I would want to give my best tolerated drug for the longest possible period of time and treatment duration are longer in the first line than the second line, and so we’ve got this great tolerability along with proven superiority and greater than 12 months PFS in the treatment naïve population. We are thinking that this will be largely used as a first line agent.

James Birchenough – BMO Capital Markets Corp.

Okay. Thanks guys.

Operator

Thank you for your call. And your next call is from Mr. Brian Klein from Stifel NIcolaus. Please go ahead.

Brian Klein – Stifel, Nicolaus & Company, Incorporated.

Great. Thank you so much for taking my questions, and for the very comprehensive update. I just have two questions; first, I was wondering if you could give us an update on an EU filing strategy?

And secondly, I was wondering if you could provide us the survival parameters around patients in both arms, who did not received any second line therapy, I know the numbers will be small, but just wondering if there is any – anything we can derive out of that value? Thank you.

William Slichenmyer

Yeah, so in terms of the EU filing strategy we have previously disclosed that the intention is well, first let me restate that the MAA is to be filed by our partners, Astellas and they’ve said that its their intention to submit in the second half of this year.

Regarding patients who had no second line therapy that was part of one of the slides that I showed showing the subsets of patients who had now second-line therapy. I might just elaborate further on that for you. In the poster we actually have a further breakdown of those patients into sub-subgroups based on whether or not they are still on their first-line therapy and obviously still alive, 100% of those, or if they discontinued their first-line therapy and received no subsequent therapy. And so we have the Kaplan-Meier and other analyses for those subgroups in the poster.

Brian Klein – Stifel, Nicolaus & Company, Incorporated.

Great. Thanks.

Operator

I would now like to turn the call over to Tuan for closing remarks. Please go ahead sir.

Tuan Ha-Ngoc

Thank you, operator. This is an exciting time for AVEO. We have the data in hand that we believe support the registration of tivozanib in advance RCC. In the months ahead, we and our partner Astellas, are focused on advancing to regulatory review process followed by the anticipated market approval and launch of tivozanib for the treatment of patients with advanced RCC. We believe that tivozanib can address unmet needs for these patients and we’ll look forward to bring it to many who can benefit.

AVEO stands ready to complete our transformation into a fully integrated company with our first commercial product in 2013. We look forward to sharing updates with you along the way. Thank you all for joining us on today’s call.

Operator

Thank you for your participations in today’s conference. This concludes presentation. You may now disconnect. Have a good day.

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