Seeking Alpha
Profile| Send Message|
( followers)

Aveo Pharmaceuticals (NASDAQ:AVEO) has recently faced many setbacks related to its New Drug Application for tivozanib, a tyrosine kinase inhibitor targeted for advanced renal cell carcinoma. After receiving a negative review in the FDA Advisory Panel, the FDA rejected tivozanib citing concerns that although the drug had improved time to progression, the overall survival in phase III was not greater than Nexavar, the comparative arm. Part of the problem resulted from poor trial design in which the control arm was allowed to cross over to the experimental arm of the trial, meaning some patients ultimately received both Nexavar and tivozanib, possibly confusing the results. Aveo has decided not to continue to pursue the renal cell carcinoma indication for tivozanib. While we may never know if the poor trial design alone condemned tivozanib, it certainly raises questions about the management's decision making in that respect. Shortly after the negative review from the Advisory Panel, Aveo's Japanese partner, Astellas Pharma decided to withdraw from their agreement to seek approval for a renal cell carcinoma indication in Europe. Aveo also decided to lay off 140 employees which is expected to result in $190 million in savings.

Through all those events, Aveo has taken a major hit to its stock price, dropping from a recent high of $8.27 to $2.60, a loss of nearly 70% . Herein, I will investigate their drug pipeline and financial position and ultimately offer an opinion on whether Aveo is now a real opportunity at this low price or a dying company on its way out.

Finances

Aveo ended the first quarter in a strong financial position with $192 million in liquid assets though their rapid cash burn will leave them with $115 million by the year's end. They expect their financial position will support operations for at least two years, until after the release of their pending Phase I and Phase II trial results. Essentially, by their own estimate, their continued existence hinges on promising results from their clinical trials to bring in additional funding.

Aveo Pharmaceuticals has three different drug candidates in their pipeline. They continue to try to seek approval for tivozanib as a treatment for breast and colorectal cancers. Ficlatuzumab is a hepatocyte growth factor inhibitory antibody which they are targeting to previously untreated Asian patients with non-small cell lung cancer. AV-203, a monoclonal antibody inhibitor of ERBB3, is currently being investigated in phase I clinical trials to evaluate safety and pharmacodynamics endpoints in patients with advanced solid tumors. All of these drugs were discovered and developed as a result of Aveo's proprietary mouse model of human cancers called Human Response Platform™.

Tivozanib

Tivozanib is an oral small molecule inhibitor of the vascular endothelial growth factor (VEGF) receptor tyrosine kinase family which is used to prevent angiogenesis, the growth of new blood vessels. Its safety is currently being evaluated in the BATON-CRC and BATON-BC trials for advanced colorectal cancer and triple-negative breast cancer. Importantly, these trials are different from their previous phase III trial, TIVO-1, because they are using Tivozanib in a combination treatment, rather than alone. In the BATON-CRC trial tivozanib is being combined with mFOLFOX6 (oxaliplatin, folinic acid, and 5-fluorouracil) and in the BATON-BC trial tivozanib is being combined with paclitaxel. Both of these treatments are rather safe baseline treatments which have been combined with VEGF receptor tyrosine kinase inhibitors before and with demonstrated safety.

These trials are also designed to begin to evaluate efficacy by looking at progression-free survival, objective response rate and overall survival. Of major concern for the colorectal cancer indication is the fact that cediranib, another potent small molecule inhibitor of VEGF receptor tyrosine kinases being developed by AstraZeneca, failed to demonstrate a significant difference in progression-free survival, overall survival or overall response rate in comparison to the standard of care bevacizumab plus FOLFOX6. However, in this trial, cediranib-treated patients on average completed two fewer chemotherapy cycles than bevacizumab-treated patients due to adverse events. Like tivozanib, cediranib is a VEGF receptor inhibitor, whereas bevacizumab is a VEGF-A inhibitor. Bevacizumab is also a monoclonal antibody, not a small molecule, an important difference for its target specificity and potency. These drug design and mechanistic difference may lead to important clinical differences and one might expect tivozanib to follow more in line with cediranib than bevacizumab. If tivozanib demonstrates reliable safety data, Aveo may justify continued development based on the presumption that they would get more treatment cycles in than was possible with cediranib.

The BATON-BC trial is evaluating tivozanib in triple-negative breast cancer. Past trials using similar agents targeting VEGF/VEGFR again raise concern. Recently, bevacizumab has had breast cancer removed as an indication for treatment by the FDA citing safety concerns and lack of efficacy. A phase III trial published in 2011 comparing sunitinib (an FDA-approved small molecule inhibitor of both VEGFRs and platelet derived growth factor (PDGF) receptors used in renal cell carcinoma and neuroendocrine tumors of the pancreas) in combination with docetaxel to docetaxel alone, failed to demonstrate increase overall survival and progression-free survival, despite a significantly higher objective response rate. In a phase IIB trial published last year comparing sorafenib (an FDA-approved small molecular inhibitor of VEGFR, PDGFR and Raf kinases used in renal cell carcinoma and unresectable hepatocellular carcinoma) with capecitabine vs capecitabine alone, progression-free survival was improved but there was no significant improvement in overall survival or overall response.

These trials by no means condemn tivozanib to failure for colorectal cancer and breast cancer indications but raise important questions about the strategy of targeting VEGF/VEGFR in these cancers. Any improvement upon the standard of care for colorectal cancer, which already employs a VEGF inhibitor, is likely to be limited at best. While the standard of care for triple negative breast cancer does not include a VEGF/VEGFR inhibitor at this time, the failure of similar agents in the past raises caution.

The greatest hope for Aveo to sufficiently differentiate tivozanib from past failures is in the biomarker analysis. There have been an estimated 30 VEGF inhibitors introduced in to clinical development with a staggering failure rate. Today, only 5 VEGF inhibitors are on the market. Positive biomarker results will help physicians know which patients are most likely to have a positive response on tivozanib. However, the clarity of these prognostic cutoffs is typically disappointingly opaque. In my mind, this is the final Hail Mary play to keep tivozanib in the game. If successful, they may have a convincing argument for bringing in more funding for further clinical development.

Ficlatuzumab

Ficlatuzumab is a monoclonal antibody inhibitor of hepatocyte growth factor (HGF) being developed for treatment naïve Asian patients with non-small cell lung cancer (NSCLC). At the beginning of October 2012, Aveo announced results of their Phase II study evaluating ficlatuzumab and gefitinib compared to gefitinib monotherapy in the target population. The trial did not achieve its primary endpoint (overall response rate) but Aveo states they remain confident that the pharmacodynamics data from the trial validated the role of HGF ligand inhibition as a treatment for cancer, particularly in patients with high stromal HGF. Importantly, the combination treatment was well tolerated and did not result in an increased incidence of adverse events.

Hepatocyte growth factor receptor (HGFR) is not a primary target of any approved treatments but is a secondary target of crizotinib which is approved for EML4-ALK fusion gene positive tumors. Interestingly, amplification of HGFR is thought to be responsible for 20% of cases of resistance to erlotinib, a treatment approved for several types of cancers. To my knowledge, there is currently only one other treatment being developed in this same class, Amgen's AMG-102, however there are a number of small molecule inhibitors in development to target Met kinase, a downstream effector of HGFR.

Aveo plans to pursue continued development of ficlatuzumab through external collaborations as the company focuses their financial resources on tivozanib and AV-203. At this point in time, it does not appear that any licensing or collaborative agreements have been made regarding ficlatuzumab.

AV-203

AV-203 is an ERBB3 inhibitory antibody currently being evaluated in a Phase I clinical trial to evaluate safety in patients with advanced solid tumors. The trial is also designed to give a glimpse at efficacy and includes exploratory biomarker analysis.

ERBB3 is a member of the epidermal growth factor receptor (EGFR) family of receptor tyrosine kinases. As a target, ERBB3 represents a novel strategy for combating a variety of cancers. There is a lot of hope that ERBB3 inhibition will be the same type of blockbuster that EGFR and HER-2 inhibition turned out to be. However, the amount of competition in this field is staggering. There are currently at least 9 ERBB3 monoclonal antibody inhibitors in development, the furthest along of which, AMG-888 being developed by U3 Pharma, Amgen, and Daiichi-Sankyo, and MM-121 being developed by Merrimack and Sanofi Aventis, are in Phase II. Many other big players, including Roche, Novartis and Genentech, are also developing their own ERBB3 inhibitors.

Recommendation and Conclusion

While Aveo Pharmaceuticals is likely to demonstrate positive safety results in their BATON-CRC, BATON-BC and AV-203 trials, their long term prospects are concerning. In the short term, these positive results may bump the stock price up. However, I think there are many reasons to be concerned about the efficacy of tivozanib in both colorectal cancer and breast cancer given the failures of similar agents in recent trials. While AV-203 looks like a potentially promising treatment from in vitro data, they lacked an established partner to help drive development of this drug and risk falling further behind in a crowded field. If ERBB3 is a valid target which demonstrates efficacy, the first to approval will garner substantial benefit.

As mentioned previously, by their own estimation, Aveo Pharmaceuticals should have a strong enough financial position to continue operations through the end of their ongoing clinical trials. At that time, they will need to convince investors or partners to continue to fund the development of these drugs. I think they will struggle to secure further funding due to their lack of sufficient differentiation between themselves and previous failures and other drugs in development. While Aveo's stock may experience a positive bump in the lead up and following the announcement of their trial results, without new drugs in their product pipeline, I think we will continue to see the decline of this company.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Aveo Pharma Hanging By A Thread