The survival question has been an overhang on Aveo shares but the TIVO-1 study did meet its progression-free survival endpoint. Tivozanib delayed the time before patients' kidney cancer started to grow by a median 11.9 months compared to 9.1 months for Nexavar -- a difference that was statistically significant and which achieved the study's primary endpoint. Tivozanib was also better tolerated than Nexavar, with fewer dose reductions and treatment discontinuations due to adverse events.
"Tivozanib is approvable," said one investor who's bearish on Aveo but not currently short the stock. "The FDA isn't dumb, there was massive crossover in this study. Plus, it's the first kidney cancer trial in which a drug was compared to an active control, so to ding them for that is dumb."
However, this Aveo bear believes tivozanib runs into trouble once approved because it will be the ninth drug marketed for kidney cancer and the fifth drug to share a similar mechanism of action.
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Sutent has been the market-leading kidney cancer drug but has recently lost ground to
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Aveo is running a follow-on study comparing tivozanib against Sutent, with results expected in 2014. A successful study may convince doctors to use tivozanib over Sutent but won't necessarily help against Votrient.
"I'm hoping Aveo shares rally into tivozanib's approval because it so I can short the launch," said the Aveo bear investor.
Aveo bulls believe tivozanib's efficacy is comparable to current crop of leading kidney cancer drugs but safer and easier to tolerate, which will drive market share and sales. RBC Capital's Adnan Butt says tivozanib is worth almost $13 per share to Aveo if the drug's peak market share reaches 15% in the U.S. and 10% in the Europe.
Aveo shares closed Friday at $7.98.
-- Reported by Adam Feuerstein in Boston.