This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Aveo Screwed Up but Its Kidney Cancer Drug Is Real

Stocks in this article: AVEO ONXX PFE NVS GSK

The PFS/OS data from the Nexavar arm of the pivotal Aveo study (the green triangle) is another outlier on the graph. With a 9.1 month median PFS, the expectation would be for a median OS of around 22.5 months. If the median OS of the Nexavar control arm were even in that range, the OS hazard ratio for the tivoazanib phase III trial would have been under 1 (a positive survival trend) instead of 1.25 (a negative survival trend) and the vote of the FDA advisory panel might have gone Aveo's way. The OS anomaly in the Nexavar arm is also consistent with the argument that crossover in the control arm affected the OS results. While this does not prove the tivozanib results were completely accurate, the data seem more consistent with the contention that the Nexavar arm was atypical.

What does this analysis mean for tivozanib's future? Given the flaws in the trial design, I do not believe it was necessarily wrong for the FDA advisory panel to vote against tivozanib. With that said, the similarity between tivozanib and previously approved kidney cancer drugs implies the former is active. A better designed phase III study would likely produce data to support approval.

But let's try this: Ignore everything we know about Aveo's history and its more recent mistakes, and just view the stock as an oncology company with a phase II asset. Let's further assume the previous tivozanib phase III trial was really a phase II trial that provided evidence -- but not proof -- of efficacy. As an investor, ask yourself: How many companies such as this trade at a discount to cash on hand? Almost none ( see Clovis Oncology, Verastem and Geron Corporation as comparable) unless there is a real question about viability.

The FDA advisory panel punished Aveo for its poor trial design and the market has punished the company for the negative vote of the advisory panel. At $2.75, Aveo has lost almost 70% of its market value. That's an overreaction, in my opinion, given the tivozanib data and comparable biotech valuations. A more reasonable valuation is justified. It may take time and don't be surprised to see Aveo raise more money, but I see Aveo eventually trading for $5-6 per share based on tivozanib's potential.

Sobek has no position in Aveo or any other stocks mentioned in this column.

David Sobek has been writing on biotech for a number of years through various outlets with a general focus on small cap oncology and antibiotics companies. He received his PhD in political science from Pennsylvnia State Univeristy in 2003 and a BA in international relations from The College of William and Mary in 1997.
2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs