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AVEO Oncology Reports Second Quarter 2014 Financial Results And Updates Progress On Strategic Plan

AVEO Oncology (NASDAQ:AVEO) today reported its second quarter 2014 financial results and provided an update on its progress toward achieving its strategic plan.

“Our strategy for building value remains focused on our AV-380 program in cachexia and in leveraging partner resources to advance the development of our clinical pipeline,” said Tuan Ha-Ngoc, president and chief executive officer of AVEO. “The partnership with Biodesix for the development and commercialization of ficlatuzumab, announced in the second quarter, is an important example of execution against this strategy. We have also demonstrated progress across the pipeline, presenting first-in-human data for AV-203 at ASCO, regaining worldwide rights to tivozanib and executing on our strategy of bringing AV-380 to the clinic.”

Recent Program Updates
  • Tivozanib – AVEO announced today that worldwide rights to tivozanib, the Company’s inhibitor of vascular endothelial growth factor (VEGF) 1, 2, and 3 receptors, were regained from Astellas Pharma, Inc. AVEO and Astellas were developing tivozanib for the treatment of renal cell carcinoma, colorectal cancer and breast cancer pursuant to a worldwide collaboration and license agreement. Subsequent to the receipt of a complete response letter, Astellas elected to terminate the license agreement, which became effective today. AVEO will actively pursue other partnerships to advance the development of tivozanib.The Company also announced today that clinical results from two Phase 2 studies of tivozanib in colorectal cancer, which were discontinued after an interim analysis, and renal cell cancer were accepted for poster presentation at the European Society for Medical Oncology (ESMO) 2014 Congress taking place September 25–30, 2014, in Madrid, Spain. The date and time of the presentations will be provided once they become available.
  • Ficlatuzumab – In April 2014, AVEO executed an agreement with Biodesix under which AVEO plans to conduct a Phase 2 clinical trial of ficlatuzumab, the Company’s hepatocyte growth factor (HGF) inhibitory antibody, in combination with erlotinib in advanced non-small cell lung cancer. The study will use Biodesix’s VeriStrat® test to select for a patient population which, in an exploratory analysis of AVEO’s Phase 2 trial data, showed a progression free survival and overall survival benefit from the addition of ficlatuzumab to an EGFR TKI. The Company announced today that results from this exploratory analysis have been accepted for poster presentation at the ESMO 2014 Congress. The date and time of the presentation will be provided once they become available.As part of the agreement between AVEO and Biodesix, Biodesix will fund up to $15 million of the cost of the new Phase 2 trial as well as the further development and registration of VeriStrat as a potential companion diagnostic. Any additional development, regulatory and commercial costs for ficlatuzumab beyond the Phase 2 trial will be shared equally between AVEO and Biodesix, as will any potential profits.
  • AV-203 – In June 2014, 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, at the American Society of Clinical Oncology (ASCO) 2014 Annual Meeting. 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 anticancer therapy. AVEO is actively pursuing partnerships to further advance the development of AV-203.
  • AV-380 – During the second quarter, AVEO initiated non-GMP manufacturing and animal toxicology studies for AV-380, the Company’s potent, humanized GDF15 inhibitory antibody, in preparation for the initiation of clinical trials planned for the 4 th quarter of 2015. The Company announced today that results from four preclinical studies of AV-380 in various in vivo cachexia models and in vitro assays have been accepted as poster presentations, and preclinical work leading to the identification of GDF15 as an important driver of cancer cachexia has been accepted for an oral presentation at the 2 nd Cancer Cachexia Conference taking place September 26-28 in Montreal, Canada. AVEO is actively pursuing partnerships to realize the full potential of AV-380 within and beyond cancer cachexia.

Second Quarter 2014 Financial Highlights
  • Ended Q2 2014 with $64.9 million in cash, cash equivalents and marketable securities.
  • Research and development (R&D) expense was $9.3 million for Q2 2014 compared with $16.2 million for Q2 2013. The decrease in R&D expense was primarily due to a reduction in personnel-related expenses following AVEO’s June 2013 strategic restructuring as well as a decrease in external clinical trial, consulting, and manufacturing costs associated with development and pre-commercialization activities for tivozanib.
  • General and administrative expense (G&A) expense was $4.8 million for Q2 2014 compared with $7.3 million for Q2 2013. The decrease in G&A expense was primarily due to a reduction in personnel-related expenses following the Company’s June 2013 strategic restructuring and a decrease in marketing and consulting costs for tivozanib related to pre-commercialization activities.
  • Restructuring and lease exit expense was $5.2 million for Q2 2014 compared with $7.9 million for Q2 2013. The expense incurred during Q2 2014 relates to space that the Company ceased using during the quarter, while the Q2 2013 expense relates to severance and employee benefits incurred as part of the June 2013 strategic restructuring.
  • Net loss for Q2 2014 was $18.0 million, or $0.35 per basic and diluted net loss per share, compared with net loss of $31.9 million, or $0.62 per basic and diluted net loss per share, for Q2 2013.

Financial Comparison of First and Second Quarters 2014
  • The Company had net cash outflows of approximately $23 million in Q2 2014, compared to $30 million in Q1 2014.
  • R&D expense was $9.3 million for Q2 2014 compared to $11.8 million in Q1 2014. The decrease in R&D expenses was primarily due to a reduction in clinical study costs and allocated overhead. The components of R&D expense are as follows:
Research & Development Expense

Q2 2014

Q1 2014

Headcount and Programs $ 8,251 $ 9,132 $ (881 )
Reimbursable Partnership Expenses $ (1,218 ) $ (1,153 ) $ (65 )
Allocated Overhead $ 1,411 $ 2,803 $ (1,392 )
Depreciation $ 659 $ 667 $ (8 )
Stock-Based Compensation Expense $ 197   $ 318   $ (121 )
Sub Total Non-Program R&D Expense $ 2,267 $ 3,788 $ (1,521 )
Total R&D Expense $ 9,300   $ 11,767   $ (2,467 )
  • G&A expense was $4.8 million for Q2 2014 compared to $5.6 million in Q1 2014. The decrease in G&A expense was primarily due to a reduction in legal expenses and allocated overhead.
  • The Company’s construction related capital expenditures in Q2 2014 were $4.0 million, down from $7.8 million in Q1 2014. These construction-related capital expenditures are associated with AVEO’s corporate headquarters at 650 E. Kendall St., Cambridge, MA.
  • With respect to the Company’s loan facility with Hercules Technology, the Company made payments toward loan principal and interest in Q2 2014 of $4.3 million compared to $3.1 million in Q1 2014. The increase was due to a $1.2 million one-time payment made in June 2014 pursuant to the terms of AVEO’s loan agreement.
  • The Company anticipates cash inflows of approximately $15 million in the second half of 2014 associated with landlord reimbursement of construction-related capital expenditures in accordance with AVEO’s lease arrangement at 650 E. Kendall St., Cambridge, MA.

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 at least the fourth quarter of 2015. This guidance does not contemplate any potential partnerships or other strategic or operational transactions.

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