Aveo Chairman: Expect 'Consequences

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CAMBRIDGE, Mass. ( TheStreet) -- The thrashing of Aveo Oncology's ( AVEO) kidney cancer drug by an FDA advisory panel earlier this month will lead to "very significant consequences" at the struggling company, said Chairman Henri Termeer, in an interview following Aveo's annual shareholder meeting.

Termeer wouldn't elaborate on what "significant consequences" means for the continued employment of Aveo's management team, including CEO Tuan Ha-Ngoc. If a management shakeup is being considered, Termeer wasn't letting on. Aveo executives have the support of the board of directors, he said.

"We are working together," said Termeer, referring to Aveo's board and current management. "As Tuan says, we are very disappointed by this outcome. There will be very significant consequences from this obviously, but for that we need to wait for the company to make its announcement."

The value of Aveo's stock has fallen more than 60% since a panel of outside experts convened by the FDA said tivozanib should not be approved for the treatment of advanced kidney cancer. Some panel members and FDA officials used the meeting to sharply criticize the conduct of Aveo's pivotal clinical trial, which showed tivozanib-treated patients were outlived by patients in the control arm treated with Onyx Pharmaceuticals' ( ONXX) Nexavar.

Since the negative panel vote on May 2, Aveo's corporate partner Astellas has informed the company that it will not pursue tivozanib's approval in Europe for kidney cancer, nor will Astellas fund any new kidney cancer clinical trials.

Wednesday's Aveo annual shareholder meeting, held in the aerie offices of a downtown Boston law firm, was the first time company executives spoke in public about the tivozanib debacle.

In prepared remarks, Aveo CEO Ha-Ngoc said the company was "extremely disappointed" by the negative FDA panel vote and "dismayed" by the criticisms of the company's actions leveled by panel members. Given the negative panel vote, Ha-Ngoc said the FDA will "more likely reach an adverse decision on tivozanib."

The FDA is expected to announce its approval decision on tivozanib by July 26.

Ha-Ngoc also used the ongoing FDA review as an excuse to refrain from making any substantive comments about the future plans for tivozanib or the company. The results of an ongoing strategic review of the company's future plans will be announced publicly in the next several weeks, he said.

"I can assure you that we are going through a very careful and intense review," said Termeer in an interview following the adjournment of the shareholders meeting. "We have a fairly significant financial war chest. Like so many companies in biotechnology that have to restart, fortunately we have the ability the look at things really carefully."

The shareholder meeting, itself, was a staid event, with only a single retail shareholder in the attendance, seated amongst Aveo employees and directors. Shareholders voted to confirm all eight of the current Aveo shareholders for another term. Proposals to add more shares to employee stock incentive and ownership plans were also approved by a plurality of shareholders A non-binding advisory vote on executive compensation was affirmed.

Aveo CEO Ha-Ngoc received a 3.25% raise for 2013, boosting his annual salary to $567,875.

Whether this is the "very significant consequence" alluded to by Termeer remains to be seen.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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