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 4th 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 2nd 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.

About AVEO

AVEO Oncology (NASDAQ: AVEO) is a biopharmaceutical company committed to discovering and developing targeted therapies designed to provide substantial impact in the lives of people with cancer by addressing unmet medical needs. AVEO’s proprietary Human Response Platform™ provides the company unique insights into cancer and related disease biology and is being leveraged in the discovery and clinical development of its therapeutic candidates. For more information, please visit the company’s website at www.aveooncology.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements of AVEO within the meaning of The Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this press release are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “target,” “potential,” “could,” “should,” “seek,” or the negative of these terms or other similar expressions, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among others, statements about AVEO’s plans to initiate a Phase 2 study of ficlatuzumab; AVEO’s advancement of its business strategy, including its plans to leverage partner resources to advance tivozanib, AV-203 and AV-380 and its plans to initiate clinical trials of AV-380 in the 4 th quarter of 2015; and AVEO’s estimates for its 2014 year-end cash balance and its ability to fund its operating plan through the fourth quarter of 2015. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that AVEO makes due to a number of important factors, including risks relating to: AVEO’s ability to execute on its business strategy and enter into and maintain new strategic partnerships and collaboration agreements; AVEO’s ability to successfully enroll and complete clinical trials and preclinical studies of its product candidates; AVEO’s ability to demonstrate to the satisfaction of the FDA, or equivalent foreign regulatory agencies, the safety, efficacy and clinically meaningful benefit of its product candidates; AVEO’s ability to achieve and maintain compliance with all regulatory requirements applicable to its product candidates; AVEO’s ability to obtain and maintain adequate protection for intellectual property rights relating to its product candidates and technologies; developments and expenses related to AVEO’s ongoing shareholder litigation and SEC inquiry; AVEO’s ability to raise the substantial additional funds required to achieve its goals; adverse general economic and industry conditions; competitive factors; and those risks discussed in the section titled “Risk Factors” included in AVEO’s most recent Quarterly Report on Form 10-Q and in its other filings with the SEC. The forward-looking statements in this press release represent AVEO’s views as of the date of this press release. AVEO anticipates that subsequent events and developments will cause its views to change. However, while AVEO may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. You should, therefore, not rely on these forward-looking statements as representing AVEO’s views as of any date subsequent to the date of this press release.

AVEO Pharmaceuticals, Inc. Condensed Consolidated Statements of Operations(In thousands, except per share amounts) (Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2014 2013 2014 2013
Collaboration revenue $ 1,846 $ 324 $ 17,135 $ 647
Operating expenses:
Research and development 9,300 16,203 21,067 37,165
General and administrative 4,846 7,324 10,400 19,773
Restructuring and lease exit   5,165     7,869     9,025     7,936  
19,311 31,396 40,492 64,874
Loss from operations (17,465 ) (31,072 ) (23,357 ) (64,227 )
Other income and expense:
Other income (expense), net (2 ) (51 ) 5 (152 )
Interest expense (502 ) (825 ) (1,083 ) (1,695 )
Interest income   10     35     26     76  
Other expense, net (494 ) (841 ) (1,052 ) (1,771 )
Net loss   (17,959 )   (31,913 )   (24,409 )   (65,998 )
Net loss per share - basic and diluted $ (0.35 ) $ (0.62 ) $ (0.47 ) $ (1.31 )

Weighted average number of commonshares outstanding
  51,663     51,312     51,649     50,351  
AVEO Pharmaceuticals, Inc.
Consolidated Balance Sheet Data
(In thousands)
June 30, December 31,
2014 2013
Cash, cash equivalents and marketable securities $ 64,937 $ 118,506
Accounts receivable 1,235 984
Prepaid expenses and other current assets 19,252 9,429
Property and equipment, net 15,863 14,140
Other assets   2,960   3,287
Total assets $ 104,247 $ 146,346
Liabilities and stockholders’ equity
Accounts payable and accrued expenses $ 19,693 $ 17,501
Total loans payable 14,184 19,205
Total deferred revenue 1,256 18,392
Total deferred rent 14,510 20,072
Other liabilities 7,646 1,238
Stockholder's equity   46,958   69,938
Total liabilities and stockholders’ equity $ 104,247 $ 146,346

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