NEW YORK (TheStreet) -- AVEO Pharmaceuticals (AVEO) stock is up by 33.79% to $1.38 in mid-morning trading on Monday, after the company announced that it secured a European licensing agreement for its renal cell carcinoma treatment.
The bio-pharmaceutical company, which focuses on cancer treatments, entered a licensing agreement with EUSA Pharma for tivozanib. The treatment is for renal cell carcinoma, a type of kidney cancer.
EUSA will pay $2.5 million initially for rights to the treatment and then pay royalties that could total up to $394 million, AVEO said.
The company's partnership with EUSA as well as Ophthotech Corp. (OPHT) and Pharmstandard will generate more than $35 million over the next 18 months, AVEO said.
"We have a solid foundation to potentially generate near-term capital and long-term value for this important asset while retaining commercial rights to tivozanib in oncology in North America," AVEO CEO Michael Bailey said in a statement on Monday. "We look forward to working with the experienced commercial and regulatory team at EUSA Pharma as they seek to successfully commercialize tivozanib in Europe."
So far today, 2 million shares of AVEO have traded, versus its 30-day average of about 470,000 shares.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate AVEO PHARMACEUTICALS INC as a Sell with a ratings score of D-. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The area that we feel has been the company's primary weakness has been its disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, AVEO PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for AVEO PHARMACEUTICALS INC is rather high; currently it is at 55.87%. It has increased significantly from the same period last year. Along with this, the net profit margin of 52.23% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 212.57% to $9.01 million when compared to the same quarter last year. In addition, AVEO PHARMACEUTICALS INC has also vastly surpassed the industry average cash flow growth rate of 1.05%.
- The current debt-to-equity ratio, 0.52, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 4.07, which clearly demonstrates the ability to cover short-term cash needs.
- This stock has increased by 53.52% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in AVEO do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- You can view the full analysis from the report here: AVEO