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AVEO Pharmaceuticals (AVEO) Q4 Earnings Beat & Sales Miss

Zacks Equity Research

AVEO Pharmaceuticals, Inc. AVEO incurred a loss of 28 cents per share in fourth-quarter 2019, narrower than the Zacks Consensus Estimate of a loss of 58 cents and also the year-ago loss of 35 cents.

The company’s top line comprises collaboration and licensing revenues plus partnership royalties. Total revenues in the reported quarter were $0.7 million compared with $1.5 million reported in fourth-quarter 2018. Moreover, revenues missed the Zacks Consensus Estimate of $2 million.

Shares of AVEO were down 7.6% in after-hours trading following the earnings release on Monday. In fact, the stock has plunged 50.3% in the past year compared to the industry’s decline of 25.4%.

We remind investors that in August 2017, AVEO and partner EUSA Pharma received an approval from the European Commission for its VEGF tyrosine kinase inhibitor Fotivda (tivozanib) for the first-line treatment of advanced renal cell carcinoma (RCC). It is the first approved drug in the company’s portfolio. AVEO receives royalties from Fotivda sales in certain European countries and additional milestone fees on the reimbursement approval obtained by EUSA.

Operating Expenses

Research & development expenses declined 13.4% year over year to $4.5 million. However, general and administrative expenses increased 11.5% year over year to $2.9 million.

Cash Guidance

AVEO had $47.7 million worth of cash, cash equivalents and marketable securities as of Dec 31, 2019 compared with $57.5 million on Sep 30, 2019. The company believes that its cash balance along with anticipated partnership payments and royalty revenues from the Fotivda sale by EUSA will help fund its planned operations through the second quarter of 2021.

Reverse Stock Split

Last month, the company’s majority stakeholders approved a reverse stock split. The board cleared the reverse stock split at a 1-for-10 ratio, effective Feb 19, 2020. AVEO’s common stock began trading on the Nasdaq on a split-adjusted basis on Feb 20, 2020.

Pipeline Updates

Last September, AVEO announced updated data from the second pre-specified analysis of overall survival (OS) in the TIVO-3 study on Fotivda for the treatment of patients with highly refractory metastatic RCC compared with Bayer AG’s BAYRY Nexavar (sorafenib). These results include an OS hazard ratio of less than one, favoring Fotivda.

In November 2019, AVEO provided a regulatory update after a meeting with the FDA authorities to discuss overall survival (OS) results from the phase III TIVO-3 study to proceed with a new drug application (NDA) for Fotivda. The company plans to file an NDA for Fotivda by this month-end and expects to report results from the final OS analysis in June 2020.

However, during the review, if the final analysis yields an OS hazard ratio of more than 1, AVEO will withdraw its NDA for Fotivda.

Meanwhile, AVEO is evaluating Fotivda in combination with AstraZeneca’s AZN PD-L1 inhibitor Imfinzi (durvalumab) in the phase Ib/II DEDUCTIVE study for the first-line treatment of patients with advanced unresectable hepatocellular carcinoma with no history of systemic therapy.

AVEO is also evaluating Fotivda in combination with Bristol-Myers’ BMY PD-1 inhibitor Opdivo (nivolumab) in the Ib/II TiNivo study for the treatment of advanced or metastatic RCC.

This apart, AVEO has a promising candidate, ficlatuzumab, in its pipeline. It is currently being evaluated in early-mid/stage studies for various oncology indications.

AVEO Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

AVEO Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

AVEO Pharmaceuticals, Inc. price-consensus-eps-surprise-chart | AVEO Pharmaceuticals, Inc. Quote

Zacks Rank

AVEO currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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