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AVEO Pharmaceuticals Posts Narrower-than-Expected Q2 Loss

Zacks Equity Research

AVEO Pharmaceuticals, Inc.’s (AVEO) shares fell 2.52% after the company reported a second-quarter 2014 loss of 35 cents per share, narrower than the year-ago loss of 62 cents per share and the Zacks Consensus Estimate of a loss of 38 cents. The narrower year-over-year loss was primarily due to lower operating expenses and higher collaboration revenues.

Aveo Pharmaceuticals, Inc - Earnings Surprise | FindTheBest

The company’s total collaboration revenue for the second quarter was $1.8 million as compared to $0.3 million in the year-ago period. In the second quarter of 2014, research and development (R&D) expenses were $9.3 million, down 42.6% year over year. The decrease in R&D expenses was primarily due to lower study-related expenses and allocated overhead. General and administrative expenses decreased 33.8% to $4.8 million, reflecting legal expenses and allocated overhead.

Pipeline Update

After the termination of its development and commercialization agreement with Astellas Pharma, Inc. (ALPMY) for the oncology candidate, tivozanib, AVEO has gained full rights to the candidate.

AVEO has several other candidates in its pipeline including ficlatuzumab (phase II – non-small cell lung cancer), AV-380 (first human trial planned for the fourth quarter of 2015 – cancer cachexia) and AV-203 (phase I completed – metastatic or advanced solid tumors).

AVEO has entered into an agreement with Biodesix, Inc. to develop and commercialize ficlatuzumab with Biodesix’s companion diagnostic test, VeriStrat.

Currently, AVEO is actively looking for a partner to support the development of AV-203 and tivozanib. AVEO also plans to evaluate partnership opportunities to develop AV-380 for the treatment of cachexia associated with other indications such as chronic kidney disease, congestive heart failure and chronic obstructive pulmonary disease.

Our Take

We believe that more than its quarterly results, pipeline related development is more important for the company. The company’s pipeline has suffered huge setbacks related to tivozanib and ficlatuzumab in the last few quarters. In the near term, we believe that investor focus will remain on the company’s ability to secure lucrative partnership deal.

AVEO carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Endo International (ENDP) and Anacor Pharmaceuticals, Inc. (ANAC). While Endo sports a Zacks Rank #1 (Strong Buy), Anacor Pharma is a Zacks Rank #2 (Buy) stock.

Read the Full Research Report on ENDP
Read the Full Research Report on ANAC
Read the Full Research Report on AVEO
Read the Full Research Report on ALPMY

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