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AVEO Pharmaceuticals Posts Narrower-than-Expected Loss - Analyst Blog

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AVEO Pharmaceuticals, Inc. AVEO reported a second-quarter 2015 loss of 10 cents per share, much narrower than the year-ago loss of 35 cents and the Zacks Consensus Estimate of a loss of 16 cents.
 

Aveo Pharmaceuticals Inc. - Earnings Surprise | FindTheBest



AVEO does not have any approved product in its portfolio. The company recognizes revenues in the form of collaboration revenues and milestone payments. The company’s total collaboration revenue in the second quarter of 2015 was $0.1 million, down from $1.8 million in the year-ago quarter. Higher revenues in the prior-year quarter included revenues recognized from Astellas Pharma, Inc. ALPMY.

We remind investors that tivozanib was returned to AVEO by Astellas in Aug 2014. AVEO had a collaboration and license agreement with Astellas for the development and commercialization of tivozanib. However, Astellas chose to exercise its right to terminate the collaboration agreement.

AVEO has made significant progress with its lead pipeline candidate, tivozanib, which is currently in late-stage development. The company is currently looking to submit a marketing authorization application for tivozanib for the treatment of renal cell carcinoma. The company is also developing the candidate for metastatic colorectal cancer. During the second quarter, AVEO received a written feedback from the FDA regarding a potential pivotal study for tivozanib for the treatment of colorectal cancer. The FDA recommended that the company continue to work on the development of its biomarker assay to address variability between assays presented.

Meanwhile, in Aug 2015, AVEO inked an exclusive license agreement with Pharmstandard for the development, manufacturing and commercialization of tivozanib in the territories of Russia, Ukraine and the Commonwealth of Independent States, for all indications excluding non-oncology ocular conditions.

Research & development expenses declined 80.2% year over year to $1.8 million. General and administrative expenses decreased 40.4% year over year to $2.9 million.

Our Take

AVEO’s performance in the second quarter was impressive with the company reporting a narrower-than-expected loss. Following the termination of the Astellas deal, AVEO is looking for partnerships for tivozanib development in colorectal cancer. We expect to see more tivozanib related agreements in the near term.

AVEO carries a Zack Rank #3 (Hold). Some better-ranked stocks in the health care sector are Valeant Pharmaceuticals International, Inc. VRX and Infinity Pharmaceuticals, Inc. INFI. While Valeant carries a Zacks Rank #1 (Strong Buy), Infinity Pharma holds a Zacks Rank #2 (Buy).

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