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AVEO Pharmaceuticals (AVEO) Q1 Loss Wider Than Expected

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AVEO Pharmaceuticals, Inc. (AVEO - Free Report) reported first-quarter 2018 loss of 8 cents per share, wider than the Zacks Consensus Estimate of a loss of 7 cents but narrower than the year-ago loss of 12 cents. However, excluding gains related to a change in fair value of warrant liability, the company reported a loss of 6 cents per share.

AVEO’s first drug, Fotivda (tivozanib) received EU approval in August 2017 for the first-line treatment of advanced renal cell carcinoma (“RCC”). The company is focused on launching the drugs in the European countries. Currently, the drug is available in Germany, Austria and the United Kingdom. The company is entitled to receive double-digit royalty payments from EUSA Pharma on net sales of the drug in Europe. However, Fotivda is not yet approved in the United States for RCC.

The company did not record any Fotivda sales during the quarter. AVEO’s top line comprises collaboration and licensing revenues and partnership royalties. Total revenues in the first quarter were approximately $1 million, down 59.5% from the year-ago figure. Revenues were almost in line with the Zacks Consensus Estimate of $0.98 million.

Shares of the company crashed 10% on May 8, presumably as the company said it is postponing the data readout from key phase III TIVO-3 study. AVEO’s share price movement shows that the stock has underperformed the industry so far this year. Specifically, the company’s shares have lost 20.3% compared with the industry’s decrease of 11.9%.

Operating Expenses

Research & development expenses were down 32.1% to about $5.4 million. However, general and administrative expenses increased 12% year over year to $2.6 million.

Cash Guidance

AVEO expects that its present cash resources of $27 million will allow the company to fund its planned operations through the first quarter of 2019.

Pipeline Updates

Concurrent with the earnings release, the company announced that it is deferring the anticipated topline data readout from TIVO-3 study evaluating Fotivda in first-line RCC in the third quarter of 2018. It was previously expected in the second quarter. AVEO is conducting the study to address the overall survival concerns from the TIVO-1 study identified by the FDA. Data from TIVO-3 study along with TIVO-1 study will be included in the regulatory application for approval of Fotivda in the United States.

In April, AVEO announced the launch of Fotivda by its partner EUSA Pharma in Austria. In February, the drug was launched in the United Kingdom which triggered a milestone payment of $2 million from EUSA Pharma.

In February 2018, AVEO announced data from the phase II portion of TiNivo study evaluating tivozanib in combination with Bristol-Myers’ (BMY - Free Report) PD1 inhibitor, Opdivo, in metastatic RCC. Data from the study showed that 64% patients achieved ORR. The disease control rate achieved by the combination therapy was 100%. In January, data presented from a phase I/II study evaluating Fotivda in advanced hepatocellular carcinoma showed that Fotivda achieved a median PFS of 5.5 months at week 24. The median OS achieved was 7.5 months.

Apart from Fotivda, AVEO is also developing ficlatuzumab in combination with Lilly’s (LLY - Free Report) Erbitux in a phase II study for treating metastatic head and neck squamous cell carcinoma. Another phase Ib study is evaluating ficlatuzumab in combination with Nab-paclitaxel and gemcitabine in treatment-naive pancreatic cancer. These studies were initiated in December last year.

Other Updates

In February, the company appointed industry veteran, John H. Johnson, with over 30 years of experience to its board of directors.

In January, AVEO announced that it has refinanced its existing debt facility of $20 million with Hercules Capital. The company said that the terms of the new facility will help it to have an additional $12.1 million in cash flow over 2018 and 2019 compared to the prior loan.

AVEO Pharmaceuticals, Inc. Price, Consensus and EPS Surprise

 

AVEO Pharmaceuticals, Inc. Price, Consensus and EPS Surprise | AVEO Pharmaceuticals, Inc. Quote

Zacks Rank & Stock to Consider

AVEO currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the health care sector is Ligand Pharmaceuticals Incorporated (LGND - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ligand’s earnings per share estimates moved up from $4.40 to $4.43 and remained stable at $5.32 for 2018 and 2019, respectively, in the last 30 days. The company pulled off a positive earnings surprise in three of the last four quarters with an average beat of 24.88%. The company’s stock is up 14.9% so far this year.

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