The recent rejection of AVEO's kidney cancer drug, tivozanib, by FDA advisory committee caused a significant drop the stock price. In this article, we are going to analyze the current status of this stock and look at the future of the company.

First let's look at the history and background of the compound and deal.

Tivozanib, an oral vascular endothelial growth factor (VEGF) inhibitor, is co-developed by AVEO Pharmaceuticals and Astellas Pharmaceuticals. VEGF stimulates blood vessel growth and is a vital process in the progression and metastasis of cancer. Blocking VEGF pathway is an effective anticancer method. Tivozanib potently inhibits all three VEGF receptors. It can not only be used for treatment of renal cancer, but also has potential for other solid tumors. Due to good phase II result in RCC treatment, Astellas and AVEO have reached a deal of 1.4 billion milestone payment after get approval. And, AVEO will retain the commercialization authority of US market and Astellas received the authority of Europe.

In the coming section of this article, we are going to review the pharmacological properties and clinical results

1. Pharmacological properties of Tivozanib [1]

Preclinical study shows that Tivozanib potently inhibits all three VEGFRs compared to the other earlier discovered TKIs and has strong selectivity on VEGFRs which leads to fewer side effects. The characteristics of Tivozanib are listed below:

(1) Long t1/2, 108 - 122 hours, good for once a day dose treatment.

(2) No food effect.

(3) Less drugs -drug interaction over other TKI inhibitors.

 

Figure 1. IC50 comparison of different VEGFRs

2. Median progression-free survival (PFS) and Median overall survival (OS) results from study of 301 [1]

Progression-free survival refers to the length of time during and after medication and treatment during which the cancer being treated doesn't get worse.

Median overall survival (OS) refers to the length of time from the start of treatment for a disease, such as cancer, that half of the patients in a group of patients diagnosed with the disease are still alive.

In 301 study, the trial met primary median PFS end point with 11.9 months in Tivozinab arm and 9.1 months in the sorafenib control arm (P value = 0.0042).

In 301 study, the median OS of Tivozinab arm and Sorafenib control arm are statistically no difference (P value = 0.105) based on type one error (α) = 0.05, and they are 28.8 months and 29.3, respectively. If comparing all median OS data of other VEGFRs (in Tablet 1), we can see that they are almost the same. Interestingly, median OS data of sorafenib is only 17.8 month using placebo as control. The non-statistical favorite of median OS data of sorafenib arm can be explained by the next-line treatment. In 301 study, 63% patients received tivozinab in sorafenib control arm as next-line treatment due to progress of disease (PD), while in tivozinab arm, only 13% of patients has been switched to sorafenib due to PD. Normally, combined treatment of cancer with multiple agents always provide better therapeutic effect and longer median OS value.

Table 1. Improvement of overall survivals of RCC agents

 

3. Active clinical trials of AVEO on cancer treatment [2]

AVEO are actively performing several clinical testing of Tivozanib on different type of cancers as below:

(1) Non-small lung cancer

(2) Colon cancer and advanced G.I. cancer

(3) Non-resectable soft tissue sarcromas

(4) Comparison with Sunitinib on treatment of metastatic renal cancer

(5) Comparison with Sorafenib on treatment of metastatic renal cancer

4. Future of AVEO

Due to the rejection of Tivozanib by FDA advisory committee, stock price of AVEO dropped more than 70% last week. We are all wondering what will be the future of AVEO Pharmaceuticals. In the last section of this article, we are going to discuss several possibilities of the company.

(1) Reach an agreement with FDA on post approval study

There is still a little chance for AVEO Pharmaceuticals to communicate with FDA to reach a post approval study agreement due to Tivozanib's good PFS results and good safety profile.

(2) Start a second Phase III trial based on FDA's suggestion

In July, FDA could totally formally reject Tivozanib and AVEO has to start another Phase III trial based on FDA's requirement. This will take another 3 years to collect OS data.

(3) Avoid Phase III trial by accomplishing the comparison trial versus Sunitinib with good result

AVEO Pharmaceuticals is conducting a comparison trial with Sunitinib. The trial will be finished in February 2014. There will be three possible different outcomes of the results.

First, Tivozanib shows exceeding results compared to Sunitinib, then, no further phase III trial will be needed for FDA approval.

Second, Tivozanib shows the same effect as Sunitinib. In this case, there is no further phase III trial will be needed also for FDA approval.

Third, Tivozanib shows the worse effect compared to Sunitinib. The phase III trial needs to be accomplished to get FDA approval.

(4) Buy out buy Astellas Pharmaceuticals or other big pharmaceutical companies

Tivozanib is highly selective and highly potent VEGFRs inhibitor. Although it hadn't get approval by FDA, it is still a good compound with good efficacy and good safety profile. Finally, it will be approved on renal cancer treatment after finished the phase III trial. And, it also can be used to treat other solid tumors. Due to its low drug-drug interaction, Tivozanib is a very good compound for combination cancer therapy.

As we know, the deal between Astellas and AVEO is 1.4 billion US dollars if Tivozanib was approved. Currently, the market value is only about 120 million US dollars. By offering 5 dollars per share to buy out AVEO, only 255 million US dollar will be needed. Since the company has 191 million US dollars of cash currently, the acute cost for this purchase is only 64 million US dollars. Currently, Astellas had paid AVEO for about 240 million. Then, the total cost for this buy out is only 304 million US dollars. Compared to 1.4 billion milestone payment, this is an 80% discount.

In summary, current stock price of 2.75 is much lower than its cash value of 3.60 (from yahoo finance). It has been heavly oversold. Further, Tivozanib is still a good compound for cancer treatment due to its high selectivity and high potency. It is also a good choice for combination treatment for cancer therapy to improve clinical effect of marketed drugs or prolong their market life. This compound has high potential to be an effective anti-tumor drug to get approval by FDA and EU.

Reference: [1] Tivozinab hydrochloride in advanced renal cell carcinoma, Advisory committee briefing materials: available for public release, FDA website.

[2] Current clinical trials in Clinicaltrials.gov.