Aveo Oncology was all but left for dead a few years ago after an FDA advisory panel panned its experimental cancer drug, tivozanib. But the Cambridge, MA-based company showed a little life this morning, cutting a deal with Novartis that reflects some confidence in the types of things Aveo has been doing since.
As is often the case with drug licensing deals, most of the numbers in this deal are “bio-bucks,” or, downstream payments tied to various milestones: Aveo (NASDAQ: AVEO) is getting a $15 million cash payment from Novartis in exchange for worldwide rights to an antibody drug called AV-380, as well as any “modified or derivative forms” of the drug. Aveo could get another $311 million if the drug hits various goals, and royalties on sales if the drug is ever sold commercially.
Still, investors embraced the partnership, causing Aveo shares—which have been flirting with a potential delisting from the Nasdaq—to more than double in pre-market trading. The 120 percent gain Aveo was posting early this morning translates to a $2.64 per share price, which, if it held up, would be Aveo’s best closing price in more than two years.
For those unfamiliar with the Aveo story, the company spent more than a decade on drug R&D and was poised for it all to pay off in 2013, when an FDA panel reviewed tivozanib as a potential treatment for kidney cancer. Instead, the panel as a disaster: it was highly critical of Aveo’s trial design (patients taking another drug, sorafenib (Nexavar), ended up living longer than those on Aveo’s drug), and voted overwhelmingly that the company should have to run another one. The FDA later rejected the drug, shares plummeted, Aveo lost partner Astellas Pharma, and restructured. Michael Bailey, formerly Aveo’s chief business officer, now runs the company; Tuan Ha-Ngoc, Aveo’s founder and longtime CEO, resigned in January (he’s now chairman).
A lot has changed in cancer care over the past few years, most notably explosion of immunotherapy treatments. But nonetheless, Aveo hasn’t completely given up on tivozanib; it’s talked of potentially seeking approval of the drug in Europe later this year, and was cut other small partnership deals for tivozanib with Pharmstandard and Ophthotech (NASDAQ: OPHT). It’s also been trying to survive by advancing a few other drugs, like AV-380, an antibody that targets an inflammatory cytokine called growth differentiation factor 15. The company has been developing the drug as a treatment for cachexia, a condition in which muscles in the body break down and cause extreme fatigue and weakness—potentially as a result of cancer or a range of other diseases.
Aveo has yet to test AV-380 in humans, but now Novartis will pick up the costs for that effort.
“Novartis brings resources and expertise to bear on advancing this program, which we believe provides the optimal path forward toward realizing its full potential,” Bailey said in a statement.