AVEO Pharmaceuticals' (AVEO) Q3 Loss Lower Than Expected

AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) reported a third-quarter 2016 loss of 7 cents per share, narrower than the Zacks Consensus Estimate of a loss of 12 cents. The company had reported earnings of 14 cents per share in the year-ago period.

AVEO does not have any approved products in its portfolio. The company’s top line mainly comprises collaboration revenues, milestone and other payments. Total collaboration revenue in the third quarter was approximately $1 million, compared with $15.2 million in the year-ago quarter.

Quarterly Highlights

Research & development expenses were $4.4 million, compared with $4.5 million in the year-ago period. General and administrative expenses also decreased 3.8% year over year to $2.1 million.

During the quarter, AVEO announced the initiation of a phase I/II study (TiNivo) evaluating its lead pipeline candidate tivozanib, in combination with Bristol-Myers Squibb Company’s (NYSE:BMY) Opdivo (anti-PD-1 therapy), for the treatment of advanced renal cell cancer (RCC). Initial safety results from the phase I portion of the phase I/II study should be out in the first half of 2017.

AVEO is also comparing tivozanib to Nexavar in a randomized, controlled, multi-center, open-label pivotal phase III study (TIVO-3) for the treatment of patients with refractory advanced RCC. Top-line data from the study is anticipated in the first quarter of 2018. Results from the TIVO-3 study, along with the previously completed TIVO-1 study (first-line treatment of RCC), are expected to support a first- and third-line indication for tivozanib in the U.S.

Meanwhile, regulatory application seeking approval for tivozanib for the first-line treatment of advanced RCC is currently under review in Europe. The application was submitted by AVEO’s partner, EUSA Pharma. EUSA Pharma is currently working on submitting responses to the European Medicines Agency’s Day 120 List of Questions before the end of 2016.

AVEO expects that its cash resources will allow the company to fund its planned operations into the fourth quarter of 2017. AVEO also expects that these cash resources, along with certain anticipated operational milestone payments from its collaboration partners, could allow the company to fund the U.S. tivozanib development strategy through at least TIVO-3 study top-line data as well as a tivozanib-PD-1 inhibitor combination study.

AVEO anticipates a milestone rich calendar over the upcoming months, across both its proprietary and partnered programs. We note that the company has retained significant North American rights for its oncology pipeline while its non-oncology pipeline is being advanced through several partnerships including the likes of Novartis AG (NYSE:NVS) .

Tivozanib’s approval in the EU would trigger a milestone payment to AVEO from EUSA Pharma.

AVEO PHARMACEUT Price, Consensus and EPS Surprise

Zacks Rank & a Stock to Consider

AVEO is a Zacks Rank #3 (Hold) stock. A better-ranked stock in the health care sector is Infinity Pharmaceuticals, Inc. (NASDAQ:INFI) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Infinity’s loss per share estimates narrowed from $3.84 to $3.79 for 2016 and from 87 cents to 86 cents for 2017 over the last 60 days. The company has posted a positive surprise in all of the four trailing quarters with an average beat of 67.62%.

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