AVEO Pharmaceuticals (AVEO) Q4 Loss Widens, Shares Down

AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) reported fourth-quarter 2017 adjusted loss of 8 cents per share (excluding gains due to a change in fair value of warrant liability), wider than the Zacks Consensus Estimate of a loss of 2 cents as well as the year-ago loss of 13 cents. However, including gains related to a change in fair value of warrant liability, the company reported earnings of 3 cents.

AVEO’s first drug, Fotivda (tivozanib) received EU approval in August 2017 for the first-line treatment of advanced renal cell carcinoma (RCC). Subsequently, in November 2017, AVEO along with its partner EUSA Pharma, launched the drug in Europe, starting with Germany. 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.

AVEO’s top line mainly comprises collaboration revenues, milestone and other payments. Total collaboration revenues in the fourth quarter were approximately $0.08 million, down 20% compared with the year-ago figure. Revenues missed the Zacks Consensus Estimate of $1 million.

Shares of the company have declined more than 4% on Mar 13, following the earnings release, due to wider loss and lower sales. However, on a year-to-date basis, AVEO’s share price movement shows that the stock has outperformed the industry. Specifically, the company’s shares have gained 3.9% compared with the industry’s increase of 3%.

Quarterly Highlights

Research & development expenses were down 26% to about $5.7 million. However, general and administrative expenses increased 26.3% year over year to $2.4 million.

Pipeline Updates

In October 2017, AVEO announced results of a pre-planned futility analysis of phase III TIVO-3 study, comparing Fotivda to Bayer’s (OTC:BAYRY) Nexavar, as treatment for patients with refractory advanced RCC. Based on the results, the company will continue the study unmodified. The data from this study along with the previously completed TIVO-1 study will support the regulatory application for approval in the United States.

In December 2017, the company announced the completion of enrollment in phase II portion of phase Ib/II TiNivo study, evaluating Fotivda in combination with Bristol-Myers’ (NYSE:BMY) Opdivo in RCC. The company expects to provide updates from the study in the second half of 2018.

Apart from Fotivda, AVEO is also developing ficlatuzumab in combination with Lilly’s (NYSE:LLY) 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.

2017 Results

Full-year sales stood at $7.6 million, missing the Zacks Consensus Estimate of $11.3 million. However, the top line drastically increased 204% compared with the year-ago figure of $2.5 million.

The full-year earnings of 61 cents per share were narrower than the Zacks Consensus Estimate of 64 cents. However, the bottom line is wider than the year-ago loss of 39 cents.

Cash Guidance

AVEO expects that its present cash resources of $33.5 million will allow the company to fund its planned operations through the first quarter of 2019.

Zacks Rank

AVEO carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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