AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO)' announced yesterday that the Food and Drug Administration rejected its kidney cancer drug tivozanib.
No surprise there. The briefing documents for the advisory panel meeting expressed the FDA reviewers' negative opinion, and tivozanib's fate was sealed when the committee voted 13-1, recommending against approving the drug.
What is a little surprising is that shares of AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) jumped 8% on the news and are up another 6% today.
But only a little.
Call it a "cover the short on the news." Not as catchy as "sell the news," but it works in the other direction as well. After the advisory committee meeting, AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) stock continued to fall, and the bump over the last two days puts it about where it traded after the meeting.
I certainly didn't see anything in the rejection announcement nor today's conference call that would make AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) worth more after the rejection. To get tivozanib approved for kidney cancer, the FDA wants a new clinical trial since the overall survival data was confounded -- to say the least -- by patients crossing over from the control group to take tivozanib as well.
But AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) and its partner Astellas don't plan to fund any further trials in kidney cancer. Tivozanib is dead as a treatment for kidney cancer.
Long road AVEO is currently trading substantially below the $192 million in cash and equivalents it had at the end of the first quarter because investors know AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) has a long road ahead. It's going to burn through all of that cash and probably substantially more before tivozanib is approved.
The drug is in two phase 2 clinical trials, one for colon cancer and another for breast cancer. The colon cancer data is due next year but is a bit of a long shot since tivozanib inhibits VEGF pathway, which hasn't been a particularly good target in colon cancer.
More promising is the potential to treat triple negative breast cancer patients who are missing the estrogen receptor, progesterone receptor, and don't overexpress HER2. It's a small chunk of the breast cancer market, but there's an unmet need, so a small gain would be meaningful. Data from that trial aren't expected until the end of next year.