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risky as some had feared,” Ha-Ngoc said. He added that investors would rather buy into his firm’s stock now rather than wait until after the company reveals initial results of its lead kidney cancer trial, which, if positive, could drive up the price of its shares.
To talk to Ha-Ngoc is to hear insights from a biotech executive who understands how past and future events are tied together. He explained how his company stock’s upward price swing might be linked to his initial talks with public buyers—some of which occurred years before he and his colleagues officially took to the IPO trail late last year.
For example, public stock buyers always asked the CEO why they should buy Aveo’s stock in the IPO rather than waiting until the firm needs cash in a follow-on financing, when its shares could potentially be scooped up at a lower cost. Ha-Ngoc’s answer was that in the IPO the firm planned to raise (and now in fact has) enough money to operate through mid-2012, and its next stock sale wouldn’t be until after it reports top-line data from the late-stage study of tivozanib. In some cases, companies spend up to 18 months recruiting patients into large cancer drug trials, which can force some firms to go back for follow-on financing before they reach a binary event like reporting results from the trial, Ha-Ngoc says.
That won’t be the case for Aveo, though. The firm has finished recruitment for its 500-patient study (which might actually end up a 515- or 520-person trial), and its first results are expected to be available about a year before the company’s estimated current war chest of roughly $90 million is depleted. In the study, the firm is testing its drug head-to-head with Bayer’s and Onyx Pharmaceuticals’s sorafenib (Nexavar). Aveo says that patients who took its drug in its mid-stage study, which included 272 participants, had median progression-free survival of 11.8 months. Compare that with 5.5 months of medial progression-free survival for patients who took Nexavar, according to data from Onyx. Still, Aveo faces the challenge of providing similar benefits to patients in its larger Phase III trial.
The promise of tivozanib—which Aveo licensed from Japan’s Kyowa Hakko Kirin in December 2006—is to thwart a tumor’s ability to develop the blood vessels it needs to grow without causing lots of side effects. In the Phase II trial, which was completed last year, Aveo found that there were relatively low numbers of patients who experienced side effects usually associated with targeted cancer drugs, such as fatigue and digestive tract inflammation.
Presumably, investors are banking on positive results from the firm’s lead kidney cancer drug trial to drive up the value of their Aveo shares further still. Until the data is reported, we won’t know whether the stock price is destined make an even bigger jump or fall hard.