Aveo Oncology’s workforce is now bearing the brunt of the collateral damage from the company’s failure before an FDA advisory panel in May.
The Cambridge, MA-based biotech has outlined a sweeping restructuring plan that will involve slashing 140 jobs—roughly 62 percent of its employees. Aveo (NASDAQ: AVEO) expects to save about $190 million over the next two years through the cuts, a figure that includes between $7.5 million and $8.5 million in restructuring charges.
Aveo had about $192 million in cash at the end of the first quarter and expects to have roughly $115 million on hand at the end of the year. Aveo said the new cuts will give it about two years’ worth of cash going forward.
“This restructuring is designed to preserve financial resources in order to support the development of Aveo’s products and pipeline,” Aveo president and CEO Tuan Ha-Ngoc said. “These were very difficult decisions that were undertaken only after careful consideration.”
Aveo will host a conference call early Wednesday to discuss the strategic direction of the company.
On May 2, Aveo saw an advisory panel vote 13-1 that the company would have to run another late-stage clinical trial for its lead drug, tivozanib, before winning approval from regulators as a kidney cancer treatment.
Though tivozanib met the main goal of Aveo’s late-stage clinical trial by keeping tumors from spreading longer than Onyx and Bayer’s approved drug, sorafenib (Nexavar), the panel was highly critical of Aveo’s trial design and the fact that patients that took sorafenib lived longer than those taking tivozanib.
The FDA weighs the input of its advisory committees when deciding whether to approve a drug, and the vote made it all but certain that the agency would reject the drug when its deadline to review tivozanib comes up in July.
Three weeks later, development partner Astellas Pharma dropped plans to support a filing in Europe for the drug, as well as its financial support for tivozanib in kidney cancer.
Aveo will now turn its attention to developing tivozanib to treat colorectal and breast cancer, where it still has the backing of Astellas.
Aveo completed patient enrollment for a mid-stage colorectal cancer study earlier this year and expects results in 2014. It is currently enrolling patients in a mid-stage breast cancer study and expects to have data readouts in late 2014 or early 2015.
Aveo plans to use the cash from the restructuring to complete those trials, find a collaboration partner for another experimental cancer drug, ficlatuzumab, and develop an additional cancer drug in early-stage testing known as AV-203.
Aveo also said executive vice president and chief operating officer Elan Ezickson will resign on July 31.
Aveo shares closed at $2.49 on Tuesday. They traded at more than $8 apiece before the advisory panel’s vote.