Aveo Pharmaceuticals Inc (AVEO) 2010 Q2 法說會逐字稿

Thank you for holding for AVEO Pharmaceuticals second quarter 2010 financial results conference call. At this time, all participants are in listen only mode. Following the formal report, AVEO management will open the line for questions and answer period. Please be advised that this call is being taped on the Company's request and will be archived on the Company's website for two weeks from today. At this time, I would like to introduce Ms. Monique Allaire. Please proceed.

Thank you, Operator, and good morning, everyone. Welcome to today's call. My name is Monique Allaire, Associate Director of Investor Relations at AVEO Pharmaceuticals. With me here today are Tuan Ha-Ngoc, our President and Chief Executive Officer; David Johnston, our Chief Financial Officer; and, Dr. Bill Slichenmyer, our Chief Medical Officer. In addition, Elan Ezickson, our Executive Vice President and Chief Business Officer will be joining us for the Q and A session. In today's call, we'll be reviewing our second quarter 2010 financial results and discussing recent achievements. The press release detailing our results was issued earlier this morning and is available on our website at www.aveopharma.com.

Before I turn the call over to management, I would like to remind you that certain remarks we will make today about AVEO's future expectations, plans and prospects constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. These include statements related to estimates of our 2010 financial performance, the efficacy and combinability of Tivozanib and its potential and various indications, including the renal cell carcinoma market, enrollment in TIVO-1 strategic alliances providing us with future revenue and our ability to discover, develop and commercialize new oncology products and create shareholder value.

Actual results may differ materially from those expressed or implied by our forward-looking statements. These risks and uncertainties are described in the Risk Factor Section of AVEO's most recent quarterly report on Form 10-Q filed with the SEC and available online at sec.gov. All of the information in this conference call is as of today, July 29, 2010, and should not be relied upon as representing AVEO's views on any date in the future. While we may choose to update these forward-looking statements in the future, we disclaim any obligation to do so. With that, let me turn the call over to our CEO, Tuan, to start us off.

Thank you, Monique. And good morning everyone. Thank you for joining us for our second quarter results conference call. We are now halfway through the year and I want to start by reviewing where AVEO stands today.

We are very strong with three key assets that we believe position us well to sustainably discover, develop and commercialize new oncology products and thereby create shareholder value. First is our lead product candidate, Tivozanib, a small molecule triple VEGF receptor inhibitor with a highly differentiated profile. Earlier this year we launched at TIVO-1 study, a pivotal Phase III clinical trial evaluating Tivozanib in patients with advanced renal cell carcinoma or RCC. Bill Slichenmyer, our Chief Medical Officer, will expand more on this trial, but I want to say that we are very happy with the progress to date.

Importantly due to mechanism action of Tivozanib, we believe that this product has significant potential not just in RCC, but in many other indications where VEGF receptors play an important role. We have multiple ongoing studies with Tivozanib in additional indications and are planning for more studies in the future.

As a reminder, we hold exclusive worldwide rights outside of Asia for the marketing of Tivozanib in RCC and all indications. And recently, the EMA granted AVEO orphan medicinal product designation for Tivozanib for the treatment of RCC in the European Union. This program holds exciting opportunities for AVEO. However, we are developing more than just Tivozanib. AVEO is committed to maintain a diverse portfolio of product candidates at various stages of development, which brings me to our second key asset, our antibody pipeline.

We have a number of antibody programs in development, ranging from discovery as with our RON and Notch programs through Phase II as with our HGF/c-Met inhibitor, AV-299. Further, we have established strategic alliances around some of these antibody programs which have been essential sources of capital for the company to date. We believe these alliances will continue to be sources of future revenue, enabling us to invest in the development of our programs.

Lastly, we have a novel cancer biology platform that we are using in multiple ways which includes improved preclinical modeling approaches to cancer drug development. Our platform was featured in a recent issue of Nature Reviews Cancer. We were delighted to collaborate on this article with our co-founders as well as top academics in oncology space which concluded that improved preclinical modeling approaches in industry, including novel mouse models, may have paved the way for much needed, more efficient and accurate preclinical models for therapeutic testing. So as I have stated before, AVEO's in a strong position today with a number of key assets that position us well for success. With that as a background, I'll pass the call over to Dave to review our financial results. Dave?

Thanks, Tuan. Good morning everybody and thanks for joining us today. We issued a press release this morning detailing our financial results so let me just briefly recap the highlights for you. Total revenues for the second quarter were $15.6 million, primarily reflecting license fees, research and development funding and milestones from our strategic alliances. Included in these milestones was an $8.5 million payment from Merck for the start of Phase II development with the AV-299 program. Bill will provide more detail on this program in just a minute.

R&D expense for the second quarter was $26 million which was largely driven by clinical costs associated with our TIVO-1 program including about $9.0 million for the purchase of the comparator drug, Nexavar, this quarter. G&A expenses $3.8 million for the second quarter and our net loss was $15.5 million, or about $0.50 per share, based on 30.8 million weighted average shares outstanding.

Lastly, we ended the second quarter with $107 million in cash and marketable securities. Today we are reaffirming our previously provided financial guidance for 2010. Based on our current operating plan, we expect to end the year with at least $50 million in cash and marketable securities. With that, let me turn the call over to William to talk us through our clinical stage pipeline.

Thank you, Dave. Let me start with a review of our lead clinical candidate, Tivozanib. Tivozanib has demonstrated excellent potency and selectivity for inhibiting VEGF receptors one, two and three. We initiated TIVO-1 based on strong Phase II data in a corresponding subset of patients with clear cell RCC who had undergone a prior nephrectomy. The median PFS for this subset of patients was 14.8 months and Tivozanib was well tolerated in the study with a low rate of off-target toxicities. These findings led us to launch TIVO-1, a global, randomized controlled trial comparing Tivozanib to Sorafenib, also known as Nexavar, in patients with advanced RCC. The study has a 90% power to detect a three month improvement in PFS with an alpha level of 0.05 which gives a planned sample size of 500 patients.

The primary endpoint of the trial is PFS and secondary endpoints include overall survival, objective response rate, safety and quality of life. We understand the need for excellent clinical execution and our team has done a great job in the design, development and implementation of this trial. In TIVO-1, Tivozanib is being administered at the same dose and on the same schedule as it was in the Phase II study.

As a prerequisite for enrollment, we are requiring independent, central review of the CT scans for all patients to ensure that they meet the eligibility criteria regarding measurable disease. During treatment, scans are obtained every 8 weeks and, again, are centrally reviewed by blinded, independent reviewers.

The study design was discussed with the FDA and the EMA and is consistent with the feedback that we received from both agencies. The study has been going well so far. Enrollment is ahead of schedule and we expect to update you on that once it has been completed.

Importantly, we believe there is broad applicability with Tivozanib beyond RCC. Its promising tolerability and efficacy profile suggests a strong potential for combinability with chemotherapies and other targeted agents. We currently have multiple clinical studies underway, evaluating Tivozanib as a single agent and in combination with approved agents in gastrointestinal, metastatic breast and lung cancers. We expect to present Phase Ib data from the studies in GI and metastatic breast cancers by the end of the year. We expect that the results of these and other trials will inform our development plans for Tivozanib in additional indications.

Beyond Tivozanib, we have a pipeline of antibody programs coming out of our proprietary platform that have broad potential in many types of cancer. Our lead antibody, AV-299, also known as SCH 900105, is a potential first-in-class inhibitor of hepatocyte growth factor, or HGF. This is a protein that activates its receptor, c-Met. Data indicate that increased HGF, or c-Met signaling, contributes to the resistance of tumors to targeted agents including Tarceva and Iressa. At ASCO, we reported results from our dose escalation Phase I study of AV-299 as a single agent in 37 patients with a variety of solid tumors. Results show that AV-299 was well tolerated with no dose-limiting toxicities up to the highest dose tested, 20 mg/kg. Additional studies with AV-299 demonstrated that it has good combinability with Tarceva and Iressa.

Based on these findings, AVEO recently launched a multi-center randomized controlled trial, a Phase II study comparing AV-299 in combination with Iressa to Iressa alone in patients with non-small cell lung cancer. The primary endpoint of the study is objective response and secondary endpoints include PFS and overall survival. Patients who demonstrate disease progression during treatment with Iressa alone may cross over to the combination arm to receive Iressa plus AV-299.

Additional trials are underway evaluating AV-299 in patients with multiple myeloma and in patients with solid tumors including those with liver metastases. We are also deploying our novel biomarker research in this program and have an effort underway to develop biomarkers that would help to identify patients with HGF and c-Met driven tumors, further guiding in which indications and combinations we will move next with AV-299.

Lastly, I'll briefly mention our newest clinical candidate, AV-203. This antibody targets ErbB3 which belongs to a family of proteins that include EGFR and Her2, both well-validated cancer targets. In preclinical studies, AV-203 significantly inhibits the growth of a number of different tumor types, including breast, prostate and pancreatic cancers. Now that we have selected the development candidate, we have initiated IND-enabling activities for AV-203. In conclusion, we are making excellent progress with Tivozanib, AV-299 and AV-203 and I will now pass the call back over to the operator to open it up for question and answer.

(Operator Instructions)

And your first question comes from the line of George Farmer from Canaccord. Please proceed, sir.

Hi, good morning, guys. A couple of questions. David, just on expenses, it looks like there was a big bump in Q2. Last quarter, part of those expenses included a milestone to Kirin, I believe, and now you're actually posting a higher expense for Q2. Is that a trend we should think about going forward and, if so, is that consistent with your cash guidance that you've given?

Good morning, George. The -- I'm looking here for one thing real fast -- is that -- it looks like actually compared to last quarter, the spending is actually a little down but it's roughly the same and last quarter we had the $10 million payment to Kirin. This quarter we had a $9 million acquisition of Nexavar and so the spending moving forward, I think, should ratchet down about by that amount if you were to look at the $9 and $10 million on a quarterly basis. And so, with that, I think that you would expect it not to continue at that level and to continue at a more normalized level. But did you also ask about does that affect the cash?

No, actually that answered my question. That's very helpful. And, thanks David. And, then moving on, Will, could you -- just about 299, I'm curious about why you chose to move forward into a randomized study with gefitinib rather that erlotinib at this stage and, also, regarding that trial, are you going to be selecting for patients with EGFR activating mutations. I take it "no," because otherwise, I think you would have said so, and is that something that you're going to be looking for in the study and how should we think about what we need from that trial in order to make a Phase III decision.

Yes. Thanks, George. So the study, the Phase II randomized trial in patients with non-small cell lung cancer, is being conducted at study sites in Asia and is restricted to patients who are non-smokers and the population is enriched for those who are expected to have mutated EGFR.

Okay.

That is not a restriction for eligibility for the study. And the study, in many ways, resembles the recently published IPASS trial, so because gefitinib is well established as the standard of care in Asia, we have chosen it as the comparator -- I should say the combination agent in that study. We will be measuring EGFR mutation status, getting genotypes for the patients in the trial, along with other biomarkers and do plan to analyze the data broken down by mutation status as well as some of the other biomarkers we're looking at.

Okay, thanks very much.

(Operator Instructions)

And your next question comes from the line of Howard Liang from Leerink Swann. Please proceed.

Thanks very much. First, regarding the enrollment. I think your comment was that it was ahead of schedule. Can you just -- I wonder if you can provide more color whether all of the sites are up and running sort of a -- any color will be helpful.

Sure. Hi, Howard. We, at this point, have 86 study sites that are actively enrolling patients and so things are, as we said, moving ahead of schedule and we do plan to update you all once we have completed enrollment. But at this point it's our policy not to get into details of the enrollment on a month-to-month basis.

I'm sorry, what are the total number of sites that you planned on?

We have 86 sites that are active. We had initially anticipated a total of 97 for the study.

Okay. On the -- just on the additional indications -- the second indication for Tivozanib. I'm wondering if you have updated thoughts on what it might be, given the recent breast cancer panel on Avastin. I don't know whether you consider it to be positive or negative for Tivozanib.

Yes. So we have been very interested in -- breast cancer is one of several future opportunities for Tivozanib but some of the other possibilities include lung cancer, colorectal or other GI malignancies and breast remains of interest to us, in part, based on data with Avastin but also based on data with some other VEGF inhibitor drugs as well as some of our own preclinical data which have given us a very strong indication that breast cancer is likely to be one that is responsive to treatment with Tivozanib. We are anticipating kicking off a trial later this year that will move us forward in the next indication and we plan to make that announcement once we have gotten that study underway.

Okay, great. And then a question for Dave. Just to follow up on or comment on the Nexavar purchase of $9 million. I think there was another purchase -- maybe in the fourth quarter or sometime -- previously. I wonder if this all the Nexavar you need for the trial.

You know, this quarter's at $9 million. We actually had decided to space the purchases out in tranches and the $9 million is actually two purchases that were done in the second quarter. There will be another purchase done but it won't be anywhere near as large. It will be the final purchase. It's actually been purchased and it's in pre-paids and it will be recognized as it's needed either in the third or fourth quarter. So there will be -- I think it's about another $3 million or so, but it's certainly not at this size and then that would wrap it up.

Okay, great. Thanks very much.

Sure.

And this concludes the question and answer session and I will now like to turn the call over to Mr. Tuan Ha-Ngoc for closing remarks.

Thank you, Operator. As you heard today, we believe we are well on our way to meeting our clinical and corporate goals for 2010. We have multiple assets with significant market opportunity and a platform designed to sustainably build a pipeline in the years to come. And thank you everybody for joining us.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.

Thank you, Operator.

My pleasure.