Aveo Pharmaceuticals Inc (AVEO) 2010 Q3 法說會逐字稿

Thank you for holding for AVEO Pharmaceuticals Third Quarter 2010 Financial Results Conference Call. At this time all participants are in a listen only mode. Following the formal report, AVEO management will open the lines for a question and answer period. Please be advised that this call is being taped at 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 Monique Allaire. Please go ahead.

Thank you, Alisa, 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 and David Johnston, our Chief Financial Officer, In addition, Dr. Bill Slichenmyer, our Chief Medical Officer and 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 third quarter 2010 financial results and discussing recent developments. The press release detailing our results was issued earlier this morning and is available on our website at 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 and plans including clinical developments and timelines and financial projections constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from our expectations.

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 November 4, 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 Tuan to start us off.

Thank you, Monique. And good morning everyone. Thank you for joining us for our third quarter results conference call. Over the last couple of months, AVEO has made significant progress that positions us well for achieving our vision of becoming a fully integrated cancer therapeutics company.

Our most recent news was execution of private placement financing which closed yesterday. Prior to that financing, AVEO had a strong balance sheet, finishing the third quarter with $87 million in cash and marketable securities. This financing strengthened our balance sheet further. We received net proceeds of approximately $57 million from the sale of 4.5 million shares of common stock at $13.50 per share. This price represents an approximate 7% discount to last Thursday's closing price the day before we priced the financing and more notably a 50% premium to our IPO price just eight months ago.

The added financial resources improve our flexibility as we look to maximize the value and development of our pipeline. Specifically, the added capital will enable us to drive forward three key initiatives central to our long term success.

First, we plan to accelerate and expand the clinical development of Tivozanib in parallel with a registration path in renal cell carcinoma as opposed to a more sequential development plan. In August we announced that we completed enrollment of Tivo-1, our global Phase III trial with our lead agent Tivozanib in patients with RCC 6 months ahead of schedule. This achievement, combined with Tivozanib's demonstrated safety and efficacy profile, gives us the confidence to move Tivozanib into the next indications as well as to further establish its differentiated profile.

Importantly, we believe there is a role for Tivozanib beyond RCC. We are currently evaluating its potential in breast and colorectal cancers and will be looking to initiate additional supportive studies that further differentiate Tivozanib. We will be reporting data with Tivozanib in combination with FOLFOX6 in GI tumors and colorectal cancer at the URTC meeting in Berlin later this month and then data of Tivozanib in combination with paclitaxel in metastatic breast cancer at the San Antonio Breast Cancer Symposium in December.

We believe that these data demonstrate a potential with Tivozanib to be combined with other agents at full doses, something that has proven very challenging with other VEGF-directed TKIs and further shows the distinctive profile of our agent.

The second initiative is to ramp up our pre-commercial efforts for Tivozanib. Again, with early enrollment of Tivo-1, all of our timelines in RCC moved up including the timing of top line data to mid 2011. We are expanding our internal infrastructure to prepare for the upcoming regulatory and commercial planning activities for Tivozanib starting with the appointment of Michael Bailey as our Chief Commercial Officer in September.

Michael is a great addition to our team with considerable experience building commercial organizations and leading the global launch of widely-used cancer therapies across multiple indications. This appointment represents our continued strategic growth and adds to the depth and breadth of our capabilities. In addition, we'll be increasing our external presence in the medical community to ensure a strong acceptance of Tivozanib by physicians and patients in the future.

The last key initiative is our regaining development responsibility for AV-299, our next most advanced clinical candidate. In September, we announced that we had regained worldwide rights from Merck for the development and commercialization of AV-299 upon HGF/c-Met pathway inhibitor, discovered through our proprietary human response platform. We are working with Merck and the full transition of this program to AVEO and are formulating our definitive plans for AV-299 moving forward.

Notably, we believe that the clinical findings with other agents in the space that targets c-Met, the sole receptor to HEF ligand, have provided validation that the HEF/c-Met pathway is an important therapeutic target. Here, data presented at ESMO, have shown that the combined inhibition of HEF/c-Met and EGFR could improve outcomes for patients.

AVEO is currently conducting a Phase II trial in Asia evaluating the combination of AV-299 with Iressa in first line patients with non-small cell known cancer. Data from this trial are expected in 2012. We believe in the potential AV-299 and we now have the financial flexibility to ultimately develop it moving forward.

So, in summary, we have two very promising (inaudible) late stage assets, a pipeline of antibodies in various stages of development, a platform for sustainable R&D and significant commercialization rights of all of our oncology products. We are making progress toward achieving our ultimate mission of bringing new treatment options to patients with cancer. Now let me turn the call over to our CFO, David Johnston, to review our financial results. Dave?

Thank you, Tuan. Good morning everyone and thanks for joining us today. This morning, we issued a press release this morning detailing our third quarter results and updated financial guidance so let me just briefly recap both of these for you.

Total collaboration revenues for the third quarter were $6.2 million, primarily reflecting license fees and research and development funding from our strategic alliances. Research and development expense for the third quarter was $20.3 million, which was largely driven by clinical costs associated with our Tivo-1 Phase III program for RCC.

G&A expense is $3.6 million for the third quarter and our net loss was $18.6 million, or $0.60 per share based on 30.9 million weighted average shares outstanding as of September 30. We have a very strong balance sheet. We ended the third quarter with $40 million in cash plus $47 million in marketable securities. As Tuan mentioned, just last week we announced a pipe financing which resulted in $57 million in net proceeds for the Company from the sale of 4.5 million shares of common stock at $13.50 per share.

With the net proceeds from this financing, we're providing updated guidance that we expect to end 2010 with at least $100 million in cash and marketable securities. We believe that this capital should provide us with the cash runway to the middle of 2012 based on our current operating plans and absent any partnering activities for Tivozanib. And importantly, the operating plans now include an accelerated and expanded clinical development strategy for Tivozanib, a ramp up of our pre-commercialization efforts for Tivozanib and assumption of responsibilities for the development of AV-299. In short, we're doing great and are working hard to move our programs forward. So with that, let me know pass the call back over to the operator and open it up for questions.

(Operator Instructions)

Your first question comes from the line of George Farmer with Canaccord. Please proceed.

Hi, good morning guys. Thanks for taking my questions. What should we be looking for in the Phase I trials that you are going to be reporting in November and December?

Good morning, George. Maybe Bill can answer that question?

Yes, hi, George. This is Bill Slichenmyer, the company's Chief Medical Officer. And the trials that we'll be reporting later this year -- one is a study that is a Phase Ib trial combining Tivozanib with the FOLFOX6 combination. This was a dose-escalation trial in patients with gastrointestinal malignancies and including patients with colorectal cancer. And so what we'll be presenting at the NCI EORTC meeting are updated results from that trial, which is still ongoing, but it will include information about safety, pharmacokinetics and some reports of anti-tumor activity from that study.

Regarding the combination trial with paclitaxel that Tuan mentioned, will be presented at the San Antonio Breast Cancer Symposium in December. It's a similar situation. We will be presenting safety and some evidence of anti-tumor activity in a dose-escalation trial.

The good news about both of these studies is that we've been very successful in escalating the doses of Tivozanib with full doses of either the combination regimen or drug and full doses of both and the safety profile and the combinability profile of Tivozanib continues to look very encouraging for potential application in breast and GI malignancies in the future.

Okay. And so, Tuan, when you say you're going to be pursuing parallel development plans with Tivozanib, does that imply we're going to see some advanced stage studies moving forward next year with Tivozanib in other indications?

That's what we meant and obviously as a matter of practice and for competitive reasons, we will announce those studies once we (inaudible - background noise) the first patient.

Okay. Another question around 299 -- do you have any other development plans in mind, looking at other combinations or looking at other disease indications?

Bill?

Yes, and so regarding AV-299, our current ongoing Phase II trial is in patients with non-small cell lung cancer. I just want to mention that's at study sites in Asia and it's restricted to patients with adenocarcinoma histology and our non-smokers, a population for which we expect roughly half of the patients to have mutated EGFR, roughly half of [wild] type. We are considering alternatives to move ahead in other tumor types and perhaps with other combinations but we've not yet made any decisions about exactly what those plans will be.

Great. And one last question. David, were there any milestones recorded in Q3? And if not, should we think about the revenue book from your collaborators as kind of a baseline run rate given the current collaborations that you have?

Thanks, George. We didn't have any specific milestones but in our revenue number we did have -- keep in mind the accounting amortizes milestones so of the $6 million revenue, about $2.5 million of it was advertised milestones that we'd had prior. In terms of looking forward as this is sort of baseline, it's hard to say because we have a history of achieving milestones and what we've seen over time is that our revenue line is somewhat lumpy in terms of when we achieve the milestone there's an increase and then there will be several quarters where there are no significant milestones and it will fade off again. But I think that you could look to this as a typical quarter that didn't have any specific milestones, yes.

Your next question comes from the line of Geoff Meacham of JPMorgan. Please proceed.

Hey guys, thanks for taking the question. So a question for you on Tivozanib and renal, are they any updates to the plans for a (inaudible) comparator? Are you guys still planning on starting this maybe in the -- either in the post-marketing or after data and is there any update to maybe the FDA's view about the comparators? And I have a follow-up.

Hi, Geoff. Bill Slichenmyer again. And at this point we're moving ahead with the Tivo-1 trial which, as you know, is a head to comparison against Nexavar in the first line setting in patients with clear cell RCC who have had a prior nephrectomy. We are in active discussions regarding what additional trials we may want to pursue in the future but have not yet finalized any of those plans but we are thinking about ways to maximize the value of Tivozanib in the RCC setting.

Geoff, I just want to clarify. I think that in ongoing discussions with the FDA we're still back to the understanding that we have both with the FDA and [NDA] that we're faced with a Tivo-1 study is sufficient providing that with the data that would be there and the top line data we're looking forward to the middle of 2011 that that study is sufficient for registration of Tivozanib.

No I was just checking to see if there's been any recent discussions on that. And then a follow up there is just with respect to partnering for Tivozanib. Where is -- where are you guys right now? Is it still a post-data kind of discussion, if partnering at all factors in the equation?

Geoff, Elan Ezickson here. Our view on a potential Tivozanib partnership really hasn't changed. We're going to continue to evaluate that as a long term strategic decision and not one driven by short term capital needs and certainly last week's financing reinforces our ability to make the right strategic decision so there continues to be a high level of interest here and we'll continue to evaluate those opportunities as they arise and basically just look to maximize the development and the value of the drug and we're not going to give any specific guidance as to exactly what we might do or when.

Okay, thanks a lot guys.

Thanks, Geoff.

(Operator Instructions)

Your next question comes from the line of Howard Liang with Leerink Swann.

Thank you very much. A couple of questions on Tivozanib. Is there for RCC -- is there a plan to move to earlier stage of the disease such as adjuvant setting?

Hi, Howard. And yes, that is something that we are considering but it's still an idea under consideration. I wouldn't say that it's part of a plan just yet.

I think that line of questioning is very interesting because Tivozanib, based on its efficacy and safety profile, might be the only ticket item that could be thought about in that particular setting but obviously that's something that's part of our expanded and accelerated strategy now to further enhance the use of Tivozanib.

Great. And regarding breast cancer, it sounds like that's -- you're talking more affirmatively that this is the next indication. Can you talk about what specific setting, is it likely second line or whether the next trial will be a Phase II or Phase III?

We're not yet ready to talk about specifically what the next trial or trials might look like but we can say that we are very encouraged by the data that we've seen and will be presented in San Antonio and are considering what the alternative paths forward might be.

Okay, and then I have a couple of questions on 299. It sort of -- what did you learn -- what's our take away from (inaudible) or the ArQule compounds in terms of what population is right for a Met inhibitor?

Yes, so we review the results from both MetMAb from Roche and ArQule's ARQ-197 as together firmly establishing that the HGF-cMet pathway is valid as a target in patients with non small cell lung cancer. We feel encouraged by the results not only because of the validation of the pathway but also regarding the design of our Phase II trial which is exclusive to patients with adenocarcinoma histology highly analogous to the non squamous patients for which the ARQ-197 trial demonstrated very encouraging activity.

In addition, our study will include collection of tissue for biomarker analysis. We will be looking at c-Met levels. This was an important biomarker in the MetMAb trial and so we feel that the design of the study that we've got ongoing is really a good one. I should point out that our trial is in the first line setting in non small cell lung cancer and in our trial we are combining AV-299 with Iressa and, as I mentioned earlier, we expect roughly half the patients in this trial to have mutated EGFR so we think that our study will differentiate a bit in that we will expect to see more patients with mutant EGFR than have been reported in those other trials that you mentioned as well as giving us a good read out on patients with wild-type EGFR.

And just a follow up. Is there any study or data on whether there's a correlation between Met-high or [metal] expression and EGFR mutation?

I don't know that I have that data at my fingertips but there are a number of data sets out there for which I think that answer could be found.

Thanks very much.

Thank you, Howard.

This concludes the Question and Answer session. I would now like to turn the presentation back 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 short and long term clinical and corporate goals. We have multiple assets with broad market opportunity for which we own significant commercial rights and a platform designed to sustainably build out a pipeline in the years to come. Thank you again and have a good day.

This concludes today's presentation. You may now all disconnect. Good day.