Aveo Pharmaceuticals Inc (AVEO) 2011 Q4 法說會逐字稿

Thank you for holding for AVEO Pharmaceuticals' Fourth Quarter and yearend 2011 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 the 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, Director of Investor Relations.

Thank you, Jasmine, and good morning, everyone. With me are Tuan Ha-Ngoc, our President and CEO, Michael Bailey, our Chief Commercial Officer, and David Johnston our Chief Financial Officer. The press release issued earlier today details our results and is available on our website at aveopharma.com. During this call we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations and plans, clinical development and regulatory timelines, the potential success of our product candidates and financial projections.

These statements involve risks and uncertainties which are described in our most recent Form 10-Q filed with the SEC and available online at sec.gov. These statements represent our views as of today and should not be relied upon as representing our views in the future. We may update these statements in the future, but are not taking on an obligation to do so. With that, let me now pass the call over to Tuan.

Thank you, Monique, and thank you all for joining us this morning. 2011 was an important year for AVEO, focused on the continued execution of our overall business strategy and the clinical advancement of tivozanib and ficlatuzumab. I am very pleased with the progress we made on all fronts and our continued momentum toward achieving our goal of building a sustainable oncology company.

In the last few weeks we reported top-line data from our successful pivotal Phase III trial, TIVO-1, in which tivozanib demonstrated superiority versus sorafenib in the first-line setting in patients with advanced renal cell carcinoma. Michael Bailey, our chief commercial officer, will be speaking more about this data and our positioning in the marketplace in a few moments.

I am very excited by the feedback we are getting from key opinion leaders and medical oncologists about the impact tivozanib may have on patient outcomes, and in particular its unique combination of efficacy and safety. The potential of having both efficacy and safety in one product without compromising either aspect is of significant importance to patients and their physicians.

Based on the positive TIVO-1 results, we and our partners at Astellas are moving forward with plans for submitting the tivozanib NDA and RCC in the third quarter of this year with the MEA submission to follow shortly. We are undertaking all of the appropriate pre-commercial activities we believe are necessary to maximize the potential of tivozanib.

Most recently the primary investigator on the TIVO-1 study, Bob Motzer of the Memorial Sloan-Kettering Cancer Center, has submitted the detailed findings of TIVO-1 for presentation at this year's ASCO meeting in June. We look forward to the opportunity to share more detailed findings with you during that congress.

In addition to our efforts in RCC, we are continuing to evaluate the potential of tivozanib in other solid tumors. Last December Astellas initiated the BATON-CRC trial, a large Phase II study evaluating tivozanib in combination with FOLFOX6 in patients with colorectal cancer. And in collaboration with Astellas we have finalized the clinical development plan for tivozanib in breast cancer, which we plan to initiate later this year. We believe these studies will position tivozanib to be competitive in the evolving treatment landscape in those indications.

Beyond tivozanib we have made progress with ficlatuzumab, a novel HGF/c-MET pathway inhibitor, and [wholly-owned] antibody. Ficlatuzumab is currently in a Phase II trial as first-line therapy in patients with non-small cell lung cancer.

The activity of ficlatuzumab in this study is being examined in both patients with wild type and activated mutations in EGFR, further, patients with stratified based to their MET levels. As such this study is well designed to identify the sub patient population who will benefit the most. And we expect data from this trial to help inform our development of ficlatuzumab in and beyond lung cancer. We completed enrollment with 188 patients last year and expect to submit detailed findings from this trial for presentation at a major medical meeting in the second half of the year.

Behind ficlatuzumab is our third anti-cancer agent, AV-203, a novel inhibitor of ErbB3. We expect to initiate our first clinical trial with AV-203 in the first half of this year. Notably a biomarker component will be a feature of this Phase I trial right from the beginning. We believe that by applying our cancer biology insights early in development we may better understand optimal patient populations for continued development with AV-203.

As we advance all of our programs our proprietary human response platform will continue to be an important element of our preclinical, clinical and commercial success. Our platform has been a key differentiator in our pre-discovery and development efforts and it's becoming more valuable in our clinical strategies.

With the success of TIVO-1 trial we have achieved the first of what we expect will be many product development, clinical and commercial milestones to come. 2012 marks a significant step in AVEO's transformation into a fully integrated sustainable oncology company. Let me now turn the call over to Michael to share some recent updates from ASCO GU and review the TIVO-1 data in the context of our market strategy for the [bose day]. Michael?

Thank you, Tuan, and good morning, everyone. As Tuan stated it's been an exciting start of the year for AVEO. As you know we're at a critical juncture in the lifecycle of tivozanib and I appreciate the opportunity to update you on our learnings as we continue our launch preparation.

In fact, the timing of this call is great. My team and I recently returned from ASCO GU in San Francisco where we had the opportunity to meet with our global clinical advisory council, which consisted of a prestigious group of the world's leading kidney cancer experts. The goal of our advisory meeting was to discuss the TIVO-1 detailed findings and determine how it may meet some of the significant unmet needs in the current RCC market.

The discussion was extremely valuable and we feel very positive about the prospects for tivozanib as we prepare to enter the $2 billion global RCC market. Importantly, our advisors have reaffirmed that there is indeed room for an improved VEGF-TKI that provides enhanced efficacy and safety, specifically despite the number of therapeutic options currently available to patients living with RCC. Each one provides less than one year of medium progression-free survival in treatment naive patients.

In addition, these therapies are often associated with significant toxicities, the most compromising of which are diarrhea, fatigue and hand-foot syndrome. These debilitating toxicities not only lead to high rates of dose interruptions, reductions and discontinuations which can adversely impact efficacy, but they may also considerably impact a patient's quality of daily living.

Our advisors have affirmed their support for the design and conduct of TIVO-1 as a successful registration-enabling trial. They agree that the patient population in TIVO-1 is comparable to that of previous studies in RCC. And they conveyed their comfort that the performance of sorafenib in terms of efficacy and safety were in line with recent clinical experience. Overall, our advisors felt that the TIVO-1 findings were positive and they provide a unique first-line therapeutic option.

Based on the data for tivozanib to date and the feedback we received from the medical community, we believe this potent, selective and continuous inhibitor of all three VEGF receptors has the potential to be an important advancement in the treatment of RCC. As a result of its long half life tivozanib can be dosed conveniently once a day and maintain consistent therapeutic exposure while avoiding potential PK spikes, inconvenient dose adjustments and off-target toxicities.

The data reported from TIVO-1 demonstrate two defining characteristics that we believe will have a significant impact on patient treatment in the clinical setting. First and foremost, we wanted to show that tivozanib could deliver the efficacy required to be competitive in the first-line setting. In fact, tivozanib achieved the longest medium PFS reported to date in a Phase III RCC study, both in the overall patient population with 11.9 months and in the treatment naive population which represents 70% of the TIVO-I patients and the most significant market opportunity where tivozanib treatment resulted in 12.7 months of PFS.

Second, what we continue to hear from our advisors and investigators alike is that the clinical safety profile for tivozanib is distinct among VEGF-TKIs. This perspective has been demonstrated by the safety data in our Phase II and TIVO-1 studies, but also through physicians' personal experience with the drug.

More importantly, tivozanib's safety profile has the potential to be an essential feature to RCC patients, particularly when you think about the typical profile with someone diagnosed with advanced RCC. These patients are often in their late 50s and they are likely still working and aspire to live active lives. It's invaluable that they be treated with a drug that gives them the best chance to carry on with their daily living while undergoing treatment.

In sum, we recognize the highly competitive nature of this market and we do not take this challenge lightly, but we believe that this very desirable combination of improved efficacy and tolerability make tivozanib an important new advancement in the treatment of RCC. I look forward to sharing more commercialization updates on tivozanib in the months to come. Let me now hand the call over to Dave to review our financials. Dave?

Thanks, Michael. Since we issued a press release this morning outlining our 2011 financial results let me just review some of the highlights and then I'll speak to the balance sheet and where we expect that to take us.

In 2011 we raised $111 million in capital through the public markets. As we start 2012 we continue to have a very strong balance sheet and we ended last year with approximately $275 million in cash and marketable securities.

Total collaborations revenue for 2011 were $164.8 million, primarily reflecting revenues related to our strategic alliances. And this includes $120.6 million from our collaboration Astellas, which we announced in February of 2011, and from which we retained $97.6 million in net proceeds after revenue share and expenses.

Research and development expense for 2011 was $101.7 million and G&A expense, which also includes pre-commercial marketing activity, was $29.2 million. Our net income for the year was $30.6 million, or $0.77 per share based on $39.7 million weighted average shares outstanding at year's end.

As we look ahead into 2012 we're providing guidance that we expect to end the year with at least $120 million in cash and marketable securities. And we believe that this capital should provide us with the cash runway into the second half of 2013 based on our current operating plans.

We also expect to spend approximately $130 million on research and development in 2012 net of cost sharing with Astellas. With the success of our TIVO-1 trial this spending includes accelerated and expanded clinical development plans for tivozanib in RCC, breast and colorectal cancers, as well as continued advancement of the ficlatuzumab, of ficlatuzumab and the rest of our oncology pipeline.

Importantly, this also includes expanded activities in medical affairs as well as technical operations as we prepare for our first product launch in 2013. With a strong balance sheet that combines our -- I'm sorry. With a strong balance sheet combined with our demonstrated track record of successful financings and collaborations and our broad and deep portfolio of assets, we believe we're well positioned to fund the ongoing development of our programs and the fundamental growth of the Company. And with that I'll pass the call back to the operator for questions.

(Operator Instructions)

And your first question will come from the line of Geoffrey Meacham with JPMorgan. You may proceed.

Hi. This is [Anu Pamerama] in for Geoff Meacham, just a quick question. You said that the TIVO-1 NDA for tivozanib will be filed in 3Q. Are there any gating factors in terms of preclinical studies or tox studies that you need to run between now and then for the submission? Or is it just the full data being presented?

Good morning. There is no gating factors we're submitting toward the filing of the NDA. It's just a matter of getting all the complete reports put together that constitute the full NDA.

Great. Thanks for taking our question.

Your next question comes from the line of George Farmer with Canaccord. You may proceed.

Hi. Good morning. Thanks for taking my questions. Without revealing too much, and I understand you have to preserve the data for ASCO, can you talk about the demographics in the trial? You mentioned like I think that the investigators that you spoke with at ASCO GU weighed in thinking and saying that this trial was consistent with other studies as far as demographics are concerned. Can you elaborate anything more on that? Specifically what I'm looking for is trying to get a handle as to why Nexavar performed the way it did.

Good morning, George. This is Tuan. As you have guessed correctly I think at this point we did present the full detailed findings with our advisors and we summarized for you there observations from those detailed findings, which is that they are consistent with all the other studies. That's all we can observe at this point in time. With regards to the sorafenib performance that you also heard that they view that very much in line with their clinical experience.

Okay. And then regarding ficlatuzumab, what's driving the go, no-go decision for Phase III? And or have you already committed to a Phase III development plan as of now?

We -- the data is still developing, still maturing. The key commitment we have made is to secure large scale process development which we enter into an agreement with [Barker Inheim] in November of last year for it. So and then we will let the data dictate where we should go next.

Okay. All right, thanks, Tuan. And, David, your -- the Q4 collaboration revenue line is probably the lowest since you've gone public that you reported. How should we think about that going forward?

So for example as you know in 2011 the collaboration revenue of the [125] that we got from Astellas we recognized about [120] of it up front. The rest of it is primarily just amortized of the remaining $5 million over the lifetime of the collaboration. And then there are some other collaboration revenue related to the [ron] collaboration with J&J.

The say I would think about it the big contributors that you're going to see, or the major contributors short of us announcing any more deals over the next 12 to 18 months will be with milestones related with the filing and approval of tivozanib in RCC in both the US and in Europe. And as a reminder, the guidance that we provided there is that there's a total of $90 million of milestones related to both the filing and the approval. So think of it as four events, two filings and two approvals over the next 18 months or so.

Okay. Do you expect an EU filing this year?

Yes.

You do.

So the guidance that we provided is an FDA filing in Q3 with an MA filing shortly after.

Okay, great. Thanks very much.

Sure, George.

Your next question comes from the line of Jason Kantor with RBC Capital Markets. You may proceed.

Thanks for taking the question. I've got I guess a clinical question and then a financial question. On the clinical side with 299 how should we think -- what would be considered positive results here and how should we think about this drug versus MetMAb or Tivantinib when we do see that data?

Hi, Jason. This is Tuan. So the design of the Phase II study in ficlatuzumab allows us several things that is different from all the other studies that have been shown. Number one, it is in first-line non-small cell lung cancer.

Number two, it is that by design we want to have a balanced patient population between EGFR wild type as well as activated mutations, and by going into a non-small core agent allow us to do so. And then obviously we also look at the MET level. So the key observation you want to derive from this study is make sure that we have a good understanding about the potential activity of inhibiting the HGF MET pathway in each of the four quadrants, one that is around two dimensions. One is EGFR wild type, as well as activated mutations, and the other one around MET low and high. So I think that this study will provide us with more learnings about what's the best use of inhibiting the HGF MET pathway through the underbody to the HGF that ficlatuzumab represents.

Okay. And then in terms of funding the Company you gave guidance that should be good through the second half of 2013. I'm wondering does that include the milestones that you've laid out? And then when you look to getting past that second half of 2013 what should investors assume the mix of say new collaboration revenue versus potential milestones from existing partnerships versus new equity financing in terms of going out beyond 2013?

Yes. So thanks. So the original guidance does take into effect the impact of the milestones. That's why it takes it into the second half, but in terms of going forward I think that you looking back you know that we've always recognized the value of having a strong balance sheet going into major events such as a product launch. And I think that we've demonstrated our track record of creating optionality for funding the Company. And we expect to continue to do that.

So I don't have any specific guidance in terms of the mix, but you have outlined some of the options, and the options do include partnerships, equity raises, other mechanisms that would be available like a convert or something along those lines, but keep in mind that ficlatuzumab is un-partnered and those other antibodies, but beyond that I think maintaining the option and having the strong balance sheet where there's no rush, and I think we can pick our spots because I think the most important I think message here.

Okay. Thank you.

All right, Jason.

Your next question comes from the line of Thomas Wei with Jefferies. You may proceed.

Thanks, just a couple of questions, a reminder maybe of when the next analysis of the TIVO-1 data is planned for I guess especially to look at overall survival. And then you had mentioned during the prepared comments that the R&D budget is going towards, partially going towards accelerated plans in renal cell carcinoma for TIVO. Could you elaborate a little bit more on what you're planning to do there?

Sure, Dave here. So on the -- I can't address the new cut of the data. We'll talk about that afterwards, but in terms of the additional programs in renal cell beyond the TIVO-1 trial we already have put in a BATON trial. And something that has come out of our conversations with our investigators was enthusiasm for using this drug in trying it in different applications.

So I think that you'll be seeing in the time between now and filing, and certainly between now and approval announcement of some other trials directly related to RCC with tivozanib. So and just as a reminder it's our practice not to get into specifics until we get first patient in for competitive reasons, but I think that I think what you can take away from it is a high degree of enthusiasm.

And then coming out of our -- and I'll let Michael describe it more, but coming out of our global advisor meeting at ASCO GU it is very clear and of those people who were at that meeting about half of them actually had actual experience. And that's generated a lot of enthusiasm with regards to everybody wanting to have an ability to have direct experience about tivozanib. All right, Michael?

And, Thomas, to answer your question about the timing and the overall survival in the next data cut, obviously as we have said we're going to present the full data set of mature data at ASCO. At this time the overall survival as you might imagine is not mature, so we will not be presenting that at ASCO and we'll be presenting that as early as possible.

Did you in the analysis plan though was there kind of like you had given us guidance on when you would expect to see the PFS primary endpoint event rate occur? Is there a similar set of parameters around overall survival in the protocol and your expected timing update on that?

There is a specific announced SAP with FDA at a specific time point. I don't have it right on top of my head right here, but that will be part of the review with FDA.

And then maybe just a follow-up on these accelerated plans in renal, is part of that -- I know that there's been this big debate around whether or not as a priority you should pursue TIVO with an mTOR inhibitor as a frontline standard of care in renal. Is that what you're talking about, or is that trial just going to take way too long for it to be a near-term priority?

The interest level of the advisors span across a spectrum of course that have first-hand experience on tivozanib, as well as answering several very intriguing scientific questions. And so that is part of that that we are looking at all of this to have people that have direct experience in that [rock]. It's not part of our registration dossier at all, and then so we are looking at those trials that we started, some this year, some next year and throughout the next several years.

Thanks.

Your next question comes from the line of Marshall Urist with Morgan Stanley. You may proceed.

Yes. Thank you, guys. Good morning. So I was wondering maybe if you could talk a little bit more about the panel discussion you guys had at ASCO GU with regards to axitinib and kind of how your panel thought about TIVO versus that, sort of label aside, but just in terms of how they were thinking about the two kind of second generation, second generation drugs.

And then also maybe if we could have a little bit more detail on kind of what the education and kind of MSL activities that you guys are thinking about post, kind of post the filing, and ahead of the launch and how you'll be positioning TIVO ahead of formal launch. Thanks.

Thanks, Marshall. And I'll interpret your question, how does the approval of Inlyta affect us and what was the advisors' perspective. Importantly, we're seeking a first-line indication as you know, not a second line indication which they have received. With that said, we believe that tivozanib's unique combination of the longest PFS and an improved safety profile, which again is unique in this setting, coupled with our convenient once-a-day dosing and minimal dose adjustments we believe positions us very well in the first-line setting.

Okay, great. And then just on the educational activities you guys can do and how we'll see that kind of come together over the next 12 months?

Yes. Of course that's, Marshall, is a very important part. And that's the part of the added investment that Dave reference to with regards to the medical affair activities. Obviously their job is to make sure that we communicate all the scientific aspects of tivozanib. Michael hinted to some, obviously the data of TIVO-1, but also the understanding about how the biochemical properties can alter, or affect rather the use in real life environment.

I think that the combination of efficacy and safety is something that is very well understood by the [kill wells], but because for so long the field, particularly community oncology has never had the option to have both safety and efficacy. Now that we have one I think that is very important that we start to talk to the community of oncology about the availability of both the option to have both efficacy and safety. And that's part of our effort to communicate that in fact the patient doesn't have to compromise, and therefore the physician doesn't have to deliver a compromise therapy that only accents to one or the other.

The other aspects about the ease of use as derived from the experience for everybody who has been using tivozanib is also a central part of what we want to communicate, a daily dosing, no need for adjustment, a more predictable therapeutic level that is very consistent with our long half life. All those scientific aspects would obviously be part of our scientific education between now and product launch.

Okay, great. Thanks for the questions.

Your next question comes from the line of Jonathan Eckard with Leerink Swann. You may proceed.

Oh, thank you for taking the question. So the first one was regarding additional indications, maybe not the RCC, but other indications for tivozanib. What are the key considerations that you in determining whether to pursue a Phase II or a Phase III strategy for some of these additional settings for the drug?

Good morning, Jonathan. So let me step back a little bit and provide a comment in general about tumor settings outside RCC. What is quite good about the fact that the TIVO-1 safety profile are quite consistent with our Phase II study, now created two large studies in which the safety profile us to go aggressively in arena beyond RCC because the drug safety profile would not create problems in combining with existing chemotherapeutic agents.

So that was our premise. We have demonstrated in a series of Phase Ibs where there is a combination with Taxil or FORFOX in various settings, but it's nice that the TIVO-1 safety profile further confirmed that. So that is the starting point.

In looking at colorectal and breast we are obviously looking at multiple aspects, obviously arena in which the medical need is still there. I think that we can safely say that despite therapeutic regimen being used in those, particularly those two settings there are much more to be had to deliver a very potent, selective and continuous inhibitor of the complete VEGF pathway. We believe it can truly add scientifically and hopefully clinically to the effect that we want to obtain with androgenisis inhibition.

We are also looking at making sure that we understand the comparative and competition that current standard of care and therefore the comparative arm in our clinical study setting. And in the large Phase II colorectal we set up so that we can head-to-head with Avastin together with FORFOX versus tivozanib versus FORFOX. We believe that by the nature of much more potent, selective and complete inhibitor tivozanib should be playing.

But there's another aspect that we are using in all of those settings is the learnings from our human response platform and the biomarkers that may result from that, as well as other biomarkers that we've set up and suspect that in other studies as well. And that's why you see in our colorectal study we have interused both the overall, give tivozanib some more chances both in terms of overall patient population as well as in prospectively selected subgroups based on biomarkers such as VEGF-A or VEGF-C, such as LDH, such as hypoxia markets, such as myeloid markers.

So those are the markers, the later biomarkers are the ones that come out from our human response platform. And we believe that may even provide opportunity for tivozanib to really show that if not in overall setting, but in its own specific subset that we can really provide the right kind of clinical benefits to the patients. And we plan to do the same thing with [slivadeev] instead of biomarkers for the [press] study as well.

So would it be fair to say that compared to the colorectal cancer trial which was kind of planned and started prior to the full readout of TIVO-1 that you have a more, you are more confident about the overall safety profile of the drug, which could allow you to potentially pursue more aggressive strategy in breast or future other settings? Would that be a fair statement?

That is a fair statement.

Okay. And if you don't mind, could you talk a little bit about the timing of the presentation of the Phase II ficlatuzumab data? This is an open-label trial if I'm not mistaken. So is the timing of the readout more based on the patients responding or the patients' kind of performance in the trial? Or is it a data analysis? At one point I thought it was going to be slightly earlier in 2012 we might see some data, so any color, any color on that?

Yes. I think that the statement we made that in my opening remarks was that we intend to submit the detailed findings of that study at a medical meeting in the second half of this year. And that's all we can say at this point in time. Of course the detailed findings will be based on maturation of different set of data, both in the primary as well as the secondary endpoints as we particularly as I said. We are looking for this study to provide us with the understanding about inhibiting HGF MET pathways in multiple subset of patient population.

Well thank you very much for taking the questions.

You're welcome.

And at this time we have no further questions. I would like to turn the call over to Mr. Tuan Ha-Ngoc for closing remarks.

Thank you, operator. In conclusion we are proud of the success we have achieved in 2011 and believe we have an exciting path forward. Throughout 2012 we expect to present the detailed findings from TIVO-1 at ASCO in June, to submit the NDA and MA for tivozanib RCC beginning of third quarter and to expand our prelaunch activities ahead of potential market launch in RCC next year.

We also expect to initiate clinical development of tivozanib in breast cancer. On our ficlatuzumab program we expect to complete the Phase II study in lung cancer and report findings on that trial in the second half of the year. Lastly, we expect to initiate clinical development with our third product candidate, AV-203. As you can tell we have a busy year ahead of us and we look forward to updating you on our progress throughout the year. Thank you very much.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a wonderful day.

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