Aveo Pharmaceuticals Inc (AVEO) 2012 Q3 法說會逐字稿

Thank you for holding for AVEO Oncology's Third Quarter 2012 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. We do advise 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'd like to introduce Monique Allaire, Director of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Today, we'll be talking about key recent developments in our third quarter 2012 financial results. With me are Tuan Ha-Ngoc, our President and CEO, David Johnston, our CFO, Bill Slichenmyer, our Chief Medical Officer, Michael Bailey, our Chief Commercial Officer, and Elan Ezickson, our Executive Vice President and Chief Operating Officer. The press release issued earlier today detailing our results is available on our website at aveooncology.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 AVEO's 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 the risk factor section of our most recent Form 10-Q filed with the SEC and available online at sec.gov.

While these forward-looking statements represent our views of today, they should not be relied upon as representing our views in the future. We may update these statements in the future, but we are not taking on an obligation to do so.

With that, let me pass the call over to Tuan.

Thank you, Monique. And thank you all for joining us this morning. Earlier today, we announced that AVEO has conducted a strategic restructuring designed to optimize company resources and reduce expenses to ensure two things, that we are well prepared and positioning to execute on the planned launch of our first product candidate, Tivozanib, in 2013 and that we maintain a focused, appropriately sized research engine to build long-term value.

Turning first to the optimization of our resources, our number-one priority is the approval and commercialization of Tivozanib (inaudible) cancer. Behind that is the continued development of Tivozanib in additional tumor types, such as colorectal and breast cancers. With this restructuring, we directing approximately 80% of our resources to supporting the anticipated approval and planned commercial launch and market update of Tivozanib in RCC, as well as maximizing its potential in other tumor types.

By also narrowing our efforts in our earlier pipeline research organization, we have made the strategic decision to explore further development of Ficlatuzumab and certain other discovery assets through external collaborations. We will continue to utilize our core discovery and platform capabilities primarily directed to biomarker research in support of our clinical stage programs and working on select noble discovery initiatives.

Consistent with this reduction in the scope of the R&D activities outside of Tivozanib, we have reduced our workforce by approximately 45 positions, or 17%, and closed approximately 30 open positions. The largest overall impact of this was in our research organization. These are difficult decisions, but we believe we have aligned our resources approximately with our updated operating plan.

In terms of the reduction in expenses, this restructuring is expected to provide AVEO with substantial cost savings in 2013, as well as over the next three years. Further, it extends our current cash run rate to year end 2013.

We believe we have made a prudent fiscal and strategic decision in our evolution toward our goal of becoming a fully integrated oncology company delivering noble cancer therapies to patients. In the recent weeks and months, we have gotten closer to this with a submission of our first NDA for Tivozanib.

With that, let me ask Bill to share some recent Tivozanib highlights. Bill?

Thanks, Tuan.

We continue to make good progress with the development of Tivozanib. As Tuan mentioned, we and our partners at Astellas submitted the NDA for Tivozanib in patients with advanced RCC. The submission was based on results from our TIVO-1 study and various supportive studies and was a significant milestone for us. We look forward to the agency's response in the next month or so.

To remind you, TIVO-1 demonstrated a statistically significant improvement in PFS with Tivozanib compared to Sorafenib in both the overall population study, as well as the pre-specified sub-population that was treatment-naive. In that patient population, Tivozanib demonstrated a PFS of 12.7 months versus 9.1 months with Sorafenib. In TIVO-1, Tivozanib demonstrated low rates of dose reductions and interruptions with 12% and 18% respectively.

Further, in our safety analysis of over 1,000 people treated with Tivozanib in 17 clinical studies, it was well tolerated. The most common adverse event was hypertension, which has been readily managed and is correlated with efficacy outcomes.

We are confident in the strength of the Tivozanib data package submitted to the NDA, as well as the potential role Tivozanib may play for patients living with kidney cancer. In fact, the past several weeks have provided us with new insights into the clinical landscape and activity of several different treatments for RCC. We believe that these further support our view of Tivozanib as an important potential first-line treatment option.

First, data from the COMPARZ trial, evaluating Pazopanib versus Sunitinib, presented at the ESMO conference, demonstrated that the PFS seen with first-line Pazopanib in treatment-naive patients with advanced RCC is 8.4 months versus a PFS of 9.5 months with Sunitinib. In this study, more than 40% of patients required a dose reduction, and more than 60% of patients required a dose interruption on each arm.

More recently, the top-line release from the Phase III AGILE 1051 trial, evaluating Axitinib versus Sorafenib in treatment-naive patients with advanced RCC indicated that Axitinib did not meet its primary end point as statistically significant longer PFS.

Of course, more details from these studies are forthcoming. However, these data suggest that there is still a need for a first-line treatment option with a PFS rate of greater than 12 months that is well tolerated with less need for dose reductions and interruptions.

We are committed to evaluating Tivozanib in other solid tumors. We and Astellas are on track to initiate the third of our biomarker-driven studies, which we call our [Bakon] series. This will be a Phase II trial in patients with triple-negative breast cancer beginning this quarter. The design for this trial was accepted for a poster presentation at the San Antonio breast cancer symposium. We'll be seeing more about this study once we've announced patient enrollment, which should take place fairly soon.

With that, let me turn the call over to Michael.

Thanks, Bill, and good morning, everyone. This is an exciting time for the commercial team in AVEO, as we continue to prepare for the planned launch of Tivozanib. As Bill said, ESMO was an informative meeting, and we strongly believe the data emerging from other clinical trials bodes well for the positive positioning of Tivozanib in RCC, once approved.

As part of our ongoing preparation in the launch and commercialization of Tivozanib, we recently appointed a vice president of sales, Brad Bailey -- no relation. Brad brings more than two decades of leadership experience in field sales, operations, account management, and reimbursement. Importantly, he also brings with him the valuable experience of having led Pfizer's US sales effort for the launch of Sutent in RCC.

I am thrilled to welcome Brad to the organization and look forward to working with him and the rest of the team to ensure a successful Tivozanib launch.

Working with Astellas, we continue to engage with the global clinical community and learn from the clinical and market dynamics affecting prescribing patterns in RCC. While we know the competition is real and significant, we are confident that our clinical data, combined with our marketing and sales strategies, will position Tivozanib to meet the unmet needs in RCC and effectively compete in this $2 billion market.

With that, let me pass the call to Dave to review our financials. Dave?

Thanks, Michael. Since we issued a press release this morning outlining our third quarter 2012 financial results, let me just review the highlights, and then I'll speak to our cash balance and our financial values.

Total collaboration revenues for the third quarter were approximately $1 million. R&D expense for the third quarter was $21.1 million. G&A expense for the third quarter was $9.3 million. And net loss for the third quarter of 2012 was $30.1 million, or a net loss per share of $0.69. We ended the third quarter of 2012 with cash and marketable securities of approximately $190 million.

As Tuan stated earlier, a strategic restructuring would reduce our expenses and provide us with some substantial savings. We expect this to result in approximately $100 million in cost savings over the next three years, as compared with prior projections, including approximately $37 million in cost savings in 2013.

We anticipate that the total charge for the reduction in our workforce will be approximately $2.6 million, which is included in both our updated short- and long-term financial guidance, which we are providing today. We now expect to end 2012 with approximately $135 million in cash or marketable securities, and based on our revised operating plan, we expect that this capital will be sufficient to fund our operations through 2013.

With that, let's open the call to your questions.

(Operator Instructions). Your first question comes from the line of Adnan Butt from RBC Capital Markets. Please go ahead, Adnan.

Adnan Butt Good morning, everyone, and thanks for taking my question. The first question is on restructuring. Does the restructuring reflect in any way on the ongoing application review? And have you had any interactions with the FDA in submitting them -- submitting the filing?

Good morning, Adnan. This is Tuan. As we mentioned, this decision about the restructuring for the company is to optimize the resources and reduce expense to ensure that AVEO is well positioned to a successful launch of Tivozanib first in RCC, but also in a continued development in other indications, so it's a clear sign of the confidence of the registration file we have submitted to the FDA. And then (inaudible) the company's research programs would still be focused on areas where we believe they can build long-term values of the company.

Adnan Butt Thanks, Tuan. And is the next interaction with the FDA expected to be the acceptance of the NDA? And that's around November? Is that correct?

That is the expected timing, yes.

Adnan Butt Okay. And then a question for Dave. Dave, can you provide any R&D or SG&A line-item guidance at this point?

I'm sorry. For -- we have never provided that. We haven't yet. So we're not going to provide that. The primary guidance is that we increased our year-end cash estimates and our projections moving forward.

Adnan Butt Okay. And then a bigger-picture question. You know, clearly the data that's been -- that's been shown by other agents tells us that Tivozanib still has the best PFS out there. In terms of the application that's filed, do you expect an ODAC? And then when do you expect survival data? And do you think that's needed for the application to make its way through the approval process?

Yes, we -- we think that it's fairly likely that we will have an ODAC meeting, although that decision, of course, is up to the FDA. And it'll be some time before they let us know their decision on that. Regarding the question about overall survival, we have included the final protocol-specified overall survival analysis in the NDA, which was submitted in late September.

Hi, guys. It's Monique. If we could jump to the next caller, thank you, Adnan. If you wouldn't mind jumping back into queue, just so we can get to everybody today.

Thank you. Your next question comes from Salveen Richter of Canaccord. Please go ahead, Salvene.

Thanks for taking my questions. Just to -- one, in terms of the strategic restructuring, are there specific, early-stage programs that are being terminated? And which positions are being eliminated outside of research? And then just wanted to get a sense -- and you kind of went over this briefly, but with all the competitive data we saw this summer, including that for (inaudible), how is that changed your strength in your view on how to position TIVO?

Salvene -- so, this is Elan -- with respect to the discovery program, so as we indicated, we are going to be continuing development of Ficlatuzumab, but as we've announced, that'll be principally through external collaborations. We are going to be continuing the AV-203 development that has begun. There's a first-in-human study that is -- that got underway earlier this year.

We're not disclosing for the discovery stage programs the specifics of each of those programs, but with regard to the question you had around positions being eliminated outside of research, those principally relate to the reduced level of internal company activities around those programs that are being cut back.

(inaudible)

Yes. So regarding the comparison with some of the recently announced data, I think some -- one of the earlier questioners mentioned about the COMPARZ results. And with Pazopanib showing its median PFS of 8.4 months, Sunitinib 9.5 months, and also importantly, the rate of dose reductions, over 45% for both drugs in that trial, dose interruptions greater than 60% for both drugs in that trial, we believe that there's still an important need for a new drug that meets the need for a longer PFS, over a year, and that's well tolerated.

And just remember that Tivozanib, in this pivotal trial, had a median PFS in the treatment-naive population of 12.7 months, excellent tolerability, a rate of dose reductions of only 12 percent, and interruptions, 18%. So clearly there remains an unmet need. We think that Tivozanib is a good potential option for the future.

Great. Thank you very much.

Thank you. Your next question comes from Marshall Urist from Morgan Stanley. Please go ahead, Marshall.

Yeah, hi, good morning. This is [Idal Yakamovits] standing in for Marshall. I had a bad connection, so I'm not sure if this was asked, but could you just review when we expect to see updated OS data for TIVO? Is that going to be an ASCO GU or something further down the road, like ASCO?

And then, also, could you just discuss a bit how the restructuring could impact timelines for the TIVO launch? Thanks.

So regarding the publication and public presentation of the overall survival data, we have submitted these for presentation at the ASGO GU conference. That will be in mid-February.

And with regard to timing of launch, there is no impact whatsoever from this restructuring on timing of launch. We are working very hard to be in a position to deliver Tivozanib to patients rapidly upon approval.

And one more from me. If you could just confirm that the TIVO NDA will be reviewed under PDUFA IV, as opposed to PDUFA V?

That is our expectation. It was submitted September 28th and met the deadline before the PDUFA V regulations came into effect on October 1st.

OK, perfect. Thank you.

Thank you. Your next question comes from Thomas Wei of Jefferies. Please go ahead, Thomas.

Thanks. Just in relation to this restructuring, I guess I wanted to clarify that it does not involve any changes to the TIVO clinical development program, and when you talk about this allowing you to extend your cash runway to the end of 2013, I guess I'm curious. What kind of TIVO development program does that allow you to pursue? Is that [TORUS], breast, colorectal, and others? And what might those others be?

Yes, regarding the Tivozanib clinical development program, there has been no change to the plan, as you've heard it, including the tumor types you've outlined. And so with Phase II trials underway in colorectal cancer, to begin very shortly, and breast cancer, and the ongoing TORUS study, as well.

Morning, Thomas. Dave here. In terms of what the extension includes, it includes everything that Bill said. Beyond that, we haven't disclosed trials, as generally we don't talk about them until we have first patient in. But it certainly doesn't -- this restructuring actually enables us to continue and broaden our Tivozanib development program.

I see. So you have cash to the end of 2013, including initiating new clinical efforts for TIVO? But you're not willing to kind of talk about what the priorities there are for clinical development?

You could say that, yeah.

Okay. Great, thanks.

Thank you.

Thank you. Your next question comes from the line of Jason Kantor from Credit Suisse.

Good morning. And thanks for the clarity around the program. Could you -- most of my questions were asked, but can you just give us some sort of breakdown of how much of the spend -- you said 80% of your resources are going to Tivozanib. How much of that is going to be, you know, new clinical -- clinical trials spent versus maybe some pre-commercial and other costs that you may have to have, regulatory and such?

Hey, Jason. This is Dave again. We don't get into that level of detail, but of the 80% -- you know, what you expect to see is, we're still in a part of our clinical development cycle where, while the primary Phase III has pretty much completed, we still have follow-on with the 902 program, which is the -- which is the extension study, and then we have the two Phase IIs in colorectal and breast.

So it's substantial, but what you're going to see over the next year, particularly, is a significant ramp-up of pre-commercial. I can't get into the specifics in terms of the percentage splits, but you will see a change in the percentages over the next probably 9 to 12 months.

So if I can ask one more question, you said that you'll have updated TIVO data at ASCO GU. Can you give us some sense of what the remaining data flow might look like in 2013, as it relates to maybe some of the other studies in the biomarkers and stuff like that? What are the time points we should be looking at?

You know, we're still looking at our plans for that. And I think maybe at a future call we might be able to provide a better update on that.

OK, thank you.

Thanks, Jason.

Thank you. Your next question comes from the line of Jim Birchenough from BMO Capital.

Yeah, hi, guys. Most of my questions have been asked and answered, but just on the second quarter earnings call, you guys mentioned that overall survival data were not yet mature. You know, by my calculation, you know, a little over 100 deaths had occurred at that one-year time point. So is there some agreement with FDA as to what represents mature overall survival data?

Are they going to look at some upper bound of risk and want that below a certain level? Just trying to get a sense of what your understanding is of mature overall survival data and when you'll have it. Thanks.

So what we've discussed with the FDA is submitting the final overall survival analysis, which was pre-specified in the protocol, based on the time point coming 24 months after the last patient was enrolled in the study. And so that led to data cutoff in late August of this year, and those data were summarized and submitted in the NDA.

And can you say what number of events had occurred at that point?

We will disclose that at ASCO GU, assuming that our abstracts are submitted for -- are accepted for presentation.

And then just following up on the questions on pre-launch planning and the impact of the restructuring, can you remind us what size of sales force you guys would entertain fielding yourselves and just what the scope of those pre-launch activities would be?

Yeah, hi, Jim. It's Michael Bailey. We've -- the guidance we've given is that we've benchmarked, again, some other companies, I think, would be a reasonable thing to model, somewhere in the ballpark of 80 salespeople total, against -- sorry.

Yeah, Jim, Dave here. Now, half of those would be fielded by Astellas and half will be fielded by us. But in some ways, it doesn't make any difference, because the -- because the total expense is shared among the, you know, two organizations.

And just so I understand, there's no impact on timing of hiring or training of those reps with the restructuring?

Absolutely not. We -- as mentioned, we hired Brad Bailey, our VP of sales. Our plan is to bring our sales leadership team in first quarter of '13 and then bring the sales force on around the second quarter of '13.

Thanks for taking the questions, guys.

Thank you.

Thank you. Your next question comes from Howard Liang from Leerink Swann. Please go ahead, Howard.

Yeah, thanks very much. Just a question on the cash guidance through end -- I think end of 2013. Can you talk about whether there's a difference whether you get approval for TIVO?

Hey, Howard, this is Dave. Yeah, so in that -- in that projection, there is an assumption that TIVO is approved in Q3 and with the accompanying milestone that's in there, as well as very preliminary -- although not very impactful -- revenues that would take place in the first quarter launch. That is not significant. But -- but, yeah, so obviously there would be a difference in projections if Tivozanib were not approved.

I guess if it was -- if we're not approved, would you -- you would have less launch expanses? I guess -- would it be -- would it be longer -- would it be -- would (inaudible) be longer or shorter without approval?

Well, you know, once again, this is all -- you're talking about a bunch of hypotheticals here in terms of timing of, you know, when we were told, how much -- how much advanced warning we had, so how much -- how much effort we've put into pre-launch activities, et cetera. So, you know, it could vary quite a bit. It could -- in terms of runway, you know, I guess theoretically, if you find out sooner rather than later, you'd actually have a longer runway.

OK, great. Thanks very much.

Thanks.

Thank you. You have no more questions queued. And I'd now like to turn the call back over to Tuan, chief executive officer, for closing remarks.

Thank you, Operator. In conclusion, with the progress we've made, all of our efforts are designed to ensure that we are well positioned to launch and commercialize Tivozanib next year.

We believe this will drive the near-term future of the company and is our greatest opportunity for value creation required for both the continued growth of the company, as well as supporting a commitment to research. We look forward to updating you on our continued progress. Thank you.

Thank you, Tuan. Ladies and gentlemen, that does conclude your conference call for today. Thank you for your participation. Take care.