Why AVEO Pharmaceuticals Shares Imploded

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of AVEO Pharmaceuticals (NASDAQ: AVEO  ) , a cancer therapeutics company, collapsed as much as 27% following the release of briefing documents today in anticipation of AVEO's meeting with the Food and Drug Administration panel on Thursday.

So what: If you recall, one of the oddities of AVEO's Tivozanib, an oral metastatic renal cell carcinoma drug, is that it outperformed Bayer and Onyx Pharmaceuticals' (UNKNOWN: ONXX.DL  ) Nexavar in terms of progression-free survival in trials (11.9 months versus 9.1 months), but actually delivered a slightly lower median overall survival than Nexavar (28.8 months versus 29.3 months). According to the briefing docs released this morning, it appears that the FDA may want AVEO to run an additional trial to confirm the added benefit of Tivozanib based on that reduction in overall median survival noted during the study.

However, AVEO CEO William Slichenmyer noted that when Nexavar-arm patients failed to respond or got sicker in trials, they were switched to Tivozanib, creating a sort of sequential instead of direct comparison late in the game. That could help explain the flip-flopped median overall survival figures.

Now what: Confused yet? We'll know more after AVEO meets with the FDA panel on Thursday. Safety doesn't seem to be a big issue here, but AVEO is going to need to convince the panel that another trial isn't needed if it has any hope of getting this drug to market within the next two years. Tivozanib clearly shows promise; but just how much promise remains to be seen.

Craving more input? Start by adding AVEO Pharmaceuticals to your free and personalized watchlist so you can keep up on the latest news with the company.

While you can certainly make huge gains in biotechs like AVEO, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2397352, ~/Articles/ArticleHandler.aspx, 4/21/2014 8:21:49 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement