AVEO Pharmaceuticals (Nasdaq: AVEO) released solid phase 3 data today.

Just not solid enough, judging by the 20% decline today. With shares up more than 15% from last year, high expectations were built into the price.

The biotech and partner Astellas Pharma tested their kidney cancer drug tivozanib against Nexavar, sold by Onyx Pharmaceuticals (Nasdaq: ONXX) and Bayer, which is a somewhat unusual move.

Cancer drugs tend to be tested against placebo rather than head to head against an active comparator. Comparison to placebo makes it easier to prove that the drug works and get it approved, but also makes it harder to compare the new drug to what's already on the market. For instance, you'll often hear that Dendreon's (Nasdaq: DNDN) Provenge has better efficacy than Sanofi's (NYSE: SNY) Taxotere because it extended survival by 4.1 months compared to placebo versus Taxotere's 2.5-month extension.  But because the two placebo groups could have enrolled different types of patients, the comparison needs to be taken with a grain of salt.

So kudos to AVEO for having the guts to test the drug against Nexavar; the gamble certainly paid off. Tivozanib delayed progression-free survival, the time it takes for the tumor to start growing again, by 11.9 months compared to 9.1 months for patients taking Nexavar. That's a solid win, especially since the Nexavar group performed better than expected.

The problem is that Nexavar isn't the top-selling kidney cancer drug. That honor belongs to Pfizer's (NYSE: PFE) Sutent. So we're back to comparing results from two separate trials to declare a winner. In a trial testing patients that hadn't been previously treated, Sutent delayed progression-free survival by about 11 months. In a pre-specified subgroup analysis of the same patient population -- about 70% of the patients -- tivozanib delayed progression-free survival by 12.7 months. That would be a solid win if it were a head-to-head trial, but given the nuances about the patient populations not being comparable, investors are right to worry about how doctors might interpret the data.

The take-home message here is that the data is good enough to get tivozanib approved and take much of the kidney cancer market being served by Nexavar. Whether it can push into Sutent's domain without head-to-head data is still up in the air. Going up against a powerhouse like Pfizer with an established drug won't be easy. Fortunately, AVEO signed up a solid partner in Astellas Pharma, which made a major move into the oncology field a few years ago with its purchase of OSI Pharmaceuticals.

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