Please ensure Javascript is enabled for purposes of website accessibility

Here's Why AVEO Pharmaceuticals Inc. Jumped 40% Higher in August

By Brian Orelli, PhD - Sep 5, 2018 at 6:32AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors jump in ahead of expected clinical trial data.

What happened

Shares of AVEO Pharmaceuticals (AVEO 0.50%) jumped 40% in August, according to data provided by S&P Global Market Intelligence as investors jump in ahead of data from its phase 3 Tivo-3 clinical trial, which is expected in the fourth quarter.

So what

The Tivo-3 study is testing AVEO's tivozanib compared to Bayer's Nexavar as a third-line treatment for advanced renal cell carcinoma, a type of kidney cancer. The trial will be analyzed after the occurrence of 255 progression-free survival (PFS) events -- defined as the patient's tumor starting to grow or the patient dying.

Shares fell in July after the company announced that the clinical trial results would be delayed, but the reason turned out to basically be a clerical error. At this point, the stock has regained all the ground it's lost, which seems about right.

AVEO Chart

AVEO data by YCharts.

AVEO has said that it plans to announce when the 255th event occurs and data will be released six to eight weeks after that since it takes some time to get all the data processed.

Female doctor showing a male patient in a hospital bed something on a tablet

Image source: Getty Images.

Now what

Even at this higher price, the market cap is under $500 million and investors can likely still profit from buying AVEO if the Tivo-3 results show tivozanib can increase PFS compared to Nexavar.

But an investment in AVEO is quite risky. With just $18.1 million in the bank at the end of the second quarter and the company having raised just $5.7 million last month, the Tivo-3 results are likely to be as binary as they come. If the clinical trial fails, it will be very hard for AVEO to recover.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AVEO Pharmaceuticals, Inc. Stock Quote
AVEO Pharmaceuticals, Inc.
$4.02 (0.50%) $0.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.