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Why AVEO Pharmaceuticals, Inc. Stock Perked Up in September

By George Budwell - Oct 10, 2018 at 11:00AM

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AVEO is close to a key clinical readout that could prove to be a major catalyst for its stock.

What happened

Shares of AVEO Pharmaceuticals (AVEO 1.68%) gained a healthy 10.7% last month, according to data from S&P Global Market Intelligence. The spark?

Investors bid up this early commercial-stage biotech stock last month in anticipation of the late-stage results for the company's advanced kidney cancer drug tivozanib. But the company also announced in late September that it would be presenting at two investor conferences in early October, which seems to have benefited AVEO's share price last month as well. 

A man in suit wearing rocket propelled wings.

Image Source: Getty Images.

So what

Tivozanib's late-stage trial, dubbed Tivo-3, could allow the drug to gain entry into the U.S. market. While the drug's commercial opportunity isn't entirely clear due to the crowded nature of the kidney cancer market, a U.S. approval would undoubtedly be a major win for AVEO and its shareholders. 

Now what

On Oct. 1, AVEO announced that the top-line analysis of Tivo-3 has now been initiated at the behest of the study's steering committee. The company expects this analysis to take around six weeks -- meaning that AVEO should release these data to investors somewhere between mid to late November.

So, assuming a positive readout, tivozanib's New Drug Application with the U.S. Food and Drug Administration should occur sometime in the first half of 2019. And if that picture-perfect timeline holds, AVEO could have the drug on the market in the U.S. by early 2020. 

The bad news, though, is that AVEO is definitely going to need to raise a lot more cash fairly soon. After all, the company exited the second quarter with less than $19 million remaining in the bank, and its recent public offering only raised $5.7 million in gross proceeds.

Put simply, AVEO is likely gearing up for a substantial secondary offering in the event that tivozanib's top-line results turn out positive. Investors, therefore, may want to take a cautious approach with this particular biotech until tivozanib's top-line data are a known quantity and the company has shored up its balance sheet.

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