Shares of AVEO Oncology (NASDAQ:AVEO) had crashed 58.6% as of 11:33 a.m. EST on Thursday. The biotech announced that based on preliminary overall survival rate data from its phase 3 Tivo-3 clinical study, it wouldn't file for regulatory approval of lead candidate Fotivda in treating advanced renal cell carcinoma (RCC). AVEO stated that the U.S. Food and Drug Administration (FDA) recommended against filing for approval because the preliminary data didn't address concerns the agency has raised in the past about the experimental drug.
This was strike two for AVEO with Fotivda. The FDA rejected approval of the drug back in 2013 because of safety concerns. AVEO had hoped that the Tivo-3 study would put those concerns to rest, but that's clearly not going to happen now.
The problem with the phase 3 study results was that the preliminary overall survival hazard ratio for patients taking Fotivda was 1.12. The hazard ratio indicates the likelihood of death for patients receiving a drug compared to that of a control group. Any hazard ratio above 1.0 isn't good news since it means that patients taking a therapy are more likely to die than other patients are.
Even worse for AVEO is that the overall survival hazard ratio had increased from what the company announced in November. At the time, AVEO reported a preliminary hazard ratio of 1.06. However, the biotech subsequently "identified the survival status of a group of patients that were previously lost to follow up."
AVEO's decision to back off from filing for FDA approval for Fotivda means that a great degree of uncertainty exists about whether or not it will ever be able to market the drug in the U.S. However, Fotvida has gained regulatory approval in the European Union, Norway, and Iceland.
AVEO stated that it now plans to designate the overall survival analysis from the Tivo-3 study, scheduled to be announced in August 2019, as interim results. However, the company expects to evaluate more mature data in the fourth quarter of 2019. AVEO CEO Michael Bailey expressed hope that this later data could "translate into an improved hazard ratio."
Cash could be a problem in the meantime for AVEO, though. The biotech's share price sank in December over worries about its cash position. With a delay in filing for Fotivda, AVEO will likely have to raise more money. That might mean issuing new shares, which would cause the value of existing shares to fall even more.