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What: Shares of cancer therapeutics company AVEO Pharmaceuticals (NASDAQ:AVEO) absolutely imploded, losing as much as 57% – and dropping as much as 70% for the week at one point – after its metastatic renal cancer carcinoma drug, Tivozanib, failed to win the backing of the Food and Drug Administrations' panel.

So what: In midday trading, AVEO and development partner Astellas Pharma reported that the FDA panel had voted 13-1 that Tivozanib had not demonstrated a favorable benefit-to-risk evaluation in treating advanced kidney cancer. AVEO's CEO, Tuan Ha-Ngoc, noted his discouragement with the FDA panels' findings, but plans to work closely with the FDA to improve upon what it felt Tivozanib lacked. If you recall, Tivozanib demonstrated a statistically significant progression-free survival benefit over Onyx Pharmaceuticals (UNKNOWN:ONXX.DL) and Bayer's (OTC:BAYRY) Nexavar in trials, but fell short of Nexavar in terms of median overall survival, which perplexed many.

Now what: Although the Food and Drug Administration isn't required to follow the recommendation of its panel, I'd find it difficult for them to approve Tivozanib here. I'm not saying the drug is a complete loss, as it clearly showed a benefit in PFS. However, there doesn't seem to be any way around the idea of AVEO having to run another costly trial to confirm that the median overall survival data was a fluke. Don't write Tivozanib off just yet, but I think it's time to push its development perhaps a year or two down the road.

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