AVEO Pharmaceuticals, Inc.
Q4 2013 Earnings Call Transcript

Published: 14 Mar 2014

[Operator:]

Thank you for holding for the AVEO conference call to discuss 2013 financial results and an update on 2014 strategy. [Operator Instructions] Following the formal report, AVEO management will open the line for a question-and-answer period. Please be advised that this call is being taped at the company's request and will be archived on the company's website for 2 weeks from today. At this time, I would like to introduce Rob Kloppenburg. Please go ahead.

[Robert Kloppenburg:]

Thank you, operator, and good afternoon, everyone. We are pleased that you could join us today for AVEO's fourth quarter and year-end 2013 conference call. With me today is Tuan Ha-Ngoc, President and CEO; Michael Bailey, Chief Business Officer; and Jeno Gyuris, Chief Scientific Officer. Let me begin by noting that the slides that support this earnings call can be found on our website at www.aveooncology.com. On Slide 2 of our presentation, we have our forward-looking statements. For those who do not have access to the slides, please note that some of the information that you will hear during our discussion today will consist of forward-looking statements, including, without limitation, those statements regarding the company's financial position and cash balance, potential partnerships and collaborations, the results of preclinical and clinical studies and future strategic opportunities. Actual results or trends could differ materially from our forecast. These projections, predictions and statements are based on management's current beliefs, as well as on a number of assumptions concerning future events. The forward-looking statements are subject to many risks, uncertainties and contingencies, and stockholders and others should recognize that actual results may differ materially from the company's expectations, whether expressed or implied. We refer you to the company's periodic reports filed with the SEC, including the company's Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of these forward-looking statements, risk factors and other factors that could affect these forward-looking statements. The information being provided today is as of this date only, and AVEO expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect changes in expectations. And now, I will turn the call over to Tuan.

[Tuan Ha-Ngoc:]

Thank you, Rob, and thank you all for joining us today. Let me begin by providing a brief update on our recent activities at AVEO and then outlining our strategy going forward. Over the last 8 months, the focus of the company has been on 3 areas outlined on Slide 3

[Operator:]

[Operator Instructions] Adnan, please proceed.

[Adnan S. Butt:]

It's Adnan from RBC Capital Markets. First question, Tuan, what led AVEO to decide on AV-380 or the other assets that are in the pipeline?

[Tuan Ha-Ngoc:]

As I mentioned in my remarks, we look at -- we conduct a comprehensive review of our assets. And we decide that the best strategy is to invest in first-in-class opportunity, and that we have defined to have addressing unmet medical need or where there's a basic patient understanding with minimum therapy that exists today, with a clear proof-of-concept, path to prove concept, as well as approval, and AV-380 fits perfectly that criteria for us. As you know, AV-380 is derived from a Human Response Platform, and it address the market, cachexia, that currently is unmet with many other -- despite many other attempts. So that is our primary focus, to make sure that we invest in areas that fit exactly our strategic criteria. Now in parallel with that, we also look at our clinical stage assets, and we believe that those assets can be more effectively developed, with the addition resources to our partnership. And therefore, we continue to have the opportunity to realize the value in the best way from those clinical stage assets.

[Adnan S. Butt:]

So Tuan, what gives you confidence that this is a good target for this disease, that it's something that can be targeted. And is there a proof-of-concept from anybody else at this stage?

[Tuan Ha-Ngoc:]

Yes. Jeno, would you like answer?

[Jeno Gyuris:]

Yes, thank you. So as Tuan mentioned in the presentation, we have a fairly significant amount of experimental data that links GDF-15 to the onset of cachexia. Some of those data are correlative data where we show, in anyone with us [ph] and in cancer patients, that elevated levels of serum GDF-15 levels correlate very strongly with the phenotype of cachexia. And also, in any more experiments, we demonstrated the GDF-15 elevated levels of circulating GDF-15 can trigger the cachexia phenotype. And this phenotype is very reminiscent of what is seen in cachexic human patients. And finally, in loss of function type of experiments using a broad range of tumor-driven cachexia models, we demonstrated that the inhibition of GDF-15 can revert the body vehicle phenotype, can restore the lost tissues of muscle and fat and can help to restore normal body composition. So based on these experiments, we believe that GDF-15 is a potential driver -- essential driver of the phenotype. And I think, based on this mechanism of action, we think it's quite unique and different from the approaches that have been tried or being tried right now in the clinic.

[Adnan S. Butt:]

So just a last follow-up. So where do you think -- first, where's the target present? And where do think that potential antibody has an impact? And then how does it have an impact? And then secondly, when you think about developing this, do you see a development path that's by itself? Or is it in combination with other approaches?

[Jeno Gyuris:]

So taking the first part, the target present. As I mentioned, GDF-15 -- and Tuan mentioned in the presentation as well, GDF-15 is a circulating cytokine. It's present in circulation. And its level is elevated in cachexic cancer patients, significantly elevated in cachexic cancer patients. And I think it's, right now, too early to talk about the potential development for this agent. But we can imagine different approaches to developing it, either as a single agent or in combination with other therapeutics.

[Tuan Ha-Ngoc:]

However, in our own animal models, it is active as a single agent. As Jeno mentioned, that it does reverse cachexia in cachexic tumor models. And in a normal animal model, it does induce cachexia.

[Jeno Gyuris:]

And one more thing that, I think, we have very nicely demonstrated that elevated GDF-15 itself can be used as a biomarker to identify patients who might be actually benefiting from a GDF-15 inhibitor, the antibody.

[Adnan S. Butt:]

Okay. And the last question, then I'll get back in line. For the -- are any partnering discussions ongoing at this time? Or is that something that the company plans to focus on going forward?

[Tuan Ha-Ngoc:]

Michael?

[Michael P. Bailey:]

This is Michael Bailey. Yes, we're in partnering discussions with several companies. They've been proceeding well. We'll make an appropriate announcement at the time that we've come to agreement with a company. What's critical to this, though, is that we're really looking to partner this in a strategic way. We're looking for a company that can enable us to realize the full potential beyond cancer cachexia into COPD [ph], CHF [ph], and chronic kidney disease. But -- which the market opportunities, or at least the patient numbers that are dramatic, upwards of 5 million in just the U.S., if you included all these other diseases.

[Adnan S. Butt:]

I'm sorry. You prompted my thought here. But the pathway is the same in the other diseases as it is in cancer? Do you see GDF-15 levels that are more elevated?

[Jeno Gyuris:]

We had ongoing efforts, right? So we have demonstrated using patient-derived plasma from cachexic cancer patients and cancer patients without cachexia. And using these patient cohorts, we were able to demonstrate the correlation with GDF-15 with the cachexia phenotype. So we have ongoing efforts using patient samples from chronic heart failure and COPD and potentially from chronic kidney disease where we can look patient cohort, patients cohorts with cachexia and without cachexia, and try to correlate elevated serum levels of GDF-15 to cachexia in those diseases as well. So these are actually ongoing efforts as we speak.

[Operator:]

Our next question will come from the line of Anupam Rama from JPMorgan.

[Anupam Rama:]

I just wanted to follow up a little bit on the earlier question, on AV-203. You seem to have a partnership already. You have a partnership already in place with Biogen. You've seen no dose-limiting toxicities in a Phase I. I mean, could you -- why not move that program forward as your lead, seeing that you've already had sort of maybe proof-of-concept established? And then just a second question, just on expenses. You mentioned $12 million in -- to those that have wind-down. So we should assume that the remaining expenses in R&D are deploying to AV-380, basically?

[Tuan Ha-Ngoc:]

Michael, what don't you answer the first question, and I will answer the second question.

[Michael P. Bailey:]

Sure. So the question being why not move forward with AV-203 with our own resources. I think Tuan touched on this in the prepared presentation. Specifically, we feel that finding a partner that can bring additional resources to accelerate the program more comprehensively than we could by ourselves, since we're focusing our resources right now on the GDF-15 Program. So we feel that an external partner could really help us move this forward more rapidly.

[Tuan Ha-Ngoc:]

And as you know, Biogen, although the partner, having the option for territory outside of North America, is no longer involved in the oncology area. So after the -- second question, the -- in our projection for 2014, we shared with you that there is -- we have budgeted $12 million for all the activities, and mostly, on the wind-down of tivozanib trials. And the remaining covering all the other programs that we have. And yes, maybe 380 is a big part of it.

[Operator:]

[Operator Instructions] Our next question will come from the line of Brian Klein from Stifel.

[Brian Klein:]

So first, I just want to explore a little bit this idea of value-creation, which you presented as a theme today. And just going off of the last question, if I do the math here, it looks like you're planning to spend about $50 million in 2014. And I'm just trying to understand what that spend is really going to. Why does it cost $50 million to develop a preclinical asset, in which you won't even have -- be approaching the IND until the middle of next year? Could you give some more color there?

[Tuan Ha-Ngoc:]

Yes. So assuming you're referring to your calculations on the basis of our guidance that we will be ending the year between $50 million and $55 million, and part of that will be -- the bigger part of that is R&D, obviously, and the $12 million that we already refer to. We believe that the exploration of the additional potential indications of AV-380 is very important part of value-creation. And that is, as Michael suggested, that could be a basis for partnership that can bring shorter-term value to the company, as well as ability to address a much larger market. So that's -- and then there's still other expenses going on with the ficlatuzumab and AV-203 as well, even though it would be -- it will be undertaking a bigger expansion of those programs in the context of future partnerships.

[Brian Klein:]

Okay. I guess then the next point is, it seems like the future of the company is highly dependent on you establishing partnerships for all of your programs. And again, I'm not quite clear how that is really an enticing theme for investors to want to invest in the company. So maybe you can talk a little bit about how you can become more directed in terms of your own destiny?

[Tuan Ha-Ngoc:]

Yes. I think that we do have -- as a key part of our strategy, our continued investment in AV-380, and moving that program to other clinics, and that is something that we have earmarked the resources to do so. When I mentioned about the partnership, it is for a potential expansion outside of [indiscernible] cancer cachexia. With regards to the clinical stage assets, we believe that the -- as we mentioned before, those are very valuable assets, but it probably will benefit from additional resource to be provided by the partners. So it is very important for us to calculate the best return on investment on behalf of the shareholders, and invest where we believe that is the better return at this point in time.

[Brian Klein:]

Okay. I guess, last question then is, was there ever any thought between you and the Board to essentially shut down all clinical activities that are being sponsored by AVEO and just out-license all of your products and return the cash and anything else you'll get from partners back to investors?

[Tuan Ha-Ngoc:]

Obviously, we're -- as we defined our strategy together with the Board, we have looked at all the past value creation. And obviously, that's our responsibility, to look all the various paths. And we agree, together with the board, that the path that is outlined today with our strategy will present the optimal path for value creation.

[Operator:]

With no further questions in the queue, I would now like to turn the call back over for closing remarks.

[Tuan Ha-Ngoc:]

Thank you all for listening to this call. I hope that the path forward has been clear with you, and we look forward for future interactions with many of you. Thank you.

[Operator:]

Ladies and gentlemen, that concludes today's presentation. You may now disconnect. Have a great day.