AVEO Pharmaceuticals, Inc.
Q3 2012 Earnings Call Transcript

Published: 30 Oct 2012

[Operator:]

Thank you for holding for AVEO Oncology's Third Quarter 2012 Financial Results Conference Call. [Operator Instructions] 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 Monique Allaire, Director of Investors Relations. Please go ahead.

[Monique Allaire:]

Thank you, Operator, and good morning, everyone. Today, we'll be talking about key recent developments and our third quarter 2012 financial results. With me are Tuan Ha-Ngoc, our President and CEO; David Johnston, our CFO; Bill Slichenmyer, our Chief Medical Officer; Michael Bailey, our Chief Commercial Officer; and Elan Ezickson, our Executive Vice President and Chief Operating Officer. The press release issued earlier today, detailing our results is available on our website at aveooncology.com. During this call, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements about AVEO's future expectations and plans, clinical development and regulatory timeline, the potential success of our product candidates and financial projections. These statements involve risks and uncertainties, which are described in the Risk Factors section of our most recent Form 10-Q filed with the SEC and available online at sec.gov. While these forward-looking statements represent our views as of today, they should not be relied upon as representing our views in the future. We may update these statements in the future, but we are not taking on an obligation to do so. With that, let me pass the call over to Tuan.

[Tuan Ha-Ngoc:]

Thank you, Monique, and thank you all for joining us this morning. Earlier today, we announced that AVEO has conducted a strategic restructuring designed to optimize company resources and reduce expenses to ensure 2 things

[William J. Slichenmyer:]

Thanks, Tuan. We continue to make good progress with the development of tivozanib. As Tuan mentioned, we and our partners at Astellas submitted the NDA for tivozanib in patients with advanced RCC. The submission was based on results from our TIVO-1 study and various supportive studies and was a significant milestone for us. We look forward to the agency's response in the next month or so. To remind you, TIVO-1 demonstrated a statistically significant improvement in PFS with tivozanib compared to sorafenib in both the overall population study as well as the prespecified subpopulation that was treatment-naive. In that patient population, tivozanib demonstrated a PFS of 12.7 months versus 9.1 months with sorafenib. In TIVO-1, tivozanib demonstrated low rates of dose reductions and interruptions with 12% and 18% respectively. Further, in our safety analysis of over 1,000 people treated with tivozanib in 17 clinical studies, it was well-tolerated. The most common adverse event was hypertension, which has been readily managed and is correlated with efficacy outcomes. We are confident in the strength of the tivozanib data package submitted to the NDA as well as the potential role tivozanib may play for patients living with kidney cancer. In fact, the past several weeks have provided us with new insights into the clinical landscape and activity of several different treatments for RCC. We believe that these further support our view of tivozanib as an important potential first-line treatment option. First, data from the COMPARZ trial evaluating pazopanib versus sunitinib presented at the ESMO conference demonstrated that the PFS seen with first-line pazopanib in treatment-naive patients with advanced RCC is 8.4 months versus a PFS of 9.5 months with sunitinib. In this study, more the 40% of patients required a dose reduction and more than 60% of patients required a dose interruption on each arm. More recently, the top line release from the Phase III AGILE 1051 trial evaluating axitinib versus sorafenib in treatment-naive patients with advanced RCC indicated that axitinib did not meet its primary endpoint as statistically significant longer PFS. Of course, more details from these studies are forthcoming. However, these data suggest that there is still a need for a first-line treatment option with a PFS rate of greater than 12 months that is well-tolerated with less need for dose reductions and interruptions. We are committed to evaluating tivozanib in other solid tumors. We and Astellas are on track to initiate the third of our biomarker-driven studies, which we call our BATON series. This will be a Phase II trial in patients of triple-negative breast cancer beginning this quarter. The design for this trial was accepted for a poster presentation at the San Antonio Breast Cancer Symposium. We'll be seeing more about this study once we've announced patient enrollment, which should take place fairly soon. With that, let me turn the call over to Michael.

[Michael P. Bailey:]

Thanks, Bill, and good morning, everyone. This is an exciting time for the commercial team at AVEO as we continue to prepare for the planned launch of tivozanib. As Bill said, ESMO was an informative meeting and we strongly believe the data emerging from other clinical trials bodes well for the positive positioning of tivozanib in RCC once approved. As part of our ongoing preparations for the launch and commercialization of tivozanib, we recently appointed a Vice President of Sales, Brad Bailey, no relation. Brad brings more than 2 decades of leadership experience in field sales, operations, account management and reimbursement. Importantly, he also brings with him the valuable experience of having led Pfizer's U.S. sales effort for the launch of Sutent in RCC. I am thrilled to welcome Brad to the organization and look forward to working with him and the rest of the team to ensure a successful tivozanib launch. Working with Astellas, we continue to engage with the global clinical community and learn from the clinical and market dynamics affecting prescribing patterns in RCC. While we know the competition is real and significant, we are confident that our clinical data combined with our marketing and sales strategies will position tivozanib to meet the unmet needs in RCC and effectively compete in the this $2 billion dollar market. With that, let me pass the call to Dave to review our financials. Dave?

[David B. Johnston:]

Thanks, Michael. Since we issued a press release this morning outlining our third quarter 2012 financial results, let me just review the highlights, and then I'll speak to our cash balance and our financial guidance. Total collaboration revenues for the third quarter were approximately $1 million. R&D expense for the third quarter was $21.1 million. G&A expense for the third quarter was $9.3 million. And net loss for the third quarter of 2012 was $30.1 million or a net loss per share of $0.69. We ended the third quarter 2012 with cash and marketable securities of approximately $190 million. As Tuan stated earlier, our strategic restructuring will reduce our expenses and provide us with some substantial savings. We expect this to result in approximately $100 million in cost savings over the next 3 years as compared with prior projections, including approximately $37 million in cost savings in 2013. We anticipate that the total charge for the reduction in our workforce will be approximately $2.6 million, which is included in both our updated short- and long-term financial guidance, which we are providing today. We now expect to end 2012 with approximately $135 million in cash and marketable securities. And based on our revised operating plan, we expect that this capital will be sufficient to fund our operations through 2013. With that, let's open the call for your questions.

[Operator:]

[Operator Instructions] Your first question comes from the line of Adnan Butt from RBC Capital Markets.

[Adnan S. Butt:]

The first question is on restructuring. Does the restructuring reflect in any way on the ongoing application review? And have you had any interactions with the FDA since submitting the filing?

[Tuan Ha-Ngoc:]

Adnan, this is Tuan. As we mentioned, this decision about restructuring for the company is to optimize the resources and reduce expense to ensure that AVEO is well positioned to a successful launch of tivozanib, first in RCC but also continued development in other indications. So it's a clear sign of the confidence of the registration filing we submitted to the FDA. And then while narrowed, the company's research programs will still be focused on areas where we believe they can build long-term value for the company.

[Adnan S. Butt:]

And is the next interaction with the FDA expected to be the acceptance of the NDA and that's around November, is that correct?

[Tuan Ha-Ngoc:]

That is the expected timing, yes.

[Adnan S. Butt:]

Okay. And then a question for Dave. Dave, can you provide any R&D or SG&A line item guidance at this point?

[David B. Johnston:]

I'm sorry for -- we haven't ever provided that. We haven't yet, so we're not going to provide that. The primary guidance is that we increased our year-end cash estimates and our projections moving forward.

[Adnan S. Butt:]

Okay. And then a bigger-picture question. Clearly, the data that's been shown by other agents tells us that tivozanib still has the best PFS out there. In terms of the application that you filed, do expect an ODAC? And then when do you expect survival data? And do you think that's needed for the application to make its way through the approval process?

[William J. Slichenmyer:]

Yes. We think that it's fairly likely that we will have an ODAC meeting, although that decision, of course, is up to the FDA. And it'll be sometime before they let us know their decision on that. Regarding the question about overall survival, we have included the final protocol-specified overall survival analysis in the NDA, which was submitted in late September.

[Operator:]

Your next question comes from Salveen Richter of Canaccord.

[Salveen J. Richter:]

Just two. One, in terms of the strategic restructuring, are there specific early-stage programs that are being terminated? And which positions are being eliminated outside of research? And then just wanted to get a sense -- and you kind of went over this briefly. But with all of the competitive data we saw this summer, including [indiscernible], Inlyta and Votrient, how does that change your strength and your view on how to position TIVO?

[Elan Z. Ezickson:]

So this is Elan. With respect to the discovery programs, so as we indicated, we are going to be continuing development of ficlatuzumab. But as we've announced, that will be principally through external collaborations. We are going to be continuing the AV-203 development that has begun. There's a first-in-human study that is -- that got underway earlier this year. We're not disclosing for the discovery stage programs the specifics of each of those programs. But with regard to the question you had around positions being eliminated outside of research, those principally relate to the reduced level of internal company activities around those programs that are being cut back.

[William J. Slichenmyer:]

Yes. So regarding comparison with some of the recently announced data. I think some -- one of the other questioners mentioned about the COMPARZ results. And with pazopanib showing its median PFS of 8.4 months, sunitinib 9.5 months, and also importantly, the rate of dose reductions, over 40% for both drugs in that trial, dose interruptions greater than 60% for both drugs in that trial. We believe that there's still an important need for a new drug that meets the need for a longer PFS -- over a year -- and that's well-tolerated. And just remember that tivozanib in this pivotal trial had a median PFS in the treatment-naive population of 12.7 months. Excellent tolerability, a rate of dose reductions of only 12% and interruptions, 18%. So clearly, there remains an unmet need. We think that tivozanib is a good potential option for the future.

[Operator:]

Your next question comes from Marshall Urist from Morgan Stanley.

[Yigal D. Nochomovitz:]

This is Yigal Nochomovitz standing in for Marshall. I had a bad connection, so I'm not sure if this was asked. But could you just review when we expect to see updated OS data for TIVO? Is that going to be ASCO GU or something further down the road like ASCO? And then also, could you just discuss a bit how the restructuring could impact timelines for the TIVO launch?

[Elan Z. Ezickson:]

So regarding the publication and public presentation of the overall survival data, we have submitted these for presentation at the ASCO GU conference. That will be in mid-February. And with regard to timing of launch, there is no impact whatsoever from this restructuring on timing of launch. We are working very hard to be in a position to deliver tivozanib to patients rapidly upon approval.

[Yigal D. Nochomovitz:]

And one more for me. If you could just confirm that the TIVO NDA will be reviewed under PDUFA IV as opposed to PDUFA V?

[Elan Z. Ezickson:]

That is our expectation. It was submitted September 28 and met the deadline before the PDUFA V regulations came into effect on October 1.

[Operator:]

Your next question comes from Thomas Wei of Jefferies.

[Thomas Wei:]

Just in relation to this restructuring, I guess I wanted to clarify that it does not involve any changes to the TIVO clinical development program. And when you talk about this allowing you to extend your cash runway to the end of 2013, I guess I'm curious what kind of TIVO development program does that allow you to pursue? Is that TAURUS, breast, colorectal and others? And what might those others be?

[William J. Slichenmyer:]

Yes. Regarding the tivozanib clinical development program, there has been no change to the plan as you heard it, including the tumor types you've outlined. And so with Phase II trials underway in colorectal cancer to begin very shortly, in breast cancer and the ongoing TAURUS study as well.

[David B. Johnston:]

Thomas, Dave here. In terms of what the extension includes, it includes everything that Bill said. Beyond that, we haven't disclosed trials as generally we don't talk about them until we have first patient in. But it certainly doesn't -- this restructuring actually enables us to continue and broaden our tivozanib development program.

[Thomas Wei:]

I see. So you have cash sitting [ph] under 2013, including initiating new clinical efforts for TIVO, but you're not willing to kind of talk about what the priorities there are for clinical development.

[David B. Johnston:]

You could say that. Yes.

[Operator:]

Your next question comes from the line of Jason Kantor from Credit Suisse.

[Jason Kantor:]

Could you -- most of my questions were asked. But can you just give us some sort of breakdown of how much of the spend -- you said 80% of your resources are going to tivozanib. How much of that is going to be new clinical trial spends versus maybe some precommercial and other costs that you may have to have, regulatory and such?

[David B. Johnston:]

Jason, this is Dave again. We don't get into that level of detail. But of the 80%, what you expect to see is we're still in a part of our clinical development cycle, where -- while the primary Phase III has pretty much completed, we still have follow-on with the 902 [ph] program, which is the extension study, and then we have the 2 Phase IIs in colorectal and breast. So it's substantial. But what you're going to see over the next year, particularly, is a significant ramp-up of precommercial. I can't get into the specifics in terms of the percentage splits. But you will see a change in the percentages over the next probably 9 to 12 months.

[Jason Kantor:]

So if I could ask one more question. You said that you'll have updated TIVO data at ASCO GU. Can you give us some sense of what the remaining dataflow might look like in 2013 as it relates to maybe some of the other studies, in biomarkers and stuff like that? What are the time points we should be looking at?

[Elan Z. Ezickson:]

We're still looking at our plans for that. And I think maybe at a future call, we might be able to provide a better update on that.

[Operator:]

Your next question comes from the line of Jim Birchenough from BMO Capital.

[Jim Birchenough:]

Most of my questions have been asked and answered. But just on the second quarter earnings call, you guys mentioned that overall survival data were not yet mature. By my calculation, a little over 100 deaths had occurred at that 1-year time point. So is there some agreement with FDA as to what represents mature overall survival data? Are they going to look at some upper downed [ph] of risk and want that below a certain level? Just trying to get a sense of what your understanding is of mature overall survival data and when you'll have it.

[Elan Z. Ezickson:]

So what we've discussed with the FDA is submitting the final overall survival analysis, which was prespecified in the protocol based on the time point coming 24 months after the last patient was enrolled in the study. And so that led to a data cutoff in late August of this year. And those data were summarized and submitted in the NDA.

[Jim Birchenough:]

And can you say what number of events had occurred at that point?

[Elan Z. Ezickson:]

We will disclose that at ASCO GU, assuming that our abstracts are submitted for -- are accepted for presentation.

[Jim Birchenough:]

And then just following up on the questions on prelaunch planning and the impact of the restructuring, can you remind us what size of sales force you guys would entertain fielding yourselves and just what the scope of those prelaunch activities would be?

[Michael P. Bailey:]

Jim, it's Michael Bailey. The guidance we've given is that we've benchmarked against some other companies, I think would be a reasonable thing to model is somewhere in the ballpark of 80 sales people.

[David B. Johnston:]

Jim, Dave here. Now half of those will be fielded by Astellas and half will be fielded by us. But in some ways, it doesn't make any difference because the total expense is shared among the 2 organizations.

[Jim Birchenough:]

And just so I understand, there's no impact on timing of hiring or training of those reps with the restructuring?

[David B. Johnston:]

Absolutely not. We -- as mentioned, we hired Brad Bailey, our VP of Sales. Our plan is to bring our sales leadership team in first quarter of '13, and then bring the sales force on around the second quarter of '13.

[Operator:]

Your next question comes from Howard Liang from Leerink Swann.

[Howard Liang:]

Just a question on the cash guidance through, I think, end of 2013. Can you talk about whether there's a difference whether you get approval for TIVO?

[David B. Johnston:]

Howard, this is Dave. Yes. So in that projection, there is an assumption that TIVO is approved in Q3 and with the accompanying milestone that's in there, as well as some very preliminary, although not very impactful, revenues that would take place in the first quarter launch -- that is not significant. But yes, so obviously there would be a difference in projections if tivozanib were not approved.

[Howard Liang:]

I guess, if it were not approved, you would have less launch expenses. I guess, would it be longer -- would the runway be longer or shorter without approval?

[David B. Johnston:]

Well, once again, this is all -- you're talking about a bunch of hypotheticals here in terms of timing of when we are told, how much advanced warning we had, so how much effort we put into prelaunch activities, et cetera. So it could vary quite a bit. It could -- in terms of runway, I guess, theoretically, to find out sooner rather than later, you'd actually have a longer runway.

[Operator:]

You have no more questions in queue. And now I'd like to turn the call back over to Tuan, Chief Executive Officer, for closing remarks.

[Tuan Ha-Ngoc:]

Thank you, Operator. In conclusion, with the progress we've made, all of our efforts are designed to ensure that we are well-positioned to launch and commercialize tivozanib next year. We believe this will drive the near-term future of the company and is our greatest opportunity for value creation required for both the continued growth of the company, as well as supporting our commitment to research. We look forward to updating you on our continued progress. Thank you.

[Operator:]

Thank you, Tuan. Ladies and gentlemen, that does conclude your conference call for today. Thank you for your participation. Take care.