UPDATED: Aveo slashes 140 jobs, halts R&D work related to doomed FDA drug application

Staring straight at an almost certain FDA rejection for its kidney cancer drug tivozanib, Cambridge, MA-based Aveo Oncology ($AVEO) today grabbed the budget ax and hacked deep into its staff. A total of 140 workers are being laid off--62% of its workforce--and the biotech's COO is joining the exodus in July. Company execs also say that after their partner Astellas decided to bail on any further research work on the lead indication, Aveo also will stop all R&D work on renal cell carcinoma and focus on ongoing trials for other cancer types.

Aveo CEO Tuan Ha-Ngoc

FDA oncology chief Richard Pazdur submitted Aveo to a regulatory mugging during an expert panel review a few weeks ago, slamming the biotech for submitting a therapy that had failed to demonstrate improved overall survival when compared to Nexavar and questioning why there wasn't more data on Americans, unhappy with the heavy bias toward Eastern Europe. After revealing that the agency had suggested a year ago that Aveo's late-stage work should be supplemented with a new trial, surprised analysts began to demand some answers of their own. Those questions grew more pointed as class action lawsuits began to pile up.

Part of the answer from Aveo came with today's restructuring, including the planned departure of Elan Ezickson, executive vice president. But there will be plenty of unhappy observers wondering why CEO Tuan Ha-Ngoc still has a job at the end of today.

Ha-Ngoc had hired a commercial operations director to prepare for a launch and confidently asserted at the J.P. Morgan confab in January that superior progression-free survival data would win the day at the FDA, keeping quiet about clear evidence of the FDA's unhappiness. The unbalanced OS data, he added, could be explained by crossovers in the study who migrated into the tivozanib arm.

The FDA's Pazdur, though, didn't buy any of it, and Aveo was left twisting in the wind as the overwhelming majority of panel members voted against an approval.

"As a result of the recent ODAC meeting, we believe that it is likely that tivozanib will not receive FDA approval for renal cell carcinoma or RCC," said Dr. William J. Slichenmyer, chief medical officer of AVEO, in a statement. "With the decision of our partner, Astellas, not to proceed with a European filing for tivozanib or financially support future clinical trials in RCC, Aveo has no plans at this time to pursue tivozanib development in RCC."

"The pre-commercial organization, including medical affairs is being eliminated," David Johnson, the CFO, told analysts in a call on Wednesday morning. The clinical and regulatory organizations were also hit, he said, adding that "virtually every organization in the company is impacted."

Slichenmyer noted that the late-stage trial pitting tivozanib against Sutent will stop enrolling new patients.

There was only one question from an analyst pointed at the remaining management team, focusing on whether the current crew was the right one to go forward. Ha-Ngoc chose to duck it, saying: "In finalizing the strategy we had reviewed the management team and we believe the existing management team would be in place to execute the strategy going forward."

About the best that Aveo could say today was that it had $192 million in cash at the end of the first quarter, leaving enough money to continue work in other areas for at least two years.

Aveo and Astellas are continuing the BATON Phase II clinical trials of tivozanib in breast and colorectal cancer, according to their release. The BATON-CRC study of tivozanib in patients with colorectal cancer completed patient enrollment earlier this year, and results are expected in 2014. The BATON-BC study of tivozanib in triple negative breast cancer is currently enrolling patients, and data results are expected in late 2014 or early 2015.

- here's the press release

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