Aveo slashes workforce, circles wagons around troubled kidney cancer drug

Struggling to overcome growing doubts about the future of its lead cancer drug, Cambridge, MA-based Aveo ($AVEO) this morning announced that it will shrink its workforce as it circles the wagons around its lead program. The company's CEO says that 45 staffers are being pink slipped--17% of the workforce--while another 30 open positions will not be filled. The move should save some $100 million over three years.

R&D appeared to take the brunt of the layoffs. Early-stage research is being put on the back burner and Aveo says that another candidate, ficlatuzumab, along with "certain discovery assets" would be studied through external collaborations. The research focus now will center squarely on the late-stage drug tivozanib, which has been stalled just as Aveo expected to begin ramping up marketing efforts. Aveo filed its NDA on tivozanib last month.

The past few months have been difficult ones for Aveo. Doubts about tivozanib reared up after the overall survival data for kidney cancer proved inferior to Nexavar, a standard therapeutic used to treat the disease. Just a few weeks ago Leerink Swann analyst Howard Liang downgraded the stock, unconvinced that the company's argument that positive progression-free survival data could win the day at the FDA. And with other kidney cancer drugs on the market, troubling safety signals could scuttle its chances with regulators.

"In our regulatory reviews, we could not find another case where the FDA approved an agent on progression-free survival benefit that has a clear unfavorable survival trend as in tivozanib's TIVO-1 trial or a similar pivotal trial design," Liang noted. "In our mind the lack of regulatory precedents increases the risk for tivozanib. In addition, safety data regarding on-study deaths from the TIVO-1 trial presented at ESMO were not clean in our view. We also view recent COMPARZ data (GSK, MP) as a net negative for Aveo due to potentially increased data hurdle and the kidney cancer market likely to face some uncertainties due to new immunotherapy anti-PD1, both limiting upside assuming approval."

Aveo, though, is soldiering on at the FDA.

"Aveo's primary focus is on the approval and successful commercialization of tivozanib, which will drive the near term future of the company and will be our greatest opportunity for value creation," said CEO Tuan Ha-Ngoc. "Aveo's drug discovery, translational research and Human Response Platform capabilities remain long-term core value drivers. We believe the cost savings resulting from the reduction in the scope of the R&D activities and associated resources outside of tivozanib position us well to successfully execute the planned launch of tivozanib, as well as make progress toward our goal of becoming a fully integrated oncology company."

- here's the press release

Special Report: Tivozanib – Top 10 Late-Stage Cancer Drugs – 2012

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