PropThink: Expense Cuts Ahead of a Pivotal Year for AVEO and Tivozanib

By Jake King

In a move that management says will save the company more than $100M over the next three years, AVEO Oncology AVEO cut its work force by 17% and made strategic shifts to lighten the R&D expenses of early-stage compounds. Management is trying to be as candid as possible going into 2013 as investor confidence waned this year and stock price dipped lower and lower, in fact setting a new 52-week low just this month. The expense cuts and visibility couldn't be more pertinent as AVEO prepares for the commercial launch of tivozanib, a potential first-line treatment for Renal Cell Carcinoma (RCC). If approved, the drug will launch late next year.

The company finished the quarter with $189M in cash, equivalents, and short-term investments and expects to end 2012 with roughly $135M, which, says management, should last through next year. Management estimates, however, hinge on tivozanib's approval, which will result in a substantial milestone payment from partner Astellas Pharma ALPMY and may allow recognition of some tivozanib revenue in the 4th quarter. That cash will be crucial in 2013 as the company moves from a developmental entity into commercialization. The company is already ramping up marketing efforts in advance of approval, bringing on industry veteran Brad Bailey as VP of Sales and creating an 80-member salesforce for the drug, for which Astellas will split expenses.Continue reading.

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