Aveo Pharmaceuticals (AVEO) announced on Thursday that its three-year deal with Big Pharma has come to a close. While this sort of news is usually bad news (it often happens when a drug doesn’t work), Aveo could be the one lucking out.
The Cambridge, Massachusetts-based biotech entered into the agreement in April 2007 with Schering-Plough -- now Merck (MRK) -- for the larger company to partner on its then preclinical cancer treatment. At the time, Aveo received a $7.5 million upfront payment, as well as $10 million in equity investments. The biotech was also eligible to receive another $460 million in milestone payments.
The deal was structured so that Aveo made out like a bandit and doesn’t really lose anything now that Merck has decided to end the collaboration. The only downside is that Schering/Merck was funding all of the research and development, but Aveo was able to get the drug into phase II trials on the Big Pharma’s dime (Merck will provide funding for the program through the end of the year). The biotech now has the option to find a new partner who can take over that funding.
"Aveo is very pleased to regain worldwide rights for the development and commercialization of AV-299," said Aveo CEO Tuan Ha-Ngoc. "Aveo now holds significant commercialization rights to all oncology products in our pipeline, and we believe that we are well-positioned to move toward our goal of becoming a fully-integrated commercial organization.”
Aveo presented positive phase I results for the drug at the 46th Annual Meeting of the American Society of Clinical Oncology (ASCO) held in Chicago earlier this year. The drug was shown to be effective in several different tumor types and was safe at all doses. The biotech moved into its first phase II study of the drug, AV-299, in patients with non-small cell lung cancer and results are expected towards the end of next year.
If the drug looks so promising then why is Merck pulling out? Simple; the Big Pharma has finally gotten around to cleaning out the excess it has in its pipeline since purchasing Schering-Plough. "Merck is pleased with our history of collaborating with AVEO, and would welcome the opportunity to work with AVEO again in the future," said David Nicholson, Ph.D., senior vice president and head of worldwide licensing and knowledge management at Merck. "The decision to return this program to AVEO is a result of portfolio prioritization."
Some critics might say that Merck dropped the drug because the phase II study wasn’t panning out as the pharmaceutical giant had expected, but this scenario is highly unlikely, largely due to the phase II testing being in such early stages of the program. Aveo is also handling all of the development of the drug, thus it’s unlikely that Merck has had a clear picture of what is really going on there.
“We do not believe Merck's decision was due to negative findings of the ongoing Phase II trial of AV-299 in lung cancer,” said Leerink Swann analyst Howard Liang in a note to investors. “In our opinion, regaining rights to this agent bolsters Aveo's pipeline and it now has two agents, one in Phase III and one in Phase II, to which it has broad commercial rights.”
Aveo’s stock is already up 10% on the news to trade around $12 per share on Friday afternoon. Expect the biotech to gain further exposure in mid-2011 when it announces late-stage trial data for its lead product, Tivozanib, and then again toward the end of the year when it announces the results of the phase II study for AV-299. Aveo could be pushed further into the limelight as its competitors announce data for their drugs that are in the same class as AV-299 – specifically ArQule’s (ARQL) ARQ-197.
The Cambridge, Massachusetts-based biotech entered into the agreement in April 2007 with Schering-Plough -- now Merck (MRK) -- for the larger company to partner on its then preclinical cancer treatment. At the time, Aveo received a $7.5 million upfront payment, as well as $10 million in equity investments. The biotech was also eligible to receive another $460 million in milestone payments.
The deal was structured so that Aveo made out like a bandit and doesn’t really lose anything now that Merck has decided to end the collaboration. The only downside is that Schering/Merck was funding all of the research and development, but Aveo was able to get the drug into phase II trials on the Big Pharma’s dime (Merck will provide funding for the program through the end of the year). The biotech now has the option to find a new partner who can take over that funding.
"Aveo is very pleased to regain worldwide rights for the development and commercialization of AV-299," said Aveo CEO Tuan Ha-Ngoc. "Aveo now holds significant commercialization rights to all oncology products in our pipeline, and we believe that we are well-positioned to move toward our goal of becoming a fully-integrated commercial organization.”
Aveo presented positive phase I results for the drug at the 46th Annual Meeting of the American Society of Clinical Oncology (ASCO) held in Chicago earlier this year. The drug was shown to be effective in several different tumor types and was safe at all doses. The biotech moved into its first phase II study of the drug, AV-299, in patients with non-small cell lung cancer and results are expected towards the end of next year.
If the drug looks so promising then why is Merck pulling out? Simple; the Big Pharma has finally gotten around to cleaning out the excess it has in its pipeline since purchasing Schering-Plough. "Merck is pleased with our history of collaborating with AVEO, and would welcome the opportunity to work with AVEO again in the future," said David Nicholson, Ph.D., senior vice president and head of worldwide licensing and knowledge management at Merck. "The decision to return this program to AVEO is a result of portfolio prioritization."
Some critics might say that Merck dropped the drug because the phase II study wasn’t panning out as the pharmaceutical giant had expected, but this scenario is highly unlikely, largely due to the phase II testing being in such early stages of the program. Aveo is also handling all of the development of the drug, thus it’s unlikely that Merck has had a clear picture of what is really going on there.
“We do not believe Merck's decision was due to negative findings of the ongoing Phase II trial of AV-299 in lung cancer,” said Leerink Swann analyst Howard Liang in a note to investors. “In our opinion, regaining rights to this agent bolsters Aveo's pipeline and it now has two agents, one in Phase III and one in Phase II, to which it has broad commercial rights.”
Aveo’s stock is already up 10% on the news to trade around $12 per share on Friday afternoon. Expect the biotech to gain further exposure in mid-2011 when it announces late-stage trial data for its lead product, Tivozanib, and then again toward the end of the year when it announces the results of the phase II study for AV-299. Aveo could be pushed further into the limelight as its competitors announce data for their drugs that are in the same class as AV-299 – specifically ArQule’s (ARQL) ARQ-197.
No comments:
Post a Comment