AVEO Pharmaceuticals (AVEO) Shares Double on Novartis Deal
Shares of AVEO Pharmaceuticals Inc. (AVEO) were trading up +1.49 or +123.83 percent to $2.60 per share in Monday's premarket after the company announced a worldwide licensing agreement with Novartis (NVS) for the development and commercialization of the company's AV-380. AVEO stock closed at $1.17, unchanged in Friday's regular trading session.Founded as GenPath Pharmaceuticals in 2001, Cambridge, Massachusetts based AVEO Pharmaceuticals is a biopharmaceutical company involved in the development of targeted therapies for cancer patients.
AVEO's proprietary Human Response Platform has made insights into cancer and related disease biology that the company seeks to leverage in the development strategy for its therapeutic candidates. The company had its initial public offering in March of 2010 at $9.00 per share.
This morning, AVEO announced it would enter in an exclusive, worldwide license agreement with Novartis to develop and commercialize AVEO's AV-380 related, modified and derivative antibodies. According to the agreement, AVEO will receive an upfront payment of $15 million with up to $311 million in reimbursements for clinical, sales and regulatory based milestone payments.
AVEO's President and Chief Executive Officer Michael Bailey said in the company's press release that, "AV-380 holds great promise as a potential treatment for cachexia secondary to multiple disease states, including cancer, chronic kidney disease, congestive heart failure and chronic obstructive pulmonary disease. Novartis brings resources and expertise to bear on advancing this program, which we believe provides the optimal path forward toward realizing its full potential."
AV-380 targets the growth differentiation factor 15 (GDP15), which is a pro inflammatory cytokine that has been correlated with cachexia, a metabolic syndrome known for severe involuntary weight loss, malnutrition and the loss of muscle and fat tissue in advanced cancer patients. The syndrome can also manifest as anemia, inflammation and suppressed immune functions.
Preclinical studies have shown that AV-380 could reverse the effects of cachexia by inhibiting GDF15 results in a switch from catabolism to anabolism. Cachexia currently affects approximately five million people in the United States.
In addition to the upfront payment and reimbursements, AVEO will be eligible to receive tiered royalties on product sales of AV-380 which would range from the high single digits to the low double digits. Novartis will be responsible for clinical development of the product, as well as all manufacturing and commercialization activities and related costs.
AVEO stock has been extremely volatile since its IPO in 2010, reaching a high of $20.68 in July of 2011, the stock broke down in January of 2014 when the stock fell under $2 per share. This morning's action could mark the beginning of a turnaround for the stock, having already more than doubled in this morning's premarket.
Other News About AVEO
AVEO Pharmaceuticals Posts Narrower-than-Expected Loss - Analyst Blog
Company lost $0.10 per share versus an analyst consensus of a -$0.16 loss.
AVEO Oncology Announces Exclusive Licensing Agreement with Pharmstandard for Tivozanib in Russia, Ukraine and CIS
Pharmstandard wil pay $1.5 million upfront and $7.5 million after the first marketing authorization.
Other Stocks in the News
Morgan Stanley Massively Hikes Price Target on Tesla, Says Stock Could Almost Double
MS analyst Adam Jonas raised his price target on the stock to $465 per share from $280.
QVC owner to buy Zulily for $2.4 billion
Liberty Interactive will pay $18.75 per share, a 49% premium to Zulily's Friday's closing price.