What happened
Shares of the early commercial-stage biotech AVEO Pharmaceuticals (AVEO) slipped by a stunning 19.8% in November, according to data from S&P Global Market Intelligence. The culprit?
AVEO's shares broke down last month after the company released its third-quarter earnings on Nov. 9. The problem was the company's admission that its current cash position is only sufficient to fund operations into the second quarter of 2019 -- despite a recent $8.4 million capital raise and the receipt of a $2 million milestone payment from its partner EUSA Pharma for the launch of the duo's kidney cancer drug Fotivda (tivozanib) in Germany.
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So what
AVEO's worrisome financial position arguably ruined what should have been a banner month for the company and its share price. The company announced early in the month that tivozanib's late-stage trial for third- and fourth-line kidney cancer met its primary endpoint, paving the way for a regulatory filing in the U.S. next year.
Now what
AVEO's current plan is to have tivozanib under regulatory review in the U.S. by mid-2019. That estimated timeline would thus have the drug's commercial launch taking place sometime toward the back end of 2020. So, as things stand, AVEO needs to find a way to float the company for about a year, and then come up with the cash to actually launch the drug stateside.
The drugmaker does have a couple of viable options to pull off this endeavor -- such as additional debt financing, selling itself, or perhaps a merger. But there's also the strong possibility that AVEO will continue to dilute current shareholders as it works toward this all-important regulatory filing. As such, investors may want to remain on the sidelines for the time being.
