AVEO Pharmaceuticals, Inc. ( AVEO ) reported a first-quarter 2014 loss of 5 cents per share (excluding one-time expenses), narrower than the year-ago loss of 69 cents per share and the Zacks Consensus Estimate of a loss of 33 cents. The narrower year-over-year loss was primarily due to lower operating expenses and higher collaboration revenues.
The company's total collaboration revenue for the first quarter was $15.3 million as compared to $0.3 million in the year-ago period. Revenue in the first quarter 2014 included a one-time revenue of $14.1 million (previously deferred revenue) as a result of the amended agreement with Biogen Idec Inc. ( BIIB ).
In the first quarter of 2014, research and development (R&D) expenses were $11.8 million, down 43.9% year over year. The decrease in R&D expenses was primarily due to lower personnel-related expenses. A decrease in expenses pertaining to the development of tivozanib also led to the reduction in R&D. General and administrative expenses decreased 55.4% to $5.6 million, reflecting cost efficiencies post restructuring initiatives and lower pre-commercialization costs associated with tivozanib.
After the termination of its development and commercialization agreement with Astellas Pharma, Inc. ( ALPMY ) for the oncology candidate, tivozanib, AVEO expects to gain full rights to the candidate in August.
AVEO has several other candidates in its pipeline including ficlatuzumab (phase II - first line non-small cell lung cancer), AV-380 (first human trial planned for the second half of 2015 - cancer cachexia) and AV-203 (phase I completed).
The phase II study evaluating ficlatuzumab for treatment-naive non-small cell lung cancer (NSCLC) patients failed to meet its primary endpoint. However, an exploratory analysis using Biodesix, Inc.'s companion diagnostic test, VeriStrat, identified a patient sub-population that experienced a PFS and overall survival benefit after using ficlatuzumab plus Iressa. Last month, AVEO entered into an agreement with Biodesix to develop and commercialize ficlatuzumab with VeriStrat.
Meanwhile, in March, AVEO regained worldwide rights to the candidate AV-203 from Biogen. We note that AVEO was developing oncology candidate AV-203 in collaboration with Biogen which had an option to develop the candidate outside the U.S.
Currently, AVEO is actively looking for a partner to support the development of AV-203 and tivozanib. AVEO also plans to evaluate partnership opportunities to develop AV-380 for the treatment of cachexia associated with other indications such as chronic kidney disease, congestive heart failure and chronic obstructive pulmonary disease.
We believe that more than its quarterly results, pipeline related development is more important for the company. The company's pipeline has suffered huge setbacks related to tivozanib and ficlatuzumab in the last few quarters. In the near term, we believe that investor focus will remain on the company's ability to secure a lucrative partnership deal.
AVEO carries a Zacks Rank #3 (Hold). Some better-ranked stocks include Alexion Pharmaceuticals, Inc. ( ALXN ) carrying a Zacks Rank #1 (Strong Buy).
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