It has been about a month since the last earnings report for AVEO Pharmaceuticals, Inc.AVEO . Shares have lost about 17.4% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AVEO Posts Narrower-than-Expected Loss
AVEO reported a fourth-quarter 2016 loss of $0.07 per share, narrower than the Zacks Consensus Estimate of a loss of $0.09. The company had reported a loss of $0. 11 per share in the year-ago period.
AVEO does not have any approved products in its portfolio. The company's top line mainly comprises of collaboration revenues, milestone and other payments. Total collaboration revenue in the fourth quarter was approximately $0.1 million, compared with $3.6 million in the year-ago quarter.
Research & development expenses were $7.7 million, compared with $3.9 million in the year-ago period. General and administrative expenses also decreased 67.9% year over year to $1.9 million.
Last month, AVEO announced that its pivotal phase III trial, TIVO-3, to compare lead candidate tivozanib to Nexavar in patients with refractory advanced renal cell carcinoma (RCC), has successfully completed the first safety review by Safety Monitoring Committee (SMC).
The committee ruled no safety concern was observed for tivozanib and recommended that the study replace the small number of patients who dropped out prior to starting treatment.
Following the SMC recommendation to replace early dropouts, the company expects to complete enrolment in Jun 2017 ahead of its prior guidance of Aug 2017. A pre-planned futility analysis of the trial is expected around mid 2017, with top-line data expected in the first quarter of 2018. The company expects that the TIVO-3 trial, together with the previously completed TIVO-1 trial on tivozanib in the first-line treatment of RCC, will support potential regulatory approval of tivozanib in the U.S. as a third- and first-line treatment for RCC.
Concurrently, AVEO announced that the first patient has been treated in phase I/II TiNivo trial. The trial is evaluating tivozanib in combination with Bristol-Myers Squibb anti-PD-1 therapy, Opdivo (nivolumab), in advanced RCC. The company expects to complete the phase I trial in the first half of 2017. This trial will evaluate the safety of tivozanib in combination with Opdivo at escalating doses of tivozanib. Assuming favorable results, the company will immediately initiate an expansion phase II trial at the established combination dose.
Meanwhile, AVEO announced that its European licensee for tivozanib, EUSA Pharma has received the Day 180 List of Outstanding Issues (LOI) from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA). The LOI implies that the MAA cannot be approved in the present form as it outlines outstanding deficiencies. EUSA Pharma has informed the company that it expects to submit written responses to the LOI next month. On the other hand, the EMA has tentatively scheduled EUSA to provide an oral explanation to the CHMP in May 2017.
AVEO expects that its cash resources of $23.3 million will allow the company to fund its planned operations into the fourth quarter of 2017. However, the company will need additional funds to extend these operations into 2018 and maintain compliance with its $10.0 million financial covenant under the loan agreement with Hercules.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted lower by 10.5% due to these changes.
AVEO Pharmaceuticals, Inc. Price and Consensus
At this time, AVEO Pharmaceuticals' stock has an average Growth Score of 'C', though it is lagging a lot on the momentum front with a 'F'. Charting an exact path, the stock was allocated a grade of 'F' on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.