AVEO – More open questions than answers

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Earlier this week, AVEO (AVEO) announced topline results from a phase III trial for tivozanib in renal cancer. Although technically the trial met its primary endpoint and could probably lead to approval, results were far from satisfactory.

AVEO intends to position tivozanib as the standard of care treatment for 1st line renal cancer, replacing Pfizer’s (PFE) Sutent. As both drugs hit common targets, AVEO hoped that tivozanib’s selectivity profile would enable it to be superior in terms of side effects and at least comparable to Sutent in terms of efficacy.  The underlying issue with AVEO’s clinical strategy was the idea of making tivozanib Sutent’s successor without comparing it directly with the Pfizer drug.

Sutent, which generated $1.06B in sales last year, is the most commonly used first line drug for renal cancer. It was approved based on impressive improvement in progression-free survival (PFS) from 5 months in the control arm to 11 months in the Sutent arm. Although Sutent is considered safer than chemotherapy agents, it is still associated with a great degree of side effects. These include liver toxicity, fatigue and diarrhea.

Shooting for indirect superiority

AVEO started with a large single-arm phase II in 1st line patients. The 272-patient study showed a PFS of 11.8 months in the general population. The activity in the patient population that was studied in Sutent’s phase III trial (clear-cell histology and prior nephrectomy) was even more impressive – 14.8 months. (The Sutent study recruited only clear cell patients, 90% of them had had prior nephrectomy).

The safety profile for tivozanib looked substantially better than that of Sutent, especially side effects that are not related to the drug’s primary mechanism of action.

Based on the results, AVEO launched a phase III trial (TIVO-1) that evaluates tivozanib in 1st line renal cancer. Patients were allowed to have a history of prior systemic therapy but prior Sutent or Nexavar was excluded. Instead of using Sutent, Onyx’s (ONXX) Nexavar was chosen as a comparator. Theoretically, Nexavar is approved for 1st line RCC but it is rarely used in that setting due to its limited efficacy (estimated PFS of just under 6 months).

Having such a weak opponent substantially increased AVEO’s chances of showing superiority over the control arm, which the company believed was enough to gain FDA approval. The company hoped that tivozanib’s results would be strong enough in order to persuade physicians to use the drug instead of Sutent based on high PFS and better tolerability.

Inconclusive data

The initial results published earlier this week showed tivozanib led to a superior PFS compared with Nexavar (11.9 vs. 9.1 months). In treatment-naive patients, who did not receive Sutent or cytokines (not commonly used today), tivozanib’s PFS was 12.7 months vs. 9.1 months for Nexavar.

Technically, the trial was successful but the data are far from satisfactory and cast a real shadow on tivozanib’s prospects in 1st line renal cancer. Numerically, a PFS of 12.7 months is at the lower end of expectations and looks slightly better than Sutent’s 11 months. In fact, Sutent’s 11 months were achieved in a patient population that included 9% patients with no prior nephrectomy. It is plausible that Sutent’s PFS only in patients with a history of prior nephrectomy was slightly higher than 11 months, making the alleged difference smaller.

Even more worrying is the better than expected PFS Nexavar achieved. This implies the patient population in AVEO’s study had a relatively good prognosis compared to other phase III trials. Sutent is considered much more effective than Nexavar in 1st line patients although the two drugs have never been compared directly. Therefore, not only is it hard for AVEO to claim superiority over Sutent, tivozanib might end up being less effective than Sutent. On a more positive note, AVEO reported that tivozanib’s safety profile was consistent with the phase II data, which could be an important differentiator going forward.

New competition on the horizon

Once approved, AVEO’s tivozanib might face competition from additional kinase inhibitors. These include Pfizer’s Inlyta and GSK’s (GSK) Votrient, both of which are expected to have phase III data in 1st line patients in the coming months. Pfizer is evaluating Inlyta against Nexavar for obvious reasons whereas GSK is the only one testing its drug head to head vs. Sutent.

Analysis of phase III results for Inlyta in 2nd line patients, which also employed Nexavar as a control, is another source of concern as to tivozanib’s future. Inlyta had a remarkable effect in a subset of patients who had not been treated with Sutent but with cytokines as 1st line treatment (12.1 vs. 6.5 months). In this case, Nexavar performed as expected, similarly to its original phase III trial. Tivozanib achieved a milder effect in this subset of patients in its recent phase III trial (~11.5 vs. 9.1 months). Normalizing these numbers results in a 86% improvement for Inlyta over Nexavar compared to a 26% improvement for tivozanib over Nexavar in a similar patient population. The fact that the Nexavar arm in AVEO’s study did better than that Nexavar arms in the Inlyta or original Nexavar phase III trials implies that AVEO used patients with better prognosis although no data has been actually published.

tivo-vs-inlyta-vs-nexavar-in-cytokine-treated.png

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Votrient, which is already approved for 1st line renal cancer, is currently being evaluated vs. Sutent in a very large phase III study (927 patients). In a previous phase III trial vs. placebo, Votrient led to a PFS of 11.1 months in 1st line patients, which is almost identical to the 11 months Sutent achieved. Numerically, AVEO’s tivozanib generated superior results (12.7 months) but again, it is still unclear whether AVEO’s trial included a more favorable mix of patients.

Summary

AVEO chose a less effective drug as a comparator in order to increase chances of regulatory approval, however, the somewhat disappointing results cast a shadow on the drug’s value. Based on available data, tivozanib appears to have an excellent safety profile and a certain degree of efficacy but it is hard to claim the drug is comparable, let alone superior, to Sutent.

The drug’s commercial success will now depend on how physicians interpret the PFS data, the weight of side effects in their decision and results for Inlyta and Votrient later this year. So far AVEO’s results are not the landslide the market was expecting.

Tivozanib’s potential spans beyond renal cancer, but the next catalyst is more than a year away. On a more positive note, AVEO has several other clinical programs as well as an impressive discovery engine, both could generate value during 2012. With a market cap of over $600M and 50% of tivozanib marketing rights, AVEO seems fully priced. 

Portfolio updates

We are selling our position in Endocyte (ECYT) following the problematic updated results from the phase II trial. On top of the bad overall survival data, which casts a shadow on the entire study, the likelihood of filing in the EU is now approaching zero and the Doxil shortage might lengthen and complicate the ongoing phase III trial.

We are initiating a position in Gilead (GILD).

                                              Portfolio holdings as of January 8th 2012

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9 thoughts on “AVEO – More open questions than answers

  1. How you say the odds of filing in the EU is zero, when they were going to file on PFS and NOT OS. So drugs can only be filed if they hit the primary and every secondary endpoint as well?

    If you dig into the data there are pretty clear reasons why OS did not hit (not powered for OS, different populations, outliers) but that is beside the point as it still hit the primary endpoint in the FR++ group.

    Of course, you are not alone in selling ECYT but I think you should be buying a company that hit its primary endpoint and is trading for less than cash rather than selling. It is just a very compelling risk/reward at these levels.

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  2. Theoretically, the p3 trial might still be successful but recent developments decrease the odds for such an outcome.

    I don’t see anyone approving this drug based on the p2 data, even when all of the alleged imbalances are taken into consideration.

    I am not saying I’ll never buy ECYT in the future, I just don’t see any reason holding the stock during 2012.

    Ohad

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  3. Fair enough and I understand that government agency can go completely against their previous guidance but if it were approval on a PFS primary endpoint, why would the EU suddenly decide to change its mind and now require OS? Again, it could happen but I think with an enterprise value of $0 that outcome is more than baked into the PPS.

    I also agree that P3 success is less likely but I personally think it will hit both PFS and OS but that is what makes a market.

    Best.

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  4. Ohad,

    Thanks for your hard work. MITI has started to really move to the upside. Do you think they could do another secondary or is a buyout a possibility? Do you have a price target to unload some shares??

    Thanks

    Heymang

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  5. David- remember we’re talking about subgroup analysis from a phase II. You might be right if this were a p3 data set.

    Heymang – The current price level fully represents the ALL opportunity pursued with the 2 ongoing ALL trials as well as the DLBCL opportunity to some extent. DLBCL is a much larger indication but the data are still preliminary (albeit very promsing). Assuming activity in DLBCL continues to impress, I see the stock in the $10-$12 range, which is just over $1B in market cap. To go beyond those levels they will need additional catalysts imo.

    Ohad

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