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AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) has been a bit of a roller coaster. The company just put out new data, and we will get to its significance. But, first, we want to do a bit of “you are here” with this one, because we find context in terms of market signals and major headline catalysts offers a helpful backdrop for interpreting new inputs.

In our last piece on the name, we noted that the stock’s reaction to its presentation of updated interim results from the Phase 2 portion of the TiNivo study was probably not a meaningful reaction. The data was good, but the stock was still full of weak-handed speculative money and the biotech space was being slaughtered. In other words, we noted that the best way to understand the October 22 decline was as a market overreaction.

AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) shares then went on to gain 33% in the next nine sessions. That is a rate of share appreciation equivalent to 916% on an annualized basis. In other words, the snapback rally was extremely sharp.

That set the context for today’s reaction to its newest data.

But before we get into that, one should also recall that all of this follows a dramatic downside breakout failure on the steering committee’s unanimous recommendation to initiate topline analysis of the primary phase 3 TIVO-3 trial – the company’s randomized, controlled, multi-center, open-label study to compare FOTIVDA (tivozanib) to sorafenib in subjects with refractory advanced renal cell carcinoma (RCC).

That brings us to today’s announcement of positive data from that recommendation. While the data was positive and met its primary endpoint, the stock declined.

We would case this reaction as likely again not necessarily a verdict on the results – sometimes, when you see a company call topline data “positive”, it is a stretched interpretation, and you learn more from the market’s verdict. However, in this case, it really was positive.

However, the stock had run 33% higher in 9 days into the result likely because traders were looking for more immediate satisfaction on the overall survival data point, when all we got was a clear sense of the median Progression Free Survival data point.

Traders are impatient. The fact that we won’t know about overall survival until next August is reason enough for traders to deal out of those speculative positions. But the larger point is this: Tivo may still end up having better results from this trial than any major competitor. And we know it will likely win in terms of toxicity.

At this point, the fast money is coming out of the stock, which is generally how strong opportunities come into place for those with the patience to capitalize.

 

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AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) pulled in sales of $433K in its last reported quarterly financials, representing top line growth of 23.4%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($18.1M against $17.2M).

It markets its lead candidate, tivozanib, an oral, once-daily, vascular endothelial growth factor receptor tyrosine kinase inhibitor, which is used for the treatment of renal cell carcinoma (RCC).

The company has also completed a Phase 3 TIVO-3 trial of tivozanib for the treatment of advanced RCC; and initiated enrollment in a phase Ib/II clinical trial of tivozanib in combination with Opdivo (nivolumab), an immune checkpoint (PD-1) inhibitor, for the treatment of advanced RCC.

In addition, it is developing Ficlatuzumab, a potent hepatocyte growth factor inhibitory antibody, in Phase I and Phase II clinical trials in squamous cell carcinoma of the head and neck, metastatic pancreatic ductal cancer, and acute myeloid leukemia; and AV-203, a potent anti-ErbB3 specific monoclonal antibody, which has completed Phase I clinical trial for treating esophageal cancer.

The company’s preclinical stage products include AV-380, a potent humanized IgG1 inhibitory monoclonal antibody for the treatment or prevention of cachexia; and AV-353 for the treatment of pulmonary arterial hypertension.

It has strategic partnerships with CANbridge Life Sciences Ltd.; EUSA Pharma (UK) Limited; Novartis International Pharmaceutical Ltd.; Biodesix, Inc.; St. Vincent’s Hospital Sydney Limited; Biogen Idec; and Kyowa Hakko Kirin Co., Ltd. The company was formerly known as GenPath Pharmaceuticals, Inc. and changed its name to AVEO Pharmaceuticals, Inc. in March 2005.