AVEO Announces Strategic Restructuring and Provides Third Quarter Financial Results

  AVEO Announces Strategic Restructuring and Provides Third Quarter Financial
  Results

     Refocused Resources Projected to Save $100 Million over Three Years

             Progress Made toward Commercialization of Tivozanib

Business Wire

CAMBRIDGE, Mass. -- October 30, 2012

AVEO Oncology (NASDAQ: AVEO) today announced a strategic restructuring
designed to optimize resources and reduce expenses to ensure AVEO is well
positioned for a successful launch of tivozanib in renal cell carcinoma (RCC)
and continued development in other cancer types, while maintaining a focused
research engine. In addition, AVEO reported consolidated financial results for
the third quarter of 2012, updated its financial guidance and summarized
recent developments.

“AVEO’s primary focus is on the approval and successful commercialization of
tivozanib, which will drive the near term future of the company and will be
our greatest opportunity for value creation,” said Tuan Ha-Ngoc, president and
chief executive officer of AVEO. “AVEO’s drug discovery, translational
research and Human Response Platform capabilities remain long-term core value
drivers. We believe the cost savings resulting from the reduction in the scope
of the R&D activities and associated resources outside of tivozanib position
us well to successfully execute the planned launch of tivozanib, as well as
make progress toward our goal of becoming a fully integrated oncology
company.”

The company plans to explore further development of ficlatuzumab and certain
discovery assets through external collaborations, including with academic
partnerships and cooperative groups. The company plans to focus its Human
Response Platform™ and discovery capabilities on supporting the clinical
development of tivozanib, advancing biomarker identification and development
across AVEO’s clinical stage programs, and developing novel, high potential
programs.

AVEO’s strategic restructuring and projected cost savings are being achieved
through a combination of reduced spending on early stage research programs and
a reduction in force of approximately 45 positions, or 17% of AVEO’s
workforce, as well as elimination of 30 open positions. This refocusing of
resources and reduction of expenses is expected to provide AVEO approximately
$100 million in cost savings over the next three years compared with prior
projections, with approximately $37 million in 2013, and is expected to extend
its cash runway through 2013.

Third Quarter 2012 Financial Results

  *Total collaboration revenue for the third quarter of 2012 was
    approximately $1.0 million compared with $3.6 million for the third
    quarter of 2011. The decrease was due to revenue recognized in the third
    quarter of 2011 under AVEO’s collaboration agreement with OSI that did not
    recur during the third quarter of 2012.
  *Research and development (R&D) expense for the third quarter of 2012 was
    $21.1 million compared with $20.1 million for the third quarter of 2011.
    The increase in R&D expense was primarily due to an increase in
    personnel-related expenses, as well as an increase in facility costs
    related to our future headquarters, partially offset by a decrease in
    clinical trial costs.
  *General and administrative (G&A) expense for the third quarter of 2012 was
    $9.3 million compared with $6.6 million for the third quarter of 2011. The
    increase in G&A expense was primarily driven by an increase in
    personnel-related expenses, as well as an increase in expenses related to
    pre-commercialization activities for tivozanib.
  *Net loss for the third quarter of 2012 was $30.1 million, or basic and
    diluted net loss per share of $0.69, compared with net loss of $23.8
    million, or basic and diluted net loss per share of $0.55, for the third
    quarter of 2011.
  *AVEO ended the third quarter of 2012 with cash, cash equivalents and
    marketable securities of $189.7 million.

Updated Financial Guidance

AVEO is updating its financial guidance that it expects to end 2012 with
approximately $135 million in cash, cash equivalents and marketable
securities. Based on its revised operating plan, AVEO anticipates that this
capital is sufficient to fund its operations through 2013.

Key Recent Developments

  *Tivozanib NDA submitted: AVEO submitted a New Drug Application to the U.S.
    Food and Drug Administration seeking approval for tivozanib in patients
    with advanced RCC. The submission is based on results of the global Phase
    3 TIVO-1 (TIvozanib Versus sOrafenib in 1st line advanced RCC) trial, in
    which tivozanib demonstrated a statistically significant improvement in
    progression-free survival versus sorafenib, an approved targeted agent,
    and a favorable tolerability profile.
  *Appointed vice president, sales: In preparation for the planned launch of
    tivozanib, AVEO has appointed Brad Bailey to the newly created position of
    vice president, sales, reporting to AVEO’s chief commercial officer. Mr.
    Bailey brings more than two decades of pharmaceutical and medical device
    industry leadership in field sales, operations, account management and
    reimbursement. Mr. Bailey’s experience includes serving as vice president
    of oncology sales and account management at Pfizer, where he led the
    launch of Sutent^® in RCC and gastrointestinal stromal tumors. He joins
    the company from UCB Biopharma where he served as senior director,
    immunology business unit and directed the company's national sales
    organization in the marketing of Cimzia^® for the treatment of rheumatoid
    arthritis and Crohn's disease.
  *New tivozanib clinical data presented at ESMO: New TIVO-1 data
    demonstrating the safety and tolerability profile of tivozanib versus
    sorafenib in the first-line setting for patients with RCC were presented
    at the ESMO 2012 Congress (European Society for Medical Oncology). Results
    showed that patients treated with tivozanib experienced fewer ≥Grade 3
    drug-related adverse events (36.3% in tivozanib arm vs. 51.0% in sorafenib
    arm). ≥Grade 3 hypertension, an established on-target effect of
    angiogenesis inhibitors, was more common in the tivozanib group (23.6% vs.
    15.2%) and ≥Grade 3 hand-foot syndrome (1.9% vs. 16.7%), diarrhea (1.9%
    vs. 5.8%) and lipase elevation (0.8% vs. 5.8%) were more common in the
    sorafenib group. Further, patients treated with tivozanib required fewer
    dose reductions (11.6% vs. 42.8%, p<0.001) and interruptions (17.8% vs.
    35.4%, p<0.001) than those on sorafenib.
  *First patient enrolled in TAURUS patient preference study: AVEO and
    Astellas began enrolling patients in the TAURUS (TivozAnib Use veRsUs
    Sunitinib in advanced renal cell carcinoma) patient preference study. The
    primary objective of the study is to compare patient preference for
    tivozanib or sunitinib.

Upcoming Activities

AVEO expects to present at the following investor conferences:

  *Lazard Capital Markets 9th Annual Healthcare Conference, November 13-14,
    2012 in New York
  *dbAccess BioFEST, December 3-4, 2012 in Boston
  *31st Annual J.P. Morgan Healthcare Conference, January 7-10, 2013 in San
    Francisco

AVEO expects to have a presence at the following oncology medical meeting:

  *San Antonio Breast Cancer Symposium (SABCS), December 4-8, 2012 in San
    Antonio

Today's Conference Call and Webcast Reminder

The AVEO management team will host a conference call at 10:00 a.m. (ET) today.
The call can be accessed by dialing 1-866-788-0543 (domestic) or
1-857-350-1681 (international) five minutes prior to the start of the call and
providing the passcode 81107349. A replay of the call will be available
approximately two hours after the completion of the call and can be accessed
by dialing 1-888-286-8010 (domestic) or 1-617-801-6888 (international),
providing the passcode 32906283. The replay will be available for two weeks
from the date of the call.

The listen-only webcast of the conference call can also be accessed by
visiting the investors section of the AVEO website at
investor.aveooncology.com. A replay of the webcast will be archived on the
company’s website for two weeks following the call.

About AVEO

AVEO Oncology (NASDAQ: AVEO) is a cancer therapeutics company committed to
discovering, developing and commercializing targeted therapies to impact
patients’ lives. AVEO's proprietary Human Response Platform^TM provides the
company unique insights into cancer biology and is being leveraged in the
discovery and clinical development of its cancer therapeutics. For more
information, please visit the company’s website at www.aveooncology.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements of AVEO within the
meaning of the Private Securities Litigation Reform Act of 1995 that involve
substantial risks and uncertainties. All statements, other than statements of
historical facts, contained in this press release are forward-looking
statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,”
“may,” “plan,” “target,” “potential,” “could,” “should,” “seek,” or the
negative of these terms or other similar expressions, are intended to identify
forward-looking statements, although not all forward-looking statements
contain these identifying words. These forward-looking statements include,
among others, statements about: the planned launch and commercialization of
tivozanib; AVEO’s planned transformation into an integrated oncology company,
including its ability to deliver therapies to cancer patients in the future;
AVEO’s plans to develop ficlatuzumab and certain discovery assets through
external collaborations; AVEO’s plans to utilize its Human Response Platform™
to support development of tivozanib, advance biomarker identification and
develop selected, novel programs; the expected benefits of its strategic
restructuring, including expected cost savings provided by the restructuring;
anticipated near and long term drivers of value; and AVEO’s estimates for its
2012 year-end cash balance and its estimate with respect to the availability
of cash through 2013 to fund its operating plans. Actual results or events
could differ materially from the plans, intentions and expectations disclosed
in the forward-looking statements that AVEO makes due to a number of important
factors, including risks relating to: whether the results of AVEO’s Phase 3
TIVO-1 (TIvozanib Versus sOrafenib in 1^st line advanced RCC) trial are
sufficient to obtain marketing approval for tivozanib in the U.S. and abroad,
which turns on the ability of AVEO to demonstrate to the satisfaction of the
FDA or comparable foreign regulatory authorities the safety and efficacy of
tivozanib based upon the findings of TIVO-1, including its data with respect
to progression-free survival, the rate of adverse events, overall survival and
other information that the FDA may determine to be relevant to approvability;
AVEO’s ability to demonstrate in subsequent trials any safety and efficacy it
demonstrated in earlier trials of tivozanib; ongoing regulatory requirements
with respect to the approval of tivozanib, including the risk that the FDA or
any comparable foreign regulatory agency could require additional positive
clinical trials as the basis for product approval; AVEO’s ability to obtain
and maintain adequate protection for intellectual property rights relating to
AVEO’s product candidates and technologies; unplanned operating expenses;
AVEO’s ability to raise substantial additional funds to achieve its goals;
adverse general economic and industry conditions; competitive factors; AVEO’s
ability to successfully implement its strategic plans, including the planned
cost savings for its restructuring; AVEO’s ability to maintain its
collaboration with Astellas; AVEO’s and Astellas’ ability to successfully
launch and commercialize tivozanib if and when it may be approved for
commercialization by the FDA and/or foreign regulatory authorities; and those
risks discussed in the section titled “Risk Factors” and elsewhere in AVEO’s
most recent Quarterly Report on Form 10-Q and in its other filings with the
Securities and Exchange Commission. The forward-looking statements in this
press release represent AVEO’s views as of the date of this press release.
AVEO anticipates that subsequent events and developments will cause its views
to change. However, while AVEO may elect to update these forward-looking
statements at some point in the future, it specifically disclaims any
obligation to do so. You should, therefore, not rely on these forward-looking
statements as representing AVEO’s views as of any date subsequent to the date
of this press release.

Sutent^® and Cimzia^® are registered trademarks of Pfizer Inc. and UCB, Inc.,
respectively.

AVEO Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
                                                              
                         For the Three Months        For the Nine Months
                         Ended September 30,         Ended September 30,
                                                                   
                         2012          2011          2012          2011
Collaboration revenue    $ 1,018       $ 3,585       $ 3,755       $ 163,753
                                                                   
Operating expenses:
Research and               21,099        20,098        67,325        83,193
development
General and               9,300       6,582       27,469      22,181  
administrative
                           30,399        26,680        94,794        105,374
                                                                   
Income (loss) from         (29,381 )     (23,095 )     (91,039 )     58,379
operations
                                                                   
Other income and
expense:
Other income, net          46            62            279           17
Interest expense           (888    )     (953    )     (2,613  )     (2,911  )
Interest income           101         168         459         332     
Other expense, net         (741    )     (723    )     (1,875  )     (2,562  )
                                                                   
Net income (loss)         (30,122 )   $ (23,818 )    (92,914 )   $ 55,817  
                                                                   
Basic net income
(loss) per share
Net income (loss)        $ (0.69   )   $ (0.55   )   $ (2.14   )   $ 1.45    
Weighted average
number of common          43,430      43,017      43,336      38,575  
shares outstanding
                                                                   
Diluted net income
(loss) per share
Net income (loss)        $ (0.69   )   $ (0.55   )   $ (2.14   )   $ 1.38    
Weighted average
number of common
shares and
                          43,430      43,017      43,336      40,377  
dilutive common share
equivalents
outstanding
                                                                             

AVEO Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value amounts)
(unaudited)
                                                                
                                                  September 30,   December 31,
                                                  2012            2011
                                                                  
Assets
Current assets:
Cash and cash equivalents                         $  114,103      $ 43,506
Marketable securities                                75,589         177,622
Accounts receivable                                  9,298          7,210
Prepaid expenses and other current assets           7,770        6,057    
Total current assets                              $  206,760        234,395
                                                                  
Marketable securities                                -              54,312
Property and equipment, net                          7,862          5,471
Other assets                                         308            121
Restricted cash                                     3,600        751      
                                                                  
Total assets                                      $  218,530     $ 295,050  
                                                                  
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable                                  $  10,259       $ 8,904
Accrued expenses                                     18,358         14,289
Loans payable, net of discount                       4,334          8,551
Deferred revenue                                     1,294          1,294
Other liabilities                                    -              1,249
Deferred rent                                       421          322      
Total current liabilities                            34,666         34,609
                                                                  
Loans payable, net of current portion and            21,624         15,619
discount
Deferred revenue, net of current portion             18,714         19,684
Deferred rent, net of current portion                4,096          359
Other liabilities                                    1,238          1,238
                                                                  
Stockholders’ equity:
Preferred Stock, $.001 par value: 5,000 shares       -              -
authorized; no shares issued and outstanding
Common stock, $.001 par value: 100,000 shares
authorized; 43,735 and 43,254 shares issued and
                                                     44             43
outstanding at September 30, 2012 and December
31, 2011, respectively
Additional paid-in capital                           436,937        429,531
Accumulated other comprehensive loss                 (9       )     (167     )
Accumulated deficit                                 (298,780 )    (205,866 )
Total stockholders’ equity                          138,192      223,541  
                                                                  
Total liabilities and stockholders’ equity        $  218,530     $ 295,050  

Contact:

Investor Contact:
AVEO Oncology
Monique Allaire, 617-299-5810
or
Media Contact:
AVEO Oncology
Rob Kloppenburg, 617-930-5595
or
Pure Communications
Dan Budwick, 973-271-6085
 
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