Aveo Pharmaceuticals Declines as Cancer Data Miss Investors’ Expectations

Aveo Pharmaceuticals Inc. (AVEO), maker of an experimental medicine for kidney cancer, fell the most ever after reporting data on the drug that missed investors’ “ultra- high expectations,” an analyst said.

Still, Aveo is planning to expand in preparation for approval of the medicine, called tivozanib. The Cambridge, Massachusetts-based company wants to add 100 employees this year after hiring a similar number in 2011, which would increase the workforce to about 340, according to Chief Executive Officer Tuan Ha-Ngoc.

“We started launch readiness activities early last year and now will continue in earnest with these successful Phase 3 results,” Ha-Ngoc said in a telephone interview today.

The drug helped patients with advanced renal cell carcinoma live for 11.9 months without their disease progressing in a late-stage study, compared with 9.1 months for those on Nexavar, a medicine sold by Onyx Pharmaceuticals Inc. (ONXX) and Bayer AG (BAYN), Aveo said today in a statement. Investors may have expected progression-free survival of at least 13 months on tivozanib, said Jason Kantor, an analyst with RBC Capital Markets.

“The data looks good from both a regulatory and commercial perspective,” Kantor, based in San Francisco, wrote in a research note today. “Though slightly below ultra-high expectations.”

Aveo Declines

Aveo dropped (AVEO) 20 percent to $13.83 as the close in New York, the biggest decline since the shares started trading publicly in March 2010, data compiled by Bloomberg show. The stock is down 7 percent in the last 12 months.

The 517-patient study was from the third and final phase of trials generally required for regulatory approval. Aveo and partner Astellas Pharma Inc. (4503), of Tokyo, plan to apply for approval in the U.S. and Europe this year, the companies said.

The medicine was “well-tolerated,” showing a safety profile similar to earlier results. The most common reported side effect was hypertension, or high blood pressure, the company said. Ha-Ngoc declined to comment on the stock’s decline.

Renal cell carcinoma forms in the lining of the small kidney tubes that filter blood and remove waste products, according to the National Cancer Institute. There were an estimated 60,920 new cases of kidney cancer in the U.S. in 2011, with 13,120 deaths, the institute said on its website.

“To address the RCC market optimally, we’d need a sales force of 70 to 80 people in the field,” Ha-Ngoc said. Aveo would supply about 40 people, splitting the force with Astellas, he said.

With the expected hiring, the company needs to “expand our facilities,” Ha-Ngoc said. Aveo plans to stay in Cambridge, he said.

“It’s the hotbed of where science is taking place,” the CEO said. “With these successful results we will be accelerating discussions. The heart of biotechnology is right here.”

To contact the reporter on this story: Meg Tirrell in New York at mtirrell@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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