Astellas taps into tivozanib's potential with billion-dollar deal

A billion-dollar deal struck with Astellas Pharma for kidney cancer drug tivozanib looks suitably grandiose for rolling stone Aveo Pharmaceuticals.

Up 10%, Aveo’s shares touched $16 this morning, close to November’s $17 record highs. The Massachusetts antibody specialist already has a healthy wad of cash in the bank, which Astellas has almost doubled with a substantial $125m upfront payment. That hopes for the phase III candidate are high is clear with a further $1.3bn available, although the drug has to prove its worth in other tumour types before much more of that money will be paid out. However, if all goes well, the drug could be filed with regulators in 2012.

Enough cash

With enough cash to last for a couple of years, Aveo was not under huge pressure to sign this deal although it was on the lookout for a partner. In a conference call yesterday chief executive Tuan Ha-Ngoc said the company wanted a partner with global presence, that recognised tivozanib as an anti-cancer pipeline-in-a-product that goes far beyond renal cell carcinoma, its lead indication.

Furthermore Aveo has wanted to build its North American commercial infrastructure while sustaining a strong presence in Europe.

Enter Astellas, Japan’s second-biggest drug developer, with a strong base in Europe, an established US presence from a $4bn acquisition of OSI Pharmaceuticals last year, experience in commercialising cancer drugs, and commitment to Aveo’s aggressive development plan.

“Importantly we believe this agreement will enable us to bring tivozanib to market faster, and to a broader set of patients that won’t have to compromise on safety and efficacy," said Mr Ha-Ngoc.

Terms

As Aveo’s biggest deal to date, Astellas has paid a very respectable $125m upfront, comprising a $75m license fee and $50m in R&D funding. Aveo could also receive another $1.3bn in milestone payments, of which $575m is available for clinical and regulatory achievements, and $780m for meeting commercial and sales targets.

The next milestone will be paid when tivozanib receives approval for renal cell carcinoma, and from then the onus is very much on notching up the clinical victories against other tumour types. The next phase of development planned is breast and colon cancers.

The partners share global rights outside of Asia – Kyowa Hakko Kirin is Aveo’s Asian partner – and will split profits 50/50. Aveo will commercialise and book sales in North America, and Astellas will be responsible for the remaining ex-Asian territories.

Tivozanib is a VEGF-receptor inhibitor, an anti-cancer class that includes Nexavar and Sutent and that has been extensively studied and validated. The pivotal trial Tivo-1 pits tivozanib against Bayer’s Nexavar, an agent analysts believe generates approximately $300m a year in RCC, and will generate results in the middle of this year.

Analysts from JP Morgan, Leerink Swann and RBC Capital Markets agree that mid-stage data for tivozanib have been compelling. In a note from last month JP Morgan wrote that tivozanib has shown the best progression-free survival time – that is, time during which a patient experiences no further advancement of their disease – than any marketed RCC drug. Meanwhile little added toxicity was observed when combining tivozanib with taxol chemotherapy.

Expectations

Currently EvaluatePharma consensus sees $309m in 2016 global sales for tivozanib, forecasts that could rise considerably given the added commercial clout of Astellas and assuming data mid-year impresses. Aveo reckons it has a $2bn market opportunity with tivozanib.

This morning Leerink Swann analysts upped their price target on Aveo shares to $20 from $18, encouraged by the renewed potential for broader applications of tivozanib, and the extra cash to spend on Aveo’s promising pipeline of other agents.

Phase II lung cancer drug AV-299, for example, which is already attracting 2016 forecasts of $55m, will report phase II data in combination with Iressa in the next few months. Rights to the drug were handed back to Aveo by Merck & Co last year to a surprisingly positive market reaction (Bigger doors open for Aveo as Merck deal closes, October 7, 2010).

Tivozanib has best-in-class potential, although an unexpectedly brilliant performance from Nexavar in head-to-head trials would have the ability to derail the programme. Otherwise with a potentially huge deal and data on the horizon, Aveo’s roll looks to be gathering little moss.

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