By Chris Rees
Aveo Pharmaceutical’s Tivozanib, an investigational renal cell carcinoma (RCC) drug, has a date with the FDA’s Oncologic Drug Advisory Committee (ODAC) on May 2, 2013 (morning session). A panel of cancer experts will discuss the efficacy and safety of Tivozanib and then vote for or against approval. In most cases, the FDA follows the recommendation of the ODAC panel.
Aveo’s stock has fallen from a high of around $20 to close to $7.50 as of April 26. The collapse in the stock price began when the FDA expressed ‘concern’ about the overall survival (OS) data. Aveo has since submitted additional OS data to the FDA.
The concern was that in the TIVO-1 Phase 3 study, Sorafenib (Nexavar) posted an OS of 29.3 months versus Tivozanib’s 28.8 months. Close, but maybe no cigar. At first glance, it would appear Tivozanib underperformed the comparator, a second line therapy, already approved for RCC. A deeper dig strongly suggests something else is going on.
Meanwhile, short sellers, sensing blood in the water, have shorted roughly 10% of the outstanding shares in a bet the ODAC will vote against approval. We believe shorts (who borrow and sell shares in hopes of buying them back later at a lower price) are worthy of respect, however, in this case we think they are wrong.
The Tivo-1 study was designed so patients who were on Sorafenib could cross over to Tivozanib at disease progression. For the first 6 months, OS was comparable between the two arms, but then the OS trend line shows a slow separation occurring with Sorafenib outperforming, though not by a statistically significant amount.
But at 6 months, 15% of patients in the Sorafenib arm had already switched to Tivozanib. At 18 months, 53% had switched, and by 26 months 67% were on Tivozanib. So was Sorafenib’s OS of 29.3 months mostly a result of the efficacy of Sorafenib or Tivozanib?
If Tivozanib reached OS of 28.8 months with minimal crossover compared to the Sorafenib arm, we believe a strong case can be made that Tivozanib contributed the lion’s share of Sorafenib’s TIVO-1 OS result.
In the TARGET study, Sorafenib was compared to placebo. The primary endpoint was overall survival. The final median OS for Sorafenib was 17.8 months. A second survival analysis of TARGET performed in November 2005 pushed Sorafenib’s OS data up to 19.3 months.
So, if Tivozanib reached OS of 28.8 months versus Sorafenib’s 19.3 months, yet they reached overall survival of 29.3 months when combined on crossover, we think we know where the extra months of survival are coming from. We think the ODAC will too.
OS is not even the primary endpoint for FDA approval but we’ll dig deeper.
Pfizer’s (PFE) Sunitinib (Sutent) and GlaxoSmithKline’s Pazopanib (Votrient) are the current standards of care in RCC. In the COMPARZ study, Pazopanib was compared to Sunitinib. OS data came in at 28.4 months for Pazopanib and 29.3 months for Sunitinib.
In a separate phase 3 study Sunitinib reached an OS of 26.4, while Pazopanib, in a different phase 3 study, attained an OS of 22.9 months. These results suggest Tivozanib’s 28.8 is as good as the best when it comes to OS.
But progression free survival (PFS) is the primary endpoint for FDA approval. In the TIVO-1 study, in treatment naïve patients, Tivozanib had the highest PFS ever recorded at 12.7 months (in a subgroup with hypertension—a marker of efficacy— PFS was 18.3 months).
Pazopanib’s best was 11.1 months in a phase 3 study, and 8.4 months in the COMPARZ study. Sunitinib’s best was 11 months in a phase 3 study and 9.5 months in the COMPARZ study. Tivozanib appears to be best in class when it comes to PFS.
That said, in our view, the real superiority of Tivozanib comes not only with its PFS data but with its tolerability and safety. RCC patients on Sunitinib endure a wide range of toxic side effects. In the COMPARZ study, patients reported a preference for Pazopanib over Sunitinib because of a more favorable side effect profile.
In the PISCES study 70% of patients preferred Pazopanib over Sunitinib. Yet, when the ODAC reviewed Pazopanib for approval, the main concern of the panel was for toxicity—specifically liver toxicity. Indeed, the current labeling for Pazopanib contains a box warning regarding episodes of fatal hepatotoxicity.
As the FDA point out in the Pazopanib briefing document “drugs possessing less hepatotoxicity than pazopanib in other settings (non-cancer therapeutic areas) have been withdrawn after being marketed because of fatal hepatic failure.”
In the COMPARZ study, 44% of patients on Pazopanib required dose reductions and 24% dose discontinuations due to adverse events. In the TIVO-1 study 12% of patients on Tivozanib required dose reductions and only 4% required dose discontinuation.
When we look at PFS and OS, RCC patients are now living a longer life than a few years ago. But as survival lengthens, the quality of that additional life becomes more relevant. The treatment related adverse event data suggests Tivozanib may offer the best quality of life yet.
For the investor, global RCC pharmaceutical sales are running around $2 billion a year and climbing. They rose 17% from September 2011 to September 2012. In the US, sales grew 33% over the same period. The sales growth drivers include expanded treatment options, price increases (in the US), general population growth, and an increase in RCC incidence.
According to Pfizer’s 10K filing with the SEC, Sunitinib (Sutent) had sales of over $1 billion in 2012. Decision Resources, a research and advisory firm, forecasts that Pazopanib will reach annual sales of $640 million by 2018 as it takes market share from Sunitinib.
But we have a different view.
In our opinion, the ODAC, after careful and diligent review of the efficacy and safety data (including the OS data), will vote for approval of Tivozanib. Sometime before July 28, 2013, we expect the FDA to approve Tivozanib for RCC.
Once approved and on the market, we believe Aveo’s Tivozanib will become accepted as the new best in class for RCC and over the next five years expect annual sales to ramp to over $500 million as it takes market share from both Sunitinib and Pazopanib. Tivozanib also has potential for use in breast and colon cancer.
Aveo anticipates ending 2013 with around $60 million in cash. That works out to about $1.15 a share. Aveo is also eligible to receive roughly $1.3 billion in potential future milestone payments equal to about $25 a share. $30 million of that (about $.60 a share) is payable upon FDA approval for RCC in the US. Thereafter, up to $780 million in milestone payments are due upon hitting specified sales targets.
A recent article by Adam Feuerstein of The Street.com attempted to lay out a bear case for why Tivozanib will not get a favorable ODAC vote. Meanwhile, ahead of the vote, Aveo and its Tivozanib partner Astellas are busy interviewing sales reps. They will be driving a company supplied Volvo S60.
At a share price near $7, with an extremely close event catalyst, we consider AVEO a bargain. We own AVEO. Our money is firmly where our mouth is.
The investments discussed are held in client accounts as of May 1, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.
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