Here's Why AVEO Oncology Rose as Much as 13.7% Today

What happened

Shares of small-cap biopharma AVEO Oncology (NASDAQ: AVEO) rose over 13% today in the first trading day since management gave a presentation to analysts at the 36th J.P. Morgan Healthcare Conference on Thursday, Jan. 11. As is commonplace at the annual event, the company provided a review of recent successes and laid out a road map for its pipeline.

After receiving its first marketing approval in the summer of 2017 -- much to the surprise of Wall Street -- the company is positioning the rest of its pipeline to be taken more seriously. It's currently developing five drugs, four of which are partnered, as potential treatments for cancers and rare diseases.

As of 3:26 p.m. EST Friday, the stock had settled to an 11.5% gain.

So what

Today's move indicates some on Wall Street are taking notice of the small biopharma. The company's first drug, Fotivda, was approved in the European Union as a treatment for kidney cancer last year. During the presentation, the company took the time to remind analysts that the total annual market opportunity for the drug is about $400 million on the continent and discussed the potential advantages in safety over existing therapies. That's not a huge market, and there's a sizable amount of well-established competition, but AVEO Oncology boasts a market cap of just $370 million, so any share of the $400 million pie is better than nothing.

Investors are also awaiting top-line data from a phase 3 trial of Fotivda in the United States, which is expected in the second quarter of 2018. AVEO Oncology says it could file a New Drug Application (NDA) within nine months of the data rollout.

Combine that with updates given on an early-stage pipeline that will progress into mid-stage trials over the course of the next year, and today's move shouldn't be too surprising -- even if it's based on potential rather than real-world results.

Now what

AVEO Pharmaceuticals will have a new type of update to provide investors this year: drug sales data. That adds a new twist to consider in addition to drug development activities. That said, Fotivda isn't expected to generate eye-popping sales or even deliver AVEO Oncology to profitability. Its early-stage pipeline is de-risked to some extent with partners, but there's no guarantee the company will gain another marketing approval after last summer's surprise.

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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.