AVEO Pharmaceuticals, Inc.

Thank you, operator. Good afternoon and thank you all for joining us on today's call to discuss AVEO's first quarter 2021 financial results and business update.

I'm joined today by Michael Bailey, Chief Executive Officer; Mike Ferraresso, Chief Commercial Officer; and Dr. Michael Needle, Chief Medical Officer.

Before we get into today's call, let me remind you that during this discussion, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to important risks and uncertainties, including those that are detailed in today's press release and in the risk factors section of our most recent quarterly report on Form 10 Q, which is on file with the SEC, that may cause actual results to differ materially from those expressed in such statements.

Furthermore, we caution you that these forward-looking statements represent our views only as of today, and we do not assume any obligation to update these statements, whether as a result of new information, future events or otherwise, except as required by law. With that, I'll now turn the call over to our President and Chief Executive Officer, Michael Bailey.

Michael?

Thank you, Erick and good afternoon, everyone. Thank you for joining us on today's call.

We excited to have the opportunity today to share with you our progress with FOTIVDA launch, as well as the business and financial results for the quarter. During this call, we plan to provide you with our early launch metrics through April 30th, in an effort to provide you with a snapshot of our initial launch performance.

Before we get into the details of the initial launch metrics, I would like to mention the recent release of abstract titles from ASCO. At this year's meeting, we look forward to presenting updates from the TIVO-3 study that explore long-term patient follow-up and further highlight FOTIVDA's unique tolerability profile.

In addition, we are excited to present the results from our randomized confirmatory Phase 2 trial for Ficlatuzumab plus or minus ERBITUX in a population of head-neck patients who have progressed through all available therapies, including platinum PD one and ERBITUX. Now, turning to the launch of FOTIVDA.

The first quarter of 2021 has been a truly transformational time for AVEO marked by U.S. FDA approval of our first commercial product FOTIVDA, our differentiated once daily VEGF RTK.

FOTIVDA is approved for the treatment of adults with relapsed or refractory advanced renal cell carcinoma, or RCC, following two or more prior systemic therapies. Notably, this approval was based on the Phase 3 TIVO-3 study, which is the first positive RCC Phase 3 study in the setting and the first RCC Phase 3 study to include a predefined subpopulation of patients who received prior immunotherapy, the standard-of-care in earlier line treatment.

Prior to FOTIVDA's approval, the therapies used in these settings were typically chosen based on extrapolating clinical data from earlier treatment setting and from clinical datasets that did not include prior immunotherapy. In addition, a large percentage of patients opted out of later line therapy due to concerns with tolerability.

With the U.S. FDA approval FOTIVDA, the oncology community now has an evidence-based treatment option with a manageable safety profile to offer patients and help address this significant unmet need.

The importance of FOTIVDA's new role in the treatment paradigm was underscored by physicians to that National Comprehensive Cancer Network's clinical practice guidelines, or NCCN, in March as we recommended regimen for subsequent therapy. With the FDA approval in hand, we were able to rapidly execute on the commercial launch, thanks to the hard work of our commercial and medical affairs teams, leading up to the FDA's decision, coupled with the full deployment of our sales organization.

While it is still early, we are pleased with the initial positive indicators. In an effort to provide you with a snapshot of our preliminary launch performance, I will now turn the call over to Mike Ferraresso to provide an update on the commercial launch.

Mike?

Thank you, Michael. As Michael mentioned, we are very encouraged by the progress we have seen thus far in the launch of FOTIVDA.

We are pleased to share with you results from our first reported quarter as a commercial stage company, as well as some more recent launch insights that we've observed in the second quarter through the end of April. Recall that FOTIVDA was approved on March 10th, 2021 with commercial availability formerly commencing on March 22nd, 2021.

For the nine days until the end of the first quarter, net product revenue was $1.1 million, which reflects inventory shipped to distributors and are 15% gross to net estimate. It's important to note that since the close of the first quarter, all of our distributors have reordered product.

And in fact, all of them have reordered more than once. Through April 30th, a total of 49 commercial prescriptions have been filled through our specialty pharmacy and specialty distributor partners.

And additionally, 75 free one month patient experience starter kits samples have been requested and delivered, representing a potentially important leading indicator for future prescriptions. While we're in the early days of this launch, we believe we're off to a strong start.

We continue to focus on educating the community and raising awareness of how FOTIVDA can help fill the unmet need in the treatment continuum. Key to this effort is establishing FOTIVDA's differentiation, including its distinct characteristics as a potent, highly selective long half-life VEGF receptor TKI, as well as sharing the unique dataset, establishing TIVO-3.

Our commercial outreach spans prescribers across all settings from major academic centers to the community. While the COVID restrictions have slowed our ability to reach all of our customers as quickly as we would like, the reception to FOTIVDA has been very positive.

The unmet need is real and our reach expand deeper in the RCC market every day we're in the field. As with any new launch, initial prescriptions take time to fill as we establish our reimbursement.

We've had very few reimbursement rejections and continue to improve our coverage. And that's reduced the time from physician prescription to patient use.

Our Quick Start program has been effective at getting patients on active treatment quickly and avoiding any interruption of patient care, while benefit verification is underway. I will now turn the call over to Michael Needle to discuss progress with the remainder of our clinical development programs.

Michael?

Thank you, Mike. While we are keenly focused on executing on the FOTIVDA's launch, we continue to make meaningful progress advancing the balance of our clinical pipeline.

In addition to the current monotherapy approval, we are also focused on the evaluation of tivozanib in the immunotherapy combination setting. The introduction of immunotherapy VEGF receptor TKI combinations mark a significant evolution in the treatment landscape of first-line RCC.

We believe that this benefit could extend to the relapse refractory setting, not an effective well tolerated combination. In March, we were pleased to announce our clinical trial collaboration and supply agreement with Bristol Myers Squibb to evaluate tivozanib in combination with nivolumab or OPDIVO Bristol Myers Squibb's anti-PD-1 therapy, in the planned Phase 3, TiNivo-2 trial for patients with advanced relapsed or refractory RCC following prior immunotherapy exposure.

Recall that we previously assessed this combination in the Phase 1, 2 TiNivo study, which demonstrated favorable tolerability and prolong PFS in both treatment naive and previously treated patients with advanced RCC. We look forward to furthering our understanding of the activity and tolerability of this combination, following prior immunotherapy.

We recently received FDA feedback on the trial design, and we are working with the agency to finalize the study design. We are targeting to commence enrollment in TiNivo-2 in mid 2021.

We also remain on track to complete enrollment later this year in the Phase 2 portion of the Phase 1b2 DEDUCTIVE trial of tivozanib in combination with durvalumab or IMFINZI AstraZeneca's PD-L1 therapy in patients with hepatocellular carcinoma, or HCC. At the ASCO GI Cancer Symposium in January, we shared data from the Phase 1b portion of the trial.

No dose limiting toxicities were observed with the combination, which demonstrated a 29% partial response rate and 71% disease control rate. These findings were compatible with the bevacizumab and atezolizumab combination, which is an emerging standard in the care of the same setting.

With a five-year survival rate of less than 5% advanced or metastatic HCC represents an area of high unmet need. We believe tivozanib has the potential to serve as an attractive VEGF receptor TKI to be used in combination with immunotherapy in this disease.

Moving to Ficlatuzumab, our HGF/c-Met inhibitor, in January, we announced completion of enrollment in the randomized confirmatory Phase 2 study of Ficlatuzumab as a single agent or in combination with cetuximab or ERBITUX, an EGFR-targeted antibody, in metastatic head and neck squamous cell carcinoma patients who have failed prior immunotherapy, chemotherapy and cetuximab. This study was designed to confirm findings from the Phase 1, 2 study of Ficlatuzumab and cetuximab, where the combination as well tolerated and resulted in a disease control rate of 67%, as well as prolonged PFS and OS compared to historical control.

We will present results from the Phase 2 study at the upcoming ASCO meeting in June, with a Phase 3 go, no go decision for Ficlatuzumab in head and neck squamous cell cancer to follow. As a reminder in September, 2020, when we regained full global rights to Ficlatuzumab and as initiated clinical manufacturer to supply the potential Phase 3 clinical trial in head and neck squamous cell cancer and consider additional development beyond that.

Progress also continues for early stage programs, AV-380 and AV-203. For AV-380, our GDF15 inhibitory antibody that we are developing as a potential treatment for cancer cachexia, a Phase 1 study in healthy volunteers is now underway, following the FDA's acceptance of our IND application earlier this year, and will guide us on our safety and dosing profile ahead of our advance into cancer patients.

Finally, for AV-203, our ErbB3 inhibitory antibody, in March, we were pleased to share that we will regain full global rights to AV-203, following the voluntary termination of our collaboration and license agreement with CANbridge. We expect to provide an update on clinical development plan in the second half of this year.

With that, I will hand the call over to Erick to discuss first quarter 2021 financial results. Erick?

Thanks Mike. We ended the first quarter of 2021 with cash, cash equivalents and marketable securities of $121.4 million compared with $61.8 million at December 31st, 2020.

We also have an additional $10 million of available credit from Hercules, which gives us up to $130 million of total potential available capital. This figure includes the approximately $78 million we added to our balance sheet during the first quarter of 2021, consisting of a $20 million drawdown under our previously announced $45 million loan and security agreement with Hercules Capital, $3.1 million from warrant exercises as of March 31st, 2021, $3.4 million in stock sales under our at-the-market sales agreement with SVB Leerink LLC and $51.6 million in net proceeds from a public offering of our common stock.

Net product revenue for the first partial quarter 2021, which consisted of a total of nine calendar days was $1.1 million. Research and development expense for the first quarter 2021 was $5.8 million compared with $7.8 million in the first quarter of 2020.

Selling, general and administrative expenses for the first quarter of 2021 was $15.1 million compared with $3.7 million in the first quarter of 2020. The net loss for the first quarter 2021 was $22 million or a net loss of $0.81 per basic and diluted share compared with a net loss of $8.4 million for the first quarter of 2020 or a net loss of $0.52 for basic and diluted share.

We continue to expect that our commercial spend will be approximately $40 million for the year. Gross margins should continue to be in the mid to high 80% range.

R&D should be around $40 million for our existing pipeline plans during 2021. In addition, quarterly G&A should approximate the level seen during the first quarter for the remainder of the year.

We expect that our existing cash, cash equivalents and investments and available credit under the Hercules facility will be sufficient to fund our launch and current pipeline plans. A full overview of results for the first quarter of 2021 are available in our quarterly Form 10-Q.

I will now turn the call back over to Michael Bailey. Michael?

Thanks Erick. Before we opened the call for Q&A, I'd like to take a moment to thank the entire AVEO team for their hard work and unwavering dedication to our mission, to improve the lives of patients with cancer.

With the U.S. commercial launch of FOTIVDA now fully underway, we are thrilled to be able to bring this exciting new therapy to patients battling relapse or refractory kidney cancer who are in dire need of effective and well tolerated treatment options.

Looking ahead, we look forward to continued progress with the commercial launch of FOTIVDA here in the U.S., as well as the continued advancement of the remainder of our pipeline programs. We believe we are well-positioned for success and look forward to providing updates on our progress in the coming quarters.

We will now open the line to Q&A. Operator?

Yeah. Good afternoon.

Thanks for taking the questions and congrats on the progress. Appreciate some of the early metrics here, and I know it's early days.

But is there any color that you can provide or any commentary that you can speak to just with respect to, I guess, where you see initial traction? And I know that you talked in your opening comments about the lack of evidence-based treatment options in this, I guess third line plus setting.

Are you seeing patients switched off of, I guess kind of an older TKI that's been recycled into later line without that evidence, or are most of the scripts that you're seeing written, are these patients who are kind of new to third line?

Hey, Steve, thanks for the question. This is Michael Bailey.

I'm going to pass this over to Mike. He can give you a little color.

We don't have quantitative analysis at this point of that detail, but I think the color might be helpful.

Great. Thanks for the question, Steve.

So, as you said, it is very early. So, all we have at this point is really anecdotal information about the setting in prior treatments.

But I will say we are hearing of patient starts in all of the relevant setting. So, what I mean by that are we have seen patients immediately following frontline combination treatment.

We've seen the more traditional third and fourth line use, and we've also seen some patients starts in more of a very late line who may have opted for no further therapy where FOTIVDA not available, considering hospice. So, across the gamut.

Okay. And then, I know you had mentioned, I think that maybe COVID is kind of impacting your ability to reach all of the accounts.

But I guess of the internal target of high priority accounts that you have, what proportion of those have you reached, and how did those split between academic and community prescribers?

Steve, so we're not reporting this specific reach numbers at this point. But what we are seeing is, as we expected launching in COVID, the restrictions have slowed our ability a bit to reach our customers as quickly as we would like.

Where a pre-COVID world, so nothing unique to us. But that said, the reception to FOTIVDA has been very positive.

And every day we're out there, we get a little deeper into the target. So, you can imagine initially we're focused on the highest tier targets and we'll continue to work our way through the list.

And as we gain adoption, we can go deeper and deeper over time into the community setting where they still these patients, but fewer on an account basis.

Okay. And then maybe just lastly, on TiNivo-2, is there anything that you can say just with respect to the regulatory feedback that you've received?

And I guess whether or not that's just the function of trial design or protocol specific questions or issues that the agency might have?

Yeah, Steve, it's Mike, again. We're not going to comment specifically on the regulatory feedback.

But I think, with our guidance and say we're responding to their questions and we still feel like we're on track for a midyear start.

Wonderful. Thanks for taking the questions and congrats.

Thank you.

Hi, good afternoon. Thanks so much for taking the questions and congrats on all the exciting progress of quarter.

For the sample program that you're doing, can you talk about logistically how that's gone with the rollout, and how many doses each sample includes?

Yeah. Mike, do you want to take that on?

Sure. Great.

Thanks Colleen for the question. So, our sample program, or as we call it the patient experience program, it's a full one month supply bottle that can be requested by physicians treating kidney cancer patients.

We have -- because of this virtual and in-person setting, we can get a signature live for a sample request. We can do it remote via a Zoom type of setting.

And that simply goes back to us and it gets mailed to them within a day or two. So, they get the physical product.

And again, it's a full one month supply of drug. So, the reception has been fantastic.

People are very excited to have the opportunity to get their hands on the drug, have it in their sample closet. And the next time they have an appropriate patient they get that patient experience opportunity for themselves.

So, as we mentioned, we've distributed through the end of April about 75 of these patients experienced our kits. So, it -- it's a full month supply.

So, it'll take a little while to see the conversion rate of those into commercial prescriptions, but we think this could very well be a good leading indicator of interest.

Yeah. Colleen, just as a reminder, why this is an important program for us, what feedback we've gotten from physicians who have used the drug is they get a very good impression, certainly of the tolerability when they get a chance to actually try the drugs.

So, this is a program that will try to encourage that early trial, hopefully that will turn into long-term usage.

Great. Thank you.

That's really helpful. I know it was still early.

I know you mentioned 15% gross to net, any insights into how that's looking so far in 2Q versus what your expectations are?

Mike, do you want to carry on?

Yeah. It's very early.

I don't think we have any updated estimate for Q2 at this point. I think the 15% for Q1 is -- all that we've calculated to this point.

Makes sense. And for the DEDUCTIVE trial and HCC, can you comment on enrollment in the Phase 2?

And when we might see data from that study? And then also what the path could look like beyond that?

Yeah. Dr.

Mike, do you want to take that?

Sure. We actually don't provide updates on enrollment, though we still feel we are on track to complete enrollment by the end of the year.

The options really going forward -- obviously, we are currently in the first line and we could consider for the first line work. Another possibility actually is to look at what to do in the second line following bev atezo, for example.

Obviously, there's no approved -- there's nothing really been tested in that setting. And this is actually not unlike what we're doing with TiNivo-2.

These are conversations that we are having and will continue to have with our partner AZ. They're in this half of us.

So, it's open for further thought.

Yeah. Just as a reminder, Colleen, the -- we did report the Phase 1 data at ASCO GI.

We had a 29% response rate, 71% disease control, which is comparable to what bev atezo saw in that setting. So, we're encouraged by that what we're seeing.

And as Mike said, if we can complete the enrollment as planned, I would expect to be getting data reported early 2022.

Awesome. That's really helpful.

And unless, if I could -- if I can fit in one more question, and Ficlatuzumab update at ASCO, can you remind us what the powering was for that study?

Mike, did we report that?

No. That's not -- I'm going to make sure I'm not on mute.

That's not really the design of the study. The way this study was designed was -- almost as if it was two -- was two Phase 2s wrapped up in one, one was Ficlatuzumab single agent.

The other was the combination. And in both cases -- combination with cetuximab and the patient population was like the Phase 1, patients who had failed cetuximab.

The actual criteria for calling -- Colleen a -- one of the two or either of the two arms positive was a progression free survival that excluded two months with a lower confidence balance was less than two months. So, that's the actual powering is such as it is.

There is no real powering for comparison. Obviously, what we'll be able to report as -- or that partner should be fair.

What Dr. Bauman will report at ASCO will be in addition to that response rates and mediums the usual, but it wasn't really powered to compare the two arms.

That's really helpful. Thank you.

Thank you. Good afternoon, Michael, Erick and Mike.

I'm glad to see the FOTIVDA [ph] scripts come in the first full month of launch. Could you -- I don't know if you -- if you're able to give this, but what percentage of these scripts -- are all these first-time scripts?

Are there any reorders within that? And also, each script has -- just like what you said on the -- under samples, is -- what is -- what is the number of pills?

Is it a month -- months script, or is it more than a month of drug in each script?

So, Mike, you want to take that -- Mike Ferraresso.

Sure. Thanks for the question, RK.

So, as you can imagine this early on, we haven't yet had time for a patient to need a refill. This is still reporting on essentially our first five weeks of launch.

And so, it's all been new patient starts for prescriptions. We do have a few physicians who have started more than one patient.

But the majority it's starting their first patient. And the number of pills or the duration of a prescription is 28 days.

So, it's -- where dose three weeks on one week off for 28-day cycle. So, each of these prescriptions is essentially a one month supply.

Okay. And then, of the 75 samples that are out there, in your own thinking, what percentage of conversion would you consider as a successful -- is successful at this point?

That's a trick question, Mike.

Yeah. Great question.

Great question, RK. Our understanding is -- we believe the physicians who put through the effort to request a sample intend to use it.

I think, the bigger question, I guess, for us and what we'll be watching is just the time and how long they have possession of it. If they're a busy practice, they may have a patient come in or a patient in mind at that moment.

If they're a lower volume practice, they may have some patients who are now on an earlier treatment and they want to use it for their next. And it's just going to be a matter of when that patient's current therapy is no longer working and they want to make that switch.

So, we think, again, they're only going through the effort to request these samples, because they intend to use them. We just don't know exactly when the right patient is going to present for that particular physician.

Okay. And then on the -- in the third line for RCC, advanced RCC, to date has been only clinical studies until FOTIVDA came.

So, what are you doing in terms of not only establishing a market for a therapy, but also trying to see if you can expand that market for the third line?

Mike, do want to comment on that?

Sure. RK, yeah.

Again, we feel we're in a very solid position having the first approval specifically in this setting. And when we look at the market today, the third and fourth lines about a $300 million market prior to our approval.

We see from the decision resources data that only about half of patients in third and fourth line that could be treated or going on to active treatment. And those who are treated are treated for an average duration of only about four months.

So, we think there's a lot that FOTIVDA can do here and we're very excited by the early traction we've seen in the market, and we're getting great reception to our story. And our customers are certainly confirming the unmet need as we understood it in this setting.

And again, the team's doing a fantastic job, and we look forward to continue progress.

Okay. So -- and last question from me on T1 -- TiNivo-2.

The study is also looking at advanced relapse refractory patients, but how different is this patient population in TiNivo-2 compared to what you are looking at in TIVO-3?

Yeah. Good question, RK.

As simply stated, basically these patients are going to be second or third line versus TIVO-3 was third or fourth line. You also would have to have immunotherapy immediately prior.

So, where that was a subpopulation of TIVO-3, it is the entire population here. So, we'd expect to see lots of IO-IO combinations or PD-1 TKI combinations as the immediate prior therapy to this study.

And we think that keeping the IO pressure on, makes a lot of sense. And with would the tolerability of TIVO, we think the combination could prove to be a nice advance for patients.

Thanks. Thanks for taking all my questions.

Hey, thanks, RK.

Well, thank you all for joining us today and thank you for your continued support. We're excited about the next coming quarters.

So, stay tuned.