Why AVEO Pharmaceuticals Shares Imploded

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of AVEO Pharmaceuticals , a cancer therapeutics company, collapsed as much as 27% following the release of briefing documents today in anticipation of AVEO's meeting with the Food and Drug Administration panel on Thursday.

So what: If you recall, one of the oddities of AVEO's Tivozanib, an oral metastatic renal cell carcinoma drug, is that it outperformed Bayer and Onyx Pharmaceuticals' Nexavar in terms of progression-free survival in trials (11.9 months versus 9.1 months), but actually delivered a slightly lower median overall survival than Nexavar (28.8 months versus 29.3 months). According to the briefing docs released this morning, it appears that the FDA may want AVEO to run an additional trial to confirm the added benefit of Tivozanib based on that reduction in overall median survival noted during the study.


However, AVEO CEO William Slichenmyer noted that when Nexavar-arm patients failed to respond or got sicker in trials, they were switched to Tivozanib, creating a sort of sequential instead of direct comparison late in the game. That could help explain the flip-flopped median overall survival figures.

Now what: Confused yet? We'll know more after AVEO meets with the FDA panel on Thursday. Safety doesn't seem to be a big issue here, but AVEO is going to need to convince the panel that another trial isn't needed if it has any hope of getting this drug to market within the next two years. Tivozanib clearly shows promise; but just how much promise remains to be seen.

Craving more input? Start by adding AVEO Pharmaceuticals to your free and personalized watchlist so you can keep up on the latest news with the company.

While you can certainly make huge gains in biotechs like AVEO, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article Why AVEO Pharmaceuticals Shares Imploded originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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