AVEO Pharmaceuticals (AVEO) Stock Climbs On Tivozanib News

AVEO Pharmaceuticals AVEO Stock News

AVEO Pharmaceuticals, Inc. (NASDAQ: AVEO) is running for the top in the market this morning. However, if you’ve checked Yahoo! Finance for press releases, you’re not going to find any. So, why is the stock up more than 10% early on?

The gains have to do with the fact that Kyowa Kirin is buying back certain rights to Tivozanib, bringing tens of millions of dollars through the door for AVEO. Here’s what’s happening:

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AVEO Stock Climbs On Tivozanib Rights News

In a press release issued early this moring, Kyowa Kirin, a Japanese pharmaceuticals company, announced that it amended its license agreement with AVEO Oncology. The license agreement was drawn up around tivozanib.

Under the terms of the amended agreement, Kyowa Kirin is buying back the non-oncology rights of tivoanib in AVEO territories. These territories include the United States and Europe. The amendment relates to a 2006 license agreement between the two companies, granting AVEO exclusive rights of tivozanib in all indications in covered territories.

As a result of the amendment, Kyowa Kirin will make an upfront payment of $25 million. The company will also waive AVEO Pharmaceutical’s obligation to make an $18 million milestone payment upon gaining U.S. marketing approval as well as up to $391 million in potential milestone payments surrounding certain development and commercial milestones in non-oncology indications.

Finally, Kyowa Kirin has agreed to make tiered royalty payments on the net sales of tivozanib in non-oncology indications. These royalties will start at high single-digit and end at low double-digit percentages.

In a statement, Michael Bailey, President and CEO at AVEO, had the following to offer:

This agreement marks another chapter in our successful partnership with Kyowa Kirin, and is consistent with our mission to develop and commercialize our oncology-focused pipeline while retaining meaningful economic interest and advancing our non-oncology pipeline through partnerships.

It also provides AVEO with $25 million in non-dilutive capital upfront and an $18 million reduction of potential future payment obligations, which strengthens our balance sheet as we pursue U.S. approval of tivozanib in renal cell carcinoma (RCC) and advance our pipeline programs, including tivozanib-immunotherapy combinations, ficlatuzumab in head and neck squamous cell carcinoma, acute myeloid leukemia, and pancreatic cancer and AV-380 for cachexia. We look forward to realizing the value of Kyowa Kirin’s development initiatives with tivozanib in non-oncology indications.

This News Is Huge

This is very big news for AVEO Pharmaceuticals and its investors. First and foremost, the amended agreement will bring $25 million in funding through the door immediately and offer up further potential revenue in the future. However, that’s not the only reason this is exciting.

The truth of the matter is that AVEO is centering its focus on the oncology space. So, offloading rights to non-oncology indications really isn’t much of a loss. At the end of the day, it allows the company to focus on what’s most important to it, helping patients win the battle against cancer!

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