Over the past few years, Aveo Oncology ($AVEO) has watched each of its most promising cancer treatments flame out in the clinic or at the feet of regulators, plunging the Cambridge, MA, biotech into penny-stock territory. But pharma giant Novartis ($NVS) sees potential in one of the company's early-stage assets, and the Swiss drugmaker has come through with a deal worth up to $326 million to partner on the project.
Under the agreement, Novartis is paying $15 million up front in exchange for the rights to AV-380, an antibody designed to treat the severe muscle and fat loss often associated with cancer. Novartis is promising as much as $311 million more if the treatment comes through on clinical, regulatory and sales milestones, Aveo said.
Aveo's antibody targets GDF15, a cytokine that plays a role in the inflammatory process. In preclinical studies, using AV-380 to block GDF15 had a positive effect on severe weight loss, called cachexia, as the antibody helped switched the body from a catabolic state to an anabolic one, Aveo said. That could translate to a marked effect for the U.S.'s 5 million cachexia sufferers, according to the company.
The deal sent Aveo's shares, previously trading at just above $1 apiece, soaring roughly 125% on Monday. Novartis' interest in AV-380 doesn't reverse the biotech's years of setbacks, but it makes for a spot of good news the down-sized company has sorely lacked.
Aveo's lead asset, the cancer treatment tivozanib, failed in three clinical trials and was twice rebuffed by the FDA, leading partner Astellas to ditch the project last year. Months later, ex-collaborator Biogen ($BIIB) bailed on AV-203, a Phase I oncology antibody, and the company has yet to find a partner for its lung cancer treatment ficlatuzumab.
Earlier this year, the cash-strapped Aveo moved to shed two-thirds of its staff, leaving just 20 employees, in an effort to save $6 million a year. CEO Tuan Ha-Ngoc and Chief Scientific Officer Jeno Gyuris stepped down, leaving former Chief Business Officer Michael Bailey at the helm with the mission of finding partners for the company's remaining assets.
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