AVEO Pharmaceuticals (AVEO) is a biopharmaceutical company dedicated to advancing a broad portfolio of targeted therapeutics for oncology and other areas of unmet medical need. The company proprietary platform has delivered unique insights into cancer and related diseases. The company's strategy is to leverage these biomarker insights and partner resources to advance the development of its clinical pipeline. The company is focused on developing its lead candidate tivozanib in North America as a treatment for renal cell carcinoma, or RCC. In addition, The company has entered into partnerships to fund the further development and commercialization of its clinical stage assets, including AV-380, ficlatuzumab, AV-203, and tivozanib for oncology indications outside of North America. The company is currently seeking a partner to develop the AV-353 platform, a preclinical asset, worldwide for the potential treatment of pulmonary arterial hypertension, or PAH.

Going Concern

AVEO Pharmaceuticals has identified conditions and events that raise substantial doubt about its ability to continue as a going concern. Based upon its approximate $40.1 million in existing cash, cash equivalents and marketable securities as of June 30, 2017, The company believe that it has sufficient cash on hand to support operations for at least the next twelve months from the date of filing this Quarterly Report on Form 10-Q. However, in order to maintain compliance with the financial covenant under its loan agreement with Hercules Technology II, L.P. and Hercules Technology III, L.P., affiliates of Hercules Technology Growth, which The company collectively refer to as Hercules, The company will need to maintain $10.0 million in unrestricted cash (defined as cash and liquid cash, including marketable securities) until the completion of the TIVO-3 trial, with results that are satisfactory to Hercules. If the results are not satisfactory to Hercules, The company will need additional capital to maintain compliance with this financial covenant for at least the next twelve months from the date of filing this Quarterly Report on Form 10-Q. This condition raises substantial doubt about its ability to continue as a going concern within one year after the date these financial statements are issued. For more information, refer to Liquidity and Capital Resources—Operating Capital Requirements and Going Concern below and Note 1 to its condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Tivozanib

The company's pipeline includes its lead candidate tivozanib, an oral, once-daily, vascular endothelial growth factor receptor, or VEGFR, tyrosine kinase inhibitor, or TKI. Tivozanib is a potent, selective and long half-life inhibitor of all three VEGF receptors and is designed to optimize VEGF blockade while minimizing off-target toxicities, potentially resulting in improved efficacy and minimal dose modifications. Tivozanib has been investigated in several tumor types, including renal cell, colorectal and breast cancers. In 2006, The company acquired the exclusive rights to develop and commercialize tivozanib in all countries outside of Asia and the Middle East under a license from Kyowa Hakko Kirin Co., Ltd. (formerly Kirin Brewery Co. Ltd.), or KHK.

Clinical and Regulatory Development in RCC

RCC First Line Phase 3 Trial (TIVO-1) : The company conducted a global phase 3 clinical trial, which The companyrefer to as the TIVO-1 trial, comparing the efficacy and safety of tivozanib with Nexavar® (sorafenib), an approved therapy, for first-line treatment of RCC. The trial met its primary endpoint for progression-free survival, or PFS, but showed a non-statistically significant trend favoring the sorafenib arm in overall survival, or OS. In June 2013, the U.S. Food and Drug Administration, or FDA, issued a complete response letter informing that it would not approve tivozanib for the first-line treatment of advanced RCC based solely on the data from this trial, and recommended that The company perform an additional clinical trial adequately sized to assure the FDA that there is no adverse effect on OS.

TIVO-1 Extension Study - One-way crossover from sorafenib to tivozanib (Study 902) : The company completed a TIVO-1 extension study in which patients with advanced RCC received tivozanib as second-line treatment subsequent to disease progression on the sorafenib arm in the TIVO-1 first-line RCC trial. The company presented the final results at the 2015 American Society of Clinical Oncology (ASCO) Annual Meeting on June 1, 2015. The final results showed a median PFS of 11.0 months and a median OS of 21.6 months, demonstrating the clinically meaningful efficacy of tivozanib in a VEGFR treatment refractory population. The company believe that the long OS derived from tivozanib following sorafenib that was demonstrated in Study 902 contributed to the discordance in the efficacy results in the TIVO-1 trial between the PFS benefit, which significantly favored tivozanib, and the OS, which trended in favor of sorafenib. However, the FDA did not accept this explanation, finding that the OS results were uninterpretable, and recommended that The company perform a second phase 3 trial, as set forth above.

European Marketing Authorization Application by EUSA : In December 2015, The company entered into a license agreement with EUSA Pharma (UK) Limited, or EUSA, under which The company granted EUSA the right to develop and commercialize tivozanib for all diseases and conditions in humans, excluding non-oncologic eye conditions, in Europe (excluding Russia, Ukraine and the Commonwealth of Independent States), Latin America (excluding Mexico), Africa, Australasia and New Zealand. EUSA submitted a marketing authorization application, or MAA, for tivozanib for the treatment of RCC to the European Medicines Agency, or EMA, in February 2016. The MAA was based primarily on its existing dataset, which includes the results from the TIVO-1 clinical trial of tivozanib in the first-line treatment of RCC, combined with the TIVO-1 extension trial, and one phase 1 and two phase 2 trials in RCC. On May 17, 2017, EUSA completed an oral explanation to the Committee for Medicinal Products for Human Use, or CHMP, which is the scientific committee of the EMA. On June 23, 2017, the CHMP issued an opinion recommending tivozanib for approval as a first-line treatment of adult patients with advanced RCC and for adult patients who are VEGFR and mTOR pathway inhibitor-naive following disease progression after one prior treatment with cytokine therapy for advanced RCC. The CHMP's recommendation was referred to the European Commission, which is expected to make its final decision about 67 days from the date of the CHMP's recommendation. If approved by the European Commission, marketing authorization for tivozanib will be granted in all 28 countries of the European Union, Norway, Iceland and Liechtenstein.

RCC Third Line Phase 3 Trial (TIVO-3) : In May 2016, The company initiated enrollment and treatment of patients in a phase 3 trial of tivozanib in the third-line treatment of patients with refractory RCC, which The company refer to as the TIVO-3 trial. The TIVO-3 clinical trial was designed to address the OS concerns from the TIVO-1 trial presented in the June 2013 complete response letter from the FDA and to support a request for regulatory approval of tivozanib in the United States as a third-line treatment and as a first-line treatment for advanced RCC. The company's trial design, which The company reviewed with the FDA, provides for a randomized, controlled, multi-center, open-label phase 3 clinical trial of approximately 322 subjects randomized 1:1 to receive either tivozanib or sorafenib. Subjects enrolled in the trial must have failed two systemic therapies one of which must have been a VEGFR TKI. Patients may have received prior immunotherapy, including immune checkpoint (PD-1) inhibitors, reflecting a potentially evolving treatment landscape. The primary objective of the TIVO-3 trial is to show improved PFS. Secondary endpoints include OS, safety and objective response rate. The trial's sites are located in North America and Europe. The TIVO-3 trial does not include a crossover design, accordingly, patients who progress in one therapy will not then be offered the opportunity to cross over to the other therapy. The TIVO-3 trial has passed two semi-annual safety data assessments. In June 2017, the TIVO-3 trial reached its enrollment target of 322 patients, more than two months ahead of its initial guidance. The company expect a pre-planned interim futility analysis to occur mid-year 2017. The company expect to report topline data from the TIVO-3 trial in the first quarter of 2018.

RCC PD-1 Combination Trial with Opdivo® (TiNivo) : In recent clinical trials, VEGFR TKI and immune checkpoint (PD-1) inhibitor combinations have shown promising efficacy in treating advanced RCC. However, several VEGFR TKI/PD-1 combinations have encountered toxicity levels that have challenged or prohibited such VEGFR TKIs from safely combining with PD-1 inhibitors for RCC treatment. In its clinical trials, tivozanib has demonstrated a superior tolerability profile relative to certain other VEGFR TKIs, including lower rates of key potential overlapping toxicities with PD-1 inhibitors. Based on this data, The company believe that tivozanib’s tolerability profile has the potential to allow tivozanib to combine with PD-1 inhibitors more safely than other VEGFR TKIs.

In March 2017, The company initiated enrollment in the TiNivo trial, a phase 1/2 clinical trial of tivozanib in combination with Opdivo (nivolumab), an immune checkpoint (PD-1) inhibitor, for the treatment of advanced RCC. Bristol-Myers Squibb is supplying nivolumab for the TiNivo trial, and The company are the trial sponsor. The TiNivo trial is being led by the Institut Gustave Roussy in Paris under the direction of Professor Bernard Escudier, MD, Chairman of the Genitourinary Oncology Committee. In June 2017, The company successfully completed the phase 1 dose escalation portion of the trial, where tivozanib was administered in two escalating dose cohorts in combination with nivolumab at a constant 240 mg every 2 weeks (n=6). The combination was well tolerated to the full dose and schedule of single agent tivozanib, with no dose limiting toxicities and promising early signs of activity. The full dose tivozanib regimen of 1.5 mg daily for 21 days, followed by a 7 day rest period, was selected as the recommended phase 2 dose (RP2D) for the expansion portion of the trial. The phase 2 portion of the trial is expected to enroll up to an additional 20 subjects. Phase 1 safety results from the ongoing study will be submitted for presentation at an upcoming scientific meeting.

Ficlatuzumab

Ficlatuzumab is a potent Hepatocyte Growth Factor, or HGF, inhibitory antibody. HGF is the sole known ligand of the c-Met receptor, which is believed to trigger many activities that are involved in cancer development and metastasis. In April 2014, The company and Biodesix, Inc., or Biodesix, entered into a worldwide Co-Development and Collaboration Agreement, or the Biodesix Agreement, to develop and commercialize ficlatuzumab. The Biodesix Agreement was amended in October 2016 to provide, among other things, for equal cost sharing in the development of ficlatuzumab.

The company and Biodesix are funding an investigator-sponsored clinical trial of ficlatuzumab in combination with ERBITUX® (cetuximab) in squamous cell carcinoma of the head and neck. The company and Biodesix are also funding an investigator-sponsored clinical trial of ficlatuzumab in combination with Cytosar® (cytarabine) in acute myeloid leukemia. In June 2017, preliminary results from both phase 1 trials were presented at the 2017 American Society of Clinical Oncology (ASCO) Annual Meeting. The study of ficlatuzumab in combination with the EGFR inhibitor cetuximab in patients with cetuximab-resistant, metastatic HNSCC demonstrated a disease control rate, prolonged progression free and overall survival that compared favorably to historical controls, in addition to being well tolerated. A randomized, Phase 2, multicenter, investigator-initiated trial to confirm these findings is expected to initiate in the second half of 2017. The second study, exploring ficlatuzumab in combination with high-dose cytarabine in patients with high risk relapsed or refractory AML, demonstrated early signs of tolerability and activity, including a 50% complete response rate.

The company continue to evaluate additional opportunities for the further clinical development of ficlatuzumab.