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Addition to the Portfolio: AVEO (AVEO Pharmaceuticals, Inc.). Stock analysis, predictions, targets.

Updated: May 1

On Friday, March 19th I announced that I added AVEO to my portfolio. Below is the analysis for AVEO stock and the reasons why I added it to my portfolio.


AVEO stock price spiked from $6 at the beginning of the year all the way to $18 on March 11th on FDA approval news. Since then the stock slowly declined to the $10.40 range as the hype is over and the shorts are at work trying to squeeze a few more percent gains on the downtrend. This creates an opportunity to buy. The price might still go down a bit to the $8-$9 range where it traded before the major spike on March 10th, but then $10 may serve as a psychological resistance.

About AVEO

AVEO Pharmaceuticals, Inc., a biopharmaceutical company, develops and commercializes a portfolio of targeted medicines for oncology and other areas of unmet medical needs.
It markets its lead candidate, tivozanib, an oral, once-daily, vascular endothelial growth factor receptor tyrosine kinase inhibitor, which is used for the treatment of renal cell carcinoma (RCC). The company has also completed a Phase III TIVO-3 trial of tivozanib for the treatment of RCC; and initiated enrollment in a phase Ib/II clinical trial of tivozanib in combination with Opdivo (nivolumab), an immune checkpoint (PD-1) inhibitor for the treatment of RCC. In addition, it is developing Ficlatuzumab, a potent hepatocyte growth factor inhibitory antibody that is in a Phase II clinical trial for the treatment of squamous cell carcinoma of the head and neck, acute myeloid leukemia, and pancreatic cancer; and AV-203, a potent anti-ErbB3 specific monoclonal antibody, which has completed Phase I clinical trial for treating esophageal cancer. The company’s preclinical stage products include AV-380, a potent humanized IgG1 inhibitory monoclonal antibody for the treatment or prevention of cachexia; and AV-353 for the treatment of pulmonary arterial hypertension.
AVEO Pharmaceuticals, Inc. has collaboration agreements with CANbridge Life Sciences Ltd.; EUSA Pharma (UK) Limited; Novartis International Pharmaceutical Ltd.; Biodesix, Inc.; St. Vincent’s Hospital Sydney Limited; Biogen Idec International GmbH; and Kyowa Kirin Co., Ltd.; AstraZeneca PLC; and Bristol Myers Squibb.

Why I am bullish on AVEO


AVEO's market cap is $282.42M at the moment. For this tiny market capitalization, it has quite a few achievements and items in the pipeline. The business update AVEO provided together with the full year 2020 results are very positive:

– FOTIVDA® (tivozanib) Approved for Adult Patients with Relapsed or Refractory Advanced Renal Cell Carcinoma Following Two or More Prior Systemic Therapies; AVEO Plans to Make FOTIVDA Available to Patients in the U.S. by March 31, 2021 –

- Entered Clinical Trial Collaboration and Supply Agreement with Bristol Myers Squibb for Planned Pivotal Phase 3 TiNivo-2 Study of FOTIVDA in Combination with OPDIVO® (nivolumab); Trial Expected to Commence Mid-2021 -

– Enrollment Complete in Phase 2 Open Label Randomized Study of Ficlatuzumab in HNSCC; Results and Phase 3 Decision on Track for Mid-2021 –

- Regained Ex-North American Rights to AV-203; AVEO Now Holds Global Rights to Three Clinical Assets in Addition to FOTIVDA North American Rights -

- $20M Tranche Drawdown Complete in Connection with FOTIVDA Approval Under Amended Hercules Loan Agreement -


In addition, AVEO provided the following guidance:

AVEO believes that its $61.8 million in cash and cash equivalents as of December 31, 2020, along with proceeds from the $20 million drawdown under the Hercules loan facility in March 2021 and from warrant exercises to date, together with anticipated partnership cost sharing reimbursements, royalties from EUSA Pharma (UK) Limited’s (EUSA) FOTIVDA sales, product revenues upon the commercial launch of FOTIVDA in the United States and the potential additional $10 million in credit under the Hercules loan agreement, would allow AVEO to fund planned operations into 2022.


Together with the announcement of Fotivda's approval, management also disclosed the pricing for the drug, set at a WAC price of $24,150 per monthly cycle, which is higher than our assumption but within the range of cost for approved TKIs.”

With the higher pricing, analysts increased Fotivda's projected price per U.S. patient from $100,000 to $200,000. The analyst expects Fotivda to rule the roost, at least until generics enter in 2029.


According to Decision Resource Group, there are 16,000 newly-diagnosed firstline metastatic pancreatic cancer patients in the US every year. Of these, 11000 patients go into 2nd line, and 10,000 move on to 3rd and 4th line eventually. Half of these patients, i.e., 5,000, are currently left untreated. Those that get VEGF treatment also get it for four months while Tivo treatment takes a year, so that's three times the revenue. The total market size for Tivo comes to $300mn in this indication.

According to a study conducted by AVEO, 83% of HCPs will prescribe FOTIVDA within six months of its availability to RCC patients. 30% of HCPs are highly likely to increase their treatment rates with the approval of FOTIVDA on the eligible patient population who are not actively receiving treatment in the post-second-line R/R setting.


Also, pancreatic cancer accounts for about 3% of all cancers in the US and about 7% of all cancer deaths.



While we cannot calculate with 100% accuracy if we say that at least 1,000 patients use FOTIVDA every year we can calculate the revenue of $200 million per year (compared to $5.9M for the previous year).


Analyst Predictions for AVEO


Analysts predict the revenue for AVEO is going to start growing very soon. AVEO will continue to have losses for the next 2 years but will reach profitability at the end of 2022.

With the growth in revenues, the average EPS prediction for AVEO are:

  • for the end of 2024: $2.83

  • for the end of 2025: $3.92

The only worry for the below estimation chart is quite some dispersion of the estimates. If the EPS follows the lower part of the band the value of the company will increase at a slower pace.



AVEO future value


Using our usual approach of calculating the future value by multiplying forward PE using its current price we come up with a forward PE of:

  • 2024: 3.68

  • 2025: 2.6

The average PE ratio of the US Biotechs industry average is 26.8.

If we use our standard PE of 20 for growing companies we should expect the following prices:

  • for the end of 2024: $56

  • for the end of 2025: $78


Analysts' Price Targets


There are 4 analysts covering AVEO stock. All of them give AVEO a 'BUY' rating. The average target price for AVEO is $22.75. The lowest target price is $18 and the highest is $27.




Disclaimer: As usual, trade at your own risk. I own AVEO stock. I do not suggest you should buy any of the stocks I write about. As usual, please do your own due diligence before investing your own money in any of the stocks I write about. The above analysis is quite basic and just gives ideas for further research. A much deeper analysis is required for each stock, including the analysis of operations, debt, etc. I may sell any of the stocks I say I currently own at any moment before it reaches the targets that I set or keep them for even when they reach the target.

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