AVEO Pharmaceuticals Inc (NASDAQ: AVEO) has what it takes to continue moving higher after rallying by more than 90% over the past month. The spike has come at the backdrop of rising trading volume an indication of renewed investor interest in the stock.
AVEO Share Price Analysis
Strong price performance comes on the company reporting impressive financial results depicted by narrowing net loss. The stock is also flying high on the company announcing positive results on its hepatocyte growth factor inhibitory antibody product candidate.
After a harrowing crash in February, the stock has bounced back and now looks like a potential break out play. A takeout of the $1 technical level has set the stage for the stock to make a run for the $2 a share resistance level.
AVEO Pharmaceuticals needs to rally and stabilize above the $2 a share mark to have a chance of recouping all the losses accrued last year. Above the crucial resistance level, bulls should be in control and could continue pushing the stock high, with the next stop probably being 52-week highs of $3.59.
About AVEO Pharmaceuticals
AVEO Pharmaceuticals casts itself as a biopharmaceutical company focused on the development and commercialization of targeted medicines for oncology. Tivozanib is the company’s lead product an endothelial growth factor used in the treatment of renal cell carcinoma.
Declining Net Loss-Clinical Trials Milestones
AVEO Pharmaceuticals price action activity has gained momentum in recent weeks on the company delivering impressive financial result for the full year ended December 31, 2018. The company ended the year with $24.4 million in cash and cash equivalent.
The company remains well positioned and financed to pursue clinical trials as it moves to strengthen its product pipeline. However, revenue took a hit on dropping to $5.4 million from $7.6 million reported a year earlier.
Amidst a decline in revenues, the company was still able to shore its bottom line. Net loss shrunk to -$5.3 million or $0.04 a share, compared to a net loss of -$65 million reported a year earlier.
Amidst the positive financial results, it is the announcement of positive clinical trials that has continued to shore the stock’s sentiments in the market. The company’s candidate drug Ficlatuzumab-Cytarabine is fresh from posting positive clinical trial results in Phase 1b trials of patients with relapsed and refractory acute myeloid leukemia.
“Elevated serum HGF level is an adverse prognostic factor, and these results demonstrate that the anti-HGF antibody ficlatuzumab combined with cytarabine holds potential to affect outcomes in patients with relapsed or refractory AML. We look forward to potentially evaluating ficlatuzumab in larger outcome studies in AML,” said Dr. Andreadis.
The company has since announced plans to carry out a public offering as it looks to generate additional capital for the development of its candidate’s drug. AVEO Pharmaceuticals also intends to use part of proceeds from the offering for working capital, and other general corporate purposes.
Class Action Lawsuit Dilemma
While everything seems to be working right for the company, right from clinical trials to operational efficiency, the company must contend with a wave of class action lawsuits. AVEO Pharmaceutical is accused of sharing false or misleading statement pertaining to TIVO-3 trial for its lead candidate drug Tivozanib.
According to the lawsuits, the candidate drug had insufficient survival data to obtain Food and Drug Administration approval, a development that led to its rejection in 2013. The lawsuits allege that the company failed to make it known that the lack of sufficient data would have made it impossible for the drug to gain regulatory approval.
Favorable technical and positive developments on operational efficiency suggest that AVEO Pharmaceuticals is on the right path. A spike in share price, as well as trading volume, also suggest that investors are slowly falling in love with the stock after a harrowing plunge in February.
The stock is back to trading in an uptrend on the release of important updates on the company’s clinical trials that suggest the company is on course to strengthen its pipeline. Narrowing net loss also suggests that the company is on a path to turning cash flow positive ideal for generating shareholder value.
The solid performance in recent weeks looks set to persist as investors take note of the company’s long-term prospects. A rally followed by a close above the $2 mark is a potential trigger point that would accelerate the stock’s upside action.
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Disclosure: We have no position in AVEO and have not been compensated for this article.