Korean drugmaker LG Chem has agreed to acquire Aveo Oncology in a deal valuing the biotechnology company’s stock at $566 million, ending a lengthy journey involving a kidney cancer drug that U.S. regulators rejected twice before finally approving last year.
Under the deal announced Tuesday, LG Chem will pay $15 per share in cash for Aveo and its kidney cancer medicine, once known as tivozanib and now sold as Fotivda. The offer represents a 43% premium to Aveo’s $10.48 per share closing price on Monday and a 71% premium to its average trading price over the last month. The deal should close in early 2023, subject to the approval of Aveo shareholders, the companies said.
Once the deal closes, Aveo will serve as the U.S. arm of LG Chem’s oncology business. The company is Korea’s largest chemicals producer, but has eyed a growing presence in the life sciences — and Boston-area biotechnology specifically, having opened in 2019 an “innovation center” in Cambridge, Massachusetts.
In acquiring Aveo, LG Chem is taking a chance on a kidney cancer drug that’s in the early stages of its U.S. launch after a decade of ups and downs.
Aveo went public in 2010 at $9 per share on the promise of tivozanib, a drug it envisioned as a treatment for newly diagnosed kidney cancer patients. The company later sought approval of tivozanib based on results from a study showing it kept tumors in check longer than the kidney cancer medicine Nexavar, with fewer side effects.
That request was panned near-unanimously by a Food and Drug Administration advisory panel and rejected in 2013 by the agency, which cited a variety of trial design issues and a trend towards a negative impact on survival. A restructuring followed for Aveo, as did shareholder lawsuits and a Securities and Exchange Commission investigation that charged multiple executives with misleading investors about tivozanib’s prospects. Several were ordered to pay penalties, and Aveo reached a $4 million settlement.
The biotech never stopped developing tivozanib, however. European regulators cleared the drug in front-line kidney cancer in 2017 on the same data U.S. regulators swatted back. It ran another trial called TIVO-3 meant to address the FDA’s concerns and, in 2018, reported positive results in kidney patients whose disease had progressed after at least two systemic therapies. U.S. regulators declined to review that filing in 2019, demanding additional data, but finally accepted the application in 2020 and approved the drug in 2021.
Aveo faced a tall order launching Fotivda. The standard of care for kidney cancer changed during its lengthy development journey, with the approvals of cancer immunotherapies and other treatments. Fotivda sales totaled just $25 million last quarter, though some analysts have suggested sales could increase following the National Comprehensive Care Network’s decision in June to upgrade the drug’s status.
More important to Fotivda’s prospects, though, was the securing of a new method of use patent last week that gives the drug market exclusivity through 2039, 11 years beyond its previously expected expiration. That extended intellectual property “may have sealed the deal” with LG Chem, wrote SVB Securities analyst Andrew Berens.
Fotivda is also being evaluated alongside Bristol Myers Squibb’s immunotherapy Opdivo in a Phase 3 trial in patients who have progressed after immunotherapy. Results are expected next year.