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aveo-10q_20200630.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number 001-34655

AVEO PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware

04-3581650

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

30 Winter Street, Boston, Massachusetts 02108

(Address of principal executive offices) (Zip Code)

(857) 400-0101

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	AVEO	Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of the registrant’s Common Stock, $0.001 par value, outstanding on August 7, 2020: 25,808,315.

AVEO PHARMACEUTICALS, INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2020

TABLE OF CONTENTS

		Page No.

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	3

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019	4

	Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2020 and 2019	5

	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2020 and 2019	6

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019	8

	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39

Item 4.	Controls and Procedures	57

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	58

Item 1A.	Risk Factors	58

Item 5.	Other Information	98

Item 6.	Exhibits	100

	Signatures	101

AVEO PHARMACEUTICALS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except par value amounts)

(Unaudited)

	June 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	45,670		$	29,785
Marketable securities		25,779			17,960
Accounts receivable		1,208			1,631
Clinical trial retainers		524			589
Other prepaid expenses and other current assets		1,047			635
Total current assets		74,228			50,600
Property and equipment, net		96			—
Operating lease right-of-use asset		1,120			—
Other assets		158			—
Total assets	$	75,602		$	50,600
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	1,785		$	1,466
Accrued clinical trial costs and contract research		5,000			5,680
Other accrued liabilities		2,121			2,336
Operating lease liability		451			—
Loans payable, net of discount		10,193			9,569
Deferred revenue		1,974			1,974
Deferred research and development reimbursements		259			93
Total current liabilities		21,783			21,118
Loans payable, net of current portion and discount		940			6,197
Deferred revenue		1,565			2,552
PIPE Warrant liability (Note 7)		1,999			5,097
Operating lease liability, non-current		473			—
Other liabilities (Note 6)		790			790
Total liabilities		27,550			35,754
Stockholders’ equity:
Preferred stock, $.001 par value: 5,000 shares authorized at June 30, 2020 and December 31, 2019; no shares issued and outstanding at each of June 30, 2020 and December 31, 2019		—			—
Common stock, $.001 par value: 50,000 shares authorized at June 30, 2020 and December 31, 2019; 25,808 shares issued and outstanding at June 30, 2020 and 16,081 issued and outstanding at December 31, 2019		26			16
Additional paid-in capital		649,335			600,451
Accumulated other comprehensive loss		(1	)		—
Accumulated deficit		(601,308	)		(585,621	)
Total stockholders’ equity		48,052			14,846
Total liabilities and stockholders’ equity	$	75,602		$	50,600

See accompanying notes.

AVEO PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Revenues:
Collaboration and licensing revenue	$	494		$	493		$	987		$	1,947
Partnership royalties		255			210			546			367
		749			703			1,533			2,314
Operating expenses:
Research and development		4,419			2,611			12,245			9,463
General and administrative		3,737			2,986			7,409			5,441
		8,156			5,597			19,654			14,904
Loss from operations		(7,407	)		(4,894	)		(18,121	)		(12,590	)
Other income (expense), net:
Interest expense, net		(349	)		(451	)		(664	)		(1,015	)
Change in fair value of PIPE Warrant liability		450			2,210			3,098			11,025
Other income (expense), net		101			1,759			2,434			10,010
Net loss	$	(7,306	)	$	(3,135	)	$	(15,687	)	$	(2,580	)

Net loss per share - basic and diluted	$	(0.42	)	$	(0.20	)	$	(0.94	)	$	(0.18	)
Weighted average number of common shares outstanding		17,364			15,902			16,722			14,574

See accompanying notes.

AVEO PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net loss	$	(7,306	)	$	(3,135	)	$	(15,687	)	$	(2,580	)
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities		(1	)		—			(1	)		—
Comprehensive loss	$	(7,307	)	$	(3,135	)	$	(15,688	)	$	(2,580	)

See accompanying notes.

AVEO PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(In thousands)

(Unaudited)

	Common Shares
	Shares		Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Income			Accumulated Deficit			Total Stockholders' Equity
Balance at December 31, 2019		16,081	$	16	$	600,451	$	—		$	(585,621	)	$	14,846
Stock-based compensation expense related to equity- classified awards		—		—		543		—			—			543
Net loss		—		—		—		—			(8,381	)		(8,381	)
Balance at March 31, 2020		16,081	$	16	$	600,994	$	—		$	(594,002	)	$	7,008
Issuance of common stock in a public offering, excluding to related parties (net of issuance costs of $3.3 million)		5,221		5		24,106		—			—			24,111
Issuance of common stock in a public offering, to related parties		4,504		5		23,639		—			—			23,644
Stock-based compensation expense related to equity-classified awards		—		—		578		—			—			578
Issuance of common stock under employee stock purchase plan		2		—		18		—			—			18
Change in unrealized gain (loss) on investments		—		—		—		(1	)		—			(1	)
Net loss		—		—		—		—			(7,306	)		(7,306	)
Balance at June 30, 2020		25,808	$	26	$	649,335	$	(1	)	$	(601,308	)	$	48,052

AVEO PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(In thousands)

(Unaudited)

	Common Shares
	Shares		Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit			Total Stockholders' Equity (Deficit)
Balance at December 31, 2018		12,648	$	13	$	567,768	$	1	$	(595,009	)	$	(27,227	)
Issuance of common stock from the SVB Leerink sales agreement (net of issuance costs of $0.2 million)		1,252		1		7,511		—		—			7,512
Stock-based compensation expense related to equity-classified awards		—		—		584		—		—			584
Net income		—		—		—		—		555			555
Balance at March 31, 2019		13,900	$	14	$	575,863	$	1	$	(594,454	)	$	(18,576	)
Issuance of common stock and warrants in a public offering, excluding to related parties (net of issuance costs of $2.3 million)		1,739		2		17,765		—		—			17,767
Issuance of common stock and warrants in a public offering, to related parties		435		—		5,000		—		—			5,000
Stock-based compensation expense related to equity-classified awards		—		—		584		—		—			584
Exercise of stock options		—		—		3		—		—			3
Net loss		—		—		—		—		(3,135	)		(3,135	)
Balance at June 30, 2019		16,074	$	16	$	599,215	$	1	$	(597,589	)	$	1,643

AVEO PHARMACEUTICALS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2020			2019
Operating activities
Net loss	$	(15,687	)	$	(2,580	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and Amortization		4			—
Stock-based compensation		1,121			1,168
Non-cash interest expense		200			311
Non-cash change in fair value of PIPE Warrant liability		(3,098	)		(11,025	)
Amortization of premium and discount on investments		(81	)		—
Changes in operating assets and liabilities:
Accounts receivable		423			2,415
Prepaid expenses and other current assets		(347	)		—
Operating lease right-of-use asset		(1,278	)		(337	)
Accounts payable		319			(1,536	)
Accrued contract research		(680	)		(1,546	)
Other accrued liabilities		(215	)		(1,143	)
Other current liabilities		451			—
Deferred revenue		(987	)		53
Deferred research and development reimbursements