Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nasdaq  >  AVEO Pharmaceuticals, Inc.    AVEO

AVEO PHARMACEUTICALS, INC.

(AVEO)
My previous session
Most popular
  Report  
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsOfficial PublicationsSector newsAnalyst Recommendations

AVEO PHARMACEUTICALS : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

share with twitter share with LinkedIn share with facebook
share via e-mail
0
03/14/2019 | 04:08pm EDT
You should read the following discussion and analysis of our financial condition
and results of operations together with our consolidated financial statements
and the related notes appearing elsewhere in this report. Some of the
information contained in this discussion and analysis or set forth elsewhere in
this report, including information with respect to our plans and strategy for
our business and related financing, includes forward-looking statements that
involve risks and uncertainties. You should read the "Risk Factors" section in
Part 1, Item 1A of this report for a discussion of important factors that could
cause actual results to differ materially from the results described in or
implied by the forward-looking statements contained in the following discussion
and analysis.

Overview

We are a biopharmaceutical company seeking to advance targeted medicines for
oncology and other unmet medical needs. We are working to develop and
commercialize our lead candidate tivozanib in North America as a treatment for
advanced or metastatic renal cell carcinoma, or RCC. In November 2018, we
announced that our phase 3 randomized, controlled, multi-center, open-label
trial comparing tivozanib to an approved therapy, sorafenib (Nexavar®), in 350
subjects as a third- and fourth-line treatment for RCC, including subjects with
prior checkpoint inhibitor therapy, which we refer to as the TIVO-3 trial, met
its primary endpoint of progression-free survival, or PFS. Data for the
secondary endpoint of the TIVO-3 trial, overall survival, or OS, was not mature
as of the time of the final PFS analysis. In January 2019, the U.S. Food and
Drug Administration, or FDA, recommended that we not submit a new drug
application, or NDA, for tivozanib at this time as the preliminary OS results
from the TIVO-3 trial did not allay its concerns about a potential detriment in
OS from our previously completed phase 3 trial for tivozanib in the first-line
treatment of RCC, which we refer to as the TIVO-1 trial.  Following discussion
with the FDA, we have extended the timeline for the TIVO-3 trial OS analysis and
plan to conduct another interim OS analysis in August 2019.  We anticipate
reporting the results of this analysis in the fourth quarter of 2019, and plan
to provide an update regarding the potential submission of an NDA for tivozanib
to the FDA.

We are leveraging several collaborations in the development of tivozanib.  We
have sublicensed tivozanib, marketed under the brand name FOTIVDA®, for
oncological indications in Europe and other territories outside of North
America. Through our partner, tivozanib is approved in the European Union, or
EU, as well as Norway and Iceland, for the first-line treatment of adult
patients with RCC and for adult patients who are vascular endothelial growth
factor receptor, or VEGFR, and mTOR pathway inhibitor-naïve following disease
progression after one prior treatment with cytokine therapy for RCC.  We also
have clinical collaborations to study tivozanib in combination with immune
checkpoint inhibitors in RCC and in hepatocellular carcinoma, or HCC.  We are
conducting a phase 2 clinical trial of tivozanib in combination with Opdivo®
(nivolumab), a PD-1 inhibitor, in the first-line and the second-line treatment
of RCC, which we refer to as the TiNivo trial. Leveraging early monotherapy
results in HCC, we have a clinical collaboration to study tivozanib in
combination with IMFINZI® (durvalumab), a PD-L1 inhibitor, for the treatment of
advanced, unresectable HCC.  In addition, a new formulation of tivozanib is in
pre-clinical development for the treatment of age-related macular degeneration.

As part of our strategy, we have also entered into partnerships to help fund the
development and commercialization of our other product candidates. Ficlatuzumab,
a hepatocyte growth factor, or HGF, inhibitory antibody, is currently being
tested in several investigator sponsored studies jointly funded by us and one of
our development partners for the potential treatment of squamous cell carcinoma
of the head and neck, or HNSCC, acute myeloid leukemia, or AML, and pancreatic
cancer.  Our partner for AV-203, an anti-ErbB3 monoclonal antibody, is planning
to initiate clinical studies in China in 2019 in esophageal squamous cell
carcinoma, or ESCC, and has committed to funding the development of AV-203
through proof-of-concept.  We have recently regained the rights to AV-380, a
humanized IgG1 inhibitory monoclonal antibody targeting growth differentiation
factor 15, or GDF15, a divergent member of the TGF-ß family, for the potential
treatment of cancer cachexia, and are working to initiate preclinical toxicology
studies mid-2019 to support the potential filing of an investigational new drug
application, or IND, with the FDA. We are evaluating options for the development
of our preclinical AV-353 platform which targets the Notch 3 pathway.



                                       81

--------------------------------------------------------------------------------

Going Concern


We have identified conditions and events that raise substantial doubt about our
ability to continue as a going concern. To continue as a going concern, we must
secure additional funding to support our current operating plan. As of December
31, 2018, we had approximately $24.4 million in cash, cash equivalents and
marketable securities. In February 2019, we sold approximately 12.5 million
shares of our common stock pursuant to our sales agreement with SVB Leerink, or
the Leerink Sales Agreement, and received approximately $7.5 million in net
proceeds. Based on our available cash resources, we do not have sufficient cash
on hand to support current operations for at least the next twelve months from
the date of filing this Annual Report on Form 10-K. This condition raises
substantial doubt about our ability to continue as a going concern. We expect
that, in order to obtain additional funding, we will need to receive additional
milestone payments and royalties from our partners and / or complete additional
public or private financings of debt or equity. We may also seek to procure
additional funds through future arrangements with collaborators, licensees or
other third parties, and these arrangements would generally require us to
relinquish or encumber rights to some of our technologies or drug candidates. We
may not receive milestone payments or be able to complete financings or enter
into third-party arrangements on acceptable terms, if at all. For more
information, refer to "Liquidity and Capital Resources-Liquidity and Going
Concern" below and Note 1, "-Liquidity and Going Concern" of the Notes to our
consolidated financial statements included elsewhere in this Annual Report on
Form 10-K.

Tivozanib

Our pipeline includes our lead candidate tivozanib, an oral, once-daily, 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, hepatocellular,
colorectal and breast cancers, as well as in age-related macular degeneration.
We have 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. We have sublicensed to EUSA
Pharma (UK) Limited, or EUSA, the right to develop and commercialize tivozanib
in our licensed territories outside of North America, including Europe
(excluding Russia, Ukraine and the Commonwealth of Independent States), Latin
America (excluding Mexico), Africa and Australasia. The EUSA sublicense excludes
non-oncologic ocular conditions, to which we have retained development rights in
all of our licensed territories. We are planning further development of
tivozanib as a combination therapy with immune checkpoint inhibitors for the
treatment of RCC and HCC.

Strategic Partnerships

AstraZeneca

In December 2018, we entered into a clinical supply agreement, or the
AstraZeneca Agreement, with a wholly-owned subsidiary of AstraZeneca PLC, or
AstraZeneca, to evaluate the safety and efficacy of AstraZeneca's IMFINZI
(durvalumab), a human monoclonal antibody directed against programmed
death-ligand 1, or PD-L1, in combination with tivozanib as a first-line
treatment for patients with advanced, unresectable HCC in a phase 1/2 study. We
will serve as the study sponsor; each party will contribute the clinical supply
of its study drug; and study costs will be otherwise shared equally. The phase 1
portion of the study is expected to commence in 2019. We did not incur any costs
under the AstraZeneca Agreement in the year ended December 31, 2018.

CANbridge


In March 2016, we entered into a collaboration and license agreement with
CANbridge, or the CANbridge Agreement, under which we granted CANbridge the
exclusive right to develop, manufacture and commercialize AV-203, our
proprietary ErbB3 (HER3) inhibitory antibody, for the diagnosis, treatment and
prevention of disease in all countries outside of North America. In addition,
CANbridge has a right of first negotiation if we determine to outlicense any
North American rights. The parties have both agreed not to develop or
commercialize any ErbB3 inhibitory antibody other than AV-203 during the term of
the CANbridge Agreement. CANbridge has responsibility for all activities and
costs associated with the development, manufacture and commercialization of
AV-203 in its territories. CANbridge is obligated to use commercially reasonable
efforts to develop and obtain regulatory approval for AV-203 in each of China,
Japan, the United Kingdom, France, Italy, Spain and Germany. Under the CANbridge
Agreement, CANbridge is required to conduct and fund the clinical development of
AV-203 through phase 2 proof-of-concept in esophageal squamous cell carcinoma,
or ESCC, after which we may elect to contribute to certain worldwide development
efforts.

In December 2017, CANbridge filed an IND application with the China National
Drug Administration, or CNDA, for a clinical study of AV-203 in ESCC.
CANbridge's IND application was accepted by the CNDA in August 2018. CANbridge
has advised us that it plans to initiate a phase 1b/extension trial in ESCC in
2019.



                                       82
--------------------------------------------------------------------------------
Upon entry into the CANbridge Agreement, CANbridge paid us an upfront fee of
$1.0 million in April 2016, net of foreign withholding taxes. CANbridge also
reimbursed us for $1.0 million in certain AV-203 manufacturing costs that we
previously incurred. CANbridge paid this manufacturing reimbursement in two
installments of $0.5 million each, one in March 2017 and one in September 2017,
net of foreign withholding taxes. In August 2018, CANbridge obtained regulatory
approval of its IND application from the CNDA for a clinical study of AV-203 in
ESCC and, accordingly, we earned a $2.0 million development and regulatory
milestone payment that was received from CANbridge in August 2018.

Pursuant to the CANbridge Agreement, we are eligible to receive up to
$40.0 million in potential additional development and regulatory milestone
payments and up to $90.0 million in potential commercial milestone payments
based on annual net sales of licensed products. Upon commercialization, we are
eligible to receive a tiered royalty, with a percentage range in the low
double-digits, on net sales of approved licensed products. CANbridge's
obligation to pay royalties for each licensed product expires on a
country-by-country basis on the later of the expiration of patent rights
covering such licensed product in such country, the expiration of regulatory
data exclusivity in such country or ten years after the first commercial sale of
such licensed product in such country. A percentage of any milestone and royalty
payments received by us under the CANbridge Agreement, excluding upfront and
reimbursement payments, are due to Biogen Idec International GmbH, or Biogen, as
a sublicensing fee under our option and license agreement with Biogen dated
March 18, 2009, as amended. The $2.0 million development and regulatory
milestone we earned in August 2018 for regulatory approval from the CNDA of an
IND application for a clinical study of AV-203 in ESCC was subject to this
sublicense fee, or $0.7 million, which was paid to Biogen in October 2018.

The term of the CANbridge Agreement continues until the last to expire royalty
term applicable to licensed products. Either party may terminate the CANbridge
Agreement in the event of a material breach of the CANbridge Agreement by the
other party that remains uncured for a period of 45 days, in the case of a
material breach of a payment obligation, and 90 days in the case of any other
material breach. CANbridge may terminate the CANbridge Agreement without cause
at any time upon 180 days' prior written notice to us. We may terminate the
CANbridge Agreement upon thirty days' prior written notice if CANbridge
challenges any of the patent rights licensed to CANbridge under the CANbridge
Agreement.

EUSA

In December 2015, we entered into a license agreement with EUSA, or the EUSA
Agreement, under which we granted to EUSA the exclusive, sublicensable right to
develop, manufacture and commercialize tivozanib in the territories of Europe
(excluding Russia, Ukraine and the Commonwealth of Independent States), Latin
America (excluding Mexico), Africa and Australasia for all diseases and
conditions in humans, excluding non-oncologic ocular conditions. EUSA is
obligated to use commercially reasonable efforts to seek regulatory approval for
and commercialize tivozanib throughout its licensed territories for RCC. EUSA
has responsibility for all activities and costs associated with the further
development, manufacture, regulatory filings and commercialization of tivozanib
in its licensed territories.

EUSA made research and development reimbursement payments to us of $2.5 million
upon the execution of the EUSA Agreement in 2015, and $4.0 million in September
2017 upon its receipt of marketing authorization from the European Commission in
August 2017 for tivozanib (FOTIVDA) for the treatment of RCC. In September 2017,
EUSA elected to opt-in to co-develop the TiNivo trial. As a result of EUSA's
exercise of its opt-in right, it became an active participant in the ongoing
conduct of the TiNivo trial and is able to utilize the resulting data from the
TiNivo trial for regulatory and commercial purposes in its territories. EUSA
made an additional research and development reimbursement payment to us of $2.0
million upon its exercise of its opt-in right. This payment was received in
October 2017, in advance of the completion of the TiNivo trial, and represents
EUSA's approximate 50% share of the total estimated costs of the TiNivo trial.
We are also eligible to receive an additional research and development
reimbursement payment from EUSA of 50% of our total costs for our TIVO-3 trial,
up to $20.0 million, if EUSA elects to opt-in to that study.

We are entitled to receive milestone payments of $2.0 million per country upon
reimbursement approval, if any, for RCC in each of France, Germany, Italy, Spain
and the United Kingdom, which we refer to collectively as the EU5, and an
additional $2.0 million for the grant of marketing approval for RCC, if any, in
three of the licensed countries outside of the EU, as mutually agreed by the
parties. In February 2018 and in November 2018, EUSA obtained reimbursement
approvals from the NICE in the United Kingdom and the GKV-SV in Germany,
respectively, for the first-line treatment of RCC. Accordingly, we earned a $2.0
million milestone payment with respect to the reimbursement approval in the
United Kingdom that was received from EUSA in March 2018 and a $2.0 million
milestone payment with respect to the reimbursement approval in Germany that was
received from EUSA in December 2018. We are also eligible to receive a payment
of $2.0 million per indication in connection with a filing by EUSA with the EMA
for marketing approval, if any, for tivozanib for the treatment of each of up to
three additional indications and $5.0 million per indication in connection with
the EMA's grant of marketing approval for each of up to three additional
indications, as well as up to $335.0 million upon EUSA's achievement of certain
sales thresholds. Upon commercialization, we are eligible to receive tiered
double-digit royalties on net sales, if any, of licensed products in its
licensed territories ranging from a low double digit up to mid-twenty percent
depending on the level of annual net sales. In November 2017, we began earning
sales royalties upon EUSA's



                                       83
--------------------------------------------------------------------------------
commencement of the first commercial launch of tivozanib (FOTIVDA) with the
initiation of product sales in Germany. The commercial launch expanded to the
United Kingdom following the reimbursement approval by the NICE in February
2018. In addition, EUSA has launched FOTIVDA in several non-EU5 European
countries and is working toward launching FOTIVDA in additional European
territories. We recognized approximately $0.5 million and $19,000 in revenue for
sales royalties in the years ended December 31, 2018 and 2017, respectively.

The research and development reimbursement payments under the EUSA Agreement are
not subject to the 30% sublicensing payment payable to KHK, subject to certain
limitations. We would, however, owe KHK 30% of other, non-research and
development payments we may receive from EUSA pursuant to the EUSA Agreement,
including any reimbursement approvals for RCC in the EU5, marketing approvals
for RCC in three specified non-EU licensed territories, EU marketing approval
filings and corresponding marketing approvals by the EMA for up to three
additional indications beyond RCC, and sales-based milestones and royalties, as
set forth above. The $2.0 million milestone payments we earned in each of
February 2018 and November 2018 upon EUSA's reimbursement approval for FOTIVDA
in the United Kingdom and in Germany, respectively, were subject to the 30% KHK
sublicense fee, or $0.6 million, each. We paid the sublicense fees for EUSA's
reimbursement approvals in the United Kingdom and Germany in April 2018 and in
January 2019, respectively.

The term of the EUSA Agreement continues on a product-by-product and
country-by-country basis until the later to occur of (a) the expiration of the
last valid patent claim for such product in such country, (b) the expiration of
market or regulatory data exclusivity for such product in such country or
(c) the tenth anniversary of the effective date. Either party may terminate the
EUSA Agreement in the event of the bankruptcy of the other party or a material
breach by the other party that remains uncured, following receipt of written
notice of such breach, for a period of (a) thirty (30) days in the case of
breach for nonpayment of any amount due under the EUSA Agreement, and (b) ninety
(90) days in the case of any other material breach. EUSA may terminate the EUSA
Agreement at any time upon one hundred eighty (180) days' prior written notice.
In addition, we may terminate the EUSA Agreement upon thirty (30) days' prior
written notice if EUSA challenges any of the patent rights licensed under the
EUSA Agreement.

Novartis

In August 2015, we entered into a license agreement with Novartis, or the
Novartis License Agreement, under which we granted Novartis the exclusive right
to develop and commercialize AV-380 and our related antibodies worldwide.
Novartis was responsible under the Novartis License Agreement for the
development, manufacture and commercialization of our antibodies and any
resulting approved therapeutic products. On June 29, 2018, Novartis notified us
that it would be terminating our collaboration without cause following change in
strategic direction at Novartis. Effective August 28, 2018, the Novartis License
Agreement was terminated, and we regained the rights to the AV-380 program.
Novartis' termination without cause triggered the termination of all licenses
and other rights granted by us to Novartis with regard to the AV-380 program,
and the grant by Novartis to us of an irrevocable, exclusive, fully paid-up
license, with a right to sub-license, to any patent rights or know-how
controlled by Novartis as of the termination date related to the AV-380 program.
Following termination, Novartis has initiated the process of transferring the
AV-380 program back to us.

On December 18, 2018, we entered into an agreement with Novartis, or the AV-380
Transfer Agreement, to further establish and clarify the terms on which the
AV-380 program will be returned to us and to support our continuing development
of the AV-380 program. The AV-380 Transfer Agreement provides for the continued
transfer to AVEO of the AV-380 program as well as cooperation regarding our
future regulatory filings relating to AV-380. Novartis is also required to
provide the AV-380 drug supply, valued at approximately $4.0 million, to us at
no charge. Pursuant to the AV-380 Transfer Agreement, Novartis made a one-time
payment to us of $2.3 million in January 2019, which we used to cover the $2.3
million time-based milestone obligation due to St. Vincent's in January 2019
under our license agreement as further described below under the heading "-St.
Vincent's Hospital." The AV-380 Transfer Agreement contains mutual releases by
both parties of all claims arising out of the Novartis Agreement, other than
indemnification obligations. Novartis has also agreed that it will not develop,
manufacture or commercialize any anti-GDF15 antagonist antibody for three years
following the date of the AV-380 Transfer Agreement.

In connection with the AV-380 Transfer Agreement, the $2.3 million payment
obligation due from Novartis was not considered a revenue transaction due to the
effective termination of the Novartis Agreement on August 28, 2018 and was
instead considered other income. We evaluated the return of the AV-380 drug
supply, valued at approximately $4.0 million, and determined that the inventory
was not capitalizable as future economic benefit is not probable at this time
due to the AV-380 drug candidate being in the pre-clinical development stage.



                                       84

--------------------------------------------------------------------------------

Biodesix


In April 2014, we entered into a worldwide co-development and collaboration
agreement with Biodesix, or the Biodesix Agreement, to develop and commercialize
ficlatuzumab. Under the Biodesix Agreement, we and Biodesix are each required to
contribute 50% of all clinical, regulatory, manufacturing and other costs to
develop ficlatuzumab, and would share equally in any future revenue from
development or commercialization, subject to certain exceptions. We retain
primary responsibility for clinical development of ficlatuzumab, although all
trials are conducted pursuant to a joint development plan.

Under the Biodesix Agreement, we granted Biodesix perpetual, non-exclusive
rights to certain intellectual property, including all clinical and biomarker
data related to ficlatuzumab, to develop and commercialize VeriStrat®,
Biodesix's proprietary companion diagnostic test. Biodesix granted us perpetual,
non-exclusive rights to certain intellectual property, including diagnostic data
related to VeriStrat, with respect to the development and commercialization of
ficlatuzumab; each license includes the right to sublicense, subject to certain
exceptions. In October 2016, we amended the Biodesix agreement in connection
with the termination of the FOCAL trial, a phase 2 proof-of-concept clinical
study of ficlatuzumab in which VeriStrat was used to select clinical trial
subjects.

Prior to the first commercial sale of ficlatuzumab, each party has the right to
elect to discontinue participating in further development or commercialization
efforts with respect to ficlatuzumab, which is referred to as an "Opt-Out". If
either we or Biodesix elects to Opt-Out, with such party referred to as the
"Opting-Out Party," then the Opting-Out Party shall not be responsible for any
future costs associated with developing and commercializing ficlatuzumab other
than any ongoing clinical trials. If we elect to Opt-Out, we will continue to
make the existing supply of ficlatuzumab available to Biodesix for the purposes
of enabling Biodesix to complete the development of ficlatuzumab, and Biodesix
will have the right to commercialize ficlatuzumab. After election of an Opt-Out,
the non-opting out party shall have sole decision-making authority with respect
to further development and commercialization of ficlatuzumab. Additionally, the
Opting-Out Party shall be entitled to receive, if ficlatuzumab is successfully
developed and commercialized, a royalty equal to 10% of net sales of
ficlatuzumab throughout the world, if any, subject to offsets under certain
circumstances. Prior to any Opt-Out, the parties shall share equally in any
payments received from a third-party licensee; provided, however, after any
Opt-Out, the Opting-Out Party shall be entitled to receive only a reduced
portion of such third-party payments. The Biodesix Agreement remains in effect
until the expiration of all payment obligations between the parties related to
development and commercialization of ficlatuzumab, unless earlier terminated.

We and Biodesix are currently funding several investigator-sponsored clinical
trials, including ficlatuzumab in combination with ERBITUX® (cetuximab) in
squamous cell carcinoma of the head and neck, ficlatuzumab in combination with
Cytosar (cytarabine) in acute myeloid leukemia and ficlatuzumab in combination
with nab-paclitaxel and gemcitabine in pancreatic cancer. We continue to
evaluate additional opportunities for the further clinical development of
ficlatuzumab. Such clinical development, beyond what we are committed to, would
require additional manufacturing efforts and costs.

St. Vincent's Hospital


In July 2012, we entered into a license agreement with St. Vincent's, or the St.
Vincent's Agreement, under which we obtained an exclusive, worldwide
sublicensable right to develop, manufacture and commercialize products for
therapeutic applications that benefit from inhibition or decreased expression or
activity of MIC-1, which is also known as GDF15. We believe GDF15 is a novel
target for cachexia, and we are exploiting this license in our AV-380 program
for cachexia. Under the St. Vincent's Agreement, we have non-exclusive rights to
certain related diagnostic products and research tools and also have a right of
first negotiation to obtain an exclusive license to certain improvements that
St. Vincent's or third parties may make to licensed therapeutic products. We are
obligated to use diligent efforts to conduct research and clinical development
and commercially launch at least one licensed therapeutic product.



                                       85

--------------------------------------------------------------------------------
In 2012, we paid St. Vincent's an upfront license fee of $0.7 million. In August
2015, in connection with the execution of the Novartis Agreement, we amended and
restated the St. Vincent's Agreement and paid St. Vincent's an additional
upfront fee of $1.5 million. We are required to make future milestone payments,
up to an aggregate total of $14.4 million (exclusive of the $2.3 million
milestone payment due in January 2019 described below), upon the earlier of
achievement of specified development and regulatory milestones or a specified
date for the first indication, and upon the achievement of specified development
and regulatory milestones for the second and third indications, for licensed
therapeutic products, some of which payments may be increased by a mid to high
double-digit percentage rate for milestones payments made after we grant any
sublicense, depending on the sublicensed territory. In February 2017, Novartis
agreed to pay $1.8 million out of its then future payment obligations to us
under the former Novartis Agreement. These funds were used to satisfy a
$1.8 million time-based milestone obligation that we owed to St. Vincent's in
March 2017. As further described above under the heading "-Novartis", we used
the $2.3 million payment received from Novartis in January 2019, pursuant to the
AV-380 Transfer Agreement, to cover a $2.3 million time-based milestone
obligation that became due to St. Vincent's in January 2019. In addition, we
will be required to pay St. Vincent's tiered royalty payments equal to a
low-single-digit percentage of any net sales we or our sublicensees make from
licensed therapeutic products. The royalty rate escalates within the
low-single-digit range during each calendar year based on increasing licensed
therapeutic product sales during such calendar year. Our royalty payment
obligations for a licensed therapeutic product in a particular country end on
the later of 10 years after the date of first commercial sale of such licensed
therapeutic product in such country or expiration of the last-to-expire valid
claim of the licensed patents covering such licensed therapeutic product in such
country and are subject to offsets under certain circumstances.

The St. Vincent's Agreement remains in effect until the later of 10 years after
the date of first commercial sale of licensed therapeutic products in the last
country in which a commercial sale is made, or expiration of the last-to-expire
valid claim of the licensed patents, unless we elect, or St. Vincent's elects,
to terminate the St. Vincent's Agreement earlier. We have the right to terminate
the St. Vincent's Agreement on six months' notice if we terminate our GDF15
research and development programs as a result of the failure of a licensed
therapeutic product in preclinical or clinical development, or if we form the
reasonable view that further GDF15 research and development is not commercially
viable, and we are not then in breach of any of our obligations under the St.
Vincent's Agreement.

Biogen Idec

In March 2009, we entered into an exclusive option and license agreement with
Biogen Idec regarding the development and commercialization of our
discovery-stage ErbB3-targeted antibodies for the potential treatment and
diagnosis of cancer and other diseases in humans outside of North America. In
March 2014, we amended our agreement with Biogen Idec, and regained worldwide
rights to AV-203. Pursuant to the amendment, we were obligated to in good faith
use reasonable efforts to seek a collaboration partner to fund further
development and commercialization of ErbB3-targeted antibodies. We satisfied
this obligation in March 2016 upon entering into our CANbridge Agreement. We are
obligated to pay Biogen Idec a percentage of milestone payments we receive under
the CANbridge Agreement and single-digit royalty payments on net sales related
to the sale of AV-203, up to cumulative maximum amount of $50.0 million.

The $2.0 million development and regulatory milestone we earned in August 2018 in connection with CANbridge's regulatory approval from the CNDA of an IND application for a clinical study of AV-203 in ESCC was subject to this sublicense fee, or $0.7 million, which was paid to Biogen in October 2018.

Kyowa Hakko Kirin


In December 2006, we entered into a license agreement with KHK, or the KHK
Agreement, under which we obtained an exclusive license, with the right to grant
sublicenses subject to certain restrictions, to research, develop, manufacture
and commercialize tivozanib, pharmaceutical compositions thereof and associated
biomarkers in all potential indications. Our exclusive license covers all
territories in the world except for Asia and the Middle East, where KHK has
retained the rights to tivozanib. Under the KHK Agreement, we obtained exclusive
rights in our territory under certain KHK patents, patent applications and
know-how related to tivozanib, to research, develop, make, have made, use,
import, offer for sale, and sell tivozanib for the diagnosis, prevention and
treatment of any and all human diseases and conditions. We and KHK each have
access to and can benefit from the other party's clinical data and regulatory
filings with respect to tivozanib and biomarkers identified in the conduct of
activities under the KHK Agreement.

Under the KHK Agreement, we are obligated to use commercially reasonable efforts
to develop and commercialize tivozanib in our territory. Prior to the first
anniversary of the first post-marketing approval sale of tivozanib in our
territory, neither we nor any of our subsidiaries has the right to conduct
certain clinical trials of, seek marketing approval for or commercialize any
other cancer product that also works by inhibiting the activity of a VEGF
receptor.



                                       86
--------------------------------------------------------------------------------
We have upfront, milestone and royalty payment obligations payable to KHK under
our KHK Agreement. Upon entering into the KHK Agreement, we made an upfront
payment in the amount of $5.0 million. In March 2010, we made a milestone
payment to KHK in the amount of $10.0 million in connection with the dosing of
the first patient in TIVO-1, our first phase 3 clinical trial of tivozanib. In
December 2012, we made a $12.0 million milestone payment to KHK in connection
with the acceptance by the FDA of our 2012 NDA filing for tivozanib. Each
milestone under the KHK Agreement is a one-time only payment obligation.
Accordingly, we did not owe KHK another milestone payment in connection with the
dosing of the first patient in our TIVO-3 trial and would not owe a milestone
payment to KHK when we file our anticipated NDA with the FDA following the
receipt of positive TIVO-3 topline data. If we obtain approval for tivozanib in
the United States, we would owe KHK a one-time milestone payment of
$18.0 million, provided that we do not sublicense U.S. rights for tivozanib
prior to obtaining a U.S. regulatory approval. If we were to sublicense the U.S.
rights, the associated U.S. regulatory milestone would be replaced by a
specified percentage of sublicensing revenue, as set forth below.

If we sublicense any of our rights to tivozanib to a third party, as we have
done with EUSA pursuant to the EUSA Agreement, the sublicense defines the
payment obligations of the sublicensee, which may vary from the milestone and
royalty payment obligations under our KHK Agreement relating to rights we
retain. We are required to pay KHK a fixed 30% of amounts we receive from our
sublicensees, including upfront license fees, milestone payments and royalties,
but excluding amounts we receive in respect of research and development
reimbursement payments or equity investments, subject to certain limitations.

Certain research and development reimbursement payments by EUSA, including the
$2.5 million upfront payment in December 2015, the $4.0 million in September
2017 upon the receipt of marketing authorization from the European Commission
for tivozanib (FOTIVDA) and the $2.0 million upon EUSA's election in September
2017 to opt-in to co-develop the TiNivo trial were not subject to sublicense
revenue payments to KHK. In addition, if EUSA elects to opt-in to the TIVO-3
trial, the additional research and development reimbursement payment from EUSA
of 50% of the total trial costs, up to $20.0 million, would also not be subject
to a sublicense revenue payment to KHK, subject to certain limitations. We
would, however, owe KHK 30% of other, non-research and development payments we
may receive from EUSA pursuant to the EUSA Agreement, including reimbursement
approvals for RCC in up to five specified EU countries, marketing approvals for
RCC in three specified non-EU licensed territories, EU marketing approval
filings and corresponding marketing approvals by the EMA for up to three
additional indications beyond RCC, and sales-based milestones and royalties. The
$2.0 million milestone payments we earned in each of February 2018 and in
November 2018 upon EUSA's reimbursement approval for FOTIVDA as a first-line
treatment for RCC in the United Kingdom and in Germany, respectively, were
subject to the 30% KHK sublicense fee, or $0.6 million each. We paid the
sublicense fees for EUSA's reimbursement approvals in the United Kingdom and
Germany in April 2018 and in January 2019, respectively.

We are also required to pay tiered royalty payments on net sales we make of
tivozanib in our North American territory, which range from the low to mid-teens
as a percentage of net sales. The royalty rate escalates within this range based
on increasing tivozanib sales. Our royalty payment obligations in a particular
country in our territory begin on the date of the first commercial sale of
tivozanib in that country, and end on the later of 12 years after the date of
first commercial sale of tivozanib in that country or the date of the last to
expire of the patents covering tivozanib that have been issued in that country.

The KHK Agreement will remain in effect until the expiration of all of our
royalty and sublicense revenue obligations to KHK, determined on a
product-by-product and country-by-country basis, unless we elect to terminate
the KHK Agreement earlier. If we fail to meet our obligations under the KHK
Agreement and are unable to cure such failure within specified time periods, KHK
can terminate the KHK Agreement, resulting in a loss of our rights to tivozanib
and an obligation to assign or license to KHK any intellectual property or other
rights we may have in tivozanib, including our regulatory filings, regulatory
approvals, patents and trademarks for tivozanib.

Financial Overview


We do not have a history of being profitable and, as of December 31, 2018, we
had an accumulated deficit of $595.0 million. We anticipate that we will
continue to incur significant operating costs over the next several years as we
continue our planned development activities for our preclinical and clinical
products. We will need additional funding to support our operating activities,
and the timing and nature of activities contemplated for 2019 and thereafter
will be conducted subject to the availability of sufficient financial resources.
Refer to the "-Going Concern" and "Liquidity and Capital Resources-Liquidity and
Going Concern" sections for a further discussion of our funding requirements.

Revenue


On January 1, 2018, we adopted the provisions of Accounting Standards
Codification Topic 606, Revenue From Contracts with Customers, or ASC 606. Refer
to Note 3, "Significant Accounting Policies - Revenue Recognition" and Note 4,
"Collaborations and License Agreements", to our consolidated financial
statements included elsewhere in this Annual Form 10-K for further information.



                                       87
--------------------------------------------------------------------------------
Our revenues have historically been generated primarily through collaborative
research, development and commercialization agreements. Payments to us under
these arrangements typically include one or more of the following:
non-refundable, upfront license fees; option exercise fees; funding of research
and/or development efforts; milestone payments; and royalties on future product
sales. In November 2017, we began earning sales royalties upon EUSA's
commencement of the first commercial launch of tivozanib (FOTIVDA).

In the future, we may generate revenue from a combination of product sales,
license fees, milestone payments and research and development payments in
connection with strategic partnerships, and royalties resulting from the sales
of products developed under licenses of our intellectual property. We expect
that any revenue we generate will fluctuate from quarter to quarter as a result
of the timing and amount of license fees, research and development
reimbursements, milestones, royalties and other payments received under our
strategic partnerships, and the payments that we receive upon the sale of our
products, to the extent any are successfully commercialized. We do not expect to
generate revenue from product sales in the near term. If we or our strategic
partners fail to complete the development of our drug candidates in a timely
manner or obtain regulatory approval for them, our ability to generate future
revenue, and our results of operations and financial position, would be
materially adversely affected.

Research and Development Expenses

Research and development expenses have historically consisted of expenses incurred in connection with the discovery and development of our product candidates. We recognize research and development expenses as they are incurred. These expenses consist primarily of:

• employee-related expenses, including salaries, bonuses, benefits and

stock-based compensation expense;

• external development-related expenses, including clinical trials conducted

by contract research organizations and investigative sites, preclinical

studies and consultants;

• the cost of acquiring and manufacturing drug development related materials

and related distribution;

• costs associated with outsourced development activities, including

regulatory and medical affairs;

• sublicense fees for, and milestone payments related to, in-licensed

products and technology; and

• facilities, depreciation and other allocated expenses, which include

direct and allocated expenses for rent and maintenance of facilities and

equipment, and depreciation of fixed assets.

Research and development expenses are net of amounts reimbursed under our agreements with EUSA, Biodesix, and Astellas for their respective shares of development costs incurred by us under our joint development plans with each respective partner.


We anticipate that research and development expenses will continue to decrease
during 2019 as we seek to complete the TIVO-3 and TiNivo trials, partially
offset by an increase in connection with the planned commencement in 2019 of a
phase 1/2 study of tivozanib in combination with IMFINZI (durvalumab) in
advanced, unresectable HCC in collaboration with AstraZeneca. This estimate
excludes possible additional clinical trials we may sponsor and any related drug
manufacturing and drug supply distribution, and pre-commercialization activities
that we may undertake subject to our decision whether to submit an NDA for
tivozanib to the FDA following the availability of more mature OS results and
subject to the availability of sufficient financial resources.

Currently, we track direct external development expenses and direct salary on a
program-by-program basis and allocate general-related expenses, such as indirect
compensation, benefits and consulting fees, to each program based on the
personnel resources allocated to such program. Facilities, IT costs and
stock-based compensation are not allocated amongst programs and are considered
overhead.

Uncertainties of Estimates Related to Research and Development Expenses


The process of conducting preclinical studies and clinical trials necessary to
obtain FDA approval for each of our product candidates is costly and
time-consuming. The probability of success for each product candidate and
clinical trial may be affected by a variety of factors, including, among others,
the quality of the product candidate's early clinical data, investment in the
program, competition, manufacturing capabilities and commercial viability.



                                       88

--------------------------------------------------------------------------------
At this time, we cannot reasonably estimate or know the nature, specific timing
and estimated costs of the efforts that will be necessary to complete the
development of our product candidates, or the period, if any, in which material
net cash inflows may commence from sales of any approved products. This
uncertainty is due to the numerous risks and uncertainties associated with
developing drugs, including the uncertainty of:

• our ability to establish and maintain strategic partnerships, the terms of

those strategic partnerships and the success of those strategic

partnerships, if any, including the timing and amount of payments that we

might receive from strategic partners;

• the scope, progress, results and costs of preclinical development,

        laboratory testing and clinical trials for any product candidate;


  • the progress and results of our clinical trials;

• the costs, timing and outcome of regulatory review of our product candidates;

• the emergence of competing technologies and products and other adverse

market developments;

• the costs of preparing, filing and prosecuting patent applications and

maintaining, enforcing and defending intellectual property-related claims;

        and


  • additional manufacturing requirements.


As a result of the uncertainties associated with developing drugs, including
those discussed above, we are unable to determine the exact duration and
completion costs of current or future clinical stages of our product candidates,
or when, or to what extent, we will generate revenues from the commercialization
and sale of any of our product candidates. Development timelines, probability of
success and development costs vary widely. We anticipate that we will make
determinations as to which additional programs to pursue and how much funding to
direct to each program on an ongoing basis in response to the scientific and
clinical success, if any, of each product candidate, as well as ongoing
assessment of each product candidate's commercial potential. We will need to
raise substantial additional capital in the future in order to fund the
development of our preclinical and clinical product candidates.

General and Administrative Expenses


General and administrative expenses consist principally of salaries, bonuses and
related costs for personnel in executive, finance, corporate development,
information technology, legal and human resource functions. Other general and
administrative expenses include facility costs not otherwise included in
research and development expenses, patent filing, prosecution and defense costs
and professional fees for legal, consulting, auditing and tax services. We
anticipate that our general and administrative expenses will remain at current
levels during 2019, excluding pre-commercialization activities that we may
undertake subject to our decision whether to submit an NDA for tivozanib to the
FDA following the availability of more mature OS results and subject to the
availability of sufficient financial resources.

Interest Expense, Net


Interest expense consists of interest, amortization of debt discount, and
amortization of deferred financing costs associated with our loans payable, and
is shown net of interest income, which consists of interest earned on our cash,
cash equivalents and marketable securities. The primary objective of our
investment policy is capital preservation.

Income Taxes


We recorded a loss for the years ended December 31, 2018, 2017, and 2016, and
since we maintain a full valuation allowance on all of our deferred tax assets,
we have recorded no income tax provision or benefit during the years ended
December 31, 2018, 2017, and 2016, except for a $0.1 million provision recorded
in each of the years ended December 31, 2017 and 2016 related to withholding
taxes incurred in a foreign jurisdiction.

On December 22, 2017, President Trump signed into law legislation commonly known
as the Tax Cuts and Jobs Act, or the Act. The Act, among other things, contains
significant changes to corporate taxation, including reduction of the corporate
tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of
the tax deduction for interest expense to 30% of adjusted earnings (except for
certain small businesses), limitation of the deduction for net operating losses
to 80% of current year taxable income and elimination of net operating loss
carrybacks, one time taxation of offshore earnings at reduced rates regardless
of whether they are repatriated, elimination of U.S. tax on foreign earnings
(subject to certain important exceptions), immediate deductions for certain new
investments instead of deductions for depreciation expense over time, and
modifying or repealing many business deductions and credits.



                                       89

--------------------------------------------------------------------------------

Significant Accounting Policies and Significant Judgments and Estimates


Our discussion and analysis of our financial condition and results of operations
are based on our consolidated financial statements and the notes thereto
included elsewhere in this Annual Report on Form 10-K, which have been prepared
in accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reported periods. On an ongoing basis, we evaluate our estimates and
judgments for changes in facts and circumstances, including those related to
revenue recognition, contract research accruals, measurements of the PIPE
Warrants liability and estimated Settlement Liability, and stock-based
compensation. We base our estimates on historical experience and various other
assumptions that we believe to be reasonable under the circumstances. Material
changes in these estimates could occur in the future. Changes in estimates are
recorded in the period in which they become known. Actual results may differ
from our estimates if past experience or other assumptions do not turn out to be
substantially accurate. During the year ended December 31, 2018, there were no
material changes to our critical accounting policies as reported in our Annual
Report on Form 10-K for the year ended December 31, 2017, which we filed with
the SEC on March 13, 2018, except as set forth below:

On January 1, 2018, we adopted ASC 606 using the modified retrospective method
and applied the new guidance to the most current period presented with the
cumulative effect of changes reflected in the opening balance of the accumulated
deficit. The adoption of ASC 606 resulted in an approximate $2.7 million
increase in each of deferred revenue and the accumulated deficit at the
transition date. The transition adjustment related solely to our EUSA Agreement.
The transition adjustment resulted from a change to our accounting policy with
respect to the recognition of milestone payments as a result of adopting ASC
606. Refer to Note 3 - "Significant Accounting Policies - Revenue Recognition"
and Note 4 - "Collaborations and License Agreements - EUSA", to our consolidated
financial statements included elsewhere in this Annual Form 10-K for further
information.

Revenue Recognition

Our revenues are generated primarily through collaborative research, development
and commercialization agreements. The terms of these agreements generally
contain multiple promised goods and services, which may include (i) licenses, or
options to obtain licenses, to our technology, (ii) research and development
activities to be performed on behalf of the collaborative partner, and (iii) in
certain cases, services in connection with the manufacturing of preclinical and
clinical material. Payments to us under these arrangements typically include one
or more of the following: non-refundable, upfront license fees; option exercise
fees; funding of research and/or development efforts; milestone payments; and
royalties on future product sales.

Collaboration Arrangements Within the Scope of ASC 808, Collaborative Arrangements


We analyze our collaboration arrangements to assess whether such arrangements
involve joint operating activities performed by parties that are both active
participants in the activities and exposed to significant risks and rewards
dependent on the commercial success of such activities and are therefore within
the scope of ASC Topic 808, Collaborative Arrangements ("ASC 808"). This
assessment is performed throughout the life of the arrangement based on changes
in the responsibilities of all parties in the arrangement. For collaboration
arrangements that are deemed to be within the scope of ASC 808, we first
determine which elements of the collaboration are deemed to be within the scope
of ASC 808 and those that are more reflective of a vendor-customer relationship
and therefore within the scope of ASC 606, Revenue from Contracts with Customers
("ASC 606"). Our policy is generally to recognize amounts received from
collaborators in connection with joint operating activities that are within the
scope of ASC 808 as a reduction in research and development expense.

Arrangements Within the Scope of ASC 606, Revenue from Contracts with Customers


Effective January 1, 2018, we adopted ASC 606 using the modified retrospective
transition method. Under this method, we have recognized the cumulative effect
of the adoption as an adjustment to the opening balance of accumulated deficit
in the current period consolidated balance sheet. Financial results for the year
ended December 31, 2018, are presented under ASC 606, while prior period amounts
are not adjusted and continue to be reported in accordance with our historical
accounting under ASC 605, Revenue Recognition. ASC 606 applies to all contracts
with customers, except for contracts that are within the scope of other
standards, such as collaboration arrangements and leases.



                                       90

--------------------------------------------------------------------------------
Under ASC 606, we recognize revenue when our customers obtain control of
promised goods or services, in an amount that reflects the consideration which
we determine we expect to receive in exchange for those goods or services. To
determine revenue recognition for arrangements that we determine are within the
scope of ASC 606, we perform the following five steps: (i) identify the
contract(s) with a customer; (ii) identify the performance obligation(s) in the
contract; (iii) determine the transaction price; (iv) allocate the transaction
price to the performance obligation(s) in the contract; and (v) recognize
revenue when (or as) we satisfy our performance obligation(s). As part of the
accounting for these arrangements, we must make significant judgments, including
identifying performance obligations in the contract, estimating the amount of
variable consideration to include in the transaction price and allocating the
transaction price to each performance obligation.



Once a contract is determined to be within the scope of ASC 606, we assess the
goods or services promised within the contract and determine those that are
performance obligations. Arrangements that include rights to additional goods or
services that are exercisable at a customer's discretion are generally
considered options. We assess if these options provide a material right to the
customer and if so, they are considered performance obligations. The exercise of
a material right is accounted for as a contract modification for accounting
purposes.

We assess whether each promised good or service is distinct for the purpose of
identifying the performance obligations in the contract. This assessment
involves subjective determinations and requires management to make judgments
about the individual promised goods or services and whether such are separable
from the other aspects of the contractual relationship. Promised goods and
services are considered distinct provided that: (i) the customer can benefit
from the good or service either on its own or together with other resources that
are readily available to the customer (that is, the good or service is capable
of being distinct) and (ii) the entity's promise to transfer the good or service
to the customer is separately identifiable from other promises in the contract
(that is, the promise to transfer the good or service is distinct within the
context of the contract). In assessing whether a promised good or service is
distinct, we consider factors such as the research, manufacturing and
commercialization capabilities of the collaboration partner and the availability
of the associated expertise in the general marketplace. We also consider the
intended benefit of the contract in assessing whether a promised good or service
is separately identifiable from other promises in the contract. If a promised
good or service is not distinct, an entity is required to combine that good or
service with other promised goods or services until it identifies a bundle of
goods or services that is distinct.

The transaction price is then determined and allocated to the identified
performance obligations in proportion to their standalone selling prices, or
SSP, on a relative SSP basis. SSP is determined at contract inception and is not
updated to reflect changes between contract inception and when the performance
obligations are satisfied. Determining the SSP for performance obligations
requires significant judgment. In developing the SSP for a performance
obligation, we consider applicable market conditions and relevant
entity-specific factors, including factors that were contemplated in negotiating
the agreement with the customer and estimated costs. We validate the SSP for
performance obligations by evaluating whether changes in the key assumptions
used to determine the SSP will have a significant effect on the allocation of
arrangement consideration between multiple performance obligations.

If the consideration promised in a contract includes a variable amount, we
estimate the amount of consideration to which it will be entitled in exchange
for transferring the promised goods or services to a customer. We determine the
amount of variable consideration by using the expected value method or the most
likely amount method. We include the unconstrained amount of estimated variable
consideration in the transaction price. The amount included in the transaction
price is constrained to the amount for which it is probable that a significant
reversal of cumulative revenue recognized will not occur. At the end of each
subsequent reporting period, we re-evaluate the estimated variable consideration
included in the transaction price and any related constraint, and if necessary,
adjust our estimate of the overall transaction price. Any such adjustments are
recorded on a cumulative catch-up basis in the period of adjustment.

In determining the transaction price, we adjust consideration for the effects of
the time value of money if the timing of payments provides us with a significant
benefit of financing. We do not assess whether a contract has a significant
financing component if the expectation at contract inception is such that the
period between payment by the licensees and the transfer of the promised goods
or services to the licensees will be one year or less. We assess each of its
revenue generating arrangements in order to determine whether a significant
financing component exists and concluded that a significant financing component
does not exist in any of our arrangements.

We then recognize as revenue the amount of the transaction price that is
allocated to the respective performance obligation when (or as) each performance
obligation is satisfied at a point in time or over time, and if over time based
on the use of an output or input method.



                                       91

--------------------------------------------------------------------------------
Licenses of intellectual property: The terms of our license agreements include
the license of functional intellectual property, given the functionality of the
intellectual property is not expected to change substantially as a result of our
ongoing activities. If the license to our intellectual property is determined to
be distinct from the other performance obligations identified in the
arrangement, we recognize revenues from the portion of the transaction price
allocated to the license when the license is transferred to the licensee and the
licensee is able to use and benefit from the license. For licenses that are
bundled with other promises (that is, for licenses that are not distinct from
other promised goods and services in an arrangement), we utilize judgment to
assess the nature of the combined performance obligation to determine whether
the combined performance obligation is satisfied over time or at a point in time
and, if over time, the appropriate method of measuring progress for purposes of
recognizing revenue. We evaluate the measure of progress each reporting period
and, if necessary, adjusts the measure of performance and related revenue
recognition.

Research and development funding: Arrangements that include payment for research
and development services are generally considered to have variable
consideration. If and when we assess the payment for these services is no longer
subject to the constraint on variable consideration, the related revenue is
included in the transaction price.

Milestone payments: At the inception of each arrangement that includes
non-refundable payments for contingent milestones, including preclinical
research and development, clinical development and regulatory, we evaluate
whether the milestones are considered probable of being achieved and estimate
the amount to be included in the transaction price using the most likely amount
method. If it is probable that a significant revenue reversal would not occur,
the associated milestone value is included in the transaction price. Milestone
payments that are not within the control of us or the licensee, such as
regulatory approvals, are not considered probable of being achieved until those
approvals are received. At the end of each reporting period, we re-evaluate the
probability of the achievement of contingent milestones and the likelihood of a
significant reversal of such milestone revenue, and if necessary, adjust our
estimate of the overall transaction price. Any such adjustments are recorded on
a cumulative catch-up basis, which would affect collaboration and licensing
revenue in the period of adjustment. This quarterly assessment may result in the
recognition of revenue related to a contingent milestone payment before the
milestone event has been achieved.

Royalties: For arrangements that include sales-based royalties, including
milestone payments based on the level of sales, and the license is deemed to be
the predominant item to which the royalties relate, we recognize revenue at the
later of (i) when the related sales occur, or (ii) when the performance
obligation to which some or all of the royalty has been allocated has been
satisfied (or partially satisfied).

The following table summarizes the total revenues earned in the years ended
December 31, 2018, 2017 and 2016, respectively, by partner (in thousands). Refer
to Note 4 "Collaborations and License Agreements" of the notes to our
consolidated financial statements included elsewhere in this Annual Report on
Form 10-K regarding specific details.



                                           Years Ended December 31,
                                         2018         2017        2016
                  Strategic Partner:           ($ in thousands)
                  EUSA                 $   3,409$ 4,414$   395
                  CANbridge                2,000       1,000       1,028
                  Novartis                     -       1,800           -
                  Biogen Idec                  -           -          38
                  Pharmstandard                -           -         939
                  Ophthotech                   -         115         115
                  Other                        -         250           -
                  Total revenues       $   5,409$ 7,579$ 2,515

Accrued Expenses and Accrued Clinical Trial Costs and Contract Research Liabilities


As part of the process of preparing our financial statements, we are required to
estimate accrued expenses. This process involves identifying services which have
been performed on our behalf, and estimating the level of service performed and
the associated cost incurred for such service as of each balance sheet date in
our financial statements. Given our current business, the primary area of
uncertainty concerning accruals which could have a material effect on our
operating results is with respect to service fees paid to contract manufacturers
in conjunction with the production of clinical drug supplies and to contract
research organizations in connection with our clinical trials. In connection
with all of the foregoing service fees, our estimates are most affected by our
understanding of the status and timing of services provided. The majority of our
service providers, including contract research organizations, invoice us in
arrears for services performed. In the event that we do not identify some costs
which have begun to be incurred, or we under or overestimate the level of
services performed or the costs of such services in a given period, our reported
expenses for such period would be understated or overstated. We currently
reflect the effects of any changes in estimates based on changes in facts and
circumstances directly in our operations in the period such change becomes
known.



                                       92
--------------------------------------------------------------------------------
Our arrangements with contract research organizations in connection with
clinical trials often provide for payment prior to commencing the project or
based upon predetermined milestones throughout the period during which services
are expected to be performed. We recognize expense relating to these
arrangements based on the various services provided over the estimated time to
completion. The date on which services commence, the level of services performed
on or before a given date, and the cost of such services are often determined
based on subjective judgments. We make these judgments based upon the facts and
circumstances known to us based on the terms of the contract and our ongoing
monitoring of service performance. During the years ended December 31, 2018,
2017 and 2016, we had arrangements with multiple contract research organizations
whereby these organizations commit to performing services for us over multiple
reporting periods. We recognize the expenses associated with these arrangements
based on our expectation of the timing of the performance of components under
these arrangements by these organizations. Generally, these components consist
of the costs of setting up the trial, monitoring the trial, closing the trial
and preparing the resulting data. Costs related to patient enrollment in
clinical trials are accrued as patients are enrolled in the trial.

With respect to financial reporting periods presented in this Annual Report on
Form 10-K, the timing of our actual costs incurred have not differed materially
from our estimated timing of such costs. In light of the foregoing, we do not
believe our practices for estimating future expenses and making judgments
concerning the accrual of expenses are reasonably likely to change in the
future.

Stock-Based Compensation


Under our stock-based compensation programs, we periodically grant stock options
and restricted stock to employees, directors and nonemployee consultants. We
also issue shares under an employee stock purchase plan. The fair value of all
awards is recognized in our statements of operations over the requisite service
period for each award.

Awards that vest as the recipient provides service are expensed on a
straight-line basis over the requisite service period. Other awards, such as
performance-based awards that vest upon the achievement of specified goals, are
expensed using the accelerated attribution method if achievement of the
specified goals is considered probable. We have also granted awards that vest
upon the achievement of market conditions. Per ASC 718, Share-Based Payments,
market conditions must be considered in determining the estimated grant-date
fair value of share-based payments and the market conditions must be considered
in determining the requisite service period over which compensation cost is
recognized. We estimate the fair value of awards with market conditions using a
Monte Carlo simulation, which utilizes several assumptions including the
risk-free interest rate, the volatility of our stock and the exercise behavior
of award recipients. The grant-date fair value of the awards is then recognized
over the requisite service period, which represents the derived service period
for the awards as determined by the Monte Carlo simulation.

We use the Black-Scholes option pricing model to value our stock option awards
without market conditions, which requires us to make certain assumptions
regarding the expected volatility of our common stock price, the expected term
of the option grants, the risk-free interest rate and the dividend yield with
respect to our common stock. We calculate volatility using our historical stock
price data. Due to the lack of our own historical data, we elected to use the
"simplified" method for "plain vanilla" options to estimate the expected term of
our stock option grants. Under this approach, the weighted-average expected life
is presumed to be the average of the vesting term and the contractual term of
the option. The risk-free interest rate used for each grant is based on the U.S.Treasury yield curve in effect at the time of grant for instruments with a
similar expected life. We utilize a dividend yield of zero based on the fact
that we have never paid cash dividends and have no present intention to pay cash
dividends.

The fair value of equity-classified awards to employees and directors are measured at fair value on the date the awards are granted. Awards to non-employee consultants are recorded at their fair values and are re-measured as of each balance sheet date until the recipient's services are complete.


During the years ended December 31, 2018, 2017 and 2016, respectively, the
assumptions used in the Black-Scholes pricing model for new grants were as
follows:



                                                              Years Ended December 31,
                                          2018                           2017                         2016
Volatility factor                   80.18% - 83.61%                71.82% - 80.15%              72.18% - 74.47%
Expected term (in years)              5.50 - 6.25                    5.50 - 6.25                  3.00 - 6.25
Risk-free interest rates             2.64% - 3.10%                  1.84% - 2.22%                1.07% - 2.01%
Dividend yield                                  -                              -                            -




On January 1, 2017, we adopted ASU No. 2016-09, Compensation-Stock Compensation
(Topic 718): Improvements to Employee Share-Based Payment Accounting and elected
to account for forfeitures as they occur. Prior to 2017, we included an estimate
of the value of the awards that would be forfeited in calculating compensation
costs, which we estimated based upon actual historical forfeitures.



                                       93

--------------------------------------------------------------------------------
We recognized stock-based compensation expense of approximately $2.5 million,
$1.1 million and $1.0 million for the years ended December 31, 2018, 2017, and
2016, respectively. As of December 31, 2018, we had approximately $5.8 million
of total unrecognized stock-based compensation expense for stock options, which
we expect to recognize over a weighted-average period of approximately 2.5
years.

We record compensation expense only for those awards that ultimately vest.

We have historically granted stock options at exercise prices that are not less than the fair market value of our common stock.

Warrants Issued in Connection with Private Placement


In May 2016, we issued warrants to purchase an aggregate of 17,642,482 shares of
our common stock in connection with a private placement financing, which we
refer to herein as the PIPE Warrants. Refer to"-Liquidity and Capital
Resources-Private Placement/PIPE Warrants" below and Note 3, "Significant
Accounting Policies - Warrants Issued in Connection with Private Placement" to
our consolidated financial statements included elsewhere in this Annual Report
on Form 10-K, for a further discussion.

The PIPE Warrants are subject to revaluation at each balance sheet date, and any
changes in fair value are recorded as a non-cash gain or (loss) in the Statement
of Operations as a component of other income (expense), net until the earlier of
their exercise or expiration or upon the completion of a liquidation event. Upon
exercise, the PIPE Warrants are subject to revaluation just prior to the date of
exercise and any changes in fair value are recorded as a non-cash gain or (loss)
in the Statement of Operations as a component of other income (expense), net and
the corresponding reduction in the warrant liability is recorded as additional
paid-in capital in the Balance Sheet as a component of stockholder's equity.

As of December 31, 2018, PIPE Warrants exercisable for 803,108 shares of common
stock had been exercised, for cash proceeds of approximately $0.8 million, and
PIPE Warrants exercisable for 16,839,375 shares of common stock were
outstanding. In July 2017, we issued to Hercules Capital Inc., or Hercules,
259,067 shares of common stock upon its exercise of all of its PIPE Warrants,
and we received approximately $0.3 million in cash proceeds. In 2018, PIPE
Warrants with respect to 544,041 shares of common stock underlying such PIPE
Warrants were exercised, and we issued 544,041 shares of our common stock and
received approximately $0.5 million in cash proceeds.

We recorded a non-cash gain of approximately $19.9 million in the year ended
December 31, 2018, a non-cash loss of $33.7 million in the year ended
December 31, 2017 and a non-cash gain of approximately $4.8 million in the year
ended December 31, 2016 in our Statement of Operations attributable to the
increases and decreases in the fair value of the warrant liability that resulted
from lower stock prices as of December 31, 2018, higher stock prices as of
December 31, 2017 and lower stock prices as of December 31, 2016, relative to
prior periods. We recorded a reduction in the warrant liability attributable to
warrant exercises, with a corresponding increase to additional paid-in capital,
of approximately $1.2 million, $0.6 million and $0 in the years ended December
31, 2018, 2017 and 2016, respectively.

The key assumptions used to value the PIPE Warrants were as follows:



                              Original      December 31,      December 31,      December 31,
                              Issuance          2016              2017              2018
 Expected price volatility        76.25 %           78.18 %           84.86 %           82.64 %
 Expected term (in years)          5.00              4.50              3.50              2.50
 Risk-free interest rates          1.22 %            1.93 %            2.09 %            2.47 %
 Stock price                 $     0.89$        0.54$        2.79$        1.60
 Dividend yield                       -                 -                 -                 -



Prior Class Action Settlement and Settlement Warrants


In December 2017, we entered into a binding memorandum of understanding, or MOU,
to settle a securities class action lawsuit, or the Class Action, captioned In
re AVEO Pharmaceuticals, Inc. Securities Litigation et al., No.
1:13-cv-11157-DJC, filed in 2013 in the United States District Court for the
District of Massachusetts, or the District Court, against us and certain of our
former officers. The Class Action was purportedly brought on behalf of
stockholders who purchased our common stock between May 16, 2012 and May 1,
2013, or the Class.



                                       94
--------------------------------------------------------------------------------
Upon entry into the MOU, our liability related to this settlement became
estimable and probable. Accordingly, we recorded an estimated $17.1 million
contingent liability, including (a) $15.0 million for the cash portion of the
settlement with a corresponding insurance recovery for the 100% portion to be
paid directly by certain of our insurance carriers, and (b) an approximate $2.1
million estimate for the fair value on December 31, 2017 of 2.0 million warrants
to purchase shares of our common stock, or the Settlement Warrants, that we
agreed to issue to the Class, with a corresponding non-cash charge to the
Statement of Operations as a component of operating expenses. The Settlement
Warrants are exercisable for a one-year period from their date of issue at an
exercise price equal to $3.00 per share, which was the closing price on
December 22, 2017, the trading day prior to the execution of the MOU.

In January 2018, we entered into a definitive stipulation of settlement
agreement, or the Stipulation. In February 2018, the District Court
preliminarily approved the Stipulation, following which the insurance carriers
funded the settlement escrow account related to the $15.0 million cash portion
of the settlement. On May 30, 2018, the District Court approved the Stipulation
in its order of final approval and final judgment, or the Final Judgment.

The settlement became effective on June 29, 2018, or the Effective Date, which
was the date on which all of the following conditions had been met: (a) a Final
Judgment containing the requisite release of claims had been entered by the
District Court; (b) no appeal was pending with respect to the Final Judgment;
(c) the Final Judgment had not been reversed, modified, vacated or amended;
(d) the time to file any appeal from the Final Judgment had expired without the
filing of an appeal or an order dismissing the appeal or affirming the Final
Judgment had been entered, and any time to file a further appeal (including a
writ of certiorari or for reconsideration of the appeal) had expired; and
(e) the MOU and any settlement agreement with respect to the claims released in
the Final Judgment had not expired or been terminated. Pursuant to the Final
Judgment, all claims against us were released upon the Effective Date. In
addition, pursuant to the Stipulation, we had no interest in the settlement
escrow account subsequent to the Effective Date. Accordingly, the $15.0 million
contingent liability associated with the cash portion of the settlement and the
corresponding insurance recovery were eliminated on the Effective Date. We had
agreed to use our best efforts to issue and deliver the Settlement Warrants
within ten business days following the Effective Date. On July 16, 2018, we
issued and delivered the Settlement Warrants in accordance with the Stipulation
and filed a corresponding shelf registration statement to register the shares of
common stock underlying the Settlement Warrants which was declared effective by
the SEC on July 25, 2018.

The estimated fair value of the Settlement Warrants was determined using the
Black-Scholes pricing model. The estimated fair value of the Settlement Warrants
was subject to revaluation at each balance sheet date and any changes in fair
value were recorded as a non-cash gain or (loss) in the Statement of Operations
as a component of operating expenses until the Settlement Warrants were issued.
We recorded a non-cash gain of approximately $0.7 million in the year ended
December 31, 2018 in our Statement of Operations attributable to the decrease in
the fair value of the Settlement Warrants from December 31, 2017 to the date the
Settlement Warrants were issued. In July 2018, upon the issuance of the
Settlement Warrants, we reclassified the approximate $1.4 million value of the
Settlement Warrants from a liability to stockholders equity as a component of
additional paid-in capital based upon the terms of the warrant agreement and,
accordingly, the approximate $1.4 million contingent liability on our balance
sheet associated with the warrant portion of the settlement was eliminated.

Refer to Note 13, "Legal Proceedings" to our consolidated financial statements
and Part I, Item 3 under the heading "Legal Proceedings" included elsewhere in
this Annual Report on Form 10-K, for a further discussion of the Class Action
settlement.

The key assumptions used to estimate the fair value of the Settlement Warrants
were as follows:



                                           December 31,       June 30,
                                               2017             2018
              Expected price volatility           101.52 %        62.74 %
              Expected term (in years)              1.00           1.00
              Risk-free interest rates              1.76 %         2.37 %
              Stock price                 $         2.79     $     2.90
              Dividend yield                           -              -






                                       95

--------------------------------------------------------------------------------

Results of Operations

Comparison of Years Ended December 31, 2018, 2017 and 2016


Revenues



                                                                2018 / 2017             2017 / 2016
                          Years Ended December 31,              Comparison               Comparison
                        2018         2017        2016          $           %            $          %
 Strategic Partner:           ($ in thousands)
 EUSA                 $   3,409$ 4,414$   395$ (1,005 )      (23 )%   $ 4,019       1017 %
 CANbridge                2,000       1,000       1,028        1,000        100 %        (28 )       (3 )%
 Novartis                     -       1,800           -       (1,800 )     (100 )%     1,800        100 %
 Biogen Idec                  -           -          38            -          - %        (38 )     (100 )%
 Pharmstandard                -           -         939            -          - %       (939 )     (100 )%
 Ophthotech                   -         115         115         (115 )     (100 )%         -          - %
 Other                        -         250           -         (250 )     (100 )%       250        100 %
 Total revenues       $   5,409$ 7,579$ 2,515$ (2,170 )      (29 )%   $ 5,064        201 %




In 2018 as compared to 2017, revenue decreased under our partnership with EUSA
by $1.0 million due primarily to a change in our accounting policy with respect
to milestone payments as a result of the adoption of ASC 606 on January 1, 2018.

Previously, under ASC 605, we recognized regulatory milestones when they were
achieved. Under ASC 606, milestone payments are included in the transaction
price when they are no longer subject to the variable consideration constraint
and, to the extent the milestone payment corresponds to a performance obligation
where revenue is recognized over time, the milestone payment is recognized over
the performance period.

The $4.0 million research and development reimbursement payment upon marketing
approval by the European Commission in RCC in August 2017 was recognized as
revenue in the third quarter of 2017 in accordance with ASC 605-28, Revenue
Recognition-Milestone Method. The impact of the adoption of ASC 606 on January
1, 2018 resulted in increases of approximately $2.7 million in each of deferred
revenue and the accumulated deficit. This amount represents the portion of the
$4.0 million research and development reimbursement payment for marketing
approval by the European Commission in RCC that will be recognized over the
remainder of our performance period through 2022 pursuant to the provisions of
ASC 606.

In February 2018, EUSA obtained reimbursement approval for tivozanib (FOTIVDA)
from the NICE in the United Kingdom in first-line RCC and, accordingly, we
earned a $2.0 million milestone payment from EUSA. In accordance with ASC 606,
we recognized approximately $0.7 million of this milestone payment in revenue
for the cumulative catch-up for the period from contract execution in December
2015 through the milestone achievement in February 2018, with the approximate
$1.3 million balance classified as deferred revenue that is being recognized as
revenue over the remainder of our performance period through April 2022.

In November 2018, EUSA obtained reimbursement approval for tivozanib (FOTIVDA)
from the GKV-SV in Germany in first-line RCC and, accordingly, we earned a $2.0
million milestone payment from EUSA. In accordance with ASC 606, we recognized
approximately $0.9 million of this milestone payment in revenue for the
cumulative catch-up for the period from contract execution in December 2015
through the milestone achievement in November 2018, with the approximate $1.1
million balance classified as deferred revenue that is being recognized as
revenue over the remainder of our performance period through April 2022.

Refer to Note 4 "Collaborations and License Agreements - EUSA", to our
consolidated financial statements included elsewhere in this Annual Form 10-K,
regarding the specific application of ASC 606 to our EUSA Agreement. Refer to
Note 3 "Significant Accounting Policies - Recently Adopted Accounting
Pronouncements", to our consolidated financial statements included elsewhere in
this Annual Form 10-K, for a comparison of revenue recognized during the year
ended December 31, 2018 under ASC 606 compared to the revenue that would have
been recognized in that period had we continued to apply the provisions of ASC
605.

In 2018 as compared to 2017, revenue increased by $1.0 million under our
partnership with CANbridge. In August 2018, CANbridge obtained regulatory
approval from the CNDA of an IND application for a clinical study of AV-203 in
ESCC and, accordingly, we earned a $2.0 million development and regulatory
milestone payment. Also, CANbridge agreed to reimburse us $1.0 million for
certain manufacturing costs and expenses incurred by us prior to the effective
date of the CANbridge agreement with respect to AV-203. CANbridge paid this
manufacturing reimbursement in two installments of $0.5 million each, including
one in March 2017 and one in September 2017. The timing and amount of revenue
recognition for the payments received from CANbridge are the same under ASC 605
and ASC 606.



                                       96
--------------------------------------------------------------------------------
In 2018 as compared to 2017, revenue decreased by $1.8 million under our former
partnership with Novartis. In February 2017, Novartis paid $1.8 million out of
its then future payment obligations to us under the former license agreement.
The funds were used to satisfy a $1.8 million time-based milestone obligation
that we owed to St. Vincent's on March 2, 2017.



In 2017 as compared to 2016, revenue increased by $5.1 million, principally due
to a $4.0 million research and development reimbursement payment by EUSA upon
the EMA approval of tivozanib (FOTIVDA) in RCC and a $1.8 million milestone
payment by Novartis related to AV-380, partially offset by $0.8 million related
to the acceleration of deferred revenue that was recognized upon the effective
termination of our licensing agreement with Pharmstandard in September 2016.

Research and Development Expenses



                                                                                     2018 / 2017             2017 / 2016
                                               Years Ended December 31,              Comparison               Comparison
                                            2018         2017         2016          $           %            $          %
                                                   ($ in thousands)
Tivozanib                                 $ 18,249$ 21,594     $

21,231 $ (3,345 ) (15 )% $ 363 2 % AV-380 Program in Cachexia

                       -        1,850          464       (1,850 )     (100 )%     1,386        299 %
Ficlatuzumab                                   586          587          746           (1 )       (0 )%      (159 )      (21 )%
AV-203                                         670            -          

76 670 100 % (76 ) (100 )% Other pipeline programs

                          -          156            

- (156 ) (100 )% 156 100 % Overhead

                                     1,147          992        

1,186 155 16 % (194 ) (16 )% Total research and development expenses $ 20,652$ 25,179$ 23,703$ (4,527 ) (18 )% $ 1,476 6 %





In 2018 as compared to 2017, research and development expenses decreased by
$4.5 million, principally due to decreases of $3.3 million in net tivozanib
expenses and $1.8 million in AV-380 for a time-based milestone obligation due to
St. Vincent's in the first quarter of 2017 that was not incurred in 2018,
partially offset by the $0.7 million sublicense fee due to Biogen in connection
with the $2.0 million development and regulatory milestone we earned under the
CANbridge Agreement for regulatory approval from the CNDA of an IND application
for a clinical study of AV-203 in ESCC.

The $3.3 million net decrease in tivozanib expenses principally included
decreases of $6.5 million for expenses related to the year-to-year conduct of
the TIVO-3 and TiNivo trials that completed enrollment in 2017 and $0.8 million
for expenses related to pre-commercial manufacturing, partially offset by
increases of $2.4 million for expenses related to the preparation of a possible
NDA submission and $1.2 million in sublicense fees due to KHK in connection with
the $2.0 million milestones we earned under our EUSA Agreement in each of
February 2018 and November 2018 for reimbursement approvals in the United
Kingdom and Germany, respectively, for the first line treatment of RCC. We
initiated the TIVO-3 trial in May 2016 and completed enrollment in August 2017.
In 2018 as compared to 2017, the majority of the patients were off treatment in
the TIVO-3 trial compared to the trial being in active enrollment in the same
period in 2017. We initiated the TiNivo trial in March 2017 and completed
enrollment in December 2017.

We anticipate that research and development expenses will continue to decrease
during 2019 as we seek to complete the TIVO-3 and TiNivo trials, partially
offset by an increase in connection with the planned commencement in 2019 of a
phase 1/2 study of tivozanib in combination with IMFINZI (durvalumab) in
advanced, unresectable HCC in collaboration with AstraZeneca. This estimate
excludes possible additional clinical trials we may sponsor and any related drug
manufacturing and drug supply distribution, and pre-commercialization activities
that we may undertake subject to our decision whether to submit an NDA for
tivozanib to the FDA following the availability of more mature OS results and
subject to the availability of sufficient financial resources.

In 2017 as compared to 2016, research and development expenses increased by $1.5
million principally due to a $0.4 million net increase in tivozanib expenses,
primarily related to the advancement of the TIVO-3 and TiNivo trials, and a
$1.4 million increase in AV-380 expense, primarily related to the net increase
in milestone payments due to St. Vincent's under our in-licensing agreement.
These increases were partially offset by $0.2 million in lower ficlatuzumab
expenses, primarily related to the discontinuation of the FOCAL trial in October
2016.



                                       97
--------------------------------------------------------------------------------
In 2017 as compared to 2016, the $0.4 million net increase in tivozanib expenses
included an increase of $1.3 million, primarily related to the advancement of
the TIVO-3 and TiNivo trials, partially offset by a $0.9 million reduction
related to cost sharing provided by EUSA in connection with the TiNivo trial. In
September 2017, EUSA elected to opt-in to co-develop the ongoing TiNivo trial
and made a research and development reimbursement payment to us of $2.0 million
that was received in October 2017, in advance of the completion of the TiNivo
trial, and represents EUSA's approximate 50% share of the total estimated costs
of the TiNivo trial. In 2017, we recognized an approximate $0.9 million
reduction in research and development expenses related to EUSA's approximate 50%
share of the cumulative study-to-date costs incurred as of December 31, 2017 as
the TiNivo trial was ongoing at the time EUSA made its opt-in election and EUSA
paid the $2.0 million maximum amount of cost sharing per the license agreement
in advance. The remaining $1.1 million in prepaid cost sharing was classified as
deferred research and development reimbursements as of December 31, 2017 and is
being recognized as a reduction in research and development expenses as the
related TiNivo trial costs are incurred over the duration of the trial.



In 2017 as compared to 2016, the $1.4 million increase in AV-380 expense is
principally due to $1.8 million in research and development expense that was
recognized in the first quarter of 2017 in connection with a time-based
milestone obligation due to St. Vincent's. In the first quarter of 2016, we
recognized approximately $0.4 million in research and development expense in
connection with a milestone obligation due to St. Vincent's related to the
selection of a development candidate.

General and Administrative Expenses



                                                                      2018 / 2017          2017 / 2016
                                  Years Ended December 31,             Comparison           Comparison
                                2018         2017        2016          $         %          $         %
                                      ($ in thousands)

General and administrative $ 10,781$ 9,138$ 8,205$ 1,643

      18 %   $   933       11 %






In 2018 as compared to 2017, general and administrative expenses increased by
$1.6 million, principally due to increases of $0.5 million in professional fees
and $1.0 million in non-cash stock-based compensation expense resulting from a
higher stock price in 2018 as compared to 2017 in connection with annual stock
option grants.

We anticipate that our general and administrative expenses will remain at
current levels during 2019, excluding pre-commercialization activities that we
may undertake subject to our decision whether to submit an NDA for tivozanib to
the FDA following the availability of more mature OS results and subject to the
availability of sufficient financial resources.

In 2017 as compared to 2016, general and administrative expenses increased by
$0.9 million, principally due to an increase of $0.8 million in professional
fees, including legal fees, investor relations and audit fees.



Settlement Costs



                                                                  2018 / 2017             2017 / 2016
                          Years Ended December 31,                Comparison              Comparison
                      2018             2017         2016         $           %            $          %
                              ($ in thousands)
 Settlement costs   $    (667 )$     2,073     $   -     $ (2,740 )     (132 )%   $ 2,073       100 %




In December 2017, we entered into a MOU related to our class action settlement
that included the issuance of the 2.0 million Settlement Warrants to purchase
shares of our common stock. The Settlement Warrants were revalued at each
balance sheet date prior to issuance. On July 16, 2018, we issued and delivered
the Settlement Warrants.

In 2018, settlement costs decreased attributable to the decreases in the fair value of the Settlement Warrants that principally resulted from a lower volatility rate of our common stock used in the Black-Scholes valuations relative to prior periods.

Change in Fair Value of PIPE Warrant Liability



                                                                               2018 / 2017              2017 / 2016
                                         Years Ended December 31,              Comparison                Comparison
                                      2018         2017         2016          $           %             $           %
                                             ($ in thousands)
Change in fair value of PIPE
Warrant liability                   $ 19,919$ (33,740 )$ 4,751$ 53,659       (159 )%   $ (38,491 )     (810 )%






                                       98
--------------------------------------------------------------------------------

In May 2016, we issued the PIPE Warrants in connection with a private placement financing and recorded the warrants as a liability. The PIPE Warrants are subject to revaluation at each balance sheet date.




In 2018, we recorded an approximate non-cash gain of $19.9 million in our
Statement of Operations attributable to the decrease in the fair value of the
PIPE Warrant liability that principally resulted from a lower stock price of
$1.60 on December 31, 2018 compared to the stock price of $2.79 on December 31,
2017.

In 2017, we recorded an approximate non-cash loss of $33.7 million in our
Statement of Operations attributable to the increase in the fair value of the
PIPE Warrant liability that principally resulted from a higher stock price of
$2.79 on December 31, 2017 compared to the stock price of $0.54 on December 31,
2016.

In 2016, we recorded an approximate $4.8 million non-cash gain in our Statement of Operations attributable to the decrease in the fair value of the warrant liability that principally resulted from a lower stock price of $0.54 on December 31, 2016 as compared to the stock price of $0.89 on the date of issuance of the PIPE warrants in May 2016.






Other Income (Expense)



                                                                    2018 / 2017          2017 / 2016
                               Years Ended December 31,             Comparison            Comparison
                             2018           2017       2016         $          %         $         %
                                   ($ in thousands)

Other income (expense) $ 2,300 $ - $ (195 )$ 2,300

   100 %   $ 195       (100 )%




In December 2018, we entered into the AV-380 Transfer Agreement with Novartis,
pursuant to which Novartis was obligated to make a one-time payment to us of
$2.3 million. The $2.3 million payment due from Novartis was not considered a
revenue transaction due to the effective termination of the Novartis Agreement
on August 28, 2018 and was instead considered other income.

Interest Expense, net



                                                                   2018 / 2017           2017 / 2016
                               Years Ended December 31,             Comparison            Comparison
                            2018         2017         2016          $         %           $         %
                                   ($ in thousands)
  Interest expense, net   $ (2,191 )$ (2,373 )$ (1,949 )$   182       (8 )%   $  (424 )     22 %




In December 2017, we refinanced our debt facility, the terms of which included a
reduction in the then interest rate from 11.9% to 9.45%, an extension in the
interest-only period by no less than 12 months, which could be extended up to a
maximum of 24 months, assuming the achievement of specified milestones relating
to the development of tivozanib, and an extension in the loan maturity from
December 2019 to July 2021.



In 2018, the interest rate increased to 9.70%, 9.95% and 10.20% in June 2018,
September 2018 and December 2018, respectively, due to corresponding increases
in the prime interest rate, which is a component of the overall interest rate.



We anticipate that interest expense in 2019 will remain at current levels. In
November 2018, Hercules granted the first 6-month extension of the interest-only
period, which resulted in the deferment of principal payments until August 1,
2019.

Provision for Income Taxes



                                                                                  2018 / 2017            2017 / 2016
                                           Years Ended December 31,               Comparison             Comparison
                                      2018           2017           2016         $          %           $           %
                                               ($ in thousands)

Provision for Income Taxes $ - $ 101$ 101

   $ (101 )     (100 )%   $   -           - %






                                       99
--------------------------------------------------------------------------------
We recorded a $0.1 million tax provision for foreign withholding taxes in each
of the years ended December 31, 2017 and 2016 in connection with partnership
payments from CANbridge. In March 2016, we received the $1.0 million upfront
payment upon the execution of the collaboration and license agreement. In 2017,
we received a total of $1.0 million in reimbursement payments related to
manufacturing development activities conducted by us prior to the Effective Date
of the collaboration and license agreement.

Contractual Obligations and Commitments

The following table summarizes our non-cancellable contractual obligations at December 31, 2018 (in thousands):

                                 Total        Less than 1 Year       1 to 3 Years       3 to 5 Years       More than 5 Years
Hercules loan agreement (1)    $  24,527     $            6,122     $       18,405     $            -     $                 -
Clinical trial costs and
contract research (2)             13,668                 12,456              1,212                  -                       -
Operating leases (3)                  60                     60                  -                  -                       -
SVH time-based milestone (4)       2,300                  2,300                  -                  -                       -
Total contractual
obligations                    $  40,555     $           20,938     $       19,617     $            -     $                 -



(1) Includes scheduled interest payments and end of term payments totaling $1.1

million due in connection with the 2016 Amendment and 2017 Loan Agreement.

(2) Clinical trial costs and contract research principally include contracts for

human clinical trials and clinical drug manufacturing and distribution. In

the event a contract is terminated prior to the planned completion, the

amount paid under such contracts may be less than the amounts presented.

(3) We sublease our principal office facility at One Broadway in Cambridge, MA.

Our lease arrangement is cancellable within 30 days' notice to our landlord.

As a result, our operating lease obligation as of December 31, 2018 is the

    January 2019 rent payable to our landlord.



(4) Under our license agreement with Kyowa Hakko Kirin, we are required to make

certain milestone payments upon the achievement of specified regulatory

milestones. We are also required to pay 30% of certain amounts we receive

from sublicensees, including upfront license fees, milestone payments and

royalties, other than amounts we receive in respect of research and

development funding or equity investments, subject to certain limitations.

Also, under our license agreement with St. Vincent's, we are required to make

certain milestone payments upon the earlier of achievement of specified

development and regulatory milestones or a specified date for the first

indication, and upon the achievement of specified development and regulatory

milestones for the second and third indications. In addition, we are also

obligated to pay Biogen a percentage of milestone payments received by AVEO

from future partnerships after March 28, 2016 and single digit royalty

payments on net sales related to the sale of ErbB3 products, if any, up to a

cumulative maximum amount of $50.0 million. At this time, we cannot

reasonably estimate when or if we may be required to make other additional

payments to Kyowa Hakko Kirin, St. Vincent's or Biogen and have not included

any additional amounts in the table above. For example, we would owe KHK a

one-time milestone payment of $18.0 million, provided that we do not

sublicense U.S. rights for tivozanib prior to obtaining a U.S. regulatory

approval. In addition, we are required to make future milestone payments to

St. Vincent's Hospital, up to an aggregate total of $14.4 million (exclusive

of the $2.3 million milestone payment due in January 2019 as described

below), upon the earlier of achievement of specified development and

regulatory milestones or a specified date for the first indication, and upon

the achievement of specified development and regulatory milestones for the

second and third indications, for licensed therapeutic products, some of

which payments may be increased by a mid to high double-digit percentage rate

for milestones payments made after we grant any sublicense under the license

agreement, depending on the sublicensed territory. As further described above

under the heading "-Novartis", we used the $2.3 million payment received from

Novartis in January 2019, pursuant to the AV-380 Transfer Agreement, to cover

    a $2.3 million time-based milestone obligation that became due to St.
    Vincent's in January 2019.



(5) As discussed in Note 4 to our consolidated financial statements included

elsewhere in this Annual Report on Form 10K, we have executed license

agreements for patented technology and other technology related to research

projects, including technology to humanize ficlatuzumab and other antibody

product candidates. The license agreements required us to pay non-refundable

license fees upon execution, and in certain cases, require milestone payments

upon the achievement of defined development goals. We have not included any

additional milestone payments in the table above as we are not able to make a

reasonable estimate of the probability and timing of such payments, if any.

In addition to the amounts in the table above, three of the four agreements

include sales and development milestones of up to $22.5 million. $5.5 million

and $4.2 million per product, respectively, and single digit royalties as a

percentage, and one agreement includes a $1.0 million license payment per

    product.










                                      100

--------------------------------------------------------------------------------

Liquidity and Capital Resources


We have financed our operations to date primarily through the sale of private
placements and public offerings of our common stock and preferred stock, license
fees, milestone payments and research and development funding from strategic
partners, and loan proceeds. As of December 31, 2018, we had cash, cash
equivalents and marketable securities of approximately $24.4 million. See
"-Liquidity and Going Concern" below and Note 1 to the consolidated financial
statements included elsewhere in this Annual Report on Form 10-K for a further
discussion of our liquidity and the conditions and events which raise
substantial doubt regarding our ability to continue as a going concern.
Currently, our funds are invested in a U.S. government money market fund and
corporate debt securities, including commercial paper. The following table sets
forth the primary sources and uses of cash for each of the periods set forth
below (in thousands):



                                                         Years Ended December 31,
                                                    2018           2017           2016
                                                              (in thousands)
 Net cash used in operating activities           $  (25,026 )   $  (19,164 

) $ (31,066 )

Net cash provided by (used in) investing

 activities                                          18,579        (10,402 

) (764 )

 Net cash provided by financing activities           15,925         29,419  

20,292

Net increase (decrease) in cash and cash

 equivalents                                     $    9,478$     (147 )$  (11,538 )




Our operating activities used cash of $25.0 million, $19.2 million and $31.1 in
2018, 2017 and 2016, respectively. Cash used in operations was principally due
to our net loss adjusted for non-cash items and changes in working capital.

Our investing activities provided cash of $18.6 million in 2018, and used cash
of $10.4 million and $0.8 million in 2017 and 2016, respectively, principally
due to net changes in the maturities and purchases of marketable securities.

Our financing activities provided cash of $15.9 million, $29.4 million and $20.3
million in 2018, 2017 and 2016, respectively. In 2018, we raised approximately
$15.9 million net from the issuance of our common stock, including approximately
$5.1 million in net proceeds from an underwritten public offering of 2.5 million
shares of our common stock in August 2018, $10.3 million in net proceeds from
the sale of approximately 4.7 million shares of our common stock pursuant to the
Leerink Sales Agreement in the fourth quarter of 2018 and approximately $1.0
million from the exercise of PIPE Warrants and stock options, offset by a $0.5
million end-of-term debt payment in January 2018 in connection with the 2014
Amendment of our loan First Loan Agreement with Hercules (all capitalized terms
being defined in the section below, "Credit Facilities"). In 2017, we raised
approximately $29.5 million in net cash proceeds, including $15.4 million from
an underwritten public offering of 34.5 million shares of our common stock,
$8.8 million from sales of 6.5 million shares of our common stock under our
former Sales Agreement with FBR & Co., or FBR, (formerly MLV & Co. LLC),
$5.0 million from additional borrowings under our Hercules Loan Agreement and
$0.3 million from the issuance of 0.3 million shares of our common stock upon
the exercise of 0.3 million PIPE warrants, offset by $0.1 million in debt
issuance costs related to the 2017 Loan Agreement with Hercules. In 2016, we
raised approximately $20.3 million in net cash proceeds, including $15.4 million
in net proceeds from a private placement of 17,642,842 units, each including one
share of our common stock and a warrant to purchase one share of our common
stock, and $4.9 million in net proceeds from additional borrowings under our
Hercules Loan Agreement.



Settlement Warrants

On July 16, 2018, we issued and delivered 2.0 million Settlement Warrants to
purchase shares of our common stock for a one-year period after the date of
issuance at an exercise price equal to $3.00 per share. Refer to the section
above, "Class Action Settlement and Settlement Warrants" for further discussion.

Sales Agreement with SVB Leerink


On November 30, 2017, we filed a shelf registration statement on Form S-3 with
the SEC, which we refer to as the 2017 Shelf. The 2017 Shelf (File No.
333-221873) was declared effective by the SEC on December 15, 2017 and covers
the offering, issuance and sale from time to time of up to $200 million of our
common stock, preferred stock, debt securities, warrants and/or units. The 2017
Shelf was filed to replace our then-existing 2015 shelf registration statement,
which was terminated upon the 2017 Shelf being declared effective by the SEC on
December 15, 2017.



                                      101
--------------------------------------------------------------------------------
In February 2018, we entered into the Leerink Sales Agreement pursuant to which
we may issue and sell shares of our common stock from time to time up to an
aggregate amount of $50 million, at our option, through SVB Leerink as our sales
agent, with any sales of common stock through SVB Leerink being made by any
method that is deemed an "at-the-market" offering as defined in Rule 415
promulgated under the Securities Act of 1933, as amended, or in other
transactions. Any such shares of common stock will be sold pursuant to a
prospectus supplement filed under the 2017 Shelf. We agreed to pay SVB Leerink a
commission of up to 3% of the gross proceeds of any sales of common stock
pursuant to the Leerink Sales Agreement. In the fourth quarter of 2018, we sold
approximately 4.7 million shares pursuant to the Leerink Sales Agreement,
resulting in approximately $10.3 million in proceeds, net of commissions.

In February 2019, we sold approximately 12.5 million shares pursuant to the SVB
Leerink Sales Agreement, resulting in proceeds of approximately $7.5 million,
net of commissions.

Public Offering - August 2018


On August 21, 2018, we closed an underwritten public offering of 2.5 million
shares of our common stock at the public offering price of $2.26 per share for
gross proceeds of approximately $5.7 million. Two greater than 5% stockholders,
including an entity affiliated with New Enterprise Associates and another
stockholder purchased approximately 2.0 million shares in this offering at the
same public offering price per share as the other investors. The net offering
proceeds to us were approximately $5.1 million after deducting underwriting
discounts and estimated offering expenses payable by us.

Public Offering - March 2017


On March 31, 2017, we closed an underwritten public offering of 34.5 million
shares of our common stock, including the exercise in full by the underwriter of
its option to purchase 4.5 million shares, at the public offering price of $0.50
per share for gross proceeds of approximately $17.3 million. Certain of our
executive officers and a director purchased an aggregate of 420,000 shares and
an entity affiliated with New Enterprise Associates purchased 6.0 million shares
in this offering at the same public offering price per share as the other
investors. The net offering proceeds to us were approximately $15.4 million
after deducting underwriting discounts and estimated offering expenses payable
by us.

Private Placement / PIPE Warrants


In May 2016, we entered into a securities purchase agreement with a select group
of qualified institutional buyers, institutional accredited investors and
accredited investors pursuant to which we sold 17,642,482 units, at a price of
$0.965 per unit, for gross proceeds of approximately $17.0 million. Each unit
consisted of one share of our common stock and a PIPE Warrant to purchase one
share of our common stock. The PIPE Warrants have an exercise price of $1.00 per
share and are exercisable in any manner at any time for a period of five years
from the date of issuance. Certain of our directors and executive officers
purchased an aggregate of 544,039 units in this offering at the same price as
the other investors. The net offering proceeds to us were approximately
$15.4 million after deducting placement agent fees and other offering expenses
payable by us. As of December 31, 2018, PIPE Warrants exercisable for 803,108
shares of common stock had been exercised, for approximately $0.8 million in
cash proceeds, and PIPE Warrants exercisable for 16,839,375 shares of common
stock were outstanding. In July 2017, we issued to Hercules Capital Inc. 259,067
shares of common stock upon its exercise of all of its PIPE Warrants, and we
received approximately $0.3 million in cash proceeds. In 2018, PIPE Warrants
with respect to 544,041 shares of common stock underlying such PIPE Warrants
were exercised, and we issued 544,041 shares of our common stock and received
approximately $0.5 million in cash proceeds.

Sales Agreement with FBR


In February 2015, we entered into a sales agreement, which we refer to as the
FBR Sales Agreement, with FBR & Co. and MLV & Co. LLC, or together FBR, pursuant
to which we issued and sold shares of our common stock from time to time up to
an aggregate amount of $17.9 million, at our option, through FBR as our sales
agent, with any sales of common stock through FBR being made by any method that
is deemed an "at-the-market" offering as defined in Rule 415 promulgated under
the Securities Act or in other transactions, in each case pursuant to an
effective shelf registration statement on Form S-3. We agreed to pay FBR a
commission of up to 3% of the gross proceeds of any sales of common stock
pursuant to the FBR Sales Agreement.

In June 2017, we sold approximately 6.5 million shares pursuant to the FBR Sales
Agreement, as amended, resulting in proceeds of approximately $8.8 million, net
of commissions and issuance costs. The FBR Sales Agreement has expired.



                                      102

--------------------------------------------------------------------------------

Credit Facilities


On May 28, 2010, we entered into a loan and security agreement with Hercules
Capital Inc. and certain of its affiliates, or the First Loan Agreement. The
First Loan Agreement was subsequently amended in March 2012, or the 2012
Amendment; September 2014, or the 2014 Amendment and May 2016, or the 2016
Amendment. In December 2017, we refinanced the First Loan Agreement, as amended,
by entering into an amended and restated loan and security agreement, or the
2017 Loan Agreement, with Hercules Funding III, LLC and Hercules Capital, Inc.,
which we collectively refer to as Hercules.

Pursuant to the 2014 Amendment, we received $10.0 million in additional loan proceeds from Hercules and were required to make an end-of-term payment of approximately $0.5 million on January 1, 2018. This payment was made on the first business day of 2018.


Pursuant to the 2016 Amendment, we received additional loan proceeds from
Hercules, in an aggregate amount of $10.0 million, received in installments of
$5.0 million in each of May 2016 and June 2017, which increased the aggregate
outstanding principal balance under the First Loan Agreement to $20.0 million.
We are required to make an end-of-term payment totaling $0.3 million on December
1, 2019. The 2016 Amendment included a financial covenant that required us to
maintain an unrestricted cash position greater than or equal to $10.0 million
through the date of completion of our TIVO-3 trial with results that were
satisfactory to Hercules. Principal payments were scheduled to commence on
January 1, 2018 and the loan was scheduled to mature on December 1, 2019.

In December 2017, we entered into the 2017 Loan Agreement to refinance our
existing loan facility with Hercules and to retire the $20.0 million in secured
debt then-outstanding under the First Loan Agreement. Per the terms of the 2017
Loan Agreement, the new $20.0 million loan facility has a 42-month maturity from
closing, no financial covenants, a lower interest rate and an interest-only
period of no less than 12 months, which could be extended up to a maximum of 24
months, assuming the achievement of specified milestones relating to the
development of tivozanib. Per the 2017 Loan Agreement, Hercules did not receive
any additional warrants to purchase shares of our common stock and no longer has
the option, subject to our written consent, to participate in our future equity
financings up to $2.0 million through the purchase of our common stock either
with cash or through the conversion of outstanding principal under the loan.

Pursuant to the 2017 Loan Agreement, the loan maturity date has been revised
from December 2019 to July 2021. We were not required to make principal payments
until February 1, 2019, at which time we would have been required to make 29
equal monthly payments of principal and interest, in the approximate amount of
$0.8 million through July 2021. An additional end-of-term payment of
approximately $0.8 million is due on July 1, 2021, which increased the total
end-of-term payments under the 2014 Amendment, 2016 Amendment and 2017 Loan
Agreement to approximately $1.6 million. The end-of-term payments under the 2014
Amendment, in the approximate amount of $0.5 million, and the 2016 Amendment, in
the amount of $0.3 million, continued to be due on their original due dates of
January 1, 2018 and December 1, 2019, respectively. The financial covenant per
the 2016 Amendment to maintain an unrestricted cash position greater than or
equal to $10.0 million through the date of completion of our TIVO-3 trial with
results that are satisfactory to Hercules has been removed. Per the 2017 Loan
Agreement, the interest rate decreased from 11.9% to 9.45%.

We must make interest payments on the principal balance of the loan each month
it remains outstanding. Per annum interest is payable on the loan balance at the
greater of 9.45% and an amount equal to 9.45% plus the prime rate minus 4.75%,
as determined daily, provided however, that the per annum interest rate shall
not exceed 15.0%. In 2018, the interest rate increased to 9.70%, 9.95% and
10.20% in June 2018, September 2018 and December 2018, respectively, due to
corresponding increases in the prime rate.

The interest-only period could be extended by two 6-month deferrals of principal
payments upon the achievement of specified milestones relating to the
development of tivozanib, subject to confirmation by Hercules at its reasonable
discretion.

In November 2018, Hercules granted the first 6-month extension of the
interest-only period. Accordingly, this resulted in the deferment of principal
payments until August 1, 2019, at which time we will be required to make 24
equal monthly payments of principal and interest, in the approximate amount of
$0.9 million through July 2021. The loan maturity date of July 1, 2021 remains
unchanged. The end-of-term payments under the 2016 Amendment, in the amount of
$0.3 million, and the 2017 Loan Agreement, in the approximate amount of $0.8
million, continue to be due on their original due dates of December 1, 2019 and
July 1, 2021, respectively.



                                      103
--------------------------------------------------------------------------------
We have determined that the risk of subjective acceleration under the material
adverse events clause included in the 2017 Loan Agreement is remote and,
therefore, have classified the outstanding principal amount in current and
long-term liabilities based on the timing of scheduled principal payments. As of
December 31, 2018, we are in compliance with all of the loan covenants and,
through the date of this filing, the lenders have not asserted any events of
default under the loan. We do not believe that there has been a material adverse
change as defined in the 2017 Loan Agreement. The loans are secured by a lien on
all of our personal property (other than intellectual property), whether owned
as of, or acquired after, the date of the First Loan Agreement.

Liquidity and Going Concern


We have devoted substantially all of our resources to our drug development
efforts, comprised of research and development, manufacturing, conducting
clinical trials for our product candidates, protecting our intellectual property
and general and administrative functions relating to these operations. Our
future success is dependent on our ability to develop our product candidates and
ultimately upon our ability to attain profitable operations. We anticipate that
we will continue to incur significant operating losses for the next several
years as we incur expenses to continue to execute on our clinical development
strategy to advance our preclinical and clinical stage assets. We will require
substantial additional funds to continue our development programs and to fulfill
our planned operating goals. In particular, our currently planned operating and
capital requirements include the need for substantial working capital to support
our development activities for tivozanib. For example, we estimate that the
aggregate remaining costs for the TIVO-3 trial, including drug supply and
distribution, could be in the range of $5.0 million to $6.0 million through
2019. We estimate that the overall cost for the TIVO-3 trial, including drug
supply and distribution, could be in the range of $49.0 million to
$50.0 million. Our aggregate remaining costs for the TiNivo trial, including
tivozanib drug supply and distribution, could be in the range of $0.6 million to
$0.8 million through 2019. We estimate that the overall cost for the TiNivo
trial, including drug supply and distribution, could be in the range of $4.0
million to $4.6 million. BMS is providing nivolumab for the TiNivo trial. In
addition, in September 2017, EUSA elected to opt-in to co-develop the TiNivo
trial and paid the maximum $2.0 million for its approximate 50% share of the
total trial costs.

Moreover, we have future payment obligations and cost-sharing arrangements under
certain of our collaboration and license agreements. For example, under our
agreements with KHK and St. Vincent's, we are required to make certain clinical
and regulatory milestone payments, have royalty obligations with respect to
product sales and are required to pay a specified percentage of sublicense
revenue in certain instances.

During the year ended December 31, 2018, we received approximately $23.6 million
in funding, including approximately $7.1 million in partnership funding and
approximately $16.4 million related to the sale of our common stock. The
approximate $7.1 million in partnership funding included $4.0 million in
milestone payments by EUSA for reimbursement approvals of RCC in the United
Kingdom and Germany, $2.0 million in a milestone payment by CANbridge for the
regulatory approval of an IND application for a clinical study of AV-203 in
ESCC, approximately $0.3 million in royalties from the sales of FOTIVDA by EUSA
and approximately $0.8 million in cost sharing payments. The approximate $16.4
million in funding from the sale of our common stock included the approximate
$5.1 million in net proceeds from the sale of 2.5 million shares of our common
stock in a public offering in August 2018, the approximate $10.3 million in net
proceeds from the sale of approximately 4.7 million shares of our common stock
pursuant to our Leerink Sales Agreement in the fourth quarter of 2018, and
approximately $1.0 million related to the exercise of PIPE Warrants and stock
options.

As of December 31, 2018, we had approximately $24.4 million in cash, cash
equivalents and marketable securities, working capital of $9.8 million and an
accumulated deficit of $595.0 million. In February 2019, we sold approximately
12.5 million shares of our common stock pursuant to our Leerink Sales Agreement
and received approximately $7.5 million in net proceeds. Based on our available
cash resources, we believe that we do not have sufficient cash on hand to
support current operations for at least the next twelve months from the date of
filing this Annual Report on Form 10-K. This condition raises substantial doubt
about our ability to continue as a going concern.

Our plans to address this condition include pursuing one or more of the following options to secure additional funding, none of which can be guaranteed or are entirely within our control:

• Earn royalty payments pursuant to the EUSA Agreement. In August 2017, EUSA

obtained marketing approval from the EMA for tivozanib (FOTIVDA) for the

        treatment of RCC.


    •   Earn milestone payments pursuant to our collaboration and license

agreements or restructure / monetize existing potential milestone and/or

royalty payments under those collaboration and license agreements.

• Raise funding through the possible additional sales of our common stock,

including public or private equity financings.

• Partner a portion or all rights to the Company's portfolio candidates to

        secure potential additional non-dilutive funds.




                                      104
--------------------------------------------------------------------------------
Pursuant to our EUSA Agreement, we are entitled to receive up to an additional
$6.0 million in milestone payments of $2.0 million per country upon
reimbursement approval for RCC, if any, in each of France, Italy and Spain, and
an additional $2.0 million milestone payment for the grant of marketing
approval, if any, in three of the licensed countries outside of the EU, as
mutually agreed by the parties. These milestone payments are subject to the 30%
sublicense fee payable to KHK. We are also eligible to receive an additional
research and development reimbursement payment from EUSA of 50% of the total
costs for our TIVO-3 trial, up to $20.0 million, if EUSA elects to opt-in to
that study. This research and development reimbursement payment would not be
subject to the 30% sublicense fee payable to KHK, subject to certain
limitations.

There can be no assurance, however, that we will receive cash proceeds from any
of these potential resources or to the extent cash proceeds are received such
proceeds would be sufficient to support our current operating plan for at least
the next twelve months from the date of filing this Annual Report on Form 10-K.

Pursuant to the requirements of Accounting Standards Codification (ASC) 205-40,
Disclosure of Uncertainties about an Entity's Ability to Continue as a Going
Concern, management must evaluate whether there are conditions or events,
considered in the aggregate, that raise substantial doubt about our ability to
continue as a going concern within one year after the date that the financial
statements are issued. This evaluation initially does not take into
consideration the potential mitigating effect of management's plans that have
not been fully implemented as of the date the financial statements are issued.
When substantial doubt exists under this methodology, management evaluates
whether the mitigating effect of its plans sufficiently alleviates substantial
doubt about our ability to continue as a going concern. The mitigating effect of
management's plans, however, is only considered if both (1) it is probable that
the plans will be effectively implemented within one year after the date that
the financial statements are issued, and (2) it is probable that the plans, when
implemented, will mitigate the relevant conditions or events that raise
substantial doubt about the entity's ability to continue as a going concern
within one year after the date that the financial statements are issued.

Under ASC 205-40, the future receipt of potential funding from our collaborators
and other resources cannot be considered probable at this time because none of
our current plans have been finalized at the time of filing this Annual Report
on Form 10-K and the implementation of any such plan is not probable of being
effectively implemented as none of the plans are entirely within our control.
Accordingly, substantial doubt is deemed to exist about our ability to continue
as a going concern within one year after the date these financial statements are
issued.

We believe that our approximate $24.4 million in cash, cash equivalents and
marketable securities at December 31, 2018, along with approximately $7.5
million received in net proceeds from the sale of approximately 12.5 million
shares of our common stock pursuant to the Leerink Sales Agreement in February
2019 and together with the extension of the interest-only period under the loan
agreement with Hercules, which results in a deferment of principal payments
until August 1, 2019, would allow us to fund our planned operations into the
first quarter of 2020. This estimate assumes no receipt of additional milestone
payments and royalties from our partners, no funding from new partnership
agreements, no additional equity financings, no debt financings, no additional
sales of equity under our Leerink Sales Agreement and no additional sales of
equity through the exercise of our outstanding PIPE Warrants or the Settlement
Warrants. Accordingly, the timing and nature of activities contemplated for the
remainder of 2019 and thereafter will be conducted subject to the availability
of sufficient financial resources.

There are numerous risks and uncertainties associated with research, development
and commercialization of pharmaceutical products. Accordingly, our future
funding requirements may vary from our current expectations and will depend on
many factors, including, but not limited to:

• our ability to establish and maintain strategic partnerships, licensing or

        other arrangements and the financial terms of such agreements;


  • the number and characteristics of the product candidates we pursue;

• the scope, progress, results and costs of researching and developing our

        product candidates, and of conducting preclinical and clinical trials;


    •   the timing of, and the costs involved in, completing our clinical trials

and obtaining regulatory approvals for our product candidates;

• the costs involved in preparing, filing, prosecuting, maintaining,

defending and enforcing patent claims, including litigation costs and the

outcome of such litigation;



    •   the absence of any breach, acceleration event or event of default under
        our 2017 Loan Agreement with Hercules or under any other agreements with
        third parties;




                                      105

--------------------------------------------------------------------------------

• the cost and outcome of any legal actions against us, including the

purported class action lawsuit filed against us in February 2019 described

above under the heading "Part I, Item 3 - Legal Proceedings";

• the cost of commercialization activities if any of our product candidates

        are approved for sale, including marketing, sales and distribution costs;


    •   the cost of manufacturing our product candidates and any products we
        successfully commercialize;

• the timing, receipt and amount of sales of, or royalties on, FOTIVDA and

        our future products, if any; and


  • our ability to continue as a going concern.


We will require additional funding to extend our planned operations. We may seek
to sell additional equity or debt securities or obtain additional credit
facilities. The sale of additional equity or convertible debt securities may
result in additional dilution to our stockholders. If we raise additional funds
through the issuance of debt securities or preferred stock or through additional
credit facilities, these securities and/or the loans under credit facilities
could provide for rights senior to those of our common stock and could contain
covenants that would restrict our operations. Additional funds may not be
available when we need them, on terms that are acceptable to us, or at all. We
also expect to seek additional funds through arrangements with collaborators,
licensees or other third parties. These arrangements would generally require us
to relinquish or encumber rights to some of our technologies or drug candidates,
and we may not be able to enter into such arrangements on acceptable terms, if
at all. If we are unable to raise substantial additional capital in the near
term, whether on terms that are acceptable to us, or at all then we may be
required to:

• delay, limit, reduce or terminate our clinical trials or other development

activities for one or more of our product candidates; and/or

• delay, limit, reduce or terminate our establishment of sales and marketing

capabilities or other activities that may be necessary to commercialize

our product candidates, if approved.

Off-Balance Sheet Arrangements

We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

© Edgar Online, source Glimpses

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on AVEO PHARMACEUTICALS, INC.
03/21AVEO PHARMACEUTICALS INC : Notice of Delisting or Failure to Satisfy a Continued..
AQ
03/15AVEO : 4Q Earnings Snapshot
AQ
03/14AVEO PHARMACEUTICALS INC : Results of Operations and Financial Condition, Financ..
AQ
03/14AVEO PHARMACEUTICALS : Management's Discussion and Analysis of Financial Conditi..
AQ
03/14AVEO PHARMACEUTICALS : Reports Full Year 2018 Financial Results and Provides Bus..
BU
03/07GLANCY PRONGAY & MURRAY LLP : Announces Investigation on Behalf of AVEO Pharmace..
BU
03/04ROBBINS ARROYO LLP : AVEO Pharmaceuticals, Inc. (AVEO) Sued for Misleading Share..
BU
03/04Law Offices of Howard G. Smith Announces Investigation on Behalf of AVEO Phar..
BU
03/03AVEO Rosen Law Firm Reminds AVEO Pharmaceuticals, Inc. Investors of Important..
BU
03/01AVEO PHARMACEUTICALS INC : Change in Directors or Principal Officers (form 8-K)
AQ
More news