AVEO Pharmaceuticals : Management's Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition
and results of operations together with our financial statements and related
notes appearing elsewhere in this Quarterly Report on Form 10-Q and the audited
financial information and the notes thereto included in our Annual Report on
Form 10-K for the year ended December 31, 2020, or Annual Report.

Overview

We are an oncology-focused biopharmaceutical company committed to delivering
medicines that provide a better life for cancer patients. Our strategy is to
focus our resources on the development and commercialization of our product
candidates in North America, while leveraging partnerships to support
development and commercialization in other geographies. With the approval of our
first commercial product, FOTIVDA® (tivozanib), in the United States, we have
transitioned from a clinical development stage biopharmaceutical company to a
commercial and clinical development stage biopharmaceutical company.

FOTIVDA is our lead product and was approved by the U.S. Food and Drug
Administration, or FDA, for marketing and sale in the United States on March 10,
2021. FOTIVDA is approved in the United States for the treatment of adult
patients with relapsed or refractory advanced renal cell carcinoma following two
or more prior systemic therapies. FOTIVDA is an oral, next-generation vascular
endothelial growth factor receptor, or VEGFR, tyrosine kinase inhibitor, or TKI.
The FDA approval of FOTIVDA is based on our pivotal phase 3 randomized,
controlled, multi-center, open-label clinical trial comparing tivozanib to an
approved therapy, Nexavar® (sorafenib), in renal cell carcinoma, or RCC,
patients whose disease had relapsed or become refractory to two or three prior
systemic therapies, which we refer to as the TIVO-3 trial. The approval is also
supported by three additional trials in RCC and includes safety data from over
1,000 clinical trial subjects.

FOTIVDA became commercially available in the United States on March 22, 2021. We
are currently commercializing FOTIVDA in the United States through the support
of approximately 65 field-based employees, which includes approximately 50
oncology sales professionals targeting practicing oncologists. The field force
is supported by the AVEO ACE Patient Support program, which is an extensive
patient and healthcare provider support program designed to optimize patient
access and help patients navigate their treatment journey. In light of the
restrictions necessitated by the COVID-19 pandemic, we designed our strategic
commercial approach to be optimized for remote as well as in-person customer
engagement capabilities and expanded our digital marketing strategies. FOTIVDA
is available to patients through a network of specialty pharmacies and
distributors.

We believe there is significant commercial opportunity for FOTIVDA in the United
States. We estimate that the current U.S. market for relapsed or refractory RCC
therapy is approximately $1.0 billion, including $700 million in the second line
and $300 million in the third and fourth lines. As the TIVO-3 trial is the first
positive phase 3 study in RCC patients whose disease had relapsed or become
refractory to two or three prior systemic therapies as well as the first phase 3
study in RCC to investigate a predefined subpopulation of patients who received
prior immunotherapy, a predominant standard of care for earlier lines of
therapy, we believe that FOTIVDA could become a standard of care in the United
States in this relapsed or refractory setting.

FOTIVDA, through our partner EUSA Pharma (UK) Limited, or EUSA, is also approved
in the European Union, or the EU, New Zealand and South Africa and is reimbursed
in the United Kingdom, Germany, Spain and certain other countries in EUSA's
territory. FOTIVDA is approved in the EU for the first line treatment of adult
patients with advanced RCC and for adult patients who are VEGFR and mTOR pathway
inhibitor-naïve following disease progression after one prior treatment with
cytokine therapy for advanced RCC. FOTIVDA has been commercially available in
the EU since 2017. EUSA has not commercially launched FOTIVDA in France,
Germany, Italy or Spain. EUSA is working to secure reimbursement approval in and
commercially launch FOTIVDA in additional EU countries. However, there is
significant competition in the front-line RCC setting in the EU due to the
approval of several immunotherapy combinations which have become a standard of
care and impacted the market opportunity for monotherapy treatments. EUSA has
reported to us that to date, it has not experienced a decrease in sales trends
or interruptions in supply or distribution of FOTIVDA during the COVID-19
pandemic; however, the future impact of the COVID-19 pandemic on FOTIVDA sales
is difficult to predict.

Based on FOTIVDA's demonstrated anti-tumor activity, tolerability profile and
reduction of regulatory T-cell production, we are seeking to advance FOTIVDA in
additional cancer indications with significant unmet medical needs. We are
studying FOTIVDA in combination with immune checkpoint inhibitors for the
treatment of hepatocellular carcinoma, or HCC, and RCC in phase 2 and phase 3
clinical trials.

We are conducting the DEDUCTIVE trial through a drug supply and cost sharing
collaboration with AstraZeneca PLC, or AstraZeneca. The DEDUCTIVE trial is an
open-label, multi-center, randomized phase 1b/2 clinical trial of tivozanib in
combination

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with IMFINZI (durvalumab), AstraZeneca's monoclonal antibody directed against
programmed death-ligand 1, or PD-L1, in the first-line treatment of patients
with advanced, unresectable HCC who have not received prior systemic therapy. In
January 2021, we presented preliminary results from the phase 1b portion of the
DEDUCTIVE trial in a poster session at the 2021 American Society of Clinical
Oncology Gastrointestinal, or ASCO GI, Cancers Symposium.

We plan to initiate enrollment in the middle of 2021 in a phase 3 study, which
we refer to as the TiNivo-2 Trial, in collaboration with Bristol-Myers Squibb
Company, or BMS. We are the sponsor of the study and BMS is supplying OPDIVO®
(nivolumab), BMS's anti-PD-1 therapy, for the study. The TiNivo-2 Trial is a
randomized, open-label, controlled phase 3 clinical trial of FOTIVDA in
combination with OPDIVO®, in patients with advanced relapsed or refractory RCC
following prior immunotherapy exposure. We recently received feedback from the
FDA regarding the trial design and we expect to commence enrollment in the trial
in the middle of 2021.

We are also seeking to advance our pipeline of three wholly owned humanized immunoglobulin G1, or IgG1, monoclonal antibody product candidates: ficlatuzumab, AV-380 and AV-203.

Ficlatuzumab is a potent humanized IgG1 monoclonal antibody that targets
hepatocyte growth factor, or HGF. We have previously reported promising early
clinical data on ficlatuzumab in squamous cell carcinoma of the head and neck,
or HNSCC, pancreatic cancer and acute myeloid leukemia, or AML. We are currently
conducting a randomized phase 2 confirmatory study of ficlatuzumab, or the Phase
2 HNSCC Trial, for the potential treatment of HNSCC and we expect to receive top
line data from the Phase 2 HNSCC Trial in the middle of 2021. We have initiated
manufacturing of the clinical supply for a potential phase 3 clinical trial of
ficlatuzumab, and we continue to evaluate opportunities for the further clinical
development of ficlatuzumab.

AV-380 is a potent humanized IgG1 monoclonal antibody that targets growth differentiation factor 15, or GDF15. In December 2020, the FDA approved our investigational new drug application, or IND, for AV-380 for the potential treatment of cancer cachexia, and, in the first quarter of 2021, we initiated a phase 1 clinical trial in healthy volunteers.

AV-203 is a potent humanized IgG1 monoclonal antibody that targets ErbB3 (also
known as HER3) to which we will regain worldwide rights in September 2021. We
are exploring AV-203 as a potential oncology treatment.

AV-353 is an IgG1 monoclonal antibody that targets the Notch 3 pathway.

Business Update Regarding COVID-19. The pandemic caused by an outbreak of a new
strain of coronavirus, or the COVID-19 pandemic, that is affecting the U.S. and
global economy and financial markets is also impacting our employees, patients,
communities and business operations to varying degrees. In the paragraphs that
follow, we have described impacts of the COVID-19 pandemic on our
commercialization plans and clinical development programs, as applicable. The
extent to which the COVID-19 pandemic will directly or indirectly impact our
business, results of operations and financial condition will depend on future
developments that are highly uncertain and cannot be accurately predicted,
including new information that may emerge concerning COVID-19, the actions taken
to contain it or treat its impact and the economic impact on local, regional,
national and international markets. Certain of our operations had been conducted
remotely prior to the COVID-19 pandemic, and we have now transitioned
essentially all of our business operations to be conducted remotely in response
to COVID-19. If the COVID-19 pandemic continues or becomes more severe, it may
further impact our ability to maintain that level of productivity, to grow the
company as we have anticipated and to execute our commercialization and other
long-term business strategies. Management is actively monitoring this situation
and the possible effects on our financial condition, liquidity, operations,
suppliers, industry and workforce. For additional information on risks posed by
the COVID-19 pandemic, please see "Part II, Item 1A. Risk Factors - Risks
Related to the COVID-19 Pandemic," included elsewhere in this Quarterly Report
on Form 10-Q.

Financial Overview

We do not have a history of generating operating profits and, as of March 31,
2021, we had an accumulated deficit of $643.3 million. We anticipate that we
will continue to incur significant operating expenses for the foreseeable future
as we seek to successfully commercialize FOTIVDA in the United States and
continue our planned development activities for our clinical stage assets.

We may require substantial additional funding to continue to advance our
pipeline of clinical stage assets, and the timing and nature of these activities
will be conducted subject to the availability of sufficient financial resources.
Please see "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources -Liquidity and Going
Concern" for a further discussion of our funding requirements.

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Revenue

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 FOTIVDA (tivozanib). 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.

On March 10, 2021, the FDA approved FOTIVDA in the United States for the
treatment of adult patients with relapsed or refractory advanced RCC following
two or more prior systemic therapies. We commenced commercial sales of our first
product FOTIVDA in the United States on March 22, 2021. We expect that any
revenue we generate will fluctuate from quarter to quarter and year to year as a
result of the timing and amount of the payments that we receive upon the sales
of FOTIVDA and any future products, to the extent any are successfully
commercialized, and license fees, research and development reimbursements,
milestones, royalties and other payments received under our strategic
partnerships. If we or our strategic partners fail to complete the development
of our product candidates in a timely manner or to obtain or maintain 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,

stock-based compensation and research-related overhead;

• external development-related expenses, including clinical trials,

preclinical studies, consultants and other outsourced services;

• costs of acquiring and manufacturing drug development related materials

and related distribution;

• costs associated with our regulatory and quality assurance operations

and medical affairs;

• upfront license payments, milestones, sublicense fees and royalties

          related to in-licensed products and technology; and


  • allocated expenses for facilities and information technology.

Research and development expenses are net of amounts reimbursed under our agreements with Biodesix and AstraZeneca 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 increase in 2021,
principally related to increases for a full year of costs for the medical
affairs function in support of the commercial launch of FOTIVDA, ficlatuzumab
manufacturing of clinical supply for a potential phase 3 clinical trial in
HNSCC, the planned TiNivo-2 trial for the treatment of advanced relapsed or
refractory RCC and the conduct of the phase 1 clinical trial of AV-380 in
healthy volunteers. These increases will be partially offset by lower costs,
principally related to the TIVO-3 trial as it nears completion and costs
incurred in 2020 related to the submission of our tivozanib new drug
application, or NDA, in March 2020 and related FDA review support that will not
be incurred in 2021. The timing and nature of contemplated activities in 2021
will be conducted 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 risk benefit profile of the product candidates' clinical activity,
investment in the program, competition, manufacturing capabilities and
commercial viability.

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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 for which we may obtain regulatory
approval. 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.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist principally of
compensation, benefits and travel for employees in executive, finance, legal,
human resource and commercial functions. Other selling, general and
administrative expenses include professional fees for audit, tax, general legal,
patent legal, investor relations, commercial, consulting services and directors'
fees, as well as facility and information technology-related costs not otherwise
included in research and development expenses.

We anticipate that selling, general and administrative expenses associated with
the commercialization of FOTIVDA will continue to increase significantly during
the first half of the year principally related to the addition of our
salesforce, and continued expansion of our marketing, market access and
commercial capabilities and general and administrative support, and will remain
consistent at that level in the second half of 2021. Accordingly, the timing and
nature of contemplated activities in 2021 will be conducted 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 calculate our provision for income taxes on ordinary income based on our
projected annual tax rate for the year. As of March 31, 2021, we are forecasting
an effective tax-rate of 0% for the year ending December 31, 2021, and since we
maintain a full valuation allowance on all of our deferred tax assets, we have
recorded no income tax provision or benefit in the current quarter.

Critical 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 Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of financial statements in conformity

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with GAAP requires us to make estimates and assumptions that affect certain
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, the assessment of our
ability to continue as a going concern, and the reported amounts of revenues and
expenses during the reporting periods. Significant items subject to such
estimates and assumptions include revenue recognition, clinical trial costs and
contract research accruals, measurement of trade receivables net, measurement of
the PIPE Warrant liability, measurement of stock-based compensation and
estimates of our capital requirements over the next twelve months from the date
of issuance of the consolidated financial statements. 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 or reflected in our
disclosures 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. Our significant accounting policies are described in the
notes to our consolidated financial statements appearing elsewhere in this
Quarterly Report on Form 10-Q.

For a discussion of recent accounting pronouncements, refer to Note 3 -
"Significant Accounting Policies - Recently Adopted Accounting Pronouncements",
to our condensed consolidated financial statements included elsewhere in this
Quarterly Report on Form 10-Q.

Results of Operations

Comparison of Three Months Ended March 31, 2021 and 2020

Revenues (in thousands)

                                 Three Months Ended           Comparison
                                      March 31,
                                  2021           2020         $          %
FOTIVDA product revenue, net   $     1,066       $   -     $ 1,066       100 %
Partnership revenue - EUSA             854         784          70         9 %
Total revenues                 $     1,920       $ 784     $ 1,136       145 %




Our total revenues increased by $1.1 million, or 145%, to $1.9 million in the
three months ended March 31, 2021 from $0.8 million in the same period in 2020,
principally due to the commencement of commercial sales of our first product
FOTIVDA in the United States on March 22, 2021 for the treatment of adult
patients with relapsed or refractory advanced RCC following two or more prior
systemic therapies.

Partnership revenues from EUSA increased by $70,000, or 9%, in the three months ended March 31, 2021 from the same period in 2020.

FOTIVDA Product Revenue, Net (in thousands)

                              Three Months Ended           Comparison
                                  March 31,
                               2021           2020         $          %
Gross product revenue      $      1,256       $   -     $ 1,256       100 %
Discounts and allowances           (190 )         -        (190 )     100 %
   Product revenue, net    $      1,066       $   -     $ 1,066       100 %

We commenced commercial sales of our first product FOTIVDA in the United States on March 22, 2021 for the treatment of adult patients with relapsed or refractory advanced RCC following two or more prior systemic therapies.

Cost of Products Sold (in thousands)

                           Three Months Ended           Comparison
                                March 31,
                           2021             2020        $         %
Cost of products sold   $       138         $   -     $ 138       100 %
Gross margin %                   87 %           -        87 %     100 %




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We commenced commercial sales of our first product FOTIVDA in the United States
on March 22, 2021 for the treatment of adult patients with relapsed or
refractory advanced RCC following two or more prior systemic therapies. Cost of
products sold is related to our product revenues for FOTIVDA and consists
primarily of tiered royalty payments we are required to pay to Kyowa Kirin Co.
(KKC) on all net sales of tivozanib in our North American territory, which range
from the low to mid-teens as a percentage of net sales. Cost of products sold
also consists of shipping and other third-party logistics and distribution costs
for FOTIVDA. We consider regulatory approval of our product candidates to be
uncertain and product manufactured prior to regulatory approval may not be sold
unless regulatory approval is obtained. As such, the manufacturing costs for
FOTIVDA incurred prior to regulatory approval were not capitalized as inventory
but were expensed as research and development costs, which favorably impacted
our gross margin. We anticipate that gross margins will be in the mid-to-high
80th percentile for the remainder of 2021.

Research and Development Expenses (in thousands)

                                            Three Months Ended
                                                 March 31,                Comparison
                                             2021          2020           $           %
Tivozanib                                 $    3,856      $ 6,161     $ (2,305)       (37 )%
AV-380                                           766          718            48         7 %
Ficlatuzumab                                     450          579         (129)       (22 )%
Overhead                                         725          368          

357 97 % Total research and development expenses $ 5,797 $ 7,826 $ (2,029) (26 )%

Our total research and development expenses decreased by $2.0 million, or 26%,
to $5.8 million in the three months ended March 31, 2021 from $7.8 million in
the same period in 2020, principally due to a decrease of $2.3 million in
tivozanib-related expenses.

Tivozanib expenses decreased by $2.3 million, or 37%, in the three months ended
March 31, 2021 as compared to the same period in 2020. The $2.3 million decrease
was principally related to $3.7 million in costs incurred in the first quarter
of 2020 that were not incurred in the first quarter of 2021 related to the
tivozanib NDA for RCC, including $0.8 million related to the completion of the
NDA submission and the $2.9 million application user fee pursuant to the
Prescription Drug User Fee Act that was due upon the filing of the tivozanib NDA
on March 31, 2020, and $0.5 million related to lower expenses in connection with
the TIVO-3 trial as it nears completion, partially offset by $1.6 million in
costs incurred in the first quarter of 2021 that were not incurred in the first
quarter of 2020, including $1.1 million related to the conduct of start-up
activities for the planned TiNivo-2 trial and $0.5 million related to the
medical affairs function in support of the commercial launch of FOTIVDA.

AV-380 expenses increased by $48,000, or 7%, in the three months ended March 31,
2021 as compared to the same period in 2020, principally due to the commencement
of the phase 1 clinical trial of AV-380 in healthy volunteers in the first
quarter of 2021, partially offset by a decrease in pre-clinical development
costs incurred in the first quarter of 2020 that were not incurred in the first
quarter of 2021.

Ficlatuzumab expenses decreased by $0.1 million, or 22%, in the three months
ended March 31, 2021 as compared to the same period in 2020, principally due to
an increase of $0.4 million related to the conduct of ficlatuzumab manufacturing
of clinical supply for a potential phase 3 clinical trial in HNSCC, offset by a
$0.5 million decrease related to costs incurred in the first quarter of 2020
that were not incurred in the first quarter of 2021 in connection with the
discontinued phase 2 clinical trial evaluating ficlatuzumab in combination with
high-dose cytarabine versus high-dose cytarabine alone in patients with AML,
which we referred to as the CyFi-2 trial, net of cost sharing with Biodesix.

We anticipate that research and development expenses will increase in 2021,
principally related to increases for a full year of costs attributable to the
medical affairs function supporting the commercial launch of FOTIVDA,
ficlatuzumab manufacturing of clinical supply for a potential phase 3 clinical
trial in HNSCC, the planned TiNivo-2 trial for the treatment of advanced
relapsed or refractory RCC and the conduct of the phase 1 clinical trial of
AV-380 in healthy volunteers. These increases will be partially offset by lower
costs, principally related to the TIVO-3 trial as it nears completion and costs
incurred in 2020 related to the submission of our tivozanib NDA in March 2020
and related FDA review support that will not be incurred in 2021. The timing and
nature of contemplated activities in 2021 will be conducted subject to the
availability of sufficient financial resources.



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Selling, General and Administrative Expenses (in thousands)

                                                  Three Months Ended
                                                       March 31,                   Comparison
                                                  2021           2020            $             %

Selling, general and administrative expenses $ 15,100 $ 3,672

 $  11,428           311 %




Selling, general and administrative expenses increased by $11.4 million, or
311%, to $15.1 million in the three months ended March 31, 2021 from $3.7
million in the same period in 2020. The $11.4 million increase was principally
due to $11.3 million in total increases, including: (i) $9.4 million in
commercial launch-readiness initiatives incurred in the first quarter of 2021
that were not incurred in the same period in 2020, including $4.6 million in
compensation and recruiting costs related to the growth in our commercial
infrastructure, including the hiring of the salesforce, and $4.8 million related
to external commercial-launch readiness activities in marketing, market access
and commercial operations, (ii) $1.1 million in other professional fees, and
(iii) $0.8 million in other compensation-related costs.

We anticipate that selling, general and administrative expenses associated with
the commercialization of FOTIVDA will continue to increase significantly during
the first half of the year principally related to the addition of our
salesforce, and continued expansion of our marketing, market access and
commercial capabilities and general and administrative support, and will remain
consistent at that level in the second half of 2021. Accordingly, the timing and
nature of contemplated activities in 2021 will be conducted subject to the
availability of sufficient financial resources.

Change in Fair Value of PIPE Warrant Liability (in thousands)

                                              Three Months Ended
                                                   March 31,                   Comparison
                                              2021           2020            $             %
Change in fair value of PIPE Warrant
liability                                  $    (2,396 )   $   2,648     $  (5,044 )        (190 )%




In May 2016, we issued PIPE Warrants, or 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 and any changes
in fair value are recorded as a non-cash gain or (loss) in our Statement of
Operations as a component of other income (expense).

In the three months ended March 31, 2021, we recorded an approximate non-cash
loss of $2.4 million in our Statement of Operations attributable to the increase
in the fair value of the PIPE Warrant liability that resulted from a higher
stock price of $7.32 on March 31, 2021 compared to the stock price of $6.20 on
December 31, 2020, an increase in our stock volatility rate and a shorter
remaining term as the PIPE Warrants approach the scheduled expiration on May 16,
2021. The $2.4 million non-cash loss recognized in the first quarter of 2021,
assuming no PIPE Warrants are exercised, will be fully reversed upon the May 16,
2021 expiration.

In the three months ended March 31, 2020, we recorded an approximate non-cash
gain of $2.6 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 $3.62 on March 31, 2020 compared to the stock price of
$6.20 on December 31, 2019.

Interest Expense, net (in thousands)

                          Three Months Ended
                               March 31,              Comparison
                          2021           2020         $         %
Interest expense, net   $    (611 )     $  (315 )   $ (296 )     94 %




Interest expense, net increased by $0.3 million, or 94%, in the three months
ended March 31, 2021 as compared to the same period in 2020. This increase was
principally due to higher loan balances on a quarter-to-quarter basis under the
2020 Loan Amendment that was entered into with Hercules Capital Inc. and certain
of its affiliates, or Hercules, on August 7, 2020. See "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources - Hercules Loan Facility" below for a
description of the 2020 Loan Amendment.

We anticipate that interest expense, net will increase in 2021 due to the $35.0
million loan balance as of March 31, 2021 and the extended interest-only period
through September 30, 2022 pursuant to the 2020 Loan Amendment and 2021 Loan
Amendment with Hercules.

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Liquidity and Capital Resources

We have financed our operations to date primarily through 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 March 31, 2021 we had cash and cash equivalents of
approximately $121.4 million. See "Part II, Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources -Liquidity and Going Concern" below and Note 1 to the
consolidated financial statements included elsewhere in this Quarterly Report on
Form 10-Q for a further discussion of our liquidity. Currently, our funds are
invested in a United States government money market fund.

The following table sets forth the primary sources and uses of cash for each of the periods set forth below (in thousands):

                                                         Three Months Ended
                                                              March 31,
                                                         2021          2020
Net cash used in operating activities                  $ (18,334 )   $ (11,687 )
Net cash provided by investing activities                      -         

7,748

Net cash provided by (used in) financing activities 77,987 (2,389 ) Net increase (decrease) in cash and cash equivalents $ 59,653 $ (6,328 )

Our operating activities used cash of $18.3 million and $11.7 million in the
three months ended March 31, 2021 and 2020, 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 $7.7 million in the three months ended
March 31, 2020 and none in the three months ended March 31, 2021, principally
due to net changes in the maturities and purchases of marketable securities in
the first quarter of 2020. We did not have any marketable securities in the
first quarter of 2021.

Our financing activities provided cash of $78.0 million in the three months
ended March 31, 2021 and used cash of $2.4 million in the three months ended
March 31, 2020. In 2021, we raised approximately $78.0 million in funding,
including approximately $51.6 million in net proceeds from the sale of
approximately 6.9 million shares of our common stock in an underwritten public
offering in March 2021, approximately $19.9 million in new loan funding pursuant
to the 2020 Loan Amendment and 2021 Loan Amendment with Hercules, net of
transaction costs, approximately $3.4 million in net proceeds from the sale of
approximately 0.3 million shares of our common stock in March 2021 pursuant to
our "at-the-market" sales agreement with SVB Leerink LLC, or SVB Leerink, which
we refer to as the SVB Leerink Sales Agreement, and approximately $3.1 million
in proceeds from the exercise of Offering Warrants. In 2020, we paid
approximately $2.4 million in principal payments pursuant to our 2017 Loan
Agreement with Hercules.

Hercules Loan Facility ($45 Million Loan Facility - $10 Million Committed Funding Remaining)

On May 28, 2010, the Company entered into a loan and security agreement, or the
First Loan Agreement with Hercules. The First Loan Agreement was subsequently
amended in March 2012, September 2014, May 2016 and amended and restated in
December 2017, or the 2017 Loan Agreement. On August 7, 2020, we entered into a
first amendment to the 2017 Loan Agreement or the 2020 Loan Amendment, to
provide us, subject to certain terms and conditions, with additional term loans
in an aggregate principal amount of up to $35.0 million, or the 2020 Loan
Facility, to be used to repay in full the 2017 Loan Agreement and for general
working capital purposes. The 2020 Loan Facility was made available to us in
four tranches, the first of which, in the amount of $15.0 million, was made
available to us immediately upon the closing of the 2020 Loan Amendment. We used
the $15.0 million in proceeds of the first tranche as follows: approximately
$9.7 million was used to repay the outstanding balance of the 2017 Loan
Agreement in full, and approximately $5.3 million was used for general working
capital purposes. In connection with the 2020 Loan Amendment, we incurred
approximately $0.3 million in loan issuance costs paid directly to Hercules,
which are accounted for as a loan discount. The 2020 Loan Amendment was
accounted for as a loan modification in accordance with ASC 470-50.

The remaining $20.0 million of term loans available to us under the 2020 Loan
Facility subject to, among other terms and conditions, the achievement of the
following milestones: (i) Tranche Two in the amount of $10.0 million, would be
available through June 30, 2021 upon achieving Performance Milestone I for FDA
approval of FOTIVDA, (ii) the third tranche, or Tranche Three, in the amount of
$5.0 million, would be available from July 1, 2021 through January 31, 2022 if
we achieve $20.0 million in net product revenues from sales of FOTIVDA,
following FDA approval, by no later than December 31, 2021, or Performance
Milestone II, and (iii) the fourth tranche, or Tranche Four, in the amount of
$5.0 million, would be available through June 30, 2022 if we achieve both
Performance Milestone I and Performance Milestone II, and if Hercules consents
to the advancement of Tranche Four.

The 2020 Loan Amendment also amended the 2017 Loan Agreement by: (i) extending
maturity of the loans from July 1, 2021 until September 1, 2023, which is
extendable to September 1, 2024 upon our option if the Tranche Three funding has
occurred, (ii) providing for an interest-only period beginning on the closing
date of 2020 Loan Amendment and ending September 30, 2021, which

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period may be extended through September 30, 2022 provided we achieved
Performance Milestone I, and further extendable through March 31, 2023 if the
Tranche Three funding has occurred, and (iii) revising the interest rate to the
greater of 9.65% and an amount equal to 9.65% plus the prime rate minus 3.25%
(subject to a 15% cap). Principal payments are scheduled to commence on October
1, 2021, at the earliest, as described above. The interest rate as of March 31,
2021 was 9.65%.

Pursuant to the terms of the Loan Agreement, principal will be repaid in equal
monthly installments following the conclusion of the interest-only period. We
may prepay all of the outstanding principal and accrued interest under the Loan
Agreement, subject to a prepayment charge up to 3.0% in the first year following
the closing of the 2020 Loan Amendment, decreasing to 2.0% in year two and 1.0%
in year three. We are obligated to make an end-of-term payment of (i) 6.95% of
the aggregate amount of loan funding received under the Loan Agreement on the
earlier of the maturity of the loans or the date on which we prepay the
outstanding loan balance in full, and (ii) an approximate $0.8 million payment
due on the earlier of July 1, 2021 or the date on which we prepay the
outstanding loan balance in full.

The Loan Agreement includes (i) a financial covenant that we maintain minimum
unrestricted cash positions of $10.0 million through the date the Second Tranche
funding is received, $15.0 million through the date the Third Tranche funding is
received and $10.0 million thereafter through the maturity of the Loan
Agreement, and (ii) an operating covenant that we achieve greater than or equal
to 75% of our forecasted net product revenues from our sales of tivozanib over a
6-month trailing period, as defined and measured on a monthly basis, commencing
upon the earlier to occur of (x) the Third Tranche funding and (y) the month of
April 2022. The Loan Agreement also includes various other affirmative and
negative covenants, including covenants to deliver certain financial reports; to
maintain insurance coverage; and to refrain from transferring assets, incurring
additional indebtedness, engaging in mergers or acquisitions, paying dividends
or making other distributions, making investments, creating liens, and suffering
a change in control, in each case subject to certain exceptions.

On February 1, 2021, we entered into the 2021 Loan Amendment. The 2021 Loan
Amendment increased the aggregate principal amount of loans available under the
2020 Loan Facility from up to $35.0 million to up to $45.0 million following FDA
approval of FOTIVDA. The 2021 Loan Amendment also (i) increased Tranche Two
funding upon achieving Performance Milestone I from $10.0 million to $20.0
million, (ii) increased the amount of net product revenues from sales of FOTIVDA
required for us to achieve Performance Milestone II from $20.0 million to $35.0
million, and changed the deadline for achieving Performance Milestone II from
December 31, 2021 to April 1, 2022, and (iii) increased the amount of
unrestricted cash required for us to satisfy the minimum financial covenant
during the period between receiving Tranche Two funding and Tranche Three
funding from $10.0 million to $15.0 million. In connection with the 2021 Loan
Amendment, we incurred approximately $0.1 million in loan issuance costs paid
directly to Hercules, which are accounted for as a loan discount.

On March 11, 2021, we completed the $20.0 million drawdown of Tranche Two
funding under the 2021 Loan Amendment that was made available in connection with
the achievement of Performance Milestone I upon FDA approval of FOTIVDA on March
10, 2021. The achievement of Performance Milestone I extended the interest-only
period by twelve months from September 30, 2021 to September 30, 2022 and
increased the amount of unrestricted cash required for us to satisfy the minimum
financial covenant during the period between receiving Tranche Two funding and
Tranche Three funding from $10.0 million to $15.0 million.

As of March 31, 2021, the total principal balance was $35.0 million, principal
payments are scheduled to commence on October 1, 2022 and the corresponding
end-of-term payments under the 2020 Loan Facility, in the aggregate amount of
approximately $2.4 million, are due upon the current loan maturity date of
September 1, 2023. The unamortized discount to be recognized over the remainder
of the loan period was approximately $2.6 million and $1.2 million as of March
31, 2021 and December 31, 2020, respectively. Per the 2017 Loan Agreement, the
end-of-term payment of approximately $0.8 million continues to be due on July 1,
2021.

Obligations under the Loan Agreement are secured by substantially all of our
assets, excluding intellectual property. The Loan Agreement provides that
certain events shall constitute a default by us, including failure by us to pay
amounts under the Loan Agreement when due; breach or default in the performance
of any covenant under the Loan Agreement by us, subject to certain cure periods;
our insolvency and certain other bankruptcy proceedings involving us; our
default of obligations involving indebtedness in excess of $500,000; and the
occurrence of an event or circumstance that would have a material adverse effect
upon our business.

We have determined that the risk of subjective acceleration under the material
adverse events clause included in the Loan Agreement is remote and, therefore,
have classified the outstanding principal amount in long-term liabilities based
on the timing of scheduled principal payments. As of March 31, 2021, 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 Agreement. We
do not believe that there has been a material adverse change as defined in the
Loan Agreement.



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Public Offering - March 2021

On March 26, 2021, we completed an underwritten public offering of 6,900,000
shares of our common stock, including the full exercise by the underwriters of
their option to purchase an additional 900,000 shares, at the public offering
price of $8.00 per share for gross proceeds of approximately $55.2 million. The
net offering proceeds to us were approximately $51.6 million after deducting
underwriting discounts and commissions and estimated offering expenses payable
by us.

Public Offering - June 2020

On June 19, 2020, we completed an underwritten public offering of 9,725,000
shares of our common stock, including the partial exercise by the underwriters
of their option to purchase an additional 1,225,000 shares, at the public
offering price of $5.25 per share for gross proceeds of approximately
$51.1 million. Three stockholders each beneficially holding more than 5% of our
voting securities, including an entity affiliated with New Enterprise Associates
and two other stockholders purchased an aggregate of 4,503,571 shares in this
offering at the same public offering price per share as the other investors. At
such time, entities affiliated with New Enterprise Associates (collectively)
beneficially held more than 5% of our voting securities. The net offering
proceeds to us were approximately $47.7 million after deducting underwriting
discounts and commissions and estimated offering expenses payable by us.

Sales Agreement with SVB Leerink ($22 Million Availability Future Stock Sales)

In February 2018, we entered into the SVB Leerink Sales Agreement with SVB
Leerink 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 2020 Shelf, as defined below. 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 SVB Leerink Sales Agreement. We sold 470,777
shares, 1,251,555 shares, 1,070,175 shares and 330,688 shares pursuant to the
SVB Leerink Sales Agreement, resulting in approximate proceeds net of
commissions of $10.3 million, $7.5 million, $5.9 million and $3.4 million in the
fourth quarter of 2018, February 2019, November 2020 and March 2021,
respectively. As of March 31, 2021, approximately $22.2 million was available
for issuance in connection with future stock sales pursuant to the SVB Leerink
Sales Agreement.

Universal Shelf Registration Statement

On November 9, 2020, we filed a shelf registration statement on Form S-3 with
the SEC, which covers the offering, issuance and sale of up to $300.0 million of
our common stock, preferred stock, debt securities, warrants and/or units, or
the 2020 Shelf. The 2020 Shelf (File No. 333-249982) was declared effective by
the SEC on November 18, 2020 and was filed to replace our then existing shelf
registration statement, which was terminated. As of March 31, 2021, there was
approximately $213.0 million available for future issuance of our common stock,
preferred stock, debt securities, warrants and/or units.

Public Offering - April 2019 (Offering Warrant Expiration - April 8, 2021)

In April 2019, we completed an underwritten public offering of 2,173,913 shares
of our common stock and warrants to purchase an aggregate of 2,500,000 shares of
our common stock, which we refer to herein as the Offering Warrants, including
warrants to purchase an aggregate of 326,086 shares of our common stock sold
pursuant to the underwriter's partial exercise of its overallotment option, at
the public offering price of $11.40 per share and $0.10 per warrant for gross
proceeds of approximately $25.0 million. The Offering Warrants were immediately
exercisable upon issuance at an exercise price of $12.50 per share, subject to
adjustment in certain circumstances, and expired two years from the date of
issuance on April 8, 2021. Any Offering Warrants that had not been exercised for
cash prior to their expiration were to be automatically exercised via cashless
exercise on the expiration date. The shares and warrants were issued separately
and were separately transferable. An entity affiliated with New Enterprise
Associates purchased 434,782 shares and warrants to purchase an aggregate of
434,782 shares in this offering at the same public offering price per share as
the other investors. At such time, entities affiliated with New Enterprise
Associates (collectively) beneficially held more than 5% of our voting
securities. The net offering proceeds to us were approximately $22.8 million
after deducting underwriting discounts and commissions and estimated offering
expenses payable by us.

In March 2021, Offering Warrants exercisable for 247,391 shares of common stock
had been exercised, for approximately $3.1 million in cash proceeds, and
Offering Warrants exercisable for 2,252,609 shares of our common stock were
outstanding as of March 31, 2021. On April 8, 2021, all of the remaining
2,252,609 Offering Warrants expired and no shares of our common stock were
issued via automatic cashless exercises of unexercised warrants on the date of
expiration as the $12.50 exercise price was greater than our closing stock price
of $7.01 on April 8, 2021.

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Private Placement / PIPE Warrants (PIPE Warrant Expiration - Scheduled on May 16, 2021)

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 1,764,242 units, at a price of
$9.65 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 $10.00
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 54,402 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 March 31, 2021, PIPE Warrants exercisable for 1,683,933
shares of common stock were outstanding, at an exercise price of $10.00 per
share, with a scheduled expiration date of May 16, 2021.

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 commercialize FOTIVDA in the
United States and develop our clinical stage assets and, ultimately, upon our
ability to create shareholder value.

On March 10, 2021, the FDA approved FOTIVDA in the United States for the
treatment of adult patients with relapsed or refractory advanced RCC following
two or more prior systemic therapies. We anticipate that we will continue to
incur significant operating expenses for the foreseeable future as we
commercialize FOTIVDA in the United States and continue our planned development
activities for our clinical stage assets. Our future product revenues will
depend upon the size of markets in which FOTIVDA, and any future products, have
received approval, and our ability to achieve sufficient market acceptance,
reimbursement from third-party payers and adequate market share for FOTIVDA and
any future products in those markets. The likelihood of our long-term success
must be considered in light of the expenses, difficulties and potential delays
that may be encountered in the development and commercialization of new
pharmaceutical products, competitive factors in the marketplace and the complex
regulatory environment in which we operate. Absent the realization of sufficient
revenues from product sales to support our cost structure, we may never attain
or sustain profitability. We may require substantial additional funding to
advance our pipeline of clinical stage assets, and the timing and nature of
these activities will be conducted subject to the availability of sufficient
financial resources.

During the three months ended March 31, 2021, we received approximately $78.0
million in equity and loan funding, including approximately $51.6 million in net
proceeds from the sale of approximately 6.9 million shares of our common stock
in an underwritten public offering in March 2021, approximately $19.9 million in
new loan funding pursuant to the 2020 Loan Amendment and 2021 Loan Amendment
with Hercules, net of transaction costs, approximately $3.4 million in net
proceeds from the sale of approximately 0.3 million shares of our common stock
in March 2021 pursuant to our SVB Leerink Sales Agreement, and approximately
$3.1 million in proceeds from the exercise of Offering Warrants.

We believe that our $121.4 million in cash and cash equivalents as of March 31,
2021, along with net product revenues from the commercial launch of FOTIVDA in
the United States, would enable us to maintain our current operations for a
period of at least 12 months following the filing of this Quarterly Form-10Q.

In 2021, we anticipate commercial operating expenses will be approximately $40.0
million, gross margins will be in the mid-to-high 80th percentile, research and
development expenses will be approximately $40.0 million in support of our
existing pipeline plans, and general and administrative expenses will remain at
the level incurred in the first quarter of this year.

However, there are numerous risks and uncertainties associated with research,
development and commercialization of pharmaceutical products, including, without
limitation, risks related to our ability to generate product revenue from sales
of FOTIVDA in the United States, which became commercially available in the
United States on March 22, 2021. Accordingly, our future funding requirements
may vary from our current expectations and will depend on many factors,
including, but not limited to:

• the cost of commercialization activities of FOTIVDA in the United States

and any of our product candidates that may be approved for sale, including

marketing, sales and distribution costs;

• the cost of manufacturing FOTIVDA in the United States, our product

candidates and any additional products we may successfully commercialize;

• 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;


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• 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 Loan Agreement, or under any other agreements with third parties;

  • the cost and outcome of any legal actions against us;

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

        our future products, if any;


  • general economic, industry and market conditions; and


  • the impact of COVID-19 on our operations, business and prospects.


We may require substantial additional funding to continue to advance our
pipeline of clinical stage assets. 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 product 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 funding to advance our pipeline of
clinical stage assets, whether on terms that are acceptable to us, or at all or
if we were to default under the Loan Agreement, and Hercules accelerated the
then remaining principal payments and fees due under the loan, 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.

Contractual Obligations and Commitments

There have been no additional material changes to our contractual obligations
and commitments outside the ordinary course of business from those disclosed in
our Annual Report on Form 10-K for the year ended December 31, 2020 filed with
the SEC on March 16, 2021, except as discussed below.

On March 11, 2021, we completed the $20.0 million drawdown of Tranche Two
funding under the 2021 Loan Amendment with Hercules that was made available in
connection with the achievement of Performance Milestone I upon FDA approval of
FOTIVDA on March 10, 2021. The achievement of Performance Milestone I extended
the interest-only period by twelve months from September 30, 2021 to September
30, 2022. For more information, see "Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources -Hercules Loan Facility" below, as well as Note 6, "-Hercules
Loan Facility" of the Notes to our consolidated financial statements, each
included elsewhere in this Quarterly Report on Form 10-Q.

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.

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