[Fierce Pharma] LG Chem picks up Aveo and its kidney cancer drug Fotivda for $566M

Aveo Oncology took a circuitous route on its way to gaining FDA approval for its kidney cancer drug Fotivda.

Now with Aveo’s sale to LG Chem, the Korean company hopes to have better luck developing Fotivda and Aveo’s other oncology candidates.

On Tuesday, the companies revealed the purchase for what amounts to $566 million. LG Chem paid $15 per share, a 43% premium from Aveo's price at close on Monday afternoon. In response to the news, the Aveo’s shares were up 40% to $14.70 on Tuesday.

The deal will take three to six months to complete, the companies said.

Making it more attractive for LG Chem was a notification Aveo recently received that its patent for Fotivda—due to expire in 2028—could extend all the way to 2039.

“We believe that this potentially extended IP may have sealed the deal as it could be worth an incremental $12 per share,” wrote SVB analyst Andrew Berens in a note to clients.

 Aveo’s run to the finish line with Fotivda was somewhat of a marathon after it filed for approval in 2012. The journey included investor lawsuits, an SEC investigation and FDA rejection. When the regulator finally approved Fotivda in March of last year, the nod surprised analysts who questioned the drug’s credentials..

Fotivda generated sales of $39 million in 2021. After a $25 million performance in the second quarter of this year, Aveo stuck with its 2022 revenue projection of $100 million to $110 million.