David Johnston, the former chief financial officer of AVEO Oncology, was found guilty of misleading investors about the company’s kidney cancer drug, Tivozanib. Under new leadership, AVEO aims to seek U.S. approval for its kidney cancer drug early next year.
David Johnston, the former chief financial officer of Cambridge, Mass.-based AVEO Oncology, was found guilty of misleading investors about the company’s kidney cancer drug, Tivozanib, the Boston Globe reported this morning.
According to the report, Johnston misled investors in the company about the likely approval of the kidney cancer drug, despite the fact that the U.S. Food and Drug Administration had raised concerns about the safety profile of the drug. Two years ago, AVEO was forced to pay a federal fine of $4 million to settle similar complaints. When the U.S. Securities and Exchange Commission leveled that fine against the company, it said that AVEO raised $53 million in its stock’s initial public offering in January 2013, despite the FDA’s 2012 recommendation for an additional trial. The SEC said AVEO understood the FDA concerns and went so far as to “design a second trial and present trial designs to the FDA” – a trial that was never conducted. The FDA ultimately rejected Tivozanib in 2013.
Johnston wasn’t the only AVEO executive charged in the fraud. The company’s former chief executive, Tuan Ha-Ngoc and chief medical officer William Slichenmyer were also charged in the scheme. The Globe reported that the government “obtained final judgments against Ha-Ngoc and Slichenmyer in March.” The two former executives were ordered to pay civil penalties of $80,000 and $50,000, respectively, the Globe said.
The company did not release a public statement following the guilty verdict. The Globe reported that the directors of the SEC’s division of enforcement said the trial outcome “makes clear that a company and its officers are required to be honest in their public communications, including about matters as critical as communications with regulators about the approval of a key product.”
While the charges against the company have been put to rest, the development of Tivozanib has not. Earlier this month AVEO reported that the drug hit the mark in a Phase III trial. The drug is being tested as a potential treatment for highly refractory advanced or metastatic renal cell carcinoma. Tivozanib met its primary endpoint of demonstrating a statistically significant benefit in progression-free survival. AVEO said tivozanib demonstrated a 44 percent improvement in median PFS and 26 percent reduction in risk of progression or death in dosed patients. Median progression-free survival was 5.6 months for tivozanib compared to 3.9 months for sorafenib, the company said.
AVEO said it intends to submit a New Drug Application to the FDA within the next six months. Tivozanib has been approved for the treatment of adult patients with advanced renal cell carcinoma (RCC) in the European Union plus Norway and Iceland. In those markets, it is sold under the brand name of Fotivda.
