AVEO Pharmaceuticals Inc. (NASDAQ: AVEO) was leading the bulls in Monday’s session on news of an exclusive licensing agreement. The company announced a license agreement in which AVEO has granted EUSA Pharma European rights to tivozanib for the treatment of advanced renal cell carcinoma (RCC). The agreement also includes a number of additional territories outside North America, including South America and South Africa, and additional potential indications.

Under the terms of the agreement, EUSA Pharma will pay AVEO $2.5 million upfront and up to $394 million in potential payments and milestones, as well as a tiered royalty ranging from a low double-digit up to mid-20% on net sales of tivozanib in the agreement’s territories. A percentage of milestone and royalty payments received by AVEO are due to Kyowa Hakko Kirin as a sublicensing fee.

EUSA Pharma will further undertake and fund future regulatory and commercial activities to bring tivozanib to market and commercialize the product within the agreement’s territories.

Tivozanib is an oral, once-daily, investigational vascular endothelial growth factor (VEGF) tyrosine kinase inhibitor (TKI). It 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 evaluated in several tumors types, including renal cell, colorectal and breast cancers.

Lee Morley, CEO of EUSA Pharma, said:

Tivozanib has the potential to become an important new first line treatment for advanced renal cell carcinoma in Europe, and we look forward to submitting a Marketing Authorization Application in the coming months. As a recently established specialty pharma company, we have ambitious growth plans, and tivozanib is a strong strategic fit with our portfolio of marketed specialty products, as we increase our focus on oncology.

Michael Bailey, president and CEO of AVEO, added:

Our agreement with EUSA Pharma marks a critical step in the execution of our company strategy. Between our partnership with EUSA and our previous agreements with Ophthotech and Pharmstandard, we have a solid foundation to potentially generate near-term capital and long-term value for this important asset while retaining commercial rights to tivozanib in oncology in North America. These tivozanib partnerships collectively amount to over $35 million in potential payments over the next 18 months in addition to potential payments from our other licensed pipeline assets, which could provide substantial additional funding to support our tivozanib development strategy for North America. We look forward to working with the experienced commercial and regulatory team at EUSA Pharma as they seek to successfully commercialize tivozanib in Europe.

Shares of AVEO were trading up 30% at $1.34 Monday morning, with a consensus analyst price target of $3.00 and a 52-week trading range of $0.75 to $3.50.

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