$AVEO is raising cash…surprised? Not really. It was matter of necessity. I first wrote about them in an post last month and thought that a financing was coming, though I thought they would take advantage of a somewhat slower summer season to announce a deal.

On their most recent 10Q they reported $232.6M cash, which includes a $125M upfront payment from Astellas (net $97.6M to them). As part of their guidance, they estimated that they would have $125M at the end of 2011, which would take them through 2012. Simply stated, by the end of this year, they will have 1-yr of cash.

(I still can’t figure out where the burn is going, though @maverickNY suggested that $AVEO is conducting a tremendous amount of biomarker research, which could contribute towards higher R&D costs – anyone know how much big biotech spends here? What about in-house antibody production in disposable units for testing – could this be a factor?)

The announcement while surprising is understandable, as no one wants to raise when they have to raise; better to raise when you can. Can one assume that their models for tivo, suggest fair value or close to fair at present, for them not to bank on a run-up into P3 tivo data (expected 4Q11)? or is it simply better to be prudent and raise without the pressure of pending data? or how about a skeptical bear – an alarming safety/efficacy signal has manifested?

Math. Assuming another $125M cash burn in 2013 – they’ll also need sales and marketing support for launching tivo in 2013 – they have reached their goal:

Centocor Ortho Biotech partnership, raised $15M, and with today’s financing:

5.75M shares x $17.50/share = $100.6M gross,  $94.4M net
862.5K over-allotment shares x $17.50/share = $15M gross, $14M net

Total: $123.4M, pretty darn close to estimated 2013 cash needs. Throw in some potential milestones and other deals, and they are well covered.

Plus, no one says they can’t raise cash again when P3 tivo data is released either.

Miscellaneous

Updated share count (from today’s prospectus, Centocor alliance and financing):

35,913,276 shares outstanding (3-31-11)
3,779,674 options @ $7.59
311,841 warrants @ $8.87
438,340 shares issued to Centocor (5-31-11)
5,750,000 issued, financing (6-15-11)
862,500 over-allotment shares, financing (6-15-11)

FD there are 47,055,631 shares, with options and warrants, well in the money

Milestones (not inclusive)

4Q11 (revised; delayed from mid-11): P3 TIVO-1 topline results
YE11 $125M cash
1Q12E File tivozanib NDA
2012 Topline data P2 ficlatuzumab
4Q12-1Q13E Tivozanib PDUFA
YE12E $123M cash with today’s financing
1H13E Tivozanib launch

While $AVEO is out of my target range, I still like tivo and the company seems to be on a roll.

On a side note: I guess if $ZIOP reports $124M cash 1Q11 so that they can run a P3 and get them through 2012, then if you are $AVEO, with tivo under your belt, you gotta have more!