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Aveo, SEC in talks on handling of drug trial

Company may face claim it failed to disclose FDA action

Tuan Ha-Ngoc, replaced in January as CEO, is now stepping down as chairman and director. CHARLIE MAHONEY FOR THE GLOBE/2012/CHARLIE MAHONEY FOR THE BOSTON G

Aveo Oncology is in talks to settle potential Securities and Exchange Commission claims stemming from its clinical studies of a kidney cancer drug candidate that was rejected more than two years ago.

The Cambridge company (formerly Aveo Pharmaceuticals Inc.) also said on Monday that Tuan Ha-Ngoc, who was chief executive during the kidney drug’s development but was replaced in January, is stepping down as chairman and leaving the board.

The board will be led by director Henri Termeer, a retired Genzyme Corp. chief executive.

Aveo said its discussions with the SEC concern “claims that the commission may bring against the company” that it violated securities laws by failing to disclose a 2012 recommendation by the Food and Drug Administration. The recommendation involved the design of clinical trials for tivozanib, which the FDA rejected on June 10, 2013.

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Six weeks earlier, at a meeting of an FDA advisory committee, the agency’s influential oncology chief, Richard Pazdur, had characterized Aveo’s clinical data as “confounding,” while other FDA staffers complained that the trial’s design made it difficult to interpret the findings — even though the drug candidate appeared to be effective in treating renal cell carcinoma.

Among the regulators’ criticisms was one about the large number of clinical trial patients from central and eastern Europe, where Aveo found it easier to enroll participants, and about the company’s decision to let patients who were given a rival drug at the outset of the trial switch to tivozanib in a later stage for humanitarian reasons. Such “crossovers” often occur in trials, but they typically allow patients taking an experimental drug to switch to an approved treatment.

By reversing that playbook, Aveo executives demonstrated confidence in their treatment, but made it difficult for regulators to evaluate the data, according to the FDA.

Shareholders filed lawsuits alleging that Aveo misled investors about guidance it had received from the FDA on the trial’s design, but the company had not disclosed a potential SEC settlement until Monday.

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Representatives of Aveo were not available for comment.

A spokeswoman for the SEC declined to comment about the discussions with Aveo.

The company, which once employed more than 160 people, has reduced its staff in stages and now has only about 20 employees.

Early this year, it eliminated its in-house research and development and replaced Ha-Ngoc with a new chief executive, Michael Bailey.

But Aveo continues to develop tivozanib and other drug candidates with outside partners. The company is planning to seek commercial approval of tivozanib in Europe and to begin a new late-stage trial in the United States early next year, it said on Monday.

Aveo’s shares, which traded at more than $20 apiece in July 2011, closed 0.8 percent higher on Monday at $1.24.


Robert Weisman can be reached
at robert.weisman@globe.com.
Follow him on Twitter @GlobeRobW.