Why Is Aravive Stock Sinking Today?

Aravive Inc (NASDAQ: ARAV) shares plunged after the company's Phase 3 AXLerate-OC trial evaluating the safety and efficacy of batiraxcept in platinum-resistant ovarian cancer did not meet its primary endpoint of progression-free survival (PFS) in the pre-specified subset of patients naïve to prior bevacizumab treatment. 

The trial did not show any difference between the two arms in the overall population (which included patients previously treated with bevacizumab). 

Bevacizumab is marketed as Avastin by Genentech, a Roche Holdings AG (OTC: RHHBY) unit.

The company will continue to evaluate the complete dataset and determine the next steps in developing batiraxcept.

"We are conducting additional analyses on the AXLerate-OC Phase 3 trial to further evaluate the results of this study and determine the best path forward with our two other planned indications in renal cell carcinoma and pancreatic cancer," said Gail McIntyre, President, and Chief Executive Officer. 

AXLerate-OC enrolled 366 patients, roughly 50% Avastin-naïveand the remaining Avastin-experienced. 

In the bevacizumab-naïve population (n=179), the median PFS in the batiraxcept plus paclitaxel arm was 5.4 months, compared to 5.4 months in the paclitaxel arm. 

In the overall population, the median PFS in the batiraxcept plus paclitaxel arm was 5.1 months, compared to 5.5 months in the paclitaxel arm. None of these differences were statistically different.

The safety profile of batiraxcept was as expected from previous studies. No new safety signals were identified.

William Blair analysts Andy Hsieh and Alexandra Ramsey have decided to downgrade Aravive shares to a Market Perform rating.

The analysts cite a lack of significant upcoming clinical milestones that could substantially change investors' perception of batiraxcept, coupled with the limited cash runway (approximately $18 million in unaudited cash by the end of the second quarter, expected to fund operations until early in the fourth quarter), 

The analysts acknowledge that the absence of a difference in progression-free survival (PFS) between Avastin-experienced and Avastin-naïve populations may be unexpected, the minimal clinical activity of batiraxcept observed in AXLerate diminishes confidence in its potential success in other indications. 

Price Action: ARAV shares are down 58.80% at $0.52 during the premarket session on the last check Thursday.