AVEO Pharmaceuticals (NASDAQ:AVEO) Soars on Cancer Drug Deal

Shares of AVEO Pharmaceuticals (NASDAQ:AVEO) soared in after hours trading on news they're partnering with Astellas Pharma for the cancer treatment drug tivozanib.

AVEO will get paid $125 million upfront in the deal, and if the drug reaches certain development and regulatory milestones, they could get a total of $575 million from Astellas (including the $125 million).

It doesn't stop there though, as another $780 million is on the table if certain sales milestones are reached, making the deal potentially worth $1.3 billion.

Other terms of the partnership are the two companies will share expenses and divide the profits on an equal basis in the European and North American markets.

Outside of those mature markets, Astellas will take care of development and marketing.

Assuming approval in the U.S., Aveo will get a royalty of 10 percent on all sales there.

The $125 million upfront payment entails a $75 million pay out for licensing and 450 million for funding of research.

Competitive drugs already approved to treat renal cell carcinoma, are Pfizer's (PFE) Sutent and Nexavar. Tivozanib users show they survive an average of 14.8 months after use, while approved drugs extend survival by less than a year.

AVEO was trading after hours at $16.99, gaining $3.11, or 22.41 percent.