Form 8-K AVEO PHARMACEUTICALS For: Jan 06

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 8-K

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CURRENT REPORT

Pursuant to Section�13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January�6, 2015

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AVEO Pharmaceuticals, Inc.

(Exact Name of Registrant as Specified in Charter)

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Delaware	�	001-34655	�	04-3581650
(State or Other Jurisdiction of Incorporation)	�	(Commission File Number)	�	(IRS Employer Identification No.)

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650 East Kendall Street Cambridge, Massachusetts	�	02142
(Address of Principal Executive Offices)	�	(Zip Code)

Registrant�s telephone number, including area code: (617)�299-5000

(Former Name or Former Address, if Changed Since Last Report)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

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�	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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�	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

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�	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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�	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item�2.05.

COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES.

(d)

On January�6, 2015, the Board of Directors (the �Board�) of AVEO Pharmaceuticals, Inc. (the �Company�) approved a strategic restructuring of the Company that will eliminate the Company�s internal research function and align the Company�s resources with the Company�s future strategic plans.

As part of this restructuring, the Company will eliminate approximately two-thirds of the Company�s workforce, or 40 positions across the organization. The Company expects the restructuring to be substantially completed by January�15, 2015 and to be fully completed by March�31, 2015. The Company currently expects to incur total restructuring charges of approximately $4.5 million, consisting of severance and benefit costs associated with the targeted staff reductions, which will be included in its results of operations for the first quarter of 2015. The Company is continuing to review the potential impact of the restructuring, and is unable to estimate any additional restructuring costs or charges at this time. If the Company subsequently determines that it will incur additional major costs and restructuring charges, it will amend this Current Report on Form 8-K with respect to such determination. The reduction in force is expected to reduce compensation expenses by approximately $6 million in 2015 and will reduce the Company�s facilities requirement by up to 80% of its current space, including the elimination of lab and vivarium needs.

The full text of the press release announcing the restructuring is attached as Exhibit 99.1 to this Current Report and is incorporated herein by reference.

Item�5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

(b), (c), (d), (e)

On January�6, 2015, the Board approved a transition of the duties of Tuan Ha-Ngoc, whereby he ceased acting as President and Chief Executive Officer of the Company effective as of such date and assumed the role of Executive Advisor until January�31, 2015 (the �Separation Date�). On January�6, 2015, he also assumed the role of Chairman of the Board. In connection with this transition, the Company entered into a Transition and Separation Agreement with Mr.�Ha-Ngoc, whereby on the Separation Date Mr.�Ha-Ngoc will resign as Executive Advisor and his employment will cease. Mr. Ha-Ngoc will be entitled to previously disclosed severance benefits on the Separation Date. Following the Separation Date, Mr.�Ha-Ngoc will continue to serve as Chairman of the Board in accordance with the terms of the Company�s by-laws. Mr.�Ha-Ngoc will receive cash compensation in connection with his service on the Board consistent with the Company�s Board compensation policy for non-employee directors. In connection with the transition, Mr.�Ha-Ngoc�s outstanding stock option awards will continue to vest for so long as he continues to serve on the Board and will continue to be exercisable until the earlier of the date that is three months following the date on which he ceases providing services (including as a director) to the Company and the expiration date of the applicable option award. On January�6, 2015, the independent members of the Board of Directors (the �Independent Board Members�), following discussion of the recommendation of the Compensation Committee, also elected to continue Mr.�Ha-Ngoc�s current annual salary through the Separation Date and to make him eligible for a 2015 annual cash incentive award prorated through the Separation Date.

On January�6, 2015, the Board also appointed Henri Termeer, an independent member of the Board, as lead outside director of the Board.

On January�6, 2015, the Board also appointed Michael Bailey, currently Chief Business Officer of the Company and a named executive officer, to act as President and Chief Executive Officer of the Company and a director of the Company, effective as of such date. Upon assumption of the role of President and Chief Executive Officer, Mr.�Bailey will also act as the Company�s principal financial officer. Mr.�Bailey, age 49, joined the Company in September 2010 and served as the Chief Commercial Officer until June 2013 at which time he became the Company�s Chief Business Officer. Prior to joining the Company, Mr.�Bailey served as Senior Vice President, Business Development and Chief Commercial Officer at Synta Pharmaceuticals from 2008 to September 2010. From 1999 to 2008, Mr.�Bailey worked at ImClone, leading their commercial organization, most recently as Senior Vice President of Commercial Operations. Prior to his role at ImClone, Mr.�Bailey managed the cardiovascular development portfolio at Genentech, Inc. from 1997 to 1999. Mr.�Bailey started his career in the pharmaceutical industry as part of Smith-Kline Beecham�s Executive Marketing Development Program, where he held a variety of commercial roles from 1992 to 1997, including sales, strategic planning, and product management. Mr.�Bailey received a B.S. in psychology from St. Lawrence University and an M.B.A. in international marketing from the Mendoza College of Business, University of Notre Dame.

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In connection with his appointment as Chief Executive Officer, the Company entered into a letter agreement with Mr.�Bailey. The agreement provides for an annual base salary of $425,000 and also provides that Mr.�Bailey is eligible for an annual bonus of up to 50% of his base salary, based on the achievement of performance goals as determined at the discretion of the Board. In addition, the Independent Board Members, upon the recommendation of the Compensation Committee, approved a grant to Mr.�Bailey of an option to purchase 900,000 shares of the Company�s common stock, which option will become exercisable in equal monthly installments over a period of four years as measured from January�6, 2015 and will have a per share exercise price equal to the closing sale price of the Company�s common stock on the NASDAQ Global Market on the date of grant. Mr.�Bailey will also receive $5,000 per month from the Company to cover commuting and housing expenses. Although the target annual cash incentive award level for Mr.�Bailey is specified in his letter agreement, the Compensation Committee and Independent Board Members have not yet determined the corporate and individual goals for the Company�s executive officers for the fiscal year ending December�31, 2015. The Company will report such goals in a future filing with the Securities and Exchange Commission once they are so determined. After the end of the 2015 fiscal year, the Compensation Committee and the Independent Board Members will evaluate the performance of the Company and each executive officer against such goals and will determine the annual cash incentive awards, if any, to be granted.

On January�7, 2015, the Company announced the departure of Jeno Gyuris, Chief Scientific Officer and named executive officer, from the Company effective as of January�15, 2015. In connection with his departure, Dr.�Gyuris signed a Release Agreement (�Release Agreement�) pursuant to which, in connection with, among other things, his commitment to provide strategic and scientific advice to the Company following his departure, the Company agreed to pay, upon such Release Agreement becoming effective, and in addition to previously-disclosed severance benefits, an amount equal to $137,799, which amount shall be paid as follows: (i)�$77,167 to be paid in a lump sum on the first payroll date following the effective date of the Release Agreement (such date, the �First Payment Date�) and (ii)�$60,632 to be paid in three equal monthly installments beginning on the one-month anniversary of the First Payment Date.

Additional information regarding the compensation of the Company�s named executive officers will be included in the Company�s proxy statement to be filed in connection with its 2015 annual meeting of stockholders.

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Item�8.01.

OTHER EVENTS.

On January�7, 2015, the Company issued a press release announcing the restructuring described in this Current Report on Form�8-K. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

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Item�9.01.

FINANCIAL STATEMENTS AND EXHIBITS.

(d)

The exhibit to this Current Report on Form 8-K is listed in the Exhibit Index attached hereto.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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AVEO Pharmaceuticals, Inc.
Date: January 6, 2015
By:	�	/s/ Joseph Vittiglio
	�	Joseph Vittiglio
	�	Senior Vice President and General Counsel

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EXHIBIT INDEX

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Exhibit No.	��	Description
99.1	��	Press Release issued by AVEO Pharmaceuticals dated January 7, 2015

Exhibit 99.1

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AVEO Announces Executive Transition and Corporate Restructuring

Michael P. Bailey Named President and Chief Executive Officer;

Tuan Ha-Ngoc Named Chairman of the Board

Company to Eliminate Internal Research Function to Align Corporate Resources with the Company�s Future Strategic Plans

CAMBRIDGE, Mass. � January�7, 2015 � AVEO Oncology (NASDAQ: AVEO) today announced that its Board of Directors has appointed Michael P. Bailey as the Company�s president and chief executive officer and has elected Mr.�Bailey as a director, effective today. Mr.�Bailey, who currently serves as chief business officer of AVEO, succeeds Tuan Ha-Ngoc, who will become chairman of AVEO�s board of directors. Current board chair, Henri A. Termeer, will become lead outside director.

�We thank Tuan Ha-Ngoc for his leadership of AVEO from its founding as a company. His legacy is one of building a strong scientific and business foundation, one which has produced a portfolio of promising assets which we believe have positioned the Company for future value creation,� said Mr.�Termeer. �As Tuan transitions to his new role, the Board has confidence in Michael Bailey�s ability to lead the Company and continue to execute a strategy to build shareholder value. Michael brings strong leadership skills coupled with extensive experience in corporate portfolio strategy, business development, commercial operations, clinical product development and business analytics, all of which will serve the Company well as it seeks to execute its strategy going forward. We are also pleased that the Company will continue to benefit from Tuan�s insights and experience in his new role as chairman of the Board.�

AVEO also announced today that it will eliminate the Company�s internal research function, as well as certain corporate support positions, to align corporate resources with the Company�s future strategic plans, focusing on advancement of its pipeline in the clinical setting. The restructuring, which includes departure of AVEO�s chief scientific officer, Jeno Gyuris, Ph.D., will result in a reduction of approximately two thirds of AVEO�s workforce, or 40 positions, leaving the Company with 20 full time positions. The restructuring will be substantially completed by January�15, 2015. AVEO expects that the related severance and outplacement charges of approximately $4.5 million incurred in connection with the restructuring will be included in its results of operations for the first quarter of 2015. The reduction in force is expected to reduce compensation expenses annually by approximately $6 million and will reduce AVEO�s facilities requirements by up to 80% of its current space, including the elimination of lab and vivarium needs.

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�Since its founding, AVEO has benefited significantly from research, making the decision to eliminate this function particularly difficult,� said Mr.�Bailey. �With our current pipeline, including AV-380, now past the research stage, it is critical that we focus on streamlining operations by aligning our current resources with our future needs. This change provides us with an opportunity to evaluate biomarker-driven clinical strategies and partnerships to advance our pipeline without continuing to incur internal research expense. I am honored to have been selected to lead AVEO�s efforts going forward.�

�It has been a privilege leading AVEO over the last 12 years, translating the Human Response Platform into multiple development programs,� said Mr.�Ha-Ngoc.��I would like especially to thank our research group and chief scientific officer Jeno Gyuris for their productive efforts, resulting in the development of ficlatuzumab, AV-203 and AV-380, as well as their initiatives to identify unique biomarkers for each of our programs, including tivozanib. We believe the potential of this pipeline creates a solid foundation for future value creation. Looking forward, I believe that Michael�s drive, strategic thinking and leadership skills are well-suited for AVEO�s long-term success.�

Mr.�Bailey joined AVEO in 2010 as its chief commercial officer, and in 2013, he was appointed chief business officer, assuming additional responsibilities including business development, program and alliance management and technical operations. Prior to joining AVEO, Mr.�Bailey was senior vice president, business development and chief commercial officer of Synta Pharmaceuticals. Prior to joining Synta, Mr.�Bailey led ImClone Systems� worldwide commercial organization. During his nine year tenure at ImClone he was responsible for commercial aspects for the planning and launch of ERBITUX� (cetuximab) across multiple indications as well as new product planning for the ImClone development portfolio, which included CYRAMZA� (ramucirumab) and necitumumab. In addition, Mr.�Bailey was a key member of the strategic leadership committees for ImClone and its North American and worldwide partnerships. Prior to joining ImClone, Mr.�Bailey managed the cardiovascular development portfolio at Genentech, Inc. and was a key member of their global commercial partnership teams. Mr.�Bailey started his career in the pharmaceutical industry as part of SmithKline Beecham�s executive marketing development program, where he held a variety of commercial roles, including sales, strategic planning, and product management. Mr.�Bailey received a B.S. in psychology from St. Lawrence University and an M.B.A. in international marketing from the Mendoza College of Business at the University of Notre Dame.

About AVEO

AVEO Oncology (NASDAQ: AVEO) is a biopharmaceutical company committed to developing targeted therapies through biomarker-driven insights to provide substantial improvements in patient outcomes where significant unmet medical needs exist. AVEO�s proprietary Human Response Platform� has delivered unique insights into cancer and related disease biology that are being leveraged in the clinical development of its therapeutic candidates. For more information, please visit AVEO�s website at www.aveooncology.com.

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Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements of AVEO within the meaning of The Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this press release are forward-looking statements. The words �anticipate,� �believe,� �estimate,� �expect,� �intend,� �may,� �plan,� �target,� �potential,� �objective,� �could,� �should,� �seek,� or the negative of these terms or other similar expressions, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among others, statements about the Company�s portfolio of assets for future growth; the Company�s strategy and ability to rebuild shareholder value; the Company�s estimated restructuring charges and realized cost reductions from the reduction in its facilities requirement; anticipated benefits from the restructuring; the opportunity to advance the Company�s pipeline, including through the biomarker-driven clinical strategy and partnerships; and the Company�s future growth and long-term success. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that AVEO makes due to a number of important factors, including risks relating to: AVEO�s ability to successfully implement and manage its restructuring and obtain the benefits it expects to derive from the reduction in its workforce and internal research functions; AVEO�s ability to execute on its business strategy and enter into and maintain new strategic partnerships and collaboration agreements; AVEO�s ability to successfully enroll and complete clinical trials of its product candidates; AVEO�s ability to demonstrate to the satisfaction of the FDA, or equivalent foreign regulatory agencies, the safety, efficacy and clinically meaningful benefit of its product candidates; AVEO�s ability to achieve and maintain compliance with all regulatory requirements applicable to its product candidates; AVEO�s ability to obtain and maintain adequate protection for intellectual property rights relating to its product candidates and technologies; developments and expenses related to AVEO�s ongoing shareholder litigation and SEC inquiry; AVEO�s ability to raise the substantial additional funds required to achieve its goals; unplanned capital requirements; adverse general economic and industry conditions; competitive factors; and those risks discussed in the section titled �Risk Factors� included in AVEO�s most recent Quarterly Report on Form 10-Q and in its other filings with the SEC. The forward-looking statements in this press release represent AVEO�s views as of the date of this press release. AVEO anticipates that subsequent events and developments will cause its views to change. However, while AVEO may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. You should, therefore, not rely on these forward-looking statements as representing AVEO�s views as of any date subsequent to the date of this press release.

Company, Media and Investor Contact:

David Pitts, Argot Partners

(212) 600-1902

[email protected]

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