As part of a plan to tighten its belt, biopharmaceutical firm Aveo Oncology has agreed to terminate the lease for its headquarters in Cambridge, MA. The troubled firm says the termination will reduce its existing lease obligations by $110 million. Aveo plans to vacate the unused portions of its premises at 650 East Kendall St. immediately and will exit the remaining occupied portions within twelve months. It will also pay its landlord BMR-650 E Kendall B LLC a termination fee of approximately $7.8 million upon the execution of the agreement, and another $7.8 million payable over the subsequent nine months.
Aveo says it has also amended its debt financing facility with Hercules Technology Growth Capital. Under the amendment, the company received a new $10 million loan on top of an outstanding principal of $11.6 million from an existing loan agreement. In conjunction with the new loan, the firm issued a warrant to purchase an aggregate of 608,696 shares of Aveo’s common stock at a price of $1.15 per share.
“Maximizing our financial strength and flexibility is a key component of Aveo's overall strategy, and success in amending our debt facility gave us the ability to terminate our lease for unused office and research space as part of our continued efforts to reduce operating costs,” Aveo's president and CEO Tuan Ha-Ngoc said in a statement. “Together, these agreements simplify our capital commitments and provide greater operating flexibility. This allows us to continue to execute on our strategy, which is to focus our internal resources to advance AV-380 in cancer cachexia while leveraging partner resources to further the development of our pipeline.”
Back in February, Aveo announced the termination of its three-year collaboration with Astellas Pharma to codevelop tivozanib (ASP4130); Astellas pulled the plug on the partnership after tivozanib produced disappointing results in clinical trials. The firm also laid off 62% of its staff back in June of 2013.