AVEO Oncology has announced plans to terminate the lease for its Cambridge headquarters.
The move is motivated by the company’s "plan to decrease operational expenses," according to a press release. AVEO will immediately vacate the unused portions of its premises at 650 East Kendall St. and will exit the remaining occupied portions of its premises within 12 months.
The company plans to relocate its headquarter in the Greater Boston area next year, the Boston Globe reported.
Under the terms of its amended lease agreement with BMR-650 E Kendall B LLC, AVEO will terminate its long-term lease dated May 9, 2012, in exchange for a termination fee of approximately $7.8 million due upon execution of the agreement, and $7.8 million payable over the subsequent nine months. Under these terms, the company reduces its existing lease obligations by $110 million.
AVEO laid off 140 employees in August 2013 after the FDA failed to approve its drug, the Globe reported.
AVEO has also amended its debt financing facility with Hercules Technology Growth Capital (HTGC). The company has received a new $10 million loan, which is in addition to an outstanding principal of $11.6 million from an existing loan agreement.
According to the press release, "Combined, these transactions do not impact the company’s prior financial guidance, with existing cash, cash equivalents and marketable securities providing resources to fund its operating plan into the fourth quarter of 2015 with an expected 2014 year-end cash balance of $50-55 million."
"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," Tuan Ha-Ngoc, president and CEO of AVEO, 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."
