AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) Is Heading Into A Major Catalyst

AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) is a company that we've come back to on numerous occasions in the past here at Insider Financial.The company is one that we believe has considerable long-term potential and, for the past 12 months at least, this belief has flown in the face of many of our competitor outlets – Fool, Street, etc.Despite these latter entities pointing towards long-term devaluation, AVEO has lived up to our expectations and currently trades for $3.08 a share – up 24% over the last 90 days and a massive 450% year to date. AVEO Daily ChartDuring October, however, the company has corrected somewhat and currently trades at an around 20% discount to early month highs of four dollars apiece.We think this discount might be an opportunity to pick up some cheap shares ahead of a potential major catalyst very near term and, additionally, we don't think this opportunity is going to last very long. This is a company that has flagged up on the screeners of a large portion of the market over the last few months and it can only be a matter of time before these traders and investors recognize the disparity between share price and inherent value and, on this recognition, buy into Aveo in an attempt to gain exposure to the upcoming revaluation.So what are we looking at as a near-term catalyst that can get this one turned around and moving up towards its "real" valuation?One of the primary reasons that this company has had a bad time over the last 12 months (in terms of market perception, not stock price) is that many believed that its lead development asset, a drug called Fotivda, would fail to pick up regulatory approval in its respective target markets.The company was going after a European approval first followed by a regulatory submission in the US.We actually put forward an argument for a European approval earlier this year and, over the summer, this argument proved valid. The European Medicines Agency (EMA), which is the European version of the FDA in the US, green-lighted the asset and AVEO was away.This regulatory approval was one of the primary drivers behind the company's strength over the last few months and it transformed AVEO from a late-stage development entity to a company with a product on-shelf and one that could start generating revenues to offset regulatory and operational expense.So with this approval in the bag, attention turned to the US program, which has the potential to be much larger in terms of revenues generated than does that of Europe. The drug in question, Fotivda, is targeting kidney cancer patients and around 1.6% of all US individuals will develop the cancer in their lifetime. That doesn't seem high, but when you're looking at a population of more than 320 million, it adds up quickly, especially against a backdrop of a relatively poor selection of effective treatments.And it's this US regulatory program that we see as being key to Fotivda being able to compound the recent upside action we have seen AVEO and the company continuing to appreciate from a market capitalization perspective into 2018 and beyond.Specifically, there is an ongoing phase 3 program in the US in this population and the data from this study is going to dictate near to medium sentiment. It's set to hit press during the first quarter of 2018, making the next few months pivotal in terms of long-term valuation for AVEO. If the numbers hit press as positive, they will support a strong regulatory submission to the FDA and, in turn, should underpin a regulatory approval in the region.Keep in mind that this is a binary event and, if the numbers are disappointing, the company will likely take a hit. With that said, however, the European approval mitigates this downside risk somewhat.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on AVEO, sign up below!Image courtesy of Ed Uthman via FlickrDisclosure: We have no position in AVEO and have not been compensated for this article.