Avalo Reports First Quarter 2024 Financial Results and Provides Business Updates
Avalo Therapeutics, Inc. (Nasdaq: AVTX) provided business updates and financial results for Q1 2024, highlighting progress on AVTX-009 trial in hidradenitis suppurativa, cash position of $110 million, and plans for future drug development. The company reported a net loss of $121.3 million, attributed to warrant fair value and acquisition expenses.
Avalo made significant progress towards initiating the Phase 2 trial of AVTX-009 in hidradenitis suppurativa.
The company secured $110 million in cash as of March 31, 2024, with funds expected to last into 2027.
Avalo plans to develop AVTX-009 in additional inflammatory indications, expanding its drug portfolio.
Avalo reported a net loss of $121.3 million for Q1 2024, mainly due to warrant fair value exceeding gross proceeds and acquisition expenses.
The company recognized a $79.3 million loss related to warrant fair value and a $27.5 million IPR&D expense from the acquisition of AlmataBio, Inc.
Insights
Upon review of Avalo Therapeutics' Q1 2024 financials, several key elements stand out. The company closed a significant private placement, enhancing their cash position to
The reported net loss of
Regarding the cash used for acquiring AlmataBio, the
Lastly, for potential investors, the dilutive effect of increased share count, as indicated by the net loss per share data, should be taken into consideration as it impacts shareholder value.
From a medical research perspective, Avalo's focus on their Phase 2 trial of AVTX-009 in hidradenitis suppurativa and the advancement of their anti-IL-1β mAb holds potential clinical significance. Hidradenitis suppurativa is a chronic, inflammatory skin condition with limited treatment options, signifying an unmet medical need. If successful, this could represent a significant market opportunity for Avalo and provide value for stakeholders.
However, topline data is not expected until 2026, indicating a long development runway. Thus, the investment in such early-stage clinical trials could either eventually pay off handsomely for patient investors or result in sunk costs if the trials do not meet their end points. The strategic review of other programs like quisovalimab also suggests possible reprioritization of the pipeline, which is not unusual in the biotech industry.
Investors should also be cognizant of the risks associated with drug development, which can include potential regulatory hurdles, efficacy and safety concerns in clinical trials and competitive pressures from alternative therapies.
- Topline results from planned Phase 2 trial of AVTX-009 in hidradenitis suppurativa expected in 2026
- Cash on hand of approximately
$110 million as of March 31, 2024 with expected cash runway into 2027
WAYNE, Pa. and ROCKVILLE, Md., May 13, 2024 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (Nasdaq: AVTX), today announced business updates and financial results for the first quarter of 2024.
“Over the past month we have made considerable progress toward initiating our planned Phase 2 trial of AVTX-009 in hidradenitis suppurativa. Our experienced team has been working closely with subject matter experts on trial enabling activities, and we plan to have the trial underway this year,” said Dr. Garry Neil, Chief Executive Officer and Chairman of the Board. “Our main focus remains on the initiation of the Phase 2 trial in hidradenitis suppurativa. Upon trial initiation, we plan to expand our focus to include the evaluation and announcement of a second indication, as well as pursuing the development of a next generation anti-IL-1β mAb.”
Program Updates and Milestones:
- AVTX-009: Anti-IL-1β monoclonal antibody (mAb) targeting inflammatory diseases.
- Avalo is pursuing the development of AVTX-009 in hidradenitis suppurativa and expects topline data from its planned Phase 2 trial in hidradenitis suppurativa in 2026.
- In addition to hidradenitis suppurativa, Avalo plans to develop AVTX-009 in at least one other chronic inflammatory indication.
- Next Generation anti-IL-1β mAb.
- Avalo is pursuing a next generation anti-IL-1β with an extended half-life.
- Quisovalimab (AVTX-002): Anti-LIGHT mAb targeting immune-inflammatory diseases.
- Avalo is conducting a strategic review of the quisovalimab program.
- AVTX-008: B and T Lymphocyte Attenuator (BTLA) agonist fusion protein targeting immune dysregulation disorders.
- Avalo is conducting a strategic review of the AVTX-008 program.
First Quarter 2024 Financial Update:
As of March 31, 2024, Avalo had
For the three months ended March 31, 2024, Avalo generated a net loss of
Consolidated Balance Sheets
(In thousands, except share and per share data)
| March 31, 2024 | December 31, 2023 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 110,177 | $ | 7,415 | ||||
| Other receivables | 35 | 136 | ||||||
| Prepaid expenses and other current assets | 997 | 843 | ||||||
| Restricted cash, current portion | 4 | 1 | ||||||
| Total current assets | 111,213 | 8,395 | ||||||
| Property and equipment, net | 1,882 | 1,965 | ||||||
| Goodwill | 10,502 | 10,502 | ||||||
| Restricted cash, net of current portion | 131 | 131 | ||||||
| Total assets | $ | 123,728 | $ | 20,993 | ||||
| Liabilities, mezzanine equity and stockholders’ (deficit) equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 916 | $ | 446 | ||||
| Accrued expenses and other current liabilities | 7,383 | 4,172 | ||||||
| Warrant liability | 194,901 | — | ||||||
| Contingent consideration | 12,500 | — | ||||||
| Total current liabilities | 215,700 | 4,618 | ||||||
| Royalty obligation | 2,000 | 2,000 | ||||||
| Deferred tax liability, net | 162 | 155 | ||||||
| Derivative liability | 5,670 | 5,550 | ||||||
| Other long-term liabilities | 1,281 | 1,366 | ||||||
| Total liabilities | 224,813 | 13,689 | ||||||
| Mezzanine equity: | ||||||||
| Series C Preferred Stock— Preferred Stock authorized at March 31, 2024 and December 31, 2023, respectively; 22,358 and 0 shares of Series C Preferred Stock issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 11,457 | — | ||||||
| Series D Preferred Stock— Stock authorized at March 31, 2024 and December 31, 2023, respectively; 1 and 0 shares of Series D Preferred Stock issued and outstanding at March 31, 2024 and December 31, 2023, respectively | — | — | ||||||
| Series E Preferred Stock— Stock authorized at March 31, 2024 and December 31, 2023, respectively; 1 and 0 shares of Series E Preferred Stock issued and outstanding at March 31, 2024 and December 31, 2023, respectively | — | — | ||||||
| Stockholders’ (deficit) equity: | ||||||||
| Common stock— 2024 and December 31, 2023; 1,034,130 and 801,746 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 1 | 1 | ||||||
| Additional paid-in capital | 343,881 | 342,437 | ||||||
| Accumulated deficit | (456,424 | ) | (335,134 | ) | ||||
| Total stockholders’ (deficit) equity | (112,542 | ) | 7,304 | |||||
| Total liabilities, mezzanine equity and stockholders’ (deficit) equity | $ | 123,728 | $ | 20,993 | ||||
The consolidated balance sheets as of March 31, 2024 and December 31, 2023 have been derived from the reviewed and audited financial statements, respectively, but do not include all of the information and footnotes required by accounting principles accepted in the United States for complete financial statements.
Consolidated Statements of Operations
(In thousands, except per share data)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenues: | ||||||||
| Product revenue, net | $ | — | $ | 475 | ||||
| Total revenues, net | — | 475 | ||||||
| Operating expenses: | ||||||||
| Cost of product sales | (80 | ) | 551 | |||||
| Research and development | 2,116 | 6,008 | ||||||
| Acquired in-process research and development | 27,538 | — | ||||||
| General and administrative | 3,193 | 2,708 | ||||||
| Total operating expenses | 32,767 | 9,267 | ||||||
| (32,767 | ) | (8,792 | ) | |||||
| Other expense: | ||||||||
| Excess of warrant fair value over private placement proceeds | (79,276 | ) | — | |||||
| Private placement transaction costs | (9,220 | ) | — | |||||
| Change in fair value of derivative liability | (120 | ) | (180 | ) | ||||
| Interest income, net | 100 | (949 | ) | |||||
| Other expense, net | — | (26 | ) | |||||
| Total other expense, net | (88,516 | ) | (1,155 | ) | ||||
| Loss before taxes | (121,283 | ) | (9,947 | ) | ||||
| Income tax expense | 7 | 8 | ||||||
| Net loss and comprehensive loss | $ | (121,290 | ) | $ | (9,955 | ) | ||
| Net loss per share of common stock, basic and diluted1 | $ | (141 | ) | $ | (204 | ) | ||
1 Amounts for prior periods presented have been retroactively adjusted to reflect the 1-for-240 reverse stock split effected on December 28, 2023.
The unaudited consolidated statements of operations for the three months ended March 31, 2024 and 2023 have been derived from the reviewed financial statements, but do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
About AVTX-009
AVTX-009 is a humanized monoclonal antibody (IgG4) that binds to interleukin-1β (IL-1β) with high affinity and neutralizes its activity. IL-1β is a central driver in the inflammatory process. Overproduction or dysregulation of IL-1β is implicated in many autoimmune and inflammatory diseases. IL-1β is a major, validated target for therapeutic intervention. There is evidence that inhibition of IL-1β could be effective in hidradenitis suppurativa and a variety of inflammatory diseases in dermatology, gastroenterology, and rheumatology.
About quisovalimab (AVTX-002)
Quisovalimab is a fully human monoclonal antibody (mAb), directed against human LIGHT (Lymphotoxin-like, exhibits Inducible expression, and competes with Herpes Virus Glycoprotein D for Herpesvirus Entry Mediator (HVEM), a receptor expressed by T lymphocytes). There is increasing evidence that the dysregulation of the LIGHT-signaling network which includes LIGHT, its receptors HVEM and LTβR and the downstream checkpoint BTLA, is a disease-driving mechanism in autoimmune and inflammatory reactions in barrier organs. Therefore, we believe reducing LIGHT levels can moderate immune dysregulation in many acute and chronic inflammatory disorders. Quisovalimab previously demonstrated proof of concept in COVID-19 induced acute respiratory distress syndrome including reduction in mortality and respiratory failure, as well as a positive signal in patients with Crohn’s Disease.
About AVTX-008
AVTX-008 is a fully human B and T Lymphocyte Attenuator (BTLA) agonist fusion protein in the IND-enabling stage. AVTX-008 is differentiated by having specific binding to BTLA, with no binding to LIGHT or CD160. AVTX-008 also has high-serum stability and solubility.
About Avalo Therapeutics
Avalo Therapeutics is a clinical stage biotechnology company focused on the treatment of immune dysregulation. Avalo’s lead asset is AVTX-009, an anti-IL-1β mAb, targeting inflammatory diseases. Avalo’s pipeline also includes quisovalimab (anti-LIGHT mAb) and AVTX-008 (BTLA agonist fusion protein).
For more information about Avalo, please visit www.avalotx.com.
Forward-Looking Statements
This press release may include forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond Avalo’s control), which could cause actual results to differ from the forward-looking statements. Such statements may include, without limitation, statements with respect to Avalo’s plans, objectives, projections, expectations and intentions and other statements identified by words such as “projects,” “may,” “might,” “will,” “could,” “would,” “should,” “continue,” “seeks,” “aims,” “predicts,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “potential,” or similar expressions (including their use in the negative), or by discussions of future matters such as: the intended use of the proceeds from the private placement; integration of AVTX-009 into our operations; drug development costs, timing of trial results and other risks, including reliance on investigators and enrollment of patients in clinical trials; reliance on key personnel; regulatory risks; general economic and market risks and uncertainties, including those caused by the war in Ukraine and the Middle East; and those other risks detailed in Avalo’s filings with the Securities and Exchange Commission, available at www.sec.gov. Actual results may differ from those set forth in the forward-looking statements. Except as required by applicable law, Avalo expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Avalo’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.
For media and investor inquiries
Christopher Sullivan, CFO
Avalo Therapeutics, Inc.
ir@avalotx.com
410-803-6793
or
Chris Brinzey
ICR Westwicke
Chris.brinzey@westwicke.com
339-970-2843
FAQ
What is the stock symbol of Avalo Therapeutics, Inc.?
The stock symbol of Avalo Therapeutics, Inc. is AVTX.
What was the net loss reported by Avalo for Q1 2024?
Avalo reported a net loss of $121.3 million for the first quarter of 2024.
What is the primary focus of Avalo's current drug development efforts?
Avalo's main focus is on initiating the Phase 2 trial of AVTX-009 in hidradenitis suppurativa.
How much cash did Avalo have on hand as of March 31, 2024?
As of March 31, 2024, Avalo had $110 million in cash and cash equivalents.
What led to the increase in net loss for Avalo in Q1 2024?
The increase in net loss was primarily driven by the excess of warrant fair value over private placement proceeds and acquisition expenses.
