Avalo Q2 2024 Financial Results and Business Updates

Avalo Therapeutics, Inc. recently provided an update on its business progress and financial performance for the second quarter of 2024. The company highlighted significant strides in its clinical programs and leadership expansions.

Dr. Garry Neil, CEO and Chairman of the Board, emphasized the rapid advancements made towards initiating the Phase 2 LOTUS Trial for AVTX-009 in hidradenitis suppurativa (HS). He also welcomed Dr. Mittie Doyle, appointed as Chief Medical Officer, and Paul Varki, appointed as Chief Legal Officer, to the leadership team. Dr. Neil believes their expertise will be instrumental as the company aims to start the LOTUS Trial and evaluate a second indication by the latter half of the year.

Program Developments and Milestones:

AVTX-009: This is an anti-IL-1β monoclonal antibody (mAb) designed to treat inflammatory diseases. Avalo is focusing on developing AVTX-009 for hidradenitis suppurativa. In July 2024, the Investigational New Drug Application (IND) for treating HS was activated, allowing Avalo to begin its Phase 2 LOTUS Trial. The company plans to enroll the first patient by the second half of 2024. Additionally, Avalo intends to explore at least one other chronic inflammatory condition for AVTX-009.

Financial Performance:

As of June 30, 2024, Avalo held $93.4 million in cash and cash equivalents. Net cash used in operating activities for the first half of 2024 was $22.5 million, which includes a $7.5 million milestone payment to AlmataBio, Inc. Avalo anticipates that its current cash reserves will support operations until 2027.

For the six months ending June 30, 2024, Avalo reported a net loss of $22.8 million, a $4.7 million increase compared to the same period in 2023. The company's total operating expenses rose by $25.3 million, primarily due to a $27.6 million expense related to acquired in-process research and development (IPR&D) from the acquisition of AlmataBio, Inc. This increase in expenses was partially mitigated by a $21.7 million rise in other income, largely attributed to changes in the valuation of the warrant liability.

Financial Statements:

Avalo's consolidated balance sheets indicate significant growth in assets from December 31, 2023, to June 30, 2024. The company’s cash and cash equivalents increased from $7.4 million to $93.4 million. Despite a rise in current liabilities from $4.6 million to $96.4 million, the company's long-term financial outlook remains positive, supported by anticipated cash runway into 2027.

Operational Highlights:

During the second quarter, Avalo's product revenue was non-existent compared to $643,000 in the same period in 2023. However, operating expenses increased due to higher costs associated with product sales, research and development, and general administrative activities. The company also recognized significant expenses related to acquired in-process research and development.

About Avalo Therapeutics:

Avalo Therapeutics is a clinical-stage biotechnology company focused on treating immune dysregulation. Its flagship product, AVTX-009, targets inflammatory diseases. The company also has two other drug candidates: quisovalimab (an anti-LIGHT mAb) and AVTX-008 (a BTLA agonist fusion protein).

About AVTX-009:

AVTX-009 is a humanized monoclonal antibody that binds to interleukin-1β (IL-1β) and neutralizes its activity. IL-1β is a key driver in the inflammatory process, implicated in various autoimmune and inflammatory diseases. The inhibition of IL-1β is believed to be effective in treating hidradenitis suppurativa and other inflammatory conditions.

About the LOTUS Trial:

The LOTUS Trial is a Phase 2 randomized, double-blind, placebo-controlled study evaluating two dose regimens of AVTX-009 in approximately 180 adults with moderate to severe hidradenitis suppurativa. The primary endpoint is achieving a Hidradenitis Suppurativa Clinical Response (HiSCR75) at Week 16. Participants will be randomized to receive one of two doses of AVTX-009 or a placebo.

About Hidradenitis Suppurativa:

Hidradenitis suppurativa is a chronic skin condition marked by painful nodules and abscesses predominantly occurring in areas such as the armpits and groin. Affecting 0.2-1.7% of the global population, HS often goes undiagnosed or misdiagnosed. Genetic, hormonal, and environmental factors contribute to its pathogenesis. Given IL-1β’s role in the inflammatory process underlying HS, targeting IL-1β is considered a promising therapeutic approach.

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