Avalo Snags Former Eli Lilly Asset and $185M in Major Pipeline Pivot

29 Mar 2024
Phase 2AcquisitionPhase 1Phase 3Clinical Trial Failure
Pictured: Close-up of a skin lesion in a patient with hidradenitis suppurativa/iStock, krblokhin Avalo Therapeutics made a significant strategic pipeline decision Wednesday, acquiring AlmataBio and focusing on the biotech’s ex-Eli Lilly hidradenitis suppurativa candidate over its existing assets. Prior to the deal, Avalo was advancing a pipeline led by an inflammatory bowel disease drug candidate. Quisovalimab, an anti-LIGHT antibody, and an BTLA agonist fusion protein remain part of Avalo’s pipeline but are now listed as “under strategic review.” The focus is on getting the acquired anti-IL-1β antibody AVTX-009 to a Phase II readout in the chronic skin condition hidradenitis suppurativa (HS). Investors have stepped up to bankroll Avalo’s goal of reporting topline results in the indication in 2026. Commodore Capital and TCGX co-led a private placement in the biotech with assists from BVF Partners, Deep Track Capital, OrbiMed, Petrichor and RA Capital Management. The placement is worth up to $185 million, $115.6 million of which the investors are providing upfront. “We believe that HS is a multi-billion-dollar commercial opportunity and that AVTX-009 has the potential to be best-in-class and best-in-indication because of its target, half-life and potency, which may allow for strong efficacy and convenient dosing,” Avalo CEO Garry Neil said in a statement. Avalo expects the upfront money to fund its operations into 2027. As such, the money will enable the biotech to show how AVTX-009 performs in HS in a Phase II trial. Avalo contends the molecule has a high probability of success in the indication. That belief is based on data generated by other developers of IL-1β drug candidates. AbbVie is running a Phase II clinical trial of the anti-IL-1α/β antibody lutikizumab in patients with HS. The drugmaker published data from the study and committed to further development early in 2024. While AbbVie’s success partly derisks AVTX-009, it also means Avalo is up against a leading drugmaker that has advanced deeper into the clinic. Avalo’s asset is different from lutikizumab in that it only targets IL-1β. As Avalo has said, clinical evidence suggests anti-IL-1α therapy is not effective in HS. The evidence comes from a Johnson & Johnson candidate that failed a Phase II clinical trial. Eli Lilly originally developed AVTX-009 but then offloaded the asset to AlmataBio. Avalo is taking control of the molecule by paying AlmataBio shareholders $15 million in stock and $7.5 million in cash. The deal also includes a $5 million milestone payment tied to the dosing of the first patient in Phase II. Avalo will pay a further $15 million when it doses the first patient in a Phase III trial. Nick Paul Taylor is a freelance pharmaceutical and biotech writer based in London. He can be reached on LinkedIn.
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