Overall, the consensus for Astria stock is a “Strong Buy.” Among the 10 analysts covering the company, nine give it a “Strong Buy” rating, and one suggests holding. The average price target of $29.89 indicates potential 253.7% upside from current levels. Meanwhile, the high price target of $49 implies the stock could surge by as much as 479.8% over the next year.In the second quarter, research and development expenses rose to $25.9 million, reflecting higher costs related to Navenibart’s Phase 3 trial and o ...

Core Insights - Avalo Therapeutics, Inc. has expanded its leadership team with the appointment of Taylor Boyd as Chief Business Officer and Ashley Ivanowicz as Senior Vice President of Human Resources, marking a significant phase for the company as it advances its clinical programs [1][2] Leadership Appointments - Taylor Boyd brings nearly 15 years of experience in biotech business development, corporate finance, and investment banking, having previously led strategic initiatives at Abzena and Longboard Pharmaceuticals, including a $2.6 billion acquisition [2][3] - Ashley Ivanowicz has nearly 20 years of experience in HR within the biotech and pharmaceutical sectors, previously serving at Venatorx Pharmaceuticals and advising life sciences companies on people strategies [3][4] Strategic Focus - The company is currently advancing AVTX-009 through the LOTUS Phase 2 trial for hidradenitis suppurativa, with a data readout expected mid-next year [2][6] - Both new leaders are expected to enhance Avalo's ability to execute its mission of developing IL-1β therapies to address significant unmet medical needs [2][3] Stock Options - Avalo's Board of Directors has approved the grant of 275,000 stock options to Mr. Boyd and 100,000 stock options to Ms. Ivanowicz, which will vest over four years [4][5] Company Overview - Avalo Therapeutics is a clinical-stage biotechnology company focused on developing IL-1β-based treatments for immune-mediated inflammatory diseases, with its lead asset AVTX-009 currently in a Phase 2 clinical trial [6][7]

WAYNE, Pa., Sept. 22, 2025 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (Nasdaq: AVTX), a clinical stage biotechnology company fully dedicated to developing IL-1β-based treatments for immune-mediated inflammatory diseases, today announced the appointment of Kevin R. Lind to its Board of Directors. Mr. Lind brings more than 20 years of leadership in capital markets, strategy, business development and company building, including most recently guiding Longboard Pharmaceuticals to a multi-billion-dollar exit. “ ...

Summary of Avalo Therapeutics Conference Call - September 15, 2025 Company Overview - **Company**: Avalo Therapeutics (NasdaqCM:AVTX) - **Location**: Outside of Philadelphia - **Employee Count**: Approximately 30 - **Current Development**: AVTX-009 in Phase 2b for hidradenitis suppurativa (HS) with expectations for full enrollment by the end of 2025 and data release by mid-2026 [3][19] Core Points and Arguments - **Mechanism of Action**: AVTX-009 is a high-affinity human antibody targeting IL-1, a key driver of inflammation in HS, with IL-1 expression over 100-fold higher in HS lesions compared to normal skin [5][12] - **Clinical Validation**: Previous studies, including AbbVie's lutacisumab, demonstrated significant efficacy in HS, particularly in patients with TNF inhibitor failures [8][9] - **Efficacy Expectations**: Avalo believes AVTX-009 will show higher efficacy than lutacisumab due to its pure targeting of IL-1, higher affinity, and better pharmacokinetics [10][11][22] - **Phase 2b Study Design**: The study will include 222 patients across three arms (two active drug, one placebo) with a 16-week duration, focusing on HiSCR75 as the primary endpoint [17][18] - **Enrollment Status**: Enrollment is progressing well, with 75% completion reported, and confidence in full enrollment by fall 2025 [19] Competitive Landscape - **Market Dynamics**: The market is shifting from TNF inhibitors to IL-17 inhibitors, but there remains a need for alternative mechanisms like IL-1 targeting [20][21] - **Safety Profile**: IL-1 inhibitors are perceived favorably due to a lack of associated risks such as increased cancer or cardiovascular risks, making them attractive to physicians [21] Future Indications and Opportunities - **Expansion Plans**: Avalo is exploring potential indications beyond HS, including conditions like ulcerative colitis, rheumatoid arthritis, and crystal arthropathy [25][26][27] - **Cash Position**: Avalo reported $125 million in cash, sufficient to fund operations through 2028 and the Phase 2 data readout, with plans to raise funds for Phase 3 trials later [28] Additional Important Points - **Dosing Regimen**: The preferred dosing regimen for AVTX-009 is once a month, which is more favorable compared to the more frequent dosing required for lutacisumab [18] - **Statistical Analysis**: The company emphasizes the importance of proper statistical methods to avoid misinterpretation of efficacy data [24] This summary encapsulates the key insights from the conference call, highlighting Avalo Therapeutics' strategic focus on IL-1 targeting in HS and its broader implications in the therapeutic landscape.

Summary of Avalo Therapeutics FY Conference Call Company Overview - **Company**: Avalo Therapeutics (NasdaqCM:AVTX) - **Focus**: Development of AVTX-009, an anti-IL-1 beta monoclonal antibody for immunological disorders, specifically hidradenitis suppurativa (HS) [1][2] Industry Insights - **Market Potential**: The HS market is projected to exceed $10 billion by 2035, indicating substantial growth potential due to minimal penetration by biologics [5][18] - **Patient Demographics**: Approximately 1% of the U.S. population is affected by HS, with an estimated 3.5 million current patients, but fewer than 100,000 are receiving proper treatment [19] Core Product Insights - **Drug Profile**: AVTX-009 is positioned as a best-in-class drug with a high affinity for IL-1 beta, 15 times higher than AbbVie's luticizumab, and is currently in phase 2B trials [4][5][21] - **Clinical Trials**: The LOTUS trial is a three-arm study with 222 patients planned, focusing on HiSCR75 as the primary endpoint, with expected top-line data by mid-2026 [17][22] Competitive Landscape - **Comparison with Competitors**: Luticizumab, currently in phase 3, showed efficacy in a refractory population, but AVTX-009 aims to demonstrate superior efficacy due to its higher affinity and better pharmacokinetic properties [4][12][21] - **Other Treatments**: Current treatments for HS have shown limited efficacy, with many patients not benefiting substantially from existing therapies [11][12] Unmet Medical Need - **Patient Impact**: HS significantly affects quality of life, causing severe pain and social stigma, highlighting the urgent need for effective treatments [7][19] - **Treatment Lag**: There is traditionally a 12-year lag from initial presentation to effective treatment, which is decreasing due to better awareness and therapies [19] Financial Position - **Cash Runway**: Avalo Therapeutics has a strong financial position with cash expected to last into 2028, allowing for continued development without immediate fundraising needs [6][22] Future Directions - **Expansion Potential**: There are plans to explore additional indications for AVTX-009 in other IL-1 beta-driven diseases, supported by ongoing biomarker research [22] - **Regulatory Plans**: Following the phase 2 readout, the company plans to engage with the FDA for an end-of-phase 2 meeting and initiate phase 3 trials in 2027 [20][22] Conclusion - **Strategic Positioning**: Avalo Therapeutics is well-positioned in the dermatology and immunology space with a differentiated product profile and a significant market opportunity, driven by a strong scientific rationale and clinical data [21][22]

Group 1 - The article does not provide any specific company or industry insights, focusing instead on the author's qualifications and disclosures [1][2][3]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents Avalo Therapeutics, Inc.'s unaudited condensed consolidated financial statements and related notes for the periods ended June 30, 2025, and December 31, 2024 [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Avalo Therapeutics, Inc.'s unaudited condensed consolidated financial statements and related notes for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of Avalo Therapeutics, Inc.'s financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (in thousands): | Item | June 30, 2025 | December 31, 2024 | Change (2025 vs 2024) | | :-------------------------------- | :------------ | :---------------- | :-------------------- | | Cash and cash equivalents | $42,290 | $134,546 | $(92,256) | | Short-term investments | $70,972 | — | $70,972 | | Total current assets | $115,185 | $138,890 | $(23,705) | | Total assets | $126,583 | $150,732 | $(24,149) | | Total current liabilities | $9,259 | $6,960 | $2,299 | | Total liabilities | $22,009 | $17,700 | $4,309 | | Total stockholders' equity | $104,574 | $133,032 | $(28,458) | [Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20(Loss)%20Income) This section outlines Avalo Therapeutics, Inc.'s financial performance, including revenues, expenses, and net loss or income for the three and six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (in thousands, except per share data): | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total operating expenses | $19,316 | $9,575 | $33,984 | $42,341 | | Loss from operations | $(19,316) | $(9,575) | $(33,984) | $(42,341) | | Change in fair value of derivative liability | $(2,530) | $(5,040) | $(2,150) | $(5,160) | | Interest income, net | $1,102 | $1,039 | $2,249 | $1,138 | | Change in fair value of warrant liability | — | $112,046 | — | $112,046 | | Net (loss) income | $(20,765) | $98,463 | $(33,914) | $(22,827) | | Net (loss) income per share - basic | $(1.92) | $4.21 | $(3.18) | $(24.11) | | Net loss per share - diluted | $(1.92) | $(14.07) | $(3.18) | $(30.63) | - The company experienced a **significant shift** from net income of **$98.5 million** in Q2 **2024** to a net loss of **$20.8 million** in Q2 **2025**, **primarily due to** the absence of a large gain from the change in fair value of warrant liability recognized in the prior year[10](index=10&type=chunk) - For the six months ended June 30, **2025**, **net loss increased** to **$33.9 million** from **$22.8 million** in the prior year, despite a decrease in total operating expenses, **largely influenced by** the non-recurring warrant liability fair value changes in **2024**[10](index=10&type=chunk) [Condensed Consolidated Statements of Mezzanine and Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Mezzanine%20and%20Stockholders'%20Equity) This section details changes in Avalo Therapeutics, Inc.'s mezzanine and stockholders' equity for the six months ended June 30, 2025, and 2024 Changes in Stockholders' Equity (in thousands): | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Balance, December 31, prior year | $133,032 | $7,304 | | Issuance of common stock | $1 | $815 | | Vesting of Restricted Stock Units | $(510) | — | | Shares purchased through ESPP | $40 | — | | Stock-based compensation | $5,959 | $1,100 | | Unrealized loss on investments, net | $(34) | — | | Net loss | $(33,914) | $(22,827) | | Balance, June 30, current year | $104,574 | $(13,608) | - **Stockholders' equity decreased** from **$133.0 million** at December 31, **2024**, to **$104.6 million** at June 30, **2025**, **primarily due to** the net loss of **$33.9 million**, **partially offset by** stock-based compensation[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents Avalo Therapeutics, Inc.'s cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Cash Flows (in thousands): | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(20,847) | $(22,485) | | Net cash (used in) provided by investing activities | $(70,860) | $356 | | Net cash (used in) provided by financing activities | $(469) | $108,140 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(92,176) | $86,011 | | Cash, cash equivalents, and restricted cash at end of period | $42,520 | $93,557 | - The company experienced a **significant net decrease in cash**, cash equivalents, and restricted cash of **$92.2 million** for the six months ended June 30, **2025**, compared to a net increase of **$86.0 million** in the prior year, **primarily driven by** substantial purchases of investments and reduced financing activities[16](index=16&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements [1. Business](index=8&type=section&id=1.%20Business) This note describes Avalo Therapeutics, Inc.'s clinical-stage biotechnology focus, lead asset development, and financial sustainability - Avalo Therapeutics, Inc. is a clinical-stage biotechnology company focused on developing IL-1β-based treatments for immune-mediated inflammatory diseases, with its lead asset, AVTX-009, currently in a Phase **2** clinical trial for hidradenitis suppurativa (HS)[18](index=18&type=chunk) - The company has **incurred significant operating and cash losses** since inception, funding operations **primarily through** equity sales, out-licensing, and asset sales[20](index=20&type=chunk) - As of June 30, **2025**, Avalo had **$113.3 million** in cash and cash equivalents and short-term investments, which are **expected to fund operations for at least twelve months** from the filing date[20](index=20&type=chunk)[21](index=21&type=chunk) [2. Basis of Presentation and Significant Accounting Policies](index=8&type=section&id=2.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This note outlines the accounting principles, presentation basis, and significant policies used in preparing the financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP, with certain information condensed or omitted as permitted by SEC rules for interim reporting[22](index=22&type=chunk)[23](index=23&type=chunk) - In Q1 **2025**, the company **reclassified other receivables** into prepaid and other current assets to conform with current period presentation[25](index=25&type=chunk) - **All investments are classified as available-for-sale** as of June 30, **2025**, reported at fair value with unrealized gains/losses included in accumulated other comprehensive loss[31](index=31&type=chunk) - The FASB issued ASU **2023-09** (Income Tax Disclosures) and ASU **2024-03** (Disaggregation of Income Statement Expenses), with the company evaluating the impact of ASU **2024-03**[32](index=32&type=chunk)[33](index=33&type=chunk) [3. Asset Acquisition](index=10&type=section&id=3.%20Asset%20Acquisition) This note details the acquisition of AVTX-009 through the AlmataBio Transaction and its accounting treatment as an asset acquisition - On March **27**, **2024**, Avalo **acquired** AVTX-009 through the AlmataBio Transaction, structured as a stock-for-stock merger, resulting in the issuance of common stock and Series C Preferred Stock[34](index=34&type=chunk) - The **acquisition was treated as an asset acquisition**, with **substantially all consideration allocated to acquired in-process research and development (IPR&D)** for AVTX-009, **recognized as an operating expense**[36](index=36&type=chunk) AlmataBio Transaction Consideration and Acquired Assets (in thousands): | Item | Six Months Ended June 30, 2024 | | :---------------------------------------------------- | :----------------------------- | | Stock consideration | $12,272 | | Milestone payment due upon close of private placement | $7,500 | | Milestone payment due upon first patient dosed in Phase 2 trial | $5,000 | | Transaction costs | $2,402 | | **Total GAAP Purchase Price at Close** | **$27,174** | | Acquired IPR&D | $27,641 | | Cash | $356 | | Accrued expenses and other current liabilities | $(823) | | **Total net assets acquired and liabilities assumed** | **$27,174** | [4. Revenue](index=11&type=section&id=4.%20Revenue) This note discusses Avalo Therapeutics, Inc.'s revenue recognition policies and the expiration of its Millipred® license and supply agreement - The **license and supply agreement for Millipred® expired** on September **30**, **2023**, and Avalo recognized **no gross revenue from product sales** for the three and six months ended June 30, **2025**, or June 30, **2024**[38](index=38&type=chunk) - The company continues to monitor estimates for commercial liabilities related to Millipred®, including sales returns and profit share reconciliation, which could result in future expense or benefit[38](index=38&type=chunk) [5. Net (Loss) Income Per Share](index=12&type=section&id=5.%20Net%20(Loss)%20Income%20Per%20Share) This note explains the calculation of net loss per share for common stock and the treatment of anti-dilutive securities - **Net loss per share for common stock was computed using the two-class method**, with no allocation of undistributed losses to participating securities during net loss periods[39](index=39&type=chunk)[40](index=40&type=chunk) Net (Loss) Income Per Share (in thousands, except per share amounts): | Item | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | Net (loss) income | $(20,765) | $(33,914) | $98,463 | $(22,827) | | Basic net (loss) income per share | $(1.92) | $(3.18) | $4.21 | $(24.11) | | Diluted net (loss) income per share | $(1.92) | $(14.07) | $(3.18) | $(30.63) | | Weighted average common shares outstanding - basic | 10,829,760 | 10,673,200 | 1,034,130 | 946,756 | | Weighted average common shares outstanding - diluted | 10,829,760 | 10,673,200 | 7,653,302 | 4,402,640 | - Outstanding stock options, warrants, Series C Preferred Stock, and Restricted Stock Units were **excluded from diluted EPS calculations** for the three and six months ended June 30, **2025** and **2024**, as their inclusion would have been anti-dilutive[44](index=44&type=chunk) [6. Fair Value Measurements](index=14&type=section&id=6.%20Fair%20Value%20Measurements) This note describes the company's fair value hierarchy for financial instruments and changes in derivative and warrant liabilities - The company **measures fair value using a three-level hierarchy**, maximizing observable inputs. As of June 30, **2025**, money market funds were **Level 1**, U.S. Treasury securities were **Level 2**, and derivative liabilities were **Level 3**[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) Fair Value Measurements (in thousands): | Item | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 3 (June 30, 2025) | Total (June 30, 2025) | | :------------------------ | :---------------------- | :---------------------- | :---------------------- | :-------------------- | | Money market funds | $22,259 | — | — | $22,259 | | U.S. Treasury securities | — | $84,524 | — | $84,524 | | Derivative liability | — | — | $10,630 | $10,630 | | Item | Level 1 (December 31, 2024) | Level 2 (December 31, 2024) | Level 3 (December 31, 2024) | Total (December 31, 2024) | | :------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Money market funds | $133,148 | — | — | $133,148 | | Derivative liability | — | — | $8,480 | $8,480 | - The **derivative liability, related to the sale of economic rights, increased** from **$8.48 million** at December 31, **2024**, to **$10.63 million** at June 30, **2025**, with the change recognized in other (expense) income[51](index=51&type=chunk)[55](index=55&type=chunk) - The **warrant liability, classified as Level 3, was fully exercised** in Q4 **2024**, resulting in **no outstanding warrant liability** as of June 30, **2025**[60](index=60&type=chunk)[61](index=61&type=chunk) [7. Investments](index=18&type=section&id=7.%20Investments) This note provides details on Avalo Therapeutics, Inc.'s available-for-sale investments and the assessment of unrealized losses Available-for-Sale Investments (in thousands) as of June 30, 2025: | Item | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | | :---------------------- | :------------- | :--------------- | :---------------- | :--------- | | Money market funds | $22,259 | — | — | $22,259 | | U.S. Treasury securities | $84,558 | $2 | $(36) | $84,524 | | **Total** | **$106,817** | **$2** | **$(36)** | **$106,783** | - As of June 30, **2025**, the aggregate fair value of securities in an **unrealized loss position** for less than **twelve months** was **$59.1 million**, with the company considering these **losses temporary and having the intent and ability to hold securities until recovery**[64](index=64&type=chunk) [8. Leases](index=19&type=section&id=8.%20Leases) This note outlines Avalo Therapeutics, Inc.'s lease arrangements for office space, including terms and associated costs - Avalo leases administrative office space in Wayne, Pennsylvania (expiring Feb **2027**) and **early-terminated a lease** for Rockville, Maryland office space effective January **31**, **2026**, incurring a **$0.3 million** early termination fee[66](index=66&type=chunk)[67](index=67&type=chunk) Lease Information (in thousands): | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Right-of-use assets | $487 | $741 | | Lease liability, current | $482 | $568 | | Lease liability, non-current | $197 | $350 | | Total operating lease liabilities | $679 | $918 | | Weighted average remaining term | **1.5 years** | N/A | | Weighted average discount rate | **9.7%** | N/A | Operating Lease Cost (in thousands): | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $148 | $113 | $294 | $222 | [9. Accrued Expenses and Other Current Liabilities](index=20&type=section&id=9.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This note details the composition and changes in Avalo Therapeutics, Inc.'s accrued expenses and other current liabilities Accrued Expenses and Other Current Liabilities (in thousands): | Item | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Research and development | $2,891 | $1,625 | | Compensation and benefits | $2,143 | $2,883 | | General and administrative | $321 | $380 | | Commercial operations | $359 | $534 | | Royalty payment | $327 | $327 | | Lease liability, current | $482 | $568 | | **Total** | **$6,523** | **$6,317** | - **Total accrued expenses and other current liabilities increased** by **$206 thousand** from December **31**, **2024**, to June **30**, **2025**, **primarily driven by** an increase in research and development accruals[72](index=72&type=chunk) [10. Capital Structure](index=20&type=section&id=10.%20Capital%20Structure) This note describes Avalo Therapeutics, Inc.'s authorized and outstanding capital stock, recent equity financings, and ATM sales agreement - As of June 30, **2025**, Avalo had **200,000,000 shares** of common stock and **5,000,000 shares** of preferred stock authorized, with **10,837,356 common shares** and **24,696 Series C Preferred Stock shares** outstanding[9](index=9&type=chunk) - The March **2024** **private placement generated** **$115.6 million** in gross proceeds from the issuance of Series C Preferred Stock and warrants, with an additional **$69.4 million** from warrant exercises in Q4 **2024**[76](index=76&type=chunk) - Series C Preferred Stock, initially recognized outside permanent equity, **met equity classification** in Q4 **2024** after a contract amendment and is now a **component of permanent stockholders' equity**[80](index=80&type=chunk) - In June **2025**, the company **entered into an at-the-market (ATM) sales agreement** to **sell up to $75.0 million** of common stock, with **$7.3 million** in gross proceeds from sales subsequent to June 30, **2025**[84](index=84&type=chunk) [11. Stock-Based Compensation](index=22&type=section&id=11.%20Stock-Based%20Compensation) This note explains Avalo Therapeutics, Inc.'s stock-based compensation plans, expense recognition, and unrecognized compensation costs - The **2016** Fourth Amended Plan automatically increases its share reserve annually by **5%** of outstanding common and as-converted Series C Preferred Stock, with **1,768,393 additional shares** made available on January **1**, **2025**[87](index=87&type=chunk) Stock-Based Compensation Expense (in thousands): | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $1,116 | $219 | $2,418 | $488 | | General and administrative | $1,602 | $252 | $3,541 | $612 | | **Total** | **$2,718** | **$471** | **$5,959** | **$1,100** | - **Total stock-based compensation expense significantly increased** to **$5.96 million** for the six months ended June 30, **2025**, from **$1.1 million** in the prior year, **driven by** new option and RSU grants and headcount additions[88](index=88&type=chunk) - As of June 30, **2025**, there was **$24.8 million** of **unrecognized compensation cost** for stock options and **$3.6 million** for RSUs, expected to be recognized over weighted-average periods of **3.0 years** and **1.7 years**, respectively[91](index=91&type=chunk)[94](index=94&type=chunk) [12. Income Taxes](index=25&type=section&id=12.%20Income%20Taxes) This note discusses Avalo Therapeutics, Inc.'s income tax expense, valuation allowance, and the impact of new tax legislation - The company **recognized minimal income tax expense** for the three and six months ended June 30, **2025** and **2024**, **due to a significant valuation allowance** against deferred tax assets and current/prior period losses[100](index=100&type=chunk) - Avalo is currently **assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBB)** on its consolidated financial statements[101](index=101&type=chunk) [13. Commitments and Contingencies](index=25&type=section&id=13.%20Commitments%20and%20Contingencies) This note outlines Avalo Therapeutics, Inc.'s contractual obligations, including license agreements, milestone payments, and royalty obligations - Avalo is party to various license and development agreements with **future payment obligations**, including **up to $70.0 million** in development/regulatory milestones and **$650.0 million** in sales-based milestones to Lilly for AVTX-009, **plus tiered royalties**[105](index=105&type=chunk) - For quisovalimab (AVTX-002), Avalo is **not currently pursuing clinical development and is exploring strategic alternatives**, but has **potential milestone payments of up to $112.5 million** (development/regulatory) and **$75.0 million** (sales-based) to KKC, plus royalties[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - The company has **potential future milestone proceeds from out-licensed compounds** AVTX-301 (**up to $18.6 million** plus royalties from Alto), AVTX-406 (**up to $26.0 million** from ES), and the **800** Series assets (**up to $45.0 million** from AUG)[128](index=128&type=chunk)[132](index=132&type=chunk)[135](index=135&type=chunk) - Avalo has a **royalty obligation for AVTX-006 to certain related parties, recorded as a liability**, and may exercise a buyout option[139](index=139&type=chunk) [14. Segments](index=31&type=section&id=14.%20Segments) This note clarifies that Avalo Therapeutics, Inc. operates as a single segment and details its research and development expenses - The company **operates and manages its business as one operating segment**, with the CEO evaluating performance based on net loss and total assets[143](index=143&type=chunk)[144](index=144&type=chunk) - The **primary evaluation of success is the ability to progress research and development pipeline programs toward commercialization or opportunistic out-licensing**[144](index=144&type=chunk) Research and Development Expenses (in thousands): | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Nonclinical expenses | $179 | $195 | $262 | $347 | | Clinical expenses | $7,215 | $1,579 | $11,065 | $1,641 | | CMC expenses | $3,266 | $740 | $5,245 | $993 | | Internal expenses: Salaries, benefits and related costs | $2,181 | $1,810 | $4,030 | $3,134 | | Stock-based compensation expense | $1,116 | $219 | $2,418 | $488 | | Other | $117 | $58 | $175 | $113 | | **Total** | **$14,074** | **$4,601** | **$23,195** | **$6,716** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Avalo Therapeutics, Inc.'s financial condition, operational results, strategic focus, and liquidity for the three and six months ended June 30, 2025, compared to prior periods [Overview](index=33&type=section&id=Overview) This section provides a high-level summary of Avalo Therapeutics, Inc.'s strategic focus, lead asset development, and measures of success - Avalo Therapeutics is a clinical-stage biotechnology company focused on IL-1β-based treatments for immune-mediated inflammatory diseases, with its lead asset, AVTX-009, in a Phase **2** clinical trial for hidradenitis suppurativa (HS)[149](index=149&type=chunk) - The company's **2025** focus is on the operational execution of the Phase **2** LOTUS trial for AVTX-009 in HS, with **topline results expected in mid-2026**[150](index=150&type=chunk) - **Management's primary measure of success is the ability to advance its pipeline towards commercialization or opportunistically out-license rights**[151](index=151&type=chunk) [Recent Developments](index=34&type=section&id=Recent%20Developments) This section highlights key recent events, including board appointments, impacting Avalo Therapeutics, Inc.'s operations - In June **2025**, Dr. Rita Jain was **appointed to the Board of Directors, bringing extensive experience in clinical development and regulatory strategy**[153](index=153&type=chunk) [Liquidity](index=34&type=section&id=Liquidity) This section assesses Avalo Therapeutics, Inc.'s cash position, funding sources, and future capital needs to support operations - Avalo has **incurred significant operating and cash losses** since inception, **primarily funding operations through** equity sales, out-licensing, and asset sales[154](index=154&type=chunk) - As of June 30, **2025**, the company had **$113.3 million** in cash, cash equivalents, and short-term investments, **expected to fund operations for at least twelve months** from the filing date and into **2028**[154](index=154&type=chunk)[155](index=155&type=chunk) - **Future cash needs may be met through equity financings** (including an at-the-market program), out-licensing, strategic alliances, program sales, or M&A, with **potential for stockholder dilution**[155](index=155&type=chunk) [Our Strategy](index=34&type=section&id=Our%20Strategy) This section outlines Avalo Therapeutics, Inc.'s strategic objectives, pipeline advancement, and approach to product development and licensing - The company's **strategy focuses on advancing its pipeline**, particularly the Phase **2** LOTUS trial for AVTX-009 in HS, and exploring further indication expansion[156](index=156&type=chunk) - Strategic initiatives include acquiring or in-licensing targeted preclinical and clinical stage compounds for immune-mediated diseases and opportunistically out-licensing rights[156](index=156&type=chunk) - The **FDA approval process is complex, time-consuming, and expensive, with no guarantee of regulatory approval for products**[157](index=157&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section analyzes Avalo Therapeutics, Inc.'s financial performance, including operating expenses and other income/expense, for the reporting periods [Comparison of the Three Months Ended June 30, 2025 and 2024](index=35&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares Avalo Therapeutics, Inc.'s financial results for the three months ended June 30, 2025, against the same period in 2024 - **Cost of product sales was zero** for Q2 **2025**, down from **$0.3 million** in Q2 **2024**, as the company **ceased selling Millipred® in September 2023**[158](index=158&type=chunk) - **Research and development expenses increased** by **$9.5 million** to **$14.1 million** in Q2 **2025**, **primarily due to** a **$5.6 million** **increase in clinical expenses** for the Phase **2** LOTUS trial and a **$2.5 million** **increase in CMC expenses**[159](index=159&type=chunk)[160](index=160&type=chunk) - **General and administrative expenses increased** by **$0.7 million** to **$5.2 million** in Q2 **2025**, **driven by** a **$1.4 million** **increase in stock-based compensation**, **partially offset by** lower legal and consulting fees[164](index=164&type=chunk) - **Other (expense) income, net, shifted** from **$108.0 million** income in Q2 **2024** to **$1.4 million** expense in Q2 **2025**, **mainly due to** the absence of the **$112.0 million** gain from the change in fair value of warrant liability in the prior year[167](index=167&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=37&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares Avalo Therapeutics, Inc.'s financial results for the six months ended June 30, 2025, against the same period in 2024 - **Cost of product sales was zero** for YTD **2025**, down from **$0.3 million** in YTD **2024**[169](index=169&type=chunk) - **Research and development expenses increased** by **$16.5 million** to **$23.2 million** for YTD **2025**, **driven by** **$9.4 million** in clinical expenses and **$4.3 million** in CMC expenses for the AVTX-009 LOTUS trial[171](index=171&type=chunk) - **Acquired in-process research and development was zero** for YTD **2025**, compared to **$27.6 million** in YTD **2024** related to the AlmataBio Transaction[174](index=174&type=chunk) - **General and administrative expenses increased** by **$3.1 million** to **$10.8 million** for YTD **2025**, **primarily due to** a **$2.9 million** **increase in stock-based compensation**[175](index=175&type=chunk) - **Other income, net, decreased** by **$19.4 million** to **$0.09 million** for YTD **2025**, **mainly due to** the prior year's accounting impact of warrant liability changes and private placement transaction costs[178](index=178&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) This section details Avalo Therapeutics, Inc.'s cash flow activities and capital resources, highlighting changes in cash and equivalents - The company **primarily uses cash to fund AVTX-009 development and organizational infrastructure costs**[180](index=180&type=chunk) Summary of Cash Flows (in thousands): | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(20,847) | $(22,485) | | Net cash (used in) provided by investing activities | $(70,860) | $356 | | Net cash (used in) provided by financing activities | $(469) | $108,140 | | Net (decrease) increase in cash and cash equivalents | $(92,176) | $86,011 | - **Net cash used in operating activities decreased** to **$20.8 million** for YTD **2025**, from **$22.5 million** in YTD **2024**, **driven by** net loss **partially offset by** non-cash charges and changes in operating assets/liabilities[182](index=182&type=chunk) - **Net cash used in investing activities was $70.9 million** for YTD **2025** **due to** purchases of available-for-sale investments, a **significant shift from** **$0.4 million** provided in YTD **2024**[184](index=184&type=chunk) - **Net cash used in financing activities was $0.5 million** for YTD **2025**, a **substantial decrease from** **$108.1 million** provided in YTD **2024**, which included proceeds from a private placement[185](index=185&type=chunk)[186](index=186&type=chunk) [Critical Accounting Policies, Estimates, and Assumptions](index=40&type=section&id=Critical%20Accounting%20Policies,%20Estimates,%20and%20Assumptions) This section discusses the significant accounting policies, estimates, and assumptions underlying Avalo Therapeutics, Inc.'s financial statements - The **financial statements rely on estimates and assumptions** for items such as clinical trial accruals, stock-based compensation, fair value measurements, derivative liabilities, revenue recognition, and going concern assessment[187](index=187&type=chunk) - **No significant changes to critical accounting policies occurred** during the six months ended June 30, **2025**, except as described in Note **2**[187](index=187&type=chunk) [Off-Balance Sheet Arrangements](index=40&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms Avalo Therapeutics, Inc.'s lack of off-balance sheet arrangements as defined by SEC regulations - The company **does not have any off-balance sheet arrangements** as defined by SEC rules and regulations[188](index=188&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Avalo Therapeutics, Inc. is exempt from providing quantitative and qualitative disclosures about market risk due to its smaller reporting company status - Avalo Therapeutics, Inc. is **exempt from providing quantitative and qualitative disclosures about market risk** due to its status as a smaller reporting company[189](index=189&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of Avalo Therapeutics, Inc.'s disclosure controls and procedures and reports on changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=41&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section presents management's conclusion on the effectiveness of Avalo Therapeutics, Inc.'s disclosure controls and procedures - Management, including the principal executive and financial officers, **concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level** as of June 30, **2025**[190](index=190&type=chunk) [Changes in Internal Control Over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes in Avalo Therapeutics, Inc.'s internal control over financial reporting during the period - There were **no changes in internal control over financial reporting** during the period covered by this report that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[192](index=192&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section includes additional required information not covered in the financial statements, such as legal proceedings and risk factors [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference information on litigation from Note 13 to the unaudited condensed consolidated financial statements - **Information regarding legal proceedings is incorporated by reference** from Note **13** - Commitments and Contingencies, under the heading 'Litigation,' in the financial statements[194](index=194&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section states that Avalo Therapeutics, Inc.'s risk factors have not materially changed from its 2024 Annual Report on Form 10-K - The company's **risk factors have not materially changed** from those described in its Annual Report on Form **10-K** for the year ended December **31**, **2024**[195](index=195&type=chunk) - **Readers should carefully consider the factors discussed** in the **2024** **10-K**, as well as additional unknown or immaterial risks, which could adversely affect the business[195](index=195&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including agreements, plans, certifications, and interactive data files - **Key exhibits include** the Sales Agreement with TD Securities (USA) LLC, the Amended and Restated Non-Employee Director Compensation Plan, certifications from principal officers, and interactive data files (XBRL)[196](index=196&type=chunk) [SIGNATURES](index=44&type=section&id=SIGNATURES) This section contains the required signatures for the Quarterly Report on Form 10-Q, confirming its submission by Avalo Therapeutics, Inc.'s Chief Financial Officer - The **report was signed by Christopher Sullivan, Chief Financial Officer, on August 7, 2025, on behalf of Avalo Therapeutics, Inc**[203](index=203&type=chunk)

Exhibit 99.1 Avalo Reports Second Quarter 2025 Financial Results and Recent Business Updates WAYNE, PA, August 7, 2025 — Avalo Therapeutics, Inc. (Nasdaq: AVTX), a clinical stage biotechnology company fully dedicated to developing IL-1β-based treatments for immune-mediated inflammatory diseases, today announced business updates and financial results for the second quarter of 2025. "The team has made tremendous progress on the execution of the Phase 2 LOTUS trial in hidradenitis suppurativa (HS). We have enr ...

Core Insights - Avalo Therapeutics, Inc. is focused on developing IL-1β-based treatments for immune-mediated inflammatory diseases, with significant progress in the Phase 2 LOTUS trial for hidradenitis suppurativa (HS) [1][10] Recent Corporate Highlights and Upcoming Anticipated Milestones - The Phase 2 LOTUS trial has enrolled over 75% of the planned patients, with completion expected by year-end and top-line results anticipated in mid-2026 [2] - Rita Jain, M.D. has been appointed to the Board of Directors, bringing extensive experience in clinical development and regulatory strategy [5][6] Second Quarter 2025 Financial Update - As of June 30, 2025, the company reported cash and short-term investments of approximately $113 million, expected to fund operations into 2028 [5][6] - Research and development expenses for Q2 2025 were $14.1 million, an increase of $9.5 million from Q2 2024, primarily due to costs associated with the LOTUS trial [6][8] - General and administrative expenses were $5.2 million for Q2 2025, up $0.7 million from the same period in 2024 [6][8] - The net loss for Q2 2025 was $20.8 million, compared to a net income of $98.5 million in Q2 2024, largely due to a $109.5 million change in other expenses related to warrants from a prior private placement [6][9] Consolidated Balance Sheets - Total current assets as of June 30, 2025, were $115.2 million, down from $138.9 million as of December 31, 2024 [4][7] - Total assets decreased to $126.6 million from $150.7 million at the end of 2024 [7] Consolidated Statements of Operations - Total operating expenses for Q2 2025 were $19.3 million, compared to $9.6 million in Q2 2024 [8][9] - The loss from operations for Q2 2025 was $19.3 million, compared to a profit of $9.6 million in Q2 2024 [9]

AVTX-009 and HS Market - AVTX-009, an anti-IL-1β mAb, is a lead compound with potential for best-in-class and best-in-disease profile in hidradenitis suppurativa (HS)[7] - The HS market is expected to grow to over $10 billion by 2035[8] - Avalo is enrolling patients in a Phase 2 LOTUS trial for HS, with topline data expected in mid-2026[8] - AVTX-009 has 15x higher affinity than lutikizumab, potentially predictive of higher efficacy and less frequent dosing[10] Financials and Strategy - Avalo expects its cash runway to extend into 2028[8] - As of March 31, 2025, Avalo had approximately $125 million in cash[70] - As of March 31, 2025, Avalo's adjusted market capitalization was $284.5 million, based on an adjusted common share count of 35.5 million and a stock price of $8.01[70] IL-1β and AVTX-009 Advantages - IL-1β gene expression is up to 100x increased in HS lesions compared to healthy skin[26] - AVTX-009 is designed to target the inflammatory driver of Hidradenitis Suppurativa (HS) to address significant unmet need[15] - AVTX-009 has a subcutaneous bioavailability of 73% and a half-life of 19 days[35]