Core Insights - Avalo Therapeutics, Inc. reported significant advancements in 2024, including the acquisition of AVTX-009, a monoclonal antibody targeting interleukin-1β, and the initiation of the Phase 2 LOTUS trial for hidradenitis suppurativa [2][5][9] Business Updates - The company acquired AVTX-009 in March 2024 and filed an IND application with the FDA, launching the Phase 2 LOTUS trial, with the first patient enrolled in October 2024 [2][5] - The primary focus for 2025 is executing the LOTUS trial, with topline data expected in 2026, while also exploring broader applications for AVTX-009 [2][5][6] - Jennifer Riley was appointed as Chief Strategy Officer to guide strategy and pipeline planning for HS and other inflammatory market opportunities [5][6] Financial Performance - As of December 31, 2024, Avalo had approximately $135 million in cash, expected to fund operations into at least 2027 [5][6] - Research and development expenses increased to $24.4 million in 2024, up from $13.8 million in 2023, primarily due to costs associated with the Phase 2 LOTUS trial [6][8] - The net loss for 2024 was $35.1 million, an increase from $31.5 million in 2023, driven by higher operating expenses [6][8] Key Financial Metrics - Cash and cash equivalents were $134.5 million as of December 31, 2024, compared to $7.4 million in 2023 [7] - Total revenues for 2024 were $441,000, down from $1.9 million in 2023 [8] - Basic net loss per share was $7.94 for 2024, compared to $113.58 for 2023 [8]

Company Overview - Avalo Therapeutics, Inc. is a clinical stage biotechnology company focused on the treatment of immune dysregulation [3] - The company's lead asset is AVTX-009, an anti-IL-1β monoclonal antibody targeting inflammatory diseases [3] - Avalo has two additional drug candidates: quisovalimab (anti-LIGHT monoclonal antibody) and AVTX-008 (BTLA agonist fusion protein) [3] Product Details - AVTX-009 is a humanized monoclonal antibody (IgG4) that binds to interleukin-1β (IL-1β) with high affinity and neutralizes its activity [4] - IL-1β is a central driver in the inflammatory process and is implicated in many autoimmune and inflammatory diseases [4] - Evidence suggests that inhibition of IL-1β could be effective in treating conditions such as hidradenitis suppurativa and various inflammatory diseases in dermatology, gastroenterology, and rheumatology [4] Upcoming Events - Management will participate in the TD Cowen 45th Annual Health Care Conference in Boston on March 3, 2025, at 3:10 pm ET [2] - The company will also engage in 1x1 and small group meetings at the Leerink Partners Global Healthcare Conference in Miami on March 12, 2025 [2] - Live webcasts and replays of these events will be available on the Avalo Therapeutics website [2]

Company Overview - Avalo Therapeutics, Inc. is a clinical stage biotechnology company focused on the treatment of immune dysregulation [3] - The company's lead asset is AVTX-009, an anti-IL-1β monoclonal antibody targeting inflammatory diseases [3] - Avalo has two additional drug candidates: quisovalimab (anti-LIGHT monoclonal antibody) and AVTX-008 (BTLA agonist fusion protein) [3] Product Details - AVTX-009 is a humanized monoclonal antibody (IgG4) that binds to interleukin-1β (IL-1β) with high affinity and neutralizes its activity [4] - IL-1β is a central driver in the inflammatory process, and its overproduction is implicated in many autoimmune and inflammatory diseases [4] - Evidence suggests that inhibition of IL-1β could be effective in treating hidradenitis suppurativa and various inflammatory diseases in dermatology, gastroenterology, and rheumatology [4] Upcoming Events - Garry A. Neil, M.D., CEO and Chairman of the Board, will present at the virtual Oppenheimer 35th Annual Healthcare Life Sciences Conference on February 11, 2025, at 10:00 a.m. ET [1] - A live webcast and replay of the presentation will be available on the Avalo Therapeutics website for at least 30 days [2]

Company Overview - Avalo Therapeutics, Inc. is a clinical stage biotechnology company focused on the treatment of immune dysregulation [3] - The company's lead asset is AVTX-009, an anti-IL-1β monoclonal antibody targeting inflammatory diseases [3] - Avalo has two additional drug candidates: quisovalimab (anti-LIGHT monoclonal antibody) and AVTX-008 (BTLA agonist fusion protein) [3] Product Details - AVTX-009 is a humanized monoclonal antibody (IgG4) that binds to interleukin-1β (IL-1β) with high affinity and neutralizes its activity [4] - IL-1β is a central driver in the inflammatory process, and its overproduction is implicated in many autoimmune and inflammatory diseases [4] - Evidence suggests that inhibition of IL-1β could be effective in treating hidradenitis suppurativa and various inflammatory diseases in dermatology, gastroenterology, and rheumatology [4] Upcoming Events - Garry A. Neil, M.D., CEO and Chairman of the Board, will present at the virtual Oppenheimer 35th Annual Healthcare Life Sciences Conference on February 11, 2025, at 10:00 a.m. ET [1] - A live webcast and replay of the presentation will be available on the Avalo Therapeutics website for at least 30 days [2]

Core Insights - Avalo Therapeutics has successfully raised a total of $185 million from a private placement, with $69.4 million coming from the full exercise of warrants issued in March 2024 [1][2] - The company is focused on advancing its Phase 2 LOTUS trial for AVTX-009, an anti-IL-1β monoclonal antibody, while also exploring additional inflammatory indications [2][4] Financial Overview - The gross proceeds from the warrant exercise amount to $69.4 million, with an exercise price of $5.796933 per share [2] - The total gross proceeds from the private placement transaction now stand at $185 million, ensuring a cash runway expected to last until at least 2027 [1][2] Company Profile - Avalo Therapeutics is a clinical-stage biotechnology company specializing in treatments for immune dysregulation, with its lead asset being AVTX-009 [3] - The company also has two additional drug candidates: quisovalimab and AVTX-008 [3] Product Information - AVTX-009 is a humanized monoclonal antibody targeting interleukin-1β (IL-1β), which plays a significant role in inflammatory diseases [4] - The drug is being evaluated for its efficacy in treating hidradenitis suppurativa and other inflammatory conditions [4][6] Clinical Trial Details - The LOTUS Trial is a Phase 2, randomized, double-blind, placebo-controlled study involving approximately 180 adults with moderate to severe hidradenitis suppurativa [5] - The primary endpoint is the proportion of subjects achieving a specific clinical response at Week 16, with various secondary objectives related to disease severity and patient-reported outcomes [5]

Company Overview - Avalo Therapeutics, Inc. is a clinical stage biotechnology company focused on the treatment of immune dysregulation [2] - The company's lead asset is AVTX-009, an anti-IL-1β monoclonal antibody targeting inflammatory diseases [2] - Avalo has two additional drug candidates: quisovalimab (anti-LIGHT monoclonal antibody) and AVTX-008 (BTLA agonist fusion protein) [2] Product Details - AVTX-009 is a humanized monoclonal antibody (IgG4) that binds to interleukin-1β (IL-1β) with high affinity and neutralizes its activity [3] - IL-1β is a central driver in the inflammatory process, and its overproduction is implicated in many autoimmune and inflammatory diseases [3] - Evidence suggests that inhibition of IL-1β could be effective in treating conditions such as hidradenitis suppurativa and various inflammatory diseases in dermatology, gastroenterology, and rheumatology [3] Upcoming Events - Garry A. Neil, M.D., CEO and Chairman of the Board, will present at the Stifel 2024 Healthcare Conference on November 18, 2024, at 3:35 PM ET [1] - He will also present at the Piper Sandler 36th Annual Healthcare Conference on December 5, 2024, at 11:00 AM ET [1] - Live webcasts and replays of these presentations will be available on the Avalo Therapeutics website [1]

Financial Performance - Avalo generated a net income of $0.2 million and negative cash flows from operations of $34.0 million for the nine months ended September 30, 2024[170]. - For the nine months ended September 30, 2024, the company recognized minimal net product revenue of $0.2 million compared to $1.4 million for the same period in 2023, primarily due to the expiration of the license and supply agreement for Millipred[187]. - Net cash used in operating activities was $34.0 million for the nine months ended September 30, 2024, consisting primarily of net income of $0.2 million and significant adjustments related to warrant liabilities and IPR&D[199]. - The company recognized minimal income tax expense for both the nine months ended September 30, 2024, and 2023[197]. Cash and Financing - As of September 30, 2024, Avalo had $81.9 million in cash and cash equivalents, with expectations to fund operations into at least 2027[171]. - Net cash provided by financing activities for the nine months ended September 30, 2024, consisted of gross proceeds of $115.6 million from a private placement investment, partially offset by $7.5 million of transaction costs[203]. - The company expects future cash used in operating activities to increase due to development plans for AVTX-009, including the execution of the Phase 2 LOTUS Trial which commenced in October 2024[202]. Research and Development - Research and development expenses increased by $8.3 million for the three months ended September 30, 2024, primarily due to a $4.2 million increase in clinical expenses and a $3.2 million increase in chemistry, manufacturing, and controls expenses[180]. - Avalo expects future research and development expenses to increase as it progresses with the AVTX-009 development plans[181]. - Research and development expenses increased by $4.3 million for the nine months ended September 30, 2024, driven by a $1.9 million increase in salaries and benefits, and increases in clinical and CMC expenses of $1.3 million and $1.2 million, respectively[190]. - The company acquired $27.6 million of in-process research and development (IPR&D) related to AVTX-009 in the first quarter of 2024, with no acquired IPR&D for the same period in 2023[191]. General and Administrative Expenses - General and administrative expenses rose by $1.8 million for the three months ended September 30, 2024, driven by increased salaries and professional expenses[182]. - General and administrative expenses increased by $4.4 million for the nine months ended September 30, 2024, primarily due to a $2.2 million increase in legal, consulting, and other professional expenses[192]. - Salaries, benefits, and related costs in general and administrative expenses increased by $0.6 million due to headcount additions and non-equity incentive plan compensation[182]. Other Income and Warrant Liability - Other income, net increased by $37.4 million for the three months ended September 30, 2024, mainly due to a $36.0 million gain on the change in fair value of the warrant liability[184]. - Other income, net increased by $59.1 million for the nine months ended September 30, 2024, primarily driven by the impact of the warrant liability associated with the March 2024 financing[194]. - The fair value of the warrant liability was $46.8 million as of September 30, 2024, down from $82.9 million as of June 30, 2024[184]. - The company anticipates no warrant liability as of December 31, 2024, following the exercise and/or expiration of the warrants during the fourth quarter of 2024[194]. Internal Controls and Compliance - Management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective at a reasonable assurance level as of the end of the reporting period[209]. - No changes in internal control over financial reporting were identified that materially affected or are likely to materially affect internal control over financial reporting[211]. - The company is not required to provide quantitative and qualitative disclosures about market risk as a smaller reporting company[209]. Clinical Trials - Avalo's Phase 2 LOTUS trial for AVTX-009 commenced in October 2024, involving approximately 180 adults with moderate to severe hidradenitis suppurativa[167]. - The company received $58.1 million in additional proceeds from the exercise of warrants issued in the March 2024 private placement financing[168].

Clinical Trials - The first patient was dosed in the Phase 2 LOTUS trial of AVTX-009 for hidradenitis suppurativa, with topline data expected in 2026[1] - The LOTUS trial will evaluate AVTX-009 in approximately 180 adults with HS, comparing two dosing regimens against placebo[3][16] - The company continues to explore AVTX-009's applications in other immune-mediated diseases while working towards selecting a second indication[3] Financial Performance - Net income for Q3 2024 was $23.0 million, a significant increase from a net loss of $5.2 million in Q3 2023, largely due to a $37.4 million increase in other income[6] - Basic net income per share was $0.98 for Q3 2024, compared to a basic net loss per share of $26.83 for Q3 2023[6] - Total revenues for Q3 2024 were $249,000, slightly up from $236,000 in Q3 2023[12] - Operating expenses for Q3 2024 totaled $13.1 million, compared to $3.99 million in Q3 2023[12] Expenses - Research and development expenses increased to $9.5 million for Q3 2024, up from $1.2 million in Q3 2023, primarily due to LOTUS trial initiation costs[5] - General and administrative expenses rose to $4.3 million in Q3 2024, compared to $2.5 million in Q3 2023, driven by increased employee compensation and professional expenses[5] Cash Position - Cash position was approximately $82 million as of September 30, 2024, with an additional $58.1 million received from warrant exercises, providing a runway into at least 2027[1][4] Risks and Uncertainties - Avalo's forward-looking statements are subject to significant risks and uncertainties, which could cause actual results to differ from projections[18] - The company emphasizes reliance on key personnel and regulatory risks as critical factors affecting future performance[18] - Economic uncertainties, including geopolitical tensions such as the war in Ukraine and the Middle East, may impact Avalo's operations[18]

Core Insights - Avalo Therapeutics has initiated the Phase 2 LOTUS trial for AVTX-009, a monoclonal antibody targeting interleukin-1β, in patients with hidradenitis suppurativa (HS) [1][2] - The trial aims to evaluate the efficacy and safety of two dosing regimens of AVTX-009 compared to placebo, with topline results expected in 2026 [1][2] Company Overview - Avalo Therapeutics is a clinical-stage biotechnology company focused on treating immune dysregulation, with AVTX-009 as its lead asset targeting inflammatory diseases [5] - The company also has two additional drug candidates: quisovalimab (anti-LIGHT mAb) and AVTX-008 (BTLA agonist fusion protein) [5] Industry Context - Hidradenitis suppurativa is a chronic inflammatory skin condition that significantly impacts quality of life, with an estimated prevalence of 0.2-1.7% of the global population [3] - Current treatment options for HS are limited, and there is a need for improved therapies targeting the inflammatory processes, particularly those involving interleukin-1β [3][4]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended June 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 001-37590 AVALO THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) 540 Gaither Road, Suite 400 Rockville, Maryland 20850 (Address of principal executive off ...