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 ...

Exhibit 99.1 Avalo Reports Second Quarter 2024 Financial Results and Provides Business Updates • Expects to enroll first patient in Phase 2 LOTUS Trial of AVTX-009 in hidradenitis suppurativa in the second half of 2024 • Appointed Dr. Mittie Doyle as Chief Medical Officer and Paul Varki as Chief Legal Officer • Cash on hand of approximately $93.4 million as of June 30, 2024 with expected cash runway into 2027 WAYNE, PA AND ROCKVILLE, MD, August 12, 2024 — Avalo Therapeutics, Inc. (Nasdaq: AVTX), today annou ...

WAYNE, Pa. and ROCKVILLE, Md., July 16, 2024 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (Nasdaq: AVTX) today announced that Mittie Doyle, MD, FACR has joined the Company as its Chief Medical Officer. “We are thrilled to have Mittie join and grow our leadership team at an exciting time as we prepare to initiate our Phase 2 LOTUS Trial in patients with hidradenitis suppurativa. Mittie brings to Avalo a strong combination of drug development experience through all stages of development and exceptional expert ...

Following FDA review, Avalo's IND application for AVTX-009 is active allowing Avalo to proceed with its Phase 2 trial (LOTUS) to evaluate the efficacy and safety of AVTX-009 in patients with hidradenitis suppurativa WAYNE, Pa. and ROCKVILLE, Md., July 09, 2024 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (NASDAQ:AVTX) today announced that the Investigational New Drug (IND) for AVTX-009, an anti-IL-1β monoclonal antibody (mAb), for the treatment of hidradenitis suppurativa (HS) is now active, permitting the ...

Following FDA review, Avalo’s IND application for AVTX-009 is active allowing Avalo to proceed with its Phase 2 trial (LOTUS) to evaluate the efficacy and safety of AVTX-009 in patients with hidradenitis suppurativa WAYNE, Pa. and ROCKVILLE, Md., July 09, 2024 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (Nasdaq: AVTX) today announced that the Investigational New Drug (IND) for AVTX-009, an anti-IL-1β monoclonal antibody (mAb), for the treatment of hidradenitis suppurativa (HS) is now active, permitting the ...

WAYNE, Pa. and ROCKVILLE, Md., June 24, 2024 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (Nasdaq: AVTX) today announced that Paul Varki has joined the Company as its Chief Legal Officer. “We are delighted to have Paul join and grow our leadership team at an exciting time at Avalo following our acquisition and private placement earlier this year,” said Garry A. Neil, MD, CEO and Chairman of the Board at Avalo. “Paul’s deep industry experience will immediately enhance our strategic and legal competencies. Fu ...

WAYNE, Pa. and ROCKVILLE, Md., June 24, 2024 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (Nasdaq: AVTX) today announced that Paul Varki has joined the Company as its Chief Legal Officer. “We are delighted to have Paul join and grow our leadership team at an exciting time at Avalo following our acquisition and private placement earlier this year,” said Garry A. Neil, MD, CEO and Chairman of the Board at Avalo. “Paul’s deep industry experience will immediately enhance our strategic and legal competencies. Fu ...