Avalo Therapeutics (AVTX) stock price nosedived on Monday after the company published relatively weak financial results. It tumbled by over 23.5% in the pre-market session and reached a low of $16.60. This plunge has lowered its market cap to about $19 million.Avalo Therapeutics earnings Copy link to section Avalo Therapeutics has made several headlines in the past few weeks. Last week, the company acquired AlmataBio in a stock deal valued at $22  million. This acquisition gave it AVTX-009, a phase 2-ready ...

Product Development and Pipeline - Avalo Therapeutics' lead asset is AVTX-009, an anti-IL-1β monoclonal antibody targeting inflammatory diseases, with a focus on its development in the near term[14]. - Avalo acquired AVTX-009 through the acquisition of AlmataBio, with potential milestone payments of up to $70 million and sales-based milestones aggregating up to $720 million upon commercialization[17]. - Quisovalimab, another product in the pipeline, has shown a statistically significant reduction in respiratory failure and mortality in COVID-19 ARDS patients, with over 50% of patients experiencing a 50% reduction in asthma-related events[22]. - The company is responsible for the development and commercialization of AVTX-008, a fully human BTLA agonist fusion protein, which is currently under strategic review[27]. - The company acquired a Phase 2-ready anti-Il-1β mAb, AVTX-009, in March 2024, intending to progress it for the treatment of hidradenitis suppurativa[100]. Financial Performance and Expectations - The company has incurred significant net losses since inception and expects to continue incurring losses in the future[9]. - The company incurred a net loss of $31.5 million for the year ended December 31, 2023, with an accumulated deficit of $335.1 million[90]. - The company has no approved commercial products and expects to generate no revenues for the foreseeable future[97]. - The company may need to raise additional funds prior to any phase 3 development of its product candidates[84]. - Future funding requirements will depend on various factors, including the progress and costs of clinical studies for product candidates[89]. - The company expects to continue incurring losses in the future, which may adversely affect stockholders' equity and working capital[91]. Regulatory and Compliance Challenges - The company must comply with extensive regulations governing the research, development, and marketing of pharmaceutical products[42]. - The FDA approval process for new products may take many years and require substantial financial resources[43]. - The company may encounter difficulties in securing necessary governmental approvals, which could delay or preclude marketing of approved product candidates[47]. - Regulatory authorities may require additional studies or impose limitations on approved indications, which could adversely affect the commercial prospects of the company's product candidates[138]. - The company may face significant ongoing regulatory obligations and expenses even after obtaining marketing approval for its product candidates[143]. Market and Competitive Landscape - The company faces intense competition from pharmaceutical and biotechnology companies, as well as academic institutions and governmental agencies[35]. - The company faces substantial competition in the biotechnology and pharmaceutical industries, with competitors having greater financial and technical resources[124]. - The company faces intense competition from numerous approved therapies, which may limit its ability to develop and commercialize its product candidates[126]. - Market acceptance among physicians, patients, and third-party payors is critical for commercial success, and the company may struggle to achieve this acceptance[128]. Intellectual Property and Licensing - The company holds ownership and exclusivity rights to develop and commercialize product candidates covered by patents and patent applications[32]. - The company has filed numerous patent applications to protect its intellectual property, which is crucial for competitive positioning[190]. - Significant payments are required under various license and development agreements, including milestone payments and royalties upon commercialization[198]. - Non-compliance with obligations under license agreements could lead to termination, adversely affecting the ability to develop and market product candidates[197]. - The potential for third-party infringement or legal challenges could significantly impact the company's intellectual property rights and market position[202]. Operational Risks - The company relies on third parties for clinical trials and manufacturing, which poses risks to timely development and commercialization of its product candidates[12]. - The company relies on contract manufacturing organizations to produce drug candidates in compliance with FDA's current good manufacturing practices (cGMP)[36]. - The company relies on third-party contract research organizations (CROs) for clinical trials, which may introduce risks related to performance and timely execution[110]. - The company outsources all manufacturing to third parties, increasing risks related to supply and compliance with cGMP requirements[174]. - There are no long-term agreements with all third-party manufacturers, which may hinder the ability to secure commercial supply[175]. Employee and Organizational Structure - As of December 31, 2023, the company employed 19 full-time employees, with 11 primarily engaged in research and development activities[78]. - The company believes its future success depends on attracting and retaining highly skilled personnel, offering competitive salaries, bonuses, and a comprehensive employment package[78]. - The company considers its relationship with employees to be good, with no employees represented by a labor union[78]. Healthcare Policy and Economic Factors - The Affordable Care Act significantly impacts the pharmaceutical industry by broadening access to health insurance and imposing new transparency requirements[57]. - The Affordable Care Act (ACA) has been subject to ongoing legislative changes, which could materially affect the healthcare industry and the company's business[60]. - The Inflation Reduction Act of 2022 aims to lower prescription drug costs for Medicare patients, with the first ten drugs selected for negotiation announced in August 2023[60]. - The company anticipates that future healthcare reform measures could limit government payments for healthcare products and services, potentially reducing demand for its products[61]. - Coverage and reimbursement for newly approved drugs may be limited, affecting demand and pricing, which could materially impact financial results[161].

Exhibit 99.1 Avalo Reports 2023 Financial Results and Provides Business Updates • Acquired AVTX-009, Phase-2 ready anti-IL-1β mAb, in March 2024 • Increased cash position with private placement financing in March 2024 providing up to $185 million, including initial upfront investment of $115.6 million • Topline results from planned Phase 2 trial of AVTX-009 in hidradenitis suppurativa expected in 2026 • Expected cash runway into 2027 WAYNE, PA AND ROCKVILLE, MD, March 29, 2024 — Avalo Therapeutics, Inc. (Na ...

Financial Performance - As of September 30, 2023, net revenue from sales of prescription drugs was $0.2 million, a decrease from $0.4 million for the same period in 2022 [33]. - For the nine months ended September 30, 2023, net revenue from sales of prescription drugs was $1.4 million, down from $2.6 million in the same period in 2022 [33]. - The Company reported a total net loss of $(23.4 million) for the nine months ended September 30, 2023, compared to $(31.8 million) for the same period in 2022 [37]. - Basic net loss per share for the three months ended September 30, 2023, was $(0.11), compared to $0.34 for the same period in 2022 [37]. - Avalo generated a net loss of $23.4 million and negative cash flows from operations of $27.9 million for the nine months ended September 30, 2023 [137]. - Net product revenue decreased to $0.2 million for the three months ended September 30, 2023, down from $0.4 million in the same period of 2022, primarily due to a decrease in units sold [142]. - Net product revenue decreased to $1.4 million for the nine months ended September 30, 2023, down from $2.6 million in the same period of 2022, primarily due to a decrease in units sold [150]. - Cost of product sales was $1.5 million for the nine months ended September 30, 2023, compared to $2.8 million for the same period in 2022, reflecting a decrease in units sold [151]. Financing and Capital - The Company requires additional financing to fund operations and execute its business strategy within one year after the date of the financial statements [25]. - The Company is currently undergoing delisting hearings with Nasdaq, which may impact its ability to raise capital [25]. - The Company entered into an "at-the-market" sales agreement to sell shares of common stock with an aggregate offering price of up to $50 million, resulting in net proceeds of approximately $32.5 million from the sale of approximately 179.1 million shares by September 30, 2023 [71]. - Avalo raised approximately $25.9 million of net proceeds under its "at-the-market" program in Q3 2023 [134]. - Net cash provided by financing activities was $25.0 million for the nine months ended September 30, 2023, including net proceeds from stock sales and an underwritten public offering [165]. - The company prepaid $6.0 million of principal on its $35.0 million venture loan in June 2023, and fully repaid the remaining balance of $14.3 million in September 2023 [65]. - The company does not expect to recognize interest expense in the fourth quarter of 2023 or beyond following the full payoff of the loan [149]. Expenses and Cost Management - Research and development expenses decreased by $5.8 million for the three months ended September 30, 2023, driven by a $2.9 million decrease in chemistry, manufacturing, and controls (CMC) expenses and a $2.1 million decrease in clinical expenses [144]. - Selling, general and administrative expenses decreased by $0.8 million for the three months ended September 30, 2023, compared to the prior period, due to cost savings initiatives and reduced headcount [146]. - Research and development expenses decreased by $13.2 million for the nine months ended September 30, 2023, primarily due to reduced manufacturing and clinical trial activities [152]. - Selling, general and administrative expenses decreased by $10.1 million for the nine months ended September 30, 2023, driven by headcount reductions and cost-saving initiatives [154]. - The company recognized a $1.5 million expense related to a cost reduction plan approved in Q1 2022, primarily for severance payments [63]. Legal and Compliance - The Company is involved in a dispute regarding a breach of the License Agreement, with a potential loss estimated between $0 and $837,522, but does not believe a loss is currently probable [97]. - The company has until February 5, 2024, to regain compliance with Nasdaq's minimum bid price and market value listing requirements [135]. - There are ongoing legal proceedings referenced in Note 13 of the financial statements, but specific details are not provided in the summary [174]. Licensing and Agreements - The Company’s license and supply agreement for Millipred expired on September 30, 2023, and it does not expect future gross revenue from this product [33]. - The company entered into a license agreement with Kyowa Kirin Co., Ltd. for AVTX-002, paying an upfront fee of $10.0 million and potential milestone payments of up to $112.5 million based on development and regulatory achievements [99]. - The company has an exclusive license agreement with Astellas for AVTX-006, with an upfront fee of $0.5 million and potential milestone payments of up to $5.5 million [103]. - The company has an exclusive license agreement with Sanford Burnham Prebys, incurring an upfront fee of $0.4 million and potential milestone payments of up to $24.2 million [106]. - The company out-licensed AVTX-301 to Alto Neuroscience, receiving a mid-six digit upfront payment and being eligible for up to $18.6 million in milestone payments [109]. - The company closed a transaction to sell rights to AVTX-801, AVTX-802, and AVTX-803 for an upfront payment of $150,000 and potential milestone payments of up to $45.0 million [124]. Cash Flow and Liquidity - Avalo's cash and cash equivalents stood at $10.2 million as of September 30, 2023 [137]. - Net cash used in operating activities was $27.9 million for the nine months ended September 30, 2023, compared to $22.8 million for the same period in 2022 [162]. - Future operating cash flows are difficult to predict and depend on the company's ability to obtain additional capital for its programs and operations [158]. - Future research and development expenses are uncertain and depend on Avalo's ability to secure additional capital [145]. Internal Controls and Procedures - No changes in internal control over financial reporting were identified that materially affected the company's internal control during the reporting period [172]. - The company's disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of the end of the reporting period [170]. - The management conducted an evaluation of the effectiveness of disclosure controls and procedures, ensuring timely decisions regarding required disclosures [171]. - The management includes the principal executive officer and principal financial officer in the evaluation of disclosure controls [171]. - The company recognizes that controls can only provide reasonable assurance of achieving desired control objectives [170]. - The evaluation of controls is a requirement under the Securities Exchange Act of 1934 [170].

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, 2023 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 ...

Avalo Therapeutics, Inc. (AVTX) Corporate Presentation May 2023 ...

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 March 31, 2023 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 of ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______to______ Commission File No. 001-37590 AVALO THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Delaware (State or o ...

Avalo Therapeutics, Inc. (AVTX) Corporate Presentation March 2023 ...