Avalo Therapeutics(US:AVTX)2023-11-08 16:00Financial 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].