Avalo Therapeutics(AVTX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION 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 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 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 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] - 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] Condensed Consolidated Statements of Mezzanine and Stockholders' Equity 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] Condensed Consolidated Statements of Cash Flows 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] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements 1. Business 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] - The company has incurred significant operating and cash losses since inception, funding operations primarily through equity sales, out-licensing, and asset sales[20] - 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][21] 2. Basis of Presentation and Significant Accounting Policies 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][23] - In Q1 2025, the company reclassified other receivables into prepaid and other current assets to conform with current period presentation[25] - 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] - 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][33] 3. Asset Acquisition 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] - 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] 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 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] - 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] 5. Net (Loss) Income Per Share 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][40] 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] 6. Fair Value Measurements 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][47][48] 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][55] - 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][61] 7. Investments 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] 8. Leases 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][67] 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 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] 10. Capital Structure 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] - 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] - 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] - 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] 11. Stock-Based Compensation 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] 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] - 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][94] 12. Income Taxes 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] - Avalo is currently assessing the impact of the recently enacted One Big Beautiful Bill Act (OBBB) on its consolidated financial statements[101] 13. Commitments and Contingencies 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] - 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][111][112] - 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][132][135] - Avalo has a royalty obligation for AVTX-006 to certain related parties, recorded as a liability, and may exercise a buyout option[139] 14. Segments 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][144] - The primary evaluation of success is the ability to progress research and development pipeline programs toward commercialization or opportunistic out-licensing[144] 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 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 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] - 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] - Management's primary measure of success is the ability to advance its pipeline towards commercialization or opportunistically out-license rights[151] Recent Developments 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] 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] - 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][155] - 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] Our Strategy 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] - Strategic initiatives include acquiring or in-licensing targeted preclinical and clinical stage compounds for immune-mediated diseases and opportunistically out-licensing rights[156] - The FDA approval process is complex, time-consuming, and expensive, with no guarantee of regulatory approval for products[157] Results of Operations 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 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] - 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][160] - 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] - 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] Comparison of the Six Months Ended June 30, 2025 and 2024 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] - 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] - 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] - 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] - 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] Liquidity and Capital Resources 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] 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] - 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] - 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][186] Critical Accounting Policies, Estimates, and Assumptions 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] - No significant changes to critical accounting policies occurred during the six months ended June 30, 2025, except as described in Note 2[187] Off-Balance Sheet Arrangements 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] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] Item 4. Controls and Procedures 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 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] Changes in Internal Control Over Financial Reporting 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] PART II. OTHER INFORMATION This section includes additional required information not covered in the financial statements, such as legal proceedings and risk factors Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] - 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] Item 6. Exhibits 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] 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]