Avalo Therapeutics(AVTX) - 2025 Q3 - Quarterly Report

Financial Performance - Avalo Therapeutics reported a net loss of $64.5 million for the nine months ended September 30, 2025, with negative cash flows from operations of $37.2 million[160]. - The company recognized no product revenue for the three months ended September 30, 2025, following the expiration of its license agreement for Millipred on September 30, 2023[164][176]. - Other expense, net was $11.4 million for the three months ended September 30, 2025, a significant decrease from other income of $35.9 million in the prior year period[174]. - The company recognized a net other expense of $11.3 million for the nine months ended September 30, 2025, compared to other income of $55.4 million in the prior year, primarily due to changes in fair value of derivative liabilities[187]. Cash Flow and Liquidity - As of September 30, 2025, Avalo had $111.6 million in cash and cash equivalents, sufficient to fund operations for at least twelve months[161]. - The company had $111.6 million in cash and cash equivalents and short-term investments as of September 30, 2025[189]. - Net cash used in operating activities was $37.2 million for the nine months ended September 30, 2025, compared to $34.0 million in 2024, primarily due to a net loss of $64.5 million[191]. - Net cash used in investing activities was $84.1 million for the nine months ended September 30, 2025, primarily from purchases of available-for-sale investments[193]. - Net cash provided by financing activities was $13.9 million for the nine months ended September 30, 2025, from sales of shares under the "at-the-market" sales agreement[194]. Research and Development - Research and development expenses increased by $4.1 million to $13.6 million for the three months ended September 30, 2025, driven by a $2.2 million rise in clinical expenses[167]. - Research and development expenses increased by $20.6 million for the nine months ended September 30, 2025, totaling $36.8 million compared to $16.3 million in 2024, driven by clinical and CMC expenses[178]. - Clinical expenses rose by $11.6 million due to advancements in the Phase 2 LOTUS trial, while CMC expenses increased by $4.8 million due to raw material purchases and drug manufacturing activities[178]. - The company expects future research and development expenses in 2025 to increase due to ongoing execution of the Phase 2 LOTUS trial[180]. Clinical Trials and Pipeline - The Phase 2 LOTUS trial for AVTX-009 in hidradenitis suppurativa has enrolled approximately 250 adults and is expected to release topline results in mid-2026[155][158]. - Clinical expenses for the Phase 2 LOTUS trial increased due to ongoing patient trial costs and activities performed by contract research organizations[168]. - Avalo's strategy includes advancing its pipeline towards regulatory approval and considering further indication expansion for AVTX-009[162]. General and Administrative Expenses - General and administrative expenses rose by $1.3 million to $5.6 million for the three months ended September 30, 2025, primarily due to increased stock-based compensation[172]. - General and administrative expenses increased by $4.4 million for the nine months ended September 30, 2025, totaling $16.4 million compared to $12.0 million in 2024, primarily due to a $3.8 million rise in stock-based compensation[183]. Future Funding and Strategy - The company plans to fund future operations through equity sales, out-licensing transactions, and strategic collaborations[161].