Avalo Therapeutics 'Represents An Attractive Pure-Play,' Analyst Initiates Coverage With Over 300% Stock Upside

Core Viewpoint - Stifel has initiated coverage on Avalo Therapeutics, highlighting the potential of its lead asset AVTX-009 in treating inflammatory diseases, particularly hidradenitis suppurativa (HS) [1][4]. Group 1: Clinical Trials and Efficacy - Avalo is conducting a Phase 2 LOTUS trial with approximately 180 adults to assess the efficacy and safety of AVTX-009 with bi-weekly and monthly dosing regimens compared to placebo, with topline data expected in 2026 [1]. - The proof-of-concept data from AbbVie's lebrikizumab suggests that IL-1β blockade is a key driver of efficacy, which de-risks the development of AVTX-009 for HS [2]. - AbbVie's Phase 2 results indicated that patients receiving lutikizumab had higher response rates compared to placebo, with 59.5% and 48.7% response rates for different dosing schedules [3]. Group 2: Market Potential and Financial Outlook - Stifel believes that AVTX-009 can achieve comparable efficacy to lutikizumab, potentially capturing a meaningful share of the HS market, which is projected to exceed $2 billion in the US [4]. - The company has a favorable risk-reward profile heading into the Phase 2 data release in 2026, supported by strong external newsflow in the next 12 months [5]. - As of December 31, 2024, Avalo had cash and cash equivalents of $134.5 million, which is expected to fund operations into at least 2027 [5]. Group 3: Stock Performance and Analyst Rating - Stifel has initiated coverage with a Buy rating and a price target of $36 for Avalo Therapeutics [4]. - The stock price of AVTX increased by 15.5% to $8.81 as of the last check [5].