Summary of Avalo Therapeutics FY Conference Call (December 02, 2025) Company Overview - **Company**: Avalo Therapeutics (NasdaqCM:AVTX) - **Focus**: Development of AVTX-009 for hidradenitis suppurativa (HS) Key Points Industry Context - **2025 Performance**: The year was described as exciting, with expectations for 2026 to be even more promising [4][5] - **Competitor Landscape**: Mention of Lutikismab, a competitor in the HS market, currently in phase 3 studies [49] Clinical Trial Updates - **LOTUS Trial**: - Phase 2 trial for HS with AVTX-009 has completed enrollment as of October 29, 2025, exceeding the target of 222 patients, reaching 250 [6][16] - The trial is designed to show a 20% delta difference in HiSCR75 on a placebo-adjusted basis with 80% power, and 90% power for a 25-30% difference [16][18] - Top-line data expected in Q2 2026, following a 16-week treatment duration and a six-week follow-up [10][11][12] Trial Design and Execution - **Demographics**: The trial includes a higher proportion of biologically experienced patients, with over a third expected to be biologically experienced [21][22] - **Site Management**: - Approximately 90 sites involved, primarily in the U.S. and Canada, with rigorous site qualification and training processes implemented [29][30] - Emphasis on managing the placebo effect through strict protocols and training for both investigators and patients [30][35] Future Development Plans - **Phase 3 Trials**: - The anchor dose for the phase 3 program will likely be one of the two doses tested in phase 2, with a preference for a more patient-friendly dosing schedule [43][44] - Discussions with the FDA will determine the need for additional dose-ranging studies [44][45] Competitive Positioning - **Differentiation from Lutikismab**: - AVTX-009 is expected to offer a longer dosing interval and potentially higher efficacy due to its higher potency [49][51] - The company aims to demonstrate a benign side effect profile similar to Lutikismab while exploring efficacy in various patient populations [52][56] Financial Considerations - **Capital Needs**: Significant capital will be required for two large phase 3 trials, with expectations of strong investor interest due to the drug's potential [58] - **Expansion Opportunities**: Potential to explore other indications related to IL-1 beta, including dermatology and rheumatology [59] Conclusion - **Outlook**: The company is optimistic about the upcoming data and its potential impact on the market, with a strong focus on execution and differentiation in a competitive landscape [62]

Summary of Avalo Therapeutics FY Conference Call Company Overview - **Company**: Avalo Therapeutics (NasdaqCM:AVTX) - **Location**: Near Philadelphia - **New Asset**: AVTX-009, a high affinity human anti-IL-1 beta monoclonal antibody targeting hidradenitis suppurativa (HS) [2][3] Key Points Product Development - **Background**: AVTX-009 was originally developed by Lilly for type 2 diabetes, showing a moderate effect size of 0.25-0.3 grams reduction in hemoglobin A1C, but was not pursued further [2][3] - **Acquisition**: Avalo acquired the asset after it was not advanced by previous owners [3] - **Funding**: The company raised $185 million in 2024 to support its operations and trials [3] - **Lotus Trial**: A phase 2b proof of concept study for AVTX-009 is fully enrolled, with data expected in mid-2026 [4] Mechanism of Action - **IL-1 Beta Role**: IL-1 beta is a master regulator of the immune system, crucial in the inflammatory response in HS lesions [5][6] - **Cytokine Levels**: IL-1 beta is the most abundant cytokine in HS lesions, making it a prime target for treatment [7] Comparison with Competitors - **AbbVie’s Lutikizumab**: A bispecific anti-IL-1 beta and anti-IL-1 alpha drug with a shorter half-life and lower affinity for IL-1 beta compared to AVTX-009 [11][12] - **Efficacy Data**: AbbVie reported a drug effect size of approximately 46% in a severe HS population, which Avalo aims to exceed with its higher affinity drug [13][15] Trial Design and Expectations - **Placebo Response**: The Lotus trial is designed to mitigate placebo responses, with a conservative estimate of a 20% placebo rate based on historical data [19][20] - **Patient Demographics**: The trial includes a mix of biologically experienced patients, with a higher proportion of TNF and IL-17 failures compared to competitors [25][26] Future Indications - **Exploration Beyond HS**: Avalo is interested in expanding indications to include crystal arthropathies, such as gout, in addition to other inflammatory conditions [30][31] Financial Health - **Balance Sheet**: Avalo has $115 million available, sufficient to fund operations through data release and into 2028, with plans to raise funds for phase three trials [33] Additional Insights - **Trial Management**: The company emphasizes rigorous training for investigators to ensure objective assessments and accurate data collection [27][28] - **Statistical Approach**: Avalo plans to handle non-responder imputation scientifically, contrasting with other companies' methods that may artificially lower efficacy results [29]