Avalo Therapeutics (NasdaqCM:AVTX) FY Conference Transcript

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]