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Avalo Reports First Quarter 2024 Financial Results and Provides Business Updates
- Topline results from planned Phase 2 trial of AVTX-009 in hidradenitis suppurativa expected in 2026
- Cash on hand of approximately $110 million as of March 31, 2024 with expected cash runway into 2027
WAYNE, Pa. and ROCKVILLE, Md., May 13, 2024 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (Nasdaq: AVTX), today announced business updates and financial results for the first quarter of 2024.
“Over the past month we have made considerable progress toward initiating our planned Phase 2 trial of AVTX-009 in hidradenitis suppurativa. Our experienced team has been working closely with subject matter experts on trial enabling activities, and we plan to have the trial underway this year,” said Dr. Garry Neil, Chief Executive Officer and Chairman of the Board. “Our main focus remains on the initiation of the Phase 2 trial in hidradenitis suppurativa. Upon trial initiation, we plan to expand our focus to include the evaluation and announcement of a second indication, as well as pursuing the development of a next generation anti-IL-1? mAb.”
Program Updates and Milestones:
- AVTX-009: Anti-IL-1? monoclonal antibody (mAb) targeting inflammatory diseases.
- Avalo is pursuing the development of AVTX-009 in hidradenitis suppurativa and expects topline data from its planned Phase 2 trial in hidradenitis suppurativa in 2026.
- In addition to hidradenitis suppurativa, Avalo plans to develop AVTX-009 in at least one other chronic inflammatory indication.
- Next Generation anti-IL-1? mAb.
- Avalo is pursuing a next generation anti-IL-1? with an extended half-life.
- Quisovalimab (AVTX-002): Anti-LIGHT mAb targeting immune-inflammatory diseases.
- Avalo is conducting a strategic review of the quisovalimab program.
- AVTX-008: B and T Lymphocyte Attenuator (BTLA) agonist fusion protein targeting immune dysregulation disorders.
- Avalo is conducting a strategic review of the AVTX-008 program.
First Quarter 2024 Financial Update:
As of March 31, 2024, Avalo had $110.2 million in cash and cash equivalents. In March 2024, the Company closed a private placement investment for up to $185.0 million in gross proceeds, including an initial upfront gross investment of $115.6 million. The Company could receive up to an additional $69.4 million of gross proceeds upon the exercise of the warrants issued in the financing. The Company’s current cash on hand is expected to fund operations through the data readout of our planned Phase 2 trial in hidradenitis suppurativa and into 2027.
For the three months ended March 31, 2024, Avalo generated a net loss of $121.3 million. The increase in net loss as compared to the prior period was primarily driven by the excess of warrant fair value over private placement proceeds. The warrants did not satisfy the conditions to be accounted for as an equity instrument and therefore were classified as a liability upon issuance. The initial fair value of the warrants at issuance was $194.9 million, which exceeded the upfront gross proceeds of $115.6 million, resulting in a $79.3 million loss recognized for the three months ended March 31, 2024. The fair value of the warrant liability was estimated using a Black-Scholes option-pricing model and the key variable input driving the fair value was the closing stock price of $21.75 on March 28, 2024, which was the initial valuation date, as well as the last trading day of the first quarter of 2024. Because the warrants are carried at fair value, future changes in fair value will be recognized in other (expense) income, net at each reporting period until the warrants are either exercised or expired. In addition, Avalo’s acquisition of AlmataBio, Inc. was accounted for as an asset acquisition resulting in the recognition of $27.5 million of acquired in-process research and development (“IPR&D”) expense. Finally, we recognized $9.2 million of private placement transaction expenses within other expense. Net loss per share of common stock decreased as a result of the increase in the shares outstanding from the first quarter of 2023, partially offset by the increase in net loss.
Consolidated Balance Sheets
(In thousands, except share and per share data)
| March 31, 2024 | December 31, 2023 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 110,177 | $ | 7,415 | ||||
| Other receivables | 35 | 136 | ||||||
| Prepaid expenses and other current assets | 997 | 843 | ||||||
| Restricted cash, current portion | 4 | 1 | ||||||
| Total current assets | 111,213 | 8,395 | ||||||
| Property and equipment, net | 1,882 | 1,965 | ||||||
| Goodwill | 10,502 | 10,502 | ||||||
| Restricted cash, net of current portion | 131 | 131 | ||||||
| Total assets | $ | 123,728 | $ | 20,993 | ||||
| Liabilities, mezzanine equity and stockholders’ (deficit) equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 916 | $ | 446 | ||||
| Accrued expenses and other current liabilities | 7,383 | 4,172 | ||||||
| Warrant liability | 194,901 | — | ||||||
| Contingent consideration | 12,500 | — | ||||||
| Total current liabilities | 215,700 | 4,618 | ||||||
| Royalty obligation | 2,000 | 2,000 | ||||||
| Deferred tax liability, net | 162 | 155 | ||||||
| Derivative liability | 5,670 | 5,550 | ||||||
| Other long-term liabilities | 1,281 | 1,366 | ||||||
| Total liabilities | 224,813 | 13,689 | ||||||
| Mezzanine equity: | ||||||||
| Series C Preferred Stock—$0.001 par value; 34,326 and 0 shares of Series C Preferred Stock authorized at March 31, 2024 and December 31, 2023, respectively; 22,358 and 0 shares of Series C Preferred Stock issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 11,457 | — | ||||||
| Series D Preferred Stock—$0.001 par value; 1 and 0 shares of Series D Preferred Stock authorized at March 31, 2024 and December 31, 2023, respectively; 1 and 0 shares of Series D Preferred Stock issued and outstanding at March 31, 2024 and December 31, 2023, respectively | — | — | ||||||
| Series E Preferred Stock—$0.001 par value; 1 and 0 shares of Series E Preferred Stock authorized at March 31, 2024 and December 31, 2023, respectively; 1 and 0 shares of Series E Preferred Stock issued and outstanding at March 31, 2024 and December 31, 2023, respectively | — | — | ||||||
| Stockholders’ (deficit) equity: | ||||||||
| Common stock—$0.001 par value; 200,000,000 shares authorized at March 31, 2024 and December 31, 2023; 1,034,130 and 801,746 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 1 | 1 | ||||||
| Additional paid-in capital | 343,881 | 342,437 | ||||||
| Accumulated deficit | (456,424 | ) | (335,134 | ) | ||||
| Total stockholders’ (deficit) equity | (112,542 | ) | 7,304 | |||||
| Total liabilities, mezzanine equity and stockholders’ (deficit) equity | $ | 123,728 | $ | 20,993 | ||||
The consolidated balance sheets as of March 31, 2024 and December 31, 2023 have been derived from the reviewed and audited financial statements, respectively, but do not include all of the information and footnotes required by accounting principles accepted in the United States for complete financial statements.
Consolidated Statements of Operations
(In thousands, except per share data)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenues: | ||||||||
| Product revenue, net | $ | — | $ | 475 | ||||
| Total revenues, net | — | 475 | ||||||
| Operating expenses: | ||||||||
| Cost of product sales | (80 | ) | 551 | |||||
| Research and development | 2,116 | 6,008 | ||||||
| Acquired in-process research and development | 27,538 | — | ||||||
| General and administrative | 3,193 | 2,708 | ||||||
| Total operating expenses | 32,767 | 9,267 | ||||||
| (32,767 | ) | (8,792 | ) | |||||
| Other expense: | ||||||||
| Excess of warrant fair value over private placement proceeds | (79,276 | ) | — | |||||
| Private placement transaction costs | (9,220 | ) | — | |||||
| Change in fair value of derivative liability | (120 | ) | (180 | ) | ||||
| Interest income, net | 100 | (949 | ) | |||||
| Other expense, net | — | (26 | ) | |||||
| Total other expense, net | (88,516 | ) | (1,155 | ) | ||||
| Loss before taxes | (121,283 | ) | (9,947 | ) | ||||
| Income tax expense | 7 | 8 | ||||||
| Net loss and comprehensive loss | $ | (121,290 |
By: GlobeNewswire
- 13 May 2024
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