Avalo Therapeutics, Inc. (Nasdaq: AVTX), today announced business
updates and financial results for the second quarter of 2024.
“The team has made outstanding progress in a
short amount of time toward initiating the Phase 2 LOTUS Trial, as
highlighted by the activation of the IND in July,” said Dr. Garry
Neil, Chief Executive Officer and Chairman of the Board.
“Furthermore, the Company is immediately benefiting from the
addition of Mittie and Paul to the leadership team as CMO and CLO,
respectively. Their deep expertise and leadership experience will
guide us as we focus on initiating the LOTUS Trial, as well as the
evaluation and announcement of a second indication, both of which
we believe are on track for the second half of the year.”
Program Updates and
Milestones:
- AVTX-009: Anti-IL-1β
monoclonal antibody (mAb) targeting inflammatory diseases.
- Avalo is pursuing the development
of AVTX-009 in hidradenitis suppurativa (HS).
- In July 2024, Avalo announced that
the Investigational New Drug Application (IND) for the treatment of
HS is active, permitting Avalo to commence its Phase 2 LOTUS Trial
in patients with HS.
- Avalo expects to enroll the first
patient in its global Phase 2 LOTUS Trial in the second half of
2024.
- In addition to hidradenitis
suppurativa, Avalo plans to develop AVTX-009 in at least one other
chronic inflammatory indication.
Second Quarter 2024 Financial
Update:
As of June 30, 2024, Avalo had $93.4 million in
cash and cash equivalents. Net cash used in operating activities
was $22.5 million for the six months ended June 30, 2024, which
includes a $7.5 million milestone payment to AlmataBio, Inc.
pursuant to the acquisition in the first quarter. The Company’s
current cash on hand is expected to fund operations into 2027.
For the six months ended June 30, 2024, Avalo
generated a net loss of $22.8 million, representing a $4.7 million
increase in net loss as compared to the same period in 2023. Total
operating expenses increased by $25.3 million and was primarily
driven by the recognition of $27.6 million of acquired in-process
research and development (“IPR&D”) expense from the acquisition
of AlmataBio, Inc. in the first quarter of 2024. The increase in
operating expenses was partially offset by a $21.7 million increase
in other income, net which largely related to the loss associated
with warrant liability from the private placement in the first
quarter being more than offset by the warrant liability change in
fair value in the second quarter. Net loss per share of common
stock decreased as a result of the increase in the shares
outstanding from the second quarter of 2023, partially offset by
the increase in net loss.
|
Consolidated Balance Sheets(In thousands, except
share and per share data) |
| |
| |
|
June 30, 2024 |
|
December 31, 2023 |
| |
|
(unaudited) |
|
|
| Assets |
|
|
|
|
| Current assets: |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
93,426 |
|
|
$ |
7,415 |
|
|
Other receivables |
|
|
33 |
|
|
|
136 |
|
|
Prepaid expenses and other current assets |
|
|
2,435 |
|
|
|
843 |
|
|
Restricted cash, current portion |
|
|
— |
|
|
|
1 |
|
| Total current assets |
|
|
95,894 |
|
|
|
8,395 |
|
| Property and equipment,
net |
|
|
1,780 |
|
|
|
1,965 |
|
| Goodwill |
|
|
10,502 |
|
|
|
10,502 |
|
| Restricted cash, net of
current portion |
|
|
131 |
|
|
|
131 |
|
| Total assets |
|
$ |
108,307 |
|
|
$ |
20,993 |
|
| Liabilities, mezzanine
equity and stockholders’ (deficit) equity |
|
|
|
|
| Current liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
654 |
|
|
$ |
446 |
|
|
Accrued expenses and other current liabilities |
|
|
7,888 |
|
|
|
4,172 |
|
|
Warrant liability |
|
|
82,855 |
|
|
|
— |
|
|
Contingent consideration |
|
|
5,000 |
|
|
|
— |
|
| Total current liabilities |
|
|
96,397 |
|
|
|
4,618 |
|
| Royalty obligation |
|
|
2,000 |
|
|
|
2,000 |
|
| Deferred tax liability,
net |
|
|
168 |
|
|
|
155 |
|
| Derivative liability |
|
|
10,710 |
|
|
|
5,550 |
|
| Other long-term
liabilities |
|
|
1,183 |
|
|
|
1,366 |
|
| Total liabilities |
|
|
110,458 |
|
|
|
13,689 |
|
| Mezzanine equity: |
|
|
|
|
|
Series C Preferred Stock—$0.001 par value; 34,326 and 0 shares of
Series C Preferred Stock authorized at June 30, 2024 and December
31, 2023, respectively; 22,358 and 0 shares of Series C Preferred
Stock issued and outstanding at June 30, 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 June 30, 2024 and December 31,
2023, respectively; 1 and 0 shares of Series D Preferred Stock
issued and outstanding at June 30, 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 June 30, 2024 and December 31,
2023, respectively; 1 and 0 shares of Series E Preferred Stock
issued and outstanding at June 30, 2024 and December 31, 2023,
respectively |
|
|
— |
|
|
|
— |
|
| Stockholders’ (deficit)
equity: |
|
|
|
|
|
Common stock—$0.001 par value; 200,000,000 shares authorized at
June 30, 2024 and December 31, 2023; 1,034,130 and 801,746 shares
issued and outstanding at June 30, 2024 and December 31, 2023,
respectively |
|
|
1 |
|
|
|
1 |
|
|
Additional paid-in capital |
|
|
344,352 |
|
|
|
342,437 |
|
|
Accumulated deficit |
|
|
(357,961 |
) |
|
|
(335,134 |
) |
| Total stockholders’ (deficit)
equity |
|
|
(13,608 |
) |
|
|
7,304 |
|
| Total liabilities, mezzanine
equity and stockholders’ (deficit) equity |
|
$ |
108,307 |
|
|
$ |
20,993 |
|
| |
The consolidated balance sheets as of June 30,
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 |
|
Six Months Ended |
| |
|
June 30, |
|
June 30, |
|
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
| Revenues: |
|
|
|
|
|
|
|
|
|
Product revenue, net |
|
$ |
— |
|
|
$ |
643 |
|
|
$ |
— |
|
|
$ |
1,117 |
|
|
Total revenues, net |
|
|
— |
|
|
|
643 |
|
|
|
— |
|
|
|
1,117 |
|
| |
|
|
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
|
|
|
Cost of product sales |
|
|
343 |
|
|
|
708 |
|
|
|
263 |
|
|
|
1,259 |
|
|
Research and development |
|
|
4,601 |
|
|
|
4,658 |
|
|
|
6,716 |
|
|
|
10,667 |
|
|
Acquired in-process research and development |
|
|
103 |
|
|
|
— |
|
|
|
27,641 |
|
|
|
— |
|
|
General and administrative |
|
|
4,528 |
|
|
|
2,427 |
|
|
|
7,721 |
|
|
|
5,134 |
|
|
Total operating expenses |
|
|
9,575 |
|
|
|
7,793 |
|
|
|
42,341 |
|
|
|
17,060 |
|
| |
|
|
(9,575 |
) |
|
|
(7,150 |
) |
|
|
(42,341 |
) |
|
|
(15,943 |
) |
| Other income (expense): |
|
|
|
|
|
|
|
|
|
Excess of initial warrant fair value over private placement
proceeds |
|
|
— |
|
|
|
— |
|
|
|
(79,276 |
) |
|
|
— |
|
|
Change in fair value of warrant liability |
|
|
112,046 |
|
|
|
— |
|
|
|
112,046 |
|
|
|
— |
|
|
Private placement transaction costs |
|
|
— |
|
|
|
— |
|
|
|
(9,220 |
) |
|
|
— |
|
|
Change in fair value of derivative liability |
|
|
(5,040 |
) |
|
|
(40 |
) |
|
|
(5,160 |
) |
|
|
(220 |
) |
|
Interest income (expense), net |
|
|
1,039 |
|
|
|
(996 |
) |
|
|
1,138 |
|
|
|
(1,945 |
) |
|
Other expense, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(25 |
) |
| Total other income (expense),
net |
|
|
108,045 |
|
|
|
(1,036 |
) |
|
|
19,528 |
|
|
|
(2,190 |
) |
| Income (loss) before
taxes |
|
|
98,470 |
|
|
|
(8,186 |
) |
|
|
(22,813 |
) |
|
|
(18,133 |
) |
| Income tax expense |
|
|
7 |
|
|
|
7 |
|
|
|
14 |
|
|
|
15 |
|
| Net income (loss) |
|
$ |
98,463 |
|
|
$ |
(8,193 |
) |
|
$ |
(22,827 |
) |
|
$ |
(18,148 |
) |
| Net income (loss) per share of
common stock1: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
4.21 |
|
|
$ |
(140.73 |
) |
|
$ |
(24.11 |
) |
|
$ |
(338.85 |
) |
|
Diluted |
|
$ |
(14.07 |
) |
|
$ |
(140.73 |
) |
|
$ |
(30.63 |
) |
|
$ |
(338.85 |
) |
|
|
1 Amounts for prior periods presented have been
retroactively adjusted to reflect the 1-for-240 reverse stock split
effected on December 28, 2023.
The unaudited consolidated statements of
operations for the three and six months ended June 30, 2024 and
2023 have been derived from the reviewed financial statements, but
do not include all of the information and footnotes required by
accounting principles generally accepted in the United States for
complete financial statements.
About Avalo Therapeutics
Avalo Therapeutics is a clinical stage
biotechnology company focused on the treatment of immune
dysregulation. Avalo’s lead asset is AVTX-009, an anti-IL-1β mAb,
targeting inflammatory diseases. Avalo also has two additional drug
candidates, which include quisovalimab (anti-LIGHT mAb) and
AVTX-008 (BTLA agonist fusion protein). For more information about
Avalo, please visit www.avalotx.com.
About AVTX-009
AVTX-009 is a humanized monoclonal antibody
(IgG4) that binds to interleukin-1β (IL-1β) with high affinity and
neutralizes its activity. IL-1β is a central driver in the
inflammatory process. Overproduction or dysregulation of IL-1β is
implicated in many autoimmune and inflammatory diseases.
IL-1β is a major, validated target for therapeutic intervention.
There is evidence that inhibition of IL-1β could be effective in
hidradenitis suppurativa and a variety of
inflammatory diseases in dermatology, gastroenterology, and
rheumatology.
About the LOTUS Trial
The LOTUS Trial is a randomized, double-blind,
placebo-controlled, parallel-group Phase 2 trial with two
AVTX-009 dose regimens to evaluate the efficacy and safety of
AVTX-009 in approximately 180 adults with moderate to severe
hidradenitis suppurativa. The primary efficacy endpoint is the
proportion of subjects achieving Hidradenitis Suppurativa Clinical
Response (HiSCR75) at Week 16. Subjects will be randomized
(1:1:1) to receive either one of two doses of AVTX-009 or
placebo.
About Hidradenitis
Suppurativa
Hidradenitis suppurativa (HS) is a chronic
inflammatory skin condition characterized by painful nodules,
abscesses, and tunnels that form in areas of the body such as the
armpits, groin, and buttocks, severely impacting the quality of
life of affected individuals.1 HS is often underdiagnosed or
misdiagnosed and therefore estimates of HS vary between 0.2-1.7% of
the population worldwide.2-5 The exact cause of HS is not fully
understood but is believed to involve a combination of genetic,
hormonal, and environmental factors. While advances in treatment
have been made, limited treatment options are available. IL-1β
plays a crucial role in the inflammatory cascade underlying HS,
contributing to tissue damage, inflammation, and disease
progression. Given the involvement of IL-1β in the inflammatory
process of HS, we believe therapies that target IL-1β offer a
potential treatment option for HS.
Forward-Looking Statements
This press release may include forward-looking
statements made pursuant to the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are statements that
are not historical facts. Such forward-looking statements are
subject to significant risks and uncertainties that are subject to
change based on various factors (many of which are beyond Avalo’s
control), which could cause actual results to differ from the
forward-looking statements. Such statements may include, without
limitation, statements with respect to Avalo’s plans, objectives,
projections, expectations and intentions and other statements
identified by words such as “projects,” “may,” “might,” “will,”
“could,” “would,” “should,” “continue,” “seeks,” “aims,”
“predicts,” “believes,” “expects,” “anticipates,” “estimates,”
“intends,” “plans,” “potential,” or similar expressions (including
their use in the negative), or by discussions of future matters
such as: drug development costs, timing of trials and trial results
and other risks, including reliance on investigators and enrollment
of patients in clinical trials; reliance on key personnel;
regulatory risks; integration of AVTX-009 into our operations;
general economic and market risks and uncertainties, including
those caused by the war in Ukraine and the Middle East; and those
other risks detailed in Avalo’s filings with the Securities and
Exchange Commission, available at www.sec.gov. Actual results may
differ from those set forth in the forward-looking statements.
Except as required by applicable law, Avalo expressly disclaims any
obligations or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to
reflect any change in Avalo’s expectations with respect thereto or
any change in events, conditions or circumstances on which any
statement is based.
References1Patel ZS et al. Curr
Pain Headache Rep. 2017;21(12):49.2Egeberg A, et al. JAMA Dermatol
2016;152:429–343Phan K, et al Biomed Dermatol 2020; 4: 2-64Jfri, A,
et al. JAMA Dermatol. 2021;157(8):924-315Nguyen TV, et al. J Eur
Acad Dermatol Venereol. 2021;35(1):50-61
For media and investor inquiries
Christopher Sullivan, CFO Avalo Therapeutics,
Inc. ir@avalotx.com 410-803-6793
or
Chris BrinzeyICR
WestwickeChris.brinzey@westwicke.com 339-970-2843
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