AVTX - Avalo Reports 2023 Financial Results and Provides Business Updates | Benzinga

• Acquired AVTX-009, Phase-2 ready anti-IL-1? mAb, in March 2024
  
• Increased cash position with private placement financing in March 2024 providing up to $185 million, including initial upfront investment of $115.6 million
• Topline results from planned Phase 2 trial of AVTX-009 in hidradenitis suppurativa expected in 2026
• Expected cash runway into 2027

WAYNE, Pa. and ROCKVILLE, Md., March 29, 2024 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (NASDAQ:AVTX), today announced business updates and year-end financial results for 2023.

"We are very excited about the acquisition of AVTX-009 and concurrent financing of up to $185 million, $115.6 million of which we received upfront. The progress we made in 2023 to strengthen our balance sheet helped enable these transactions. I am proud of the team's efforts and continued dedication in executing our strategy focused on the treatment of inflammatory conditions," said Dr. Garry Neil, Chief Executive Officer and Chairman of the Board. "Our focus in 2024 is executing operationally on the development of AVTX-009 for the treatment of hidradenitis suppurativa. Our experienced team is ready to hit the ground running on progressing the drug candidate and is motivated by the potential of developing a meaningful treatment for patients suffering from hidradenitis suppurativa, many of whom are searching for improved treatment options."

Corporate Updates

• On March 27, 2024, Avalo acquired AVTX-009, a Phase 2 ready anti-IL-1? mAb, through an acquisition of AlmataBio, Inc. The consideration included stock valued at $15 million, as well as a $7.5 million payment due upon closing of the private placement investment. Avalo is also required to pay development milestones to the former AlmataBio stockholders including $5 million due upon the first patient dosed in a Phase 2 trial in patients with hidradenitis suppurativa (HS) and $15 million due upon the first patient dosed in a Phase 3 trial, both of which are payable in cash, Avalo stock, or a combination thereof at the election of the former AlmataBio stockholders. 
  
• On March 28, 2024, Avalo closed a private placement led by Commodore Capital and TCGX, with participation from BVF Partners, Deep Track Capital, OrbiMed, Petrichor, and RA Capital Management for gross proceeds of up to $185 million, including $115.6 million of initial upfront funding received at close. The upfront investment is expected to fund operations through Avalo's planned Phase 2 data readout in hidradenitis suppurativa and into 2027.
  
• As part of the private placement, the Company issued (i) an aggregate of $115.6 million of non-voting convertible preferred stock and (ii) warrants to purchase Avalo's common stock or an equivalent amount (as converted to common stock) of non-voting convertible preferred stock for an aggregate exercise price of $69.4 million. The warrants are exercisable for approximately $5.80 per underlying share of common stock until the earlier of five years from the date of issuance or 30 days after the public announcement of the first patient dosed in a Phase 2 trial of AVTX-009 in HS. On an as-converted basis and after accounting for the financing and acquisition (excluding the exercise of the warrants), the total number of shares of Avalo common stock outstanding would be approximately 23.4 million immediately after the closing of the transactions.
  

Program Updates and Milestones:

• AVTX-009: Anti-IL-1? monoclonal antibody (mAb) targeting inflammatory diseases.
  
  • Avalo intends to pursue 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 intends to develop AVTX-009 in at least one other chronic inflammatory indication.
    
    
• 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.

2023 Financial Update:

As of December 31, 2023, Avalo had $7.4 million in cash and cash equivalents. We raised approximately $46.2 million of net proceeds from equity financings in 2023 and fully retired our original $35 million of debt with principal payments of $21.2 million, inclusive of the full payoff of the loan in September 2023.

The decrease in net loss was primarily attributable to a $26.2 million decrease in operating expenses driven by significantly reduced research and development expenses and selling, general and administrative expenses partially offset by a decrease of $14.2 million in license and other revenue. The significant reduction of research and development expenses was driven by fewer development programs ongoing during 2023 (due to divestitures in both 2022 and 2023), the AVTX-002 trial reading out in June of 2023 with no new trials initiated in the second half of the year, and a reduction of manufacturing costs due to the timing of manufacturing runs. Selling, general and administrative expenses decreased due to a smaller infrastructure to support the focused pipeline, severance in 2022 that did not repeat, as well as cost savings initiatives. Net loss per share decreased as a result of the decrease in net loss and due to an increase in the shares outstanding.

In March 2024, we closed a private placement financing for gross upfront proceeds of $115.6 million. Avalo estimates upfront net proceeds of approximately $105 million after deducting estimated transaction fees and expenses from both the private placement financing and the acquisition of AlmataBio. We expect future research and development expenses and cash used in operating activities to increase in 2024 as a result of our development plans to initiate and progress a Phase 2 trial in hidradenitis suppurativa. Topline results from this planned Phase 2 trial are expected in 2026 and the upfront funding is expected to fund operations through this data readout and into 2027.

Consolidated Balance Sheets
(In thousands, except share and per share data)

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