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-1β 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-1β
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)
| |
December 31, |
| |
2023 |
|
2022 |
| Assets |
|
|
|
| Current assets: |
|
|
|
|
Cash and cash equivalents |
$ |
7,415 |
|
|
$ |
13,172 |
|
|
Other receivables |
|
136 |
|
|
|
1,919 |
|
|
Inventory, net |
|
— |
|
|
|
20 |
|
|
Prepaid expenses and other current assets |
|
843 |
|
|
|
1,290 |
|
|
Restricted cash, current portion |
|
1 |
|
|
|
15 |
|
| Total current assets |
|
8,395 |
|
|
|
16,416 |
|
| Property and equipment,
net |
|
1,965 |
|
|
|
2,411 |
|
| Goodwill |
|
10,502 |
|
|
|
14,409 |
|
| Restricted cash, net of
current portion |
|
131 |
|
|
|
131 |
|
| Total assets |
$ |
20,993 |
|
|
$ |
33,367 |
|
| Liabilities and
stockholders’ equity |
|
|
|
| Current liabilities: |
|
|
|
|
Accounts payable |
$ |
446 |
|
|
$ |
2,882 |
|
|
Deferred revenue |
|
— |
|
|
|
88 |
|
|
Accrued expenses and other current liabilities |
|
4,172 |
|
|
|
13,214 |
|
|
Notes payable, current |
|
— |
|
|
|
5,930 |
|
| Total current liabilities |
|
4,618 |
|
|
|
22,114 |
|
| Notes payable,
non-current |
|
— |
|
|
|
13,486 |
|
| Royalty obligation |
|
2,000 |
|
|
|
2,000 |
|
| Deferred tax liability,
net |
|
155 |
|
|
|
141 |
|
| Derivative liability |
|
5,550 |
|
|
|
4,830 |
|
| Other long-term
liabilities |
|
1,366 |
|
|
|
1,711 |
|
| Total liabilities |
|
13,689 |
|
|
|
44,282 |
|
| Stockholders’ equity (deficit)
: |
|
|
|
|
Common stock—$0.001 par value; 200,000,000 shares authorized at
December 31, 2023 and 2022; 801,7461 and
39,2941 shares issued and outstanding at December 31,
2023 and 2022, respectively |
|
1 |
|
|
|
— |
|
|
Additional paid-in capital1 |
|
342,437 |
|
|
|
292,909 |
|
|
Accumulated deficit |
|
(335,134 |
) |
|
|
(303,824 |
) |
| Total stockholders’ equity
(deficit) |
|
7,304 |
|
|
|
(10,915 |
) |
| Total liabilities and
stockholders’ equity (deficit) |
$ |
20,993 |
|
|
$ |
33,367 |
|
| |
|
|
|
|
|
|
|
1Amounts for prior periods presented have been
retroactively adjusted to reflect the 1-for-240 reverse stock split
effected on December 28, 2023.
The consolidated balance sheets as of December
31, 2023 and 2022 have been derived from the audited financial
statements, 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)
| |
Year Ended December 31, |
| |
2023 |
|
2022 |
| Revenues: |
|
|
|
|
Product revenue, net |
$ |
1,408 |
|
|
$ |
3,364 |
|
|
License and other revenue |
|
516 |
|
|
|
14,687 |
|
|
Total revenues, net |
|
1,924 |
|
|
|
18,051 |
|
| |
|
|
|
| Operating expenses: |
|
|
|
|
Cost of product sales |
|
1,284 |
|
|
|
3,434 |
|
|
Research and development |
|
13,784 |
|
|
|
31,308 |
|
|
Selling, general and administrative |
|
10,300 |
|
|
|
20,711 |
|
|
Goodwill impairment |
|
3,907 |
|
|
|
— |
|
|
Amortization expense |
|
— |
|
|
|
38 |
|
|
Total operating expenses |
|
29,275 |
|
|
|
55,491 |
|
| |
|
(27,351 |
) |
|
|
(37,440 |
) |
| Other expense: |
|
|
|
|
Interest expense, net |
|
(3,417 |
) |
|
|
(4,170 |
) |
|
Change in fair value of derivative liability |
|
(720 |
) |
|
|
— |
|
|
Other expense, net |
|
(42 |
) |
|
|
(20 |
) |
| Total other expense, net |
|
(4,179 |
) |
|
|
(4,190 |
) |
| Loss before income taxes |
|
(31,530 |
) |
|
|
(41,630 |
) |
| Income tax expense |
|
14 |
|
|
|
28 |
|
| Net loss |
$ |
(31,544 |
) |
|
$ |
(41,658 |
) |
| |
|
|
|
| Net loss per share of common
stock, basic and diluted1 |
$ |
(114 |
) |
|
$ |
(1,063 |
) |
| |
|
|
|
|
|
|
|
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 consolidated statements of operations for
the year ended December 31, 2023 and 2022 have been derived from
the audited 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 AVTX-009AVTX-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 quisovalimab
(AVTX-002)Quisovalimab is a fully human monoclonal
antibody (mAb), directed against human LIGHT
(Lymphotoxin-like, exhibits
Inducible expression, and competes with Herpes
Virus Glycoprotein D for
Herpesvirus Entry Mediator (HVEM), a receptor
expressed by T lymphocytes). There is increasing
evidence that the dysregulation of the LIGHT-signaling network
which includes LIGHT, its receptors HVEM and LTβR and the
downstream checkpoint BTLA, is a disease-driving mechanism in
autoimmune and inflammatory reactions in barrier organs. Therefore,
we believe reducing LIGHT levels can moderate immune dysregulation
in many acute and chronic inflammatory disorders. Quisovalimab
previously demonstrated proof of concept in COVID-19 induced acute
respiratory distress syndrome including reduction in mortality and
respiratory failure, as well as a positive signal in patients with
Crohn’s Disease.
About AVTX-008AVTX-008 is a
fully human B and T Lymphocyte Attenuator (BTLA) agonist fusion
protein in the IND-enabling stage. AVTX-008 is differentiated by
having specific binding to BTLA, with no binding to LIGHT or CD160.
AVTX-008 also has high-serum stability and solubility.
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’s pipeline also includes quisovalimab (anti-LIGHT mAb) and
AVTX-008 (BTLA agonist fusion protein).
For more information about Avalo, please visit
www.avalotx.com.
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: the intended use of the proceeds from the private
placement; integration of AVTX-009 into our operations; drug
development costs, timing of trial results and other risks,
including reliance on investigators and enrollment of patients in
clinical trials; reliance on key personnel; regulatory risks;
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.
For media and investor inquiries
Christopher Sullivan, CFO Avalo Therapeutics,
Inc. ir@avalotx.com410-803-6793
or
Chris BrinzeyICR
WestwickeChris.brinzey@westwicke.com339-970-2843
Avalo Therapeutics (NASDAQ:AVTX)
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