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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549  

FORM 8-K
 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 12, 2024

AVALO THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)  
Delaware
(State or other jurisdiction of incorporation)
001-3759045-0705648
(Commission File Number)(IRS Employer Identification No.)
540 Gaither Road, Suite 400, Rockville, Maryland 20850
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (410) 522-8707

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 Par ValueAVTXNasdaq Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02    Results of Operations and Financial Condition.

On August 12, 2024, Avalo Therapeutics, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2024. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.

Information in this Item 2.02 (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01    Financial Statements and Exhibits.

(d)    Exhibits:

Exhibit No. Description
99.1
104The cover pages of this Current Report on Form 8-K, formatted in Inline XBRL.
    
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

AVALO THERAPEUTICS, INC.
Date: August 12, 2024By:/s/ Christopher Sullivan
Christopher Sullivan
Chief Financial Officer



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Exhibit 99.1

avalo-logoxblk1a.jpg

Avalo Reports Second Quarter 2024 Financial Results and Provides Business Updates

•Expects to enroll first patient in Phase 2 LOTUS Trial of AVTX-009 in hidradenitis suppurativa in the second half of 2024
•Appointed Dr. Mittie Doyle as Chief Medical Officer and Paul Varki as Chief Legal Officer
•Cash on hand of approximately $93.4 million as of June 30, 2024 with expected cash runway into 2027

WAYNE, PA AND ROCKVILLE, MD, August 12, 2024 — 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.
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Consolidated Balance Sheets
(In thousands, except share and per share data)
June 30, 2024December 31, 2023
(unaudited)
Assets        
Current assets:  
Cash and cash equivalents$93,426 $7,415 
Other receivables33 136 
Prepaid expenses and other current assets2,435 843 
Restricted cash, current portion— 1 
Total current assets95,894 8,395 
Property and equipment, net1,780 1,965 
Goodwill10,502 10,502 
Restricted cash, net of current portion131 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 liabilities7,888 4,172 
Warrant liability82,855 — 
Contingent consideration5,000 — 
Total current liabilities96,397 4,618 
Royalty obligation2,000 2,000 
Deferred tax liability, net168 155 
Derivative liability10,710 5,550 
Other long-term liabilities1,183 1,366 
Total liabilities110,458 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, respectively11,457 — 
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, respectively1 1 
Additional paid-in capital344,352 342,437 
Accumulated deficit(357,961)(335,134)
Total stockholders’ (deficit) equity(13,608)7,304 
Total liabilities, mezzanine equity and stockholders’ (deficit) equity$108,307 $20,993 
The consolidated balance sheets as of June 30, 2024 and December 31, 2023 have been derived from the reviewed and audited financial statements, respectively, but do not include all of the information and footnotes required by accounting principles accepted in the United States for complete financial statements.
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Consolidated Statements of Operations
(In thousands, except per share data)
Three Months EndedSix Months Ended
 June 30,June 30,
 2024202320242023
Revenues:
Product revenue, net$— $643 $— $1,117 
Total revenues, net— 643 — 1,117 
Operating expenses:
Cost of product sales343 708 263 1,259 
Research and development4,601 4,658 6,716 10,667 
Acquired in-process research and development103 — 27,641 — 
General and administrative4,528 2,427 7,721 5,134 
Total operating expenses9,575 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 liability112,046 — 112,046 — 
Private placement transaction costs— — (9,220)— 
Change in fair value of derivative liability(5,040)(40)(5,160)(220)
Interest income (expense), net1,039 (996)1,138 (1,945)
Other expense, net— — — (25)
Total other income (expense), net108,045 (1,036)19,528 (2,190)
Income (loss) before taxes98,470 (8,186)(22,813)(18,133)
Income tax expense7 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.


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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.


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References
1Patel ZS et al. Curr Pain Headache Rep. 2017;21(12):49.
2Egeberg A, et al. JAMA Dermatol 2016;152:429–34
3Phan K, et al Biomed Dermatol 2020; 4: 2-6
4Jfri, A, et al. JAMA Dermatol. 2021;157(8):924-31
5Nguyen 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 Brinzey
ICR Westwicke
Chris.brinzey@westwicke.com
339-970-2843
5
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Cover Page Document
Aug. 12, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Aug. 12, 2024
Entity Registrant Name AVALO THERAPEUTICS, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-37590
Entity Tax Identification Number 45-0705648
Entity Address, Address Line One 540 Gaither Road, Suite 400
Entity Address, City or Town Rockville
Entity Address, State or Province MD
Entity Address, Postal Zip Code 20850
City Area Code 410
Local Phone Number 522-8707
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.001 Par Value
Trading Symbol AVTX
Entity Emerging Growth Company false
Entity Central Index Key 0001534120
Amendment Flag false
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