Avalo Reports Third Quarter 2022 Financial Results and Provides Business Updates
- Topline data expected in the first half of 2023 from the Phase 2 PEAK Trial of AVTX-002 in non-eosinophilic asthma (NEA)
- Entered into agreement to sell future economic rights to previously out-licensed assets in consideration for $5 million to be received upon closing
- Progressed BTLA Agonist Fusion Protein (AVTX-008) to IND-enabling studies
- Disclosed cash of approximately $17 million as of September 30, 2022
WAYNE, Pa. and ROCKVILLE, Md., Nov. 07, 2022 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (Nasdaq: AVTX), today announced business updates and financial results for the third quarter of 2022.
“We have made great operational progress on the enrollment of our Phase 2 PEAK trial of AVTX-002 in NEA. We expect to complete enrollment by the end of the year, which keeps us on track to release topline data in the first half of 2023,” said Dr. Garry Neil, Chief Executive Officer and Chairman of the Board. “Additionally, we expect to further strengthen our balance sheet with the $5 million to be received from the sale of economic rights of previously out-licensed assets upon the transaction closing, which further demonstrates the execution of our strategy to utilize business development to fund our core programs. Once completed, we will have raised $20 million through nondilutive transactions since August. Avalo is focused on closing out the year with further operational and strategic success.”
- On November 4, 2022, Avalo entered into an agreement with ES Therapeutics, LLC, an affiliate of Armistice Capital LLC (Armistice), to sell its net economic rights to future payments of previously out-licensed assets including AVTX-007, AVTX-501, and AVTX-611 for proceeds of $5 million. The sale is expected to close in November.
- In August 2022, Avalo’s Board of Directors appointed Dr. Garry Neil, MD, Avalo’s Chief Executive Officer and Director, as Chairman of the Board. Steven Boyd and Keith Maher, MD, both of Armistice, left Avalo’s Board of Directors. The former directors expressed that they were pleased with Avalo’s strategic progress under Dr. Neil and continued to be supportive of Avalo.
- Avalo sharpened its focus to dysregulated inflammation specifically as it relates to the LIGHT-signaling network. We have two drug candidates that modulate the LIGHT-signaling network, AVTX-002, an anti-LIGHT monoclonal antibody in Phase 2, and AVTX-008, a BTLA agonist fusion protein in lead optimization.
Program Updates and Milestones:
- AVTX-002: Anti-LIGHT monoclonal antibody (mAb) targeting immune-inflammatory diseases.
- NEA: Topline data expected in the first half of 2023 from the Phase 2 PEAK trial evaluating the safety and efficacy of AVTX-002 in approximately 80 patients with poorly controlled NEA.
- AVTX-008: B and T Lymphocyte Attenuator (BTLA) agonist fusion protein targeting immune dysregulation disorders.
- Avalo identified a lead molecule and is currently evaluating several immune dysregulation disorders, with a target IND submission planned in 2024.
- AVTX-803: Fucose replacement for leukocyte adhesion deficiency type II (LAD II, also known as SLC35C1-CDG), a congenital disorder of glycosylation (CDG).
- Pivotal data expected in the first half of 2023 from the pivotal LADDER trial evaluating the safety and efficacy of AVTX-803 in approximately 2 patients with LAD II.
Third Quarter 2022 Financial Update:
Avalo had $16.9 million in cash as of September 30, 2022, representing a $37.7 million decrease compared to December 31, 2021. The decrease was primarily driven by operating expenditures to fund and support pipeline development and a $15.0 million partial prepayment under its loan and security agreement, partially offset by the $14.5 million upfront payment received from the out-license of AVTX-007 to Apollo Therapeutics (“Apollo”) in July 2022. Subsequent to September 30, 2022, Avalo entered into a transaction to sell its net economic rights to future payments of certain previously out-licensed legacy assets for consideration of $5.0 million to be received upon closing, which is expected in November.
Total net revenues increased $12.0 million for the nine months ended September 30, 2022, as compared to the same period in 2021. The increase was mainly driven by the $14.5 million upfront consideration received pursuant to the out-license and transfer of AVTX-007 to Apollo.
Total operating expenses decreased $23.6 million for the nine months ended September 30, 2022. Research and development expenses decreased $23.2 million due to a $10.0 million upfront license fee incurred in the first quarter of 2021, which did not repeat. The remaining $13.2 million decrease was primarily driven by timing of manufacturing and reduced non-clinical and clinical trial activities as a result of pipeline prioritization and the out-license of AVTX-007. Selling, general and administrative expenses decreased $0.9 million due to reduced legal, consulting and marketing expenses from cost savings initiatives, partially offset by increased severance and stock-based compensation expense driven by headcount reductions from the pipeline prioritization plan announced in the first quarter of 2022 and other separations. Cost of product sales increased $1.7 million due to the net profit share of our non-core commercialized product, Millipred®, that began in the third quarter of 2021 and a $1.0 million reserve recognized in the second quarter of 2022 related to a receivable due in December 2024 pursuant to the transition service agreement with the third party that previously managed Millipred®’s commercial operations.
The net loss and change in net loss for the nine months ended September 30, 2022 was largely driven by operating expenses, partially offset by license revenue.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share and per share data)
|September 30, 2022||December 31, 2021|
|Cash and cash equivalents||$||16,943||$||54,585|
|Accounts receivable, net||—||1,060|
|Prepaid expenses and other current assets||1,118||2,372|
|Restricted cash, current portion||53||51|
|Total current assets||19,450||61,845|
|Property and equipment, net||2,507||2,695|
|Other long-term asset||—||1,000|
|Intangible assets, net||—||38|
|Restricted cash, net of current portion||181||227|
|Liabilities and stockholders’ (deficit) equity|
|Accrued expenses and other current liabilities||13,696||16,519|
|Notes payable, current||2,564||—|
|Total current liabilities||18,149||19,888|
|Notes payable, non-current||16,502||32,833|
|Deferred tax liability, net||133||113|
|Other long-term liabilities||1,791||2,298|
|Stockholders’ (deficit) equity:|
|Common stock—$0.001 par value; 200,000,000 shares authorized at September 30, 2022 and December 31, 2021; 9,414,104 and 9,399,517 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively1||9||9|
|Additional paid-in capital1||291,975||285,239|
|Total stockholders’ (deficit) equity||(2,028||)||23,082|
|Total liabilities and stockholders’ (deficit) equity||$||36,547||$||80,214|
1 Results for prior periods presented have been retroactively adjusted to reflect the 1-for-12 reverse stock split effected on July 7, 2022.
The unaudited condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 have been derived from the reviewed financial statements, but do not include all of the information and footnotes required by accounting principles accepted in the United States for complete financial statements.
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)
|Three Months Ended||Nine Months Ended|
|September 30,||September 30,|
|Product revenue, net||$||432||$||1,350||$||2,638||$||4,554|
|Total revenues, net||14,949||1,350||17,155||5,179|
|Cost of product sales||528||908||2,814||1,067|
|Research and development||7,042||10,551||25,136||48,325|
|Selling, general and administrative||3,284||5,926||17,752||18,677|
|Total operating expenses||10,854||17,813||45,740||69,350|
|Interest expense, net||(898||)||<|