On March 29, 2023 Avalo Therapeutics, Inc. (Nasdaq: AVTX), reported business updates and year-end financial results for 2022 (Press release, Avalo Therapeutics, MAR 29, 2023, View Source [SID1234629483]).
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"We made significant strategic and operational progress over the past year, by executing our goals of streamlining the pipeline to the most promising assets/trials, implementing corresponding infrastructure cost reductions, executing operationally and extending the cash runway through business development transactions," said Dr. Garry Neil, Chief Executive Officer and Chairman of the Board. "2023 will be a transformational year for Avalo as we look forward to our upcoming data readout of the Phase 2 PEAK trial of AVTX-002 in patients with NEA in the second quarter."
Program Updates and Milestones:
•AVTX-002: Anti-LIGHT monoclonal antibody (mAb) targeting immune-inflammatory diseases.
◦NEA: Avalo completed enrollment of the Phase 2 PEAK trial evaluating the safety and efficacy of AVTX-002 in 91 patients with NEA. Topline data expected in the second quarter of 2023.
•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).
◦Timing of pivotal data from the pivotal LADDER trial evaluating the safety and efficacy of AVTX-803 in approximately 2 patients with LAD II is under evaluation.
2022 Financial Update:
Avalo had $13.2 million in cash and cash equivalents as of December 31, 2022, representing a $41.4 million decrease compared to December 31, 2021. The decrease was primarily driven by operating expenditures and a $15.0 million partial prepayment under its loan and security agreement, partially offset by $19.5 million of upfront payments received from out-license and business development activity. In February 2023, we closed an equity financing in which we raised approximately $13.7 million in net proceeds.
Total net revenues increased $12.7 million for the year ended December 31, 2022. The increase was driven by $14.5 million of upfront consideration received pursuant to the out-license of AVTX-007. Total operating expenses decreased $32.0 million for the year ended December 31, 2022, mainly driven by significantly reduced research and development expenses. Research and development expenses decreased $28.5 million as a result of our narrowed focus in 2022 on primarily progressing our lead development asset, AVTX-002, as opposed to the progression of multiple programs in 2021. We also recognized a $10.0 million upfront license
fee in 2021 for the AVTX-002 expanded indication license agreement that did not repeat in 2022. As a result of the focused pipeline, Avalo executed a cost reduction plan, including reducing its headcount and supporting infrastructure. Selling, general and administrative expenses decreased $3.9 million as a result, however, these decreases were partially offset by $6.7 million of severance and stock-based compensation expense from employee separations.
The net loss and net loss per share for the year ended December 31, 2022 was largely driven by operating expenses and partially offset by revenue from business development transactions.
Consolidated Balance Sheets
(In thousands, except share and per share data)
December 31,
2022 2021
Assets
Current assets:
Cash and cash equivalents $ 13,172 $ 54,585
Accounts receivable, net — 1,060
Other receivables 1,919 3,739
Inventory, net 20 38
Prepaid expenses and other current assets 1,290 2,372
Restricted cash, current portion 15 51
Total current assets 16,416 61,845
Property and equipment, net 2,411 2,695
Other long-term asset — 1,000
Intangible assets, net — 38
Goodwill 14,409 14,409
Restricted cash, net of current portion 131 227
Total assets $ 33,367 $ 80,214
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable $ 2,882 $ 3,369
Deferred revenue 88 —
Accrued expenses and other current liabilities 13,214 16,519
Notes payable, current 5,930 —
Total current liabilities 22,114 19,888
Notes payable, non-current 13,486 32,833
Royalty obligation 2,000 2,000
Deferred tax liability, net 141 113
Derivative liability 4,830 —
Other long-term liabilities 1,711 2,298
Total liabilities 44,282 57,132
Stockholders’ (deficit) equity:
Common stock—$0.001 par value; 200,000,000 shares authorized at December 31, 2022 and 2021; 9,430,535 and 9,399,517 shares issued and outstanding at December 31, 2022 and 2021, respectively1
9 9
Additional paid-in capital1
292,900 285,239
Accumulated deficit (303,824) (262,166)
Total stockholders’ (deficit) equity (10,915) 23,082
Total liabilities and stockholders’ (deficit) equity $ 33,367 $ 80,214
1 Amounts for prior periods presented have been retroactively adjusted to reflect the 1-for-12 reverse stock split effected on July 7, 2022. See Note 1 for details.
The consolidated balance sheets as of December 31, 2022 and 2021 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,
2022 2021
Revenues:
Product revenue, net $ 3,364 $ 4,773
License and other revenue 14,687 625
Total revenues, net 18,051 5,398
Operating expenses:
Cost of product sales 3,434 1,491
Research and development 31,308 59,835
Selling, general and administrative 20,711 24,658
Amortization expense 38 1,548
Total operating expenses 55,491 87,532
(37,440) (82,134)
Other expense:
Interest expense, net (4,170) (2,391)
Other expense, net (20) (20)
Total other expense, net from continuing operations (4,190) (2,411)
Loss from continuing operations before income taxes (41,630) (84,545)
Income tax expense (benefit) 28 (196)
Loss from continuing operations $ (41,658) $ (84,349)
Loss from discontinued operations — (27)
Net loss $ (41,658) $ (84,376)
Net (loss) income per share of common stock, basic and diluted1:
Continuing operations $ (4.43) $ (9.95)
Discontinued operations — 0.00
Net loss per share of common stock, basic and diluted $ (4.43) $ (9.95)
Net (loss) income per share of preferred stock, basic and diluted1:
Continuing operations $ (4.15)
Discontinued operations —
Net loss per share of preferred stock, basic and diluted $ (4.15)
1 Amounts for prior periods presented have been retroactively adjusted to reflect the 1-for-12 reverse stock split effected on July 7, 2022. See Note 1 for details.
The consolidated statements of operations for the year ended December 31, 2022 and 2021 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-002
AVTX-002, Avalo’s lead development asset, 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, including NEA. AVTX-002 previously demonstrated proof of concept in COVID-19 induced acute respiratory distress syndrome including reduction in mortality and respiratory failure.
About AVTX-002 PEAK Trial
The Phase 2 PEAK Trial is a randomized, double-blind, placebo-controlled, parallel group trial designed to evaluate the safety and efficacy of AVTX-002 for the treatment of poorly controlled NEA (NCT05288504). Following 12 weeks of treatment, the efficacy and safety of AVTX-002 will be evaluated compared with placebo. The primary endpoint is the proportion of patients who experience any of the following asthma-related events: (i) ≥6 additional reliever puffs of a short-acting beta-agonist (compared to baseline) in a 24-hour period on 2 consecutive days, or (ii) increase in inhaled corticosteroid dose ≥4 times than the dose at baseline, or (iii) a decrease in peak flow of 30% or more (compared to baseline) on 2 consecutive days of treatment, or (iv) an asthma exacerbation requiring the use of systemic corticosteroids (tablets, suspension, or injection) for at least 3 days, or (v) a hospitalization or emergency room visit because of an asthma exacerbation.