Avalo Therapeutics, Inc. (Nasdaq: AVTX), today announced business
updates and financial results for the second quarter of 2022.
“We have made significant progress advancing our
clinical trials while also securing critical nondilutive capital
since our first quarter business update,” said Dr. Garry Neil,
President and Chief Executive Officer of Avalo Therapeutics. “We
are pleased to have enrolled the first patient in both our Phase 2
PEAK trial of AVTX-002 in NEA as well as our pivotal LADDER trial
of ATX-803 in LAD II. Additionally, it’s critically important that
we secured approximately $15 million of initial consideration from
our license and transfer of our AVTX-007 program. The transaction
allows us to operationally and financially focus on our most
promising programs, most notably AVTX-002.”
Business Updates:
- In July 2022, Avalo granted an
exclusive license to Apollo Therapeutics Group Limited (Apollo)
granting rights to Apollo to research, develop, manufacture and
commercialize AVTX-007. The AVTX-007 program was originally
licensed to Avalo by MedImmune Limited, a subsidiary of AstraZeneca
plc, and such license was transferred to Apollo as part of the
transaction.
- Avalo received approximately $15
million of upfront consideration.
- Avalo is also entitled to up to $74
million of milestone payments, as well as a royalty payment of a
low single digit percentage of annual net sales.
- On July 7, 2022, Avalo effected a
1-for-12 reverse stock split to increase the per share price of its
common stock to regain compliance with the listing requirements of
the Nasdaq Capital Market. On July 22, 2022, the Company received
written notification from Nasdaq that Avalo had regained compliance
and that the matter is now closed.
- In June 2022, Avalo, prepaid
$15 million under its loan venture loan and security agreement
(the Loan Agreement), of which $14.8 million was applied to
principal and the remainder applied to accrued interest. As of June
30, 2022, the remaining principal payments were $21.2 million.
Program Updates and
Milestones:
- AVTX-002:
Anti-LIGHT monoclonal antibody (mAb) targeting immune-inflammatory
diseases.
- NEA: Avalo has initiated its Phase
2 PEAK trial (A Phase 2, Randomized, Double-Blind,
Placebo-Controlled, Parallel Group Study to Evaluate the Safety and
Efficacy of AVTX-002 for the Treatment of Poorly
Controlled Non-Eosinophilic
Asthma K) evaluating the safety
and efficacy of AVTX-002 in 80 patients with poorly controlled NEA.
The first patient was dosed in May 2022. Top-line data from the
trial are expected in the first half of 2023.
- AVTX-800 programs (AVTX-803
and AVTX-801): Monosaccharide therapies for two congenital
disorders of glycosylation (CDGs): leukocyte adhesion deficiency
type II (LAD II, also known as SLC35C1-CDG) and PGM1-CDG.
- LAD II: Avalo has initiated its
pivotal LADDER trial (A Phase 3, Randomized, Double-blind,
Two-period, Crossover, Withdrawal Study to Assess the Efficacy and
Safety of AVTX-803 in Subjects
with Leukocyte Adhesion Deficiency
Type II (LAD II) ER)
evaluating the safety and efficacy of AVTX-803 in patients with LAD
II (n=2). The first patient was dosed in July 2022. Data from this
pivotal trial are expected in the first half of 2023.
- PGM1-CDG: Milestone timing and the
development plan is under review as a result of recent feedback
from the U.S. Food and Drug Administration (FDA).
Second Quarter 2022 Financial
Update:
Avalo had $11.2 million in cash and cash
equivalents as of June 30, 2022, representing a $43.4 million
decrease as 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
the Loan Agreement. Subsequent to June 30, 2022, Avalo received the
approximate $15 million of upfront payment from its transfer of
AVTX-007.
Total operating expenses decreased $16.7 million
for the six months ended June 30, 2022 as compared to the same
period in 2021. Research and development expenses decreased $19.7
million due to a $10.0 million upfront license fee incurred in the
first quarter of 2021, which did not repeat, and a $9.2 million
reduction due to specific timing of manufacturing, non-clinical
activities and clinical trial activities. Selling, general and
administrative expenses increased $1.7 million mainly due to
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, partially offset by
decreases to legal, consulting and marketing expenses from cost
savings initiatives. Cost of product sales increased $2.1 million
due to the net profit share of our non-core commercialized product,
Millipred®, that began in the third quarter of 2021. Additionally,
in the second quarter of 2022, we fully reserved the
$1.0 million 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 was largely driven by operating expenses.
Condensed Consolidated Balance Sheets
(Unaudited) (In thousands, except share and per share
data)
|
|
June 30, 2022 |
|
December 31, 2021 |
Assets |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
11,249 |
|
|
$ |
54,585 |
|
Accounts receivable, net |
|
|
544 |
|
|
|
1,060 |
|
Other receivables |
|
|
1,306 |
|
|
|
3,739 |
|
Inventory, net |
|
|
23 |
|
|
|
38 |
|
Prepaid expenses and other current assets |
|
|
1,885 |
|
|
|
2,372 |
|
Restricted cash, current portion |
|
|
14 |
|
|
|
51 |
|
Total current assets |
|
|
15,021 |
|
|
|
61,845 |
|
Property and equipment,
net |
|
|
2,567 |
|
|
|
2,695 |
|
Other long-term asset |
|
|
— |
|
|
|
1,000 |
|
Intangible assets, net |
|
|
— |
|
|
|
38 |
|
Goodwill |
|
|
14,409 |
|
|
|
14,409 |
|
Restricted cash, net of
current portion |
|
|
227 |
|
|
|
227 |
|
Total assets |
|
$ |
32,224 |
|
|
$ |
80,214 |
|
Liabilities and
stockholders’ (deficit) equity |
|
|
|
|
Current liabilities: |
|
|
|
|
Accounts payable |
|
$ |
2,164 |
|
|
$ |
3,369 |
|
Accrued expenses and other current liabilities |
|
|
13,231 |
|
|
|
16,519 |
|
Total current liabilities |
|
|
15,395 |
|
|
|
19,888 |
|
Notes payable,
non-current |
|
|
18,713 |
|
|
|
32,833 |
|
Royalty obligation |
|
|
2,000 |
|
|
|
2,000 |
|
Deferred tax liability,
net |
|
|
128 |
|
|
|
113 |
|
Other long-term
liabilities |
|
|
1,939 |
|
|
|
2,298 |
|
Total liabilities |
|
|
38,175 |
|
|
|
57,132 |
|
Stockholders’ (deficit)
equity: |
|
|
|
|
Common stock—$0.001 par value; 200,000,000 shares authorized at
June 30, 2022 and December 31, 2021; 9,405,724 and 9,399,517 shares
issued and outstanding at June 30, 2022 and December 31, 2021,
respectively1 |
|
|
9 |
|
|
|
9 |
|
Additional paid-in capital1 |
|
|
291,244 |
|
|
|
285,239 |
|
Accumulated deficit |
|
|
(297,204 |
) |
|
|
(262,166 |
) |
Total stockholders’ (deficit)
equity |
|
|
(5,951 |
) |
|
|
23,082 |
|
Total liabilities and
stockholders’ (deficit) equity |
|
$ |
32,224 |
|
|
$ |
80,214 |
|
1 Results 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 June 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 |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2022 |
|
2021 |
|
|
2022 |
|
|
2021 |
Revenues: |
|
|
|
|
|
|
|
|
Product revenue, net |
|
$ |
1,033 |
|
|
$ |
2,730 |
|
|
$ |
2,206 |
|
|
$ |
3,204 |
|
License revenue |
|
|
— |
|
|
|
625 |
|
|
|
— |
|
|
|
625 |
|
Total revenues, net |
|
|
1,033 |
|
|
|
3,355 |
|
|
|
2,206 |
|
|
|
3,829 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Cost of product sales |
|
|
1,567 |
|
|
|
83 |
|
|
|
2,286 |
|
|
|
159 |
|
Research and development |
|
|
8,510 |
|
|
|
12,569 |
|
|
|
18,094 |
|
|
|
37,774 |
|
Selling, general and administrative |
|
|
2,784 |
|
|
|
7,404 |
|
|
|
14,468 |
|
|
|
12,751 |
|
Amortization expense |
|
|
— |
|
|
|
428 |
|
|
|
38 |
|
|
|
853 |
|
Total operating expenses |
|
|
12,861 |
|
|
|
20,484 |
|
|
|
34,886 |
|
|
|
51,537 |
|
|
|
|
(11,828 |
) |
|
|
(17,129 |
) |
|
|
(32,680 |
) |
|
|
(47,708 |
) |
Other expense: |
|
|
|
|
|
|
|
|
Other expense, net |
|
|
— |
|
|
|
(5 |
) |
|
|
(20 |
) |
|
|
(5 |
) |
Interest expense, net |
|
|
(1,154 |
) |
|
|
(239 |
) |
|
|
(2,323 |
) |
|
|
(222 |
) |
Total other expense, net from
continuing operations |
|
|
(1,154 |
) |
|
|
(244 |
) |
|
|
(2,343 |
) |
|
|
(227 |
) |
Loss from continuing
operations before taxes |
|
|
(12,982 |
) |
|
|
(17,373 |
) |
|
|
(35,023 |
) |
|
|
(47,935 |
) |
Income tax expense
(benefit) |
|
|
5 |
|
|
|
(199 |
) |
|
|
15 |
|
|
|
(188 |
) |
Loss from continuing
operations |
|
$ |
(12,987 |
) |
|
$ |
(17,174 |
) |
|
$ |
(35,038 |
) |
|
$ |
(47,747 |
) |
Income (loss) from
discontinued operations |
|
|
— |
|
|
|
69 |
|
|
|
— |
|
|
|
(38 |
) |
Net loss |
|
$ |
(12,987 |
) |
|
$ |
(17,105 |
) |
|
$ |
(35,038 |
) |
|
$ |
(47,785 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share of common
stock, basic and diluted1: |
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(1.38 |
) |
|
$ |
(2.12 |
) |
|
$ |
(3.73 |
) |
|
$ |
(5.97 |
) |
Discontinued operations |
|
|
0.00 |
|
|
|
0.01 |
|
|
|
0.00 |
|
|
|
0.00 |
|
Net loss per share of common
stock, basic and diluted |
|
$ |
(1.38 |
) |
|
$ |
(2.11 |
) |
|
$ |
(3.73 |
) |
|
$ |
(5.97 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share of
preferred stock, basic and diluted1: |
|
|
|
|
|
|
|
|
Continuing operations |
|
|
|
$ |
(0.88 |
) |
|
|
|
$ |
(2.49 |
) |
Discontinued operations |
|
|
|
|
0.00 |
|
|
|
|
|
0.00 |
|
Net loss per share of
preferred stock, basic and diluted |
|
|
|
$ |
(0.88 |
) |
|
|
|
$ |
(2.49 |
) |
1 Results have been retroactively adjusted to
reflect the 1-for-12 reverse stock split effected on July 7,
2022.
The unaudited condensed consolidated statements
of operations for the three and six months ended June 30, 2022 and
2021 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.
About Avalo Therapeutics
Avalo Therapeutics is a leading clinical-stage
precision medicine company that discovers, develops, and
commercializes targeted therapeutics for patients with significant
unmet clinical need in immunology and rare genetic diseases. The
Company has built a diverse portfolio of innovative therapies to
deliver meaningful medical impact for patients in urgent need. The
Company’s clinical candidates commonly have a proven mechanistic
rationale, biomarkers and/or an established proof-of-concept to
expedite and increase the probability of success.
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 future financial and operational outlook; the
development of product candidates or products; timing and success
of trial results and regulatory review; potential attributes and
benefits of product candidates; and other statements that are not
historical. These statements are based upon the current beliefs and
expectations of Avalo’s management but are subject to significant
risks and uncertainties, including: Avalo's cash position and the
need for it to raise additional capital in the near future; drug
development costs, timing and other risks, including reliance on
investigators and enrollment of patients in clinical trials, which
might be slowed by the COVID-19 pandemic; reliance on key
personnel, including as a result of recent management changes;
regulatory risks; general economic and market risks and
uncertainties, including those caused by the COVID-19 pandemic and
tensions in Ukraine; and those other risks detailed in Avalo’s
filings with the SEC. 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
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