WAYNE, Pa. and ROCKVILLE, Md. - Avalo Therapeutics, Inc. (NASDAQ: NASDAQ:AVTX) has announced the acquisition of a Phase 2-ready monoclonal antibody, AVTX-009, through its purchase of AlmataBio, Inc. The transaction includes a private placement financing round, which is expected to provide Avalo with up to $185 million in gross proceeds, including an initial investment of $115.6 million. This financing is anticipated to extend Avalo's operational runway into 2027.
The acquired antibody, AVTX-009, targets interleukin-1β (IL-1β), a key player in inflammatory processes, and is poised for Phase 2 clinical trials in patients with hidradenitis suppurativa (HS), a chronic autoimmune skin condition. Topline results from the trial are expected in 2026. Avalo also plans to explore the drug's potential in treating other chronic inflammatory diseases.
Avalo's CEO, Dr. Garry A. Neil, expressed confidence in the high probability of success for AVTX-009 in the treatment of HS, citing recent data that supports the inhibition of IL-1β in the disease. Dr. Neil also highlighted the multi-billion-dollar commercial opportunity in HS and the potential of AVTX-009 to be a leading therapy in the field due to its target, half-life, and potency.
The acquisition and the concurrent financing are set to close on Thursday, March 28, 2024, subject to standard closing conditions. Avalo's current leadership will remain unchanged, with no AlmataBio affiliates joining as officers or employees. However, following the transaction, Jonathan Goldman, M.D., was appointed to Avalo's Board of Directors.
The acquisition was structured as a stock-for-stock transaction, with AlmataBio's equity interests exchanged for a combination of Avalo common stock and non-voting convertible preferred stock, valued at approximately $15 million. Additionally, a cash payment of $7.5 million is due to former AlmataBio shareholders upon the initial closing of the private placement.
InvestingPro Insights
Avalo Therapeutics, Inc. (NASDAQ: AVTX) has made a significant move by acquiring AlmataBio, Inc. and securing substantial funding for its operational future. As the company prepares for the upcoming Phase 2 clinical trials of AVTX-009, it's crucial for potential investors to consider the financial metrics and analyst insights provided by InvestingPro. Here's a snapshot of the company's current financial health and market performance:
- Avalo Therapeutics holds a relatively small market capitalization of $3.81 million, reflecting its status as a micro-cap company in the biopharmaceutical industry.
- The company's price-to-book ratio as of the last twelve months leading up to Q3 2023 stands at 0.26, suggesting that the stock may be undervalued relative to its book value.
- Revenue has seen a significant decline, with a reported decrease of 87.06% over the last twelve months as of Q3 2023, indicating challenges in sales growth.
InvestingPro Tips highlight several aspects investors should be aware of:
1. Avalo Therapeutics is quickly burning through cash, which may raise concerns about its financial sustainability despite the recent funding.
2. Analysts do not anticipate the company to be profitable this year, underlining the risks associated with investing in a company that is yet to turn a profit.
For those interested in a deeper dive into Avalo Therapeutics' financials and market prospects, InvestingPro provides an additional 13 InvestingPro Tips. These insights can help investors make more informed decisions and are available at: https://www.investing.com/pro/AVTX. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to these valuable tips.
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