Avalo Reports Second Quarter 2025 Financial Results and Recent Business Updates

Rhea-AI Summary

Avalo Therapeutics (Nasdaq: AVTX), a clinical-stage biotech company focused on IL-1β-based treatments, reported Q2 2025 financial results and business updates. The company's Phase 2 LOTUS trial for hidradenitis suppurativa (HS) has enrolled over 75% of planned patients, with topline data expected mid-2026.

Financial highlights include $113.3 million in cash and short-term investments as of June 30, 2025, providing runway into 2028. Q2 2025 showed a net loss of $20.8 million ($1.92 per share), compared to net income of $98.5 million in Q2 2024. R&D expenses increased by $9.5 million to $14.1 million, primarily due to LOTUS trial costs.

The company strengthened its leadership by appointing Rita Jain, M.D. to the Board of Directors, bringing valuable experience in clinical development and regulatory strategy.

Positive

• Strong cash position of $113.3 million expected to fund operations into 2028
• Phase 2 LOTUS trial over 75% enrolled with completion expected by year-end
• Addition of experienced board member Rita Jain, M.D. strengthening leadership

Negative

• Net loss of $20.8 million in Q2 2025, compared to net income in Q2 2024
• R&D expenses increased significantly by $9.5 million year-over-year
• General and administrative expenses increased by $0.7 million from Q2 2024

Insights

Biotech Investment Analyst

Avalo reports $113.3M cash position extending runway to 2028 while advancing Phase 2 HS trial with mid-2026 data readout.

Avalo Therapeutics is making steady progress with its Phase 2 LOTUS trial for hidradenitis suppurativa (HS), having enrolled over 75% of the planned 222 patients. The study is evaluating AVTX-009, an IL-1β-targeted therapy, with topline data expected in mid-2026. This timeline aligns with management's previously stated goals, suggesting operational execution remains on track.

The company's financial position appears solid with $113.3 million in cash and short-term investments as of June 30, 2025. Management projects this will fund operations into 2028, providing a substantial runway beyond their mid-2026 data readout. This extensive cash runway is particularly valuable for clinical-stage biotech companies as it reduces financing risk during critical development periods.

R&D expenses increased to $14.1 million in Q2 2025, up $9.5 million from Q2 2024, reflecting the advancing LOTUS trial. The net loss of $20.8 million for Q2 2025 contrasts with the $98.5 million net income reported in Q2 2024, though that prior period figure was primarily driven by a $109.5 million change in warrant valuation accounting, not operational improvements.

The appointment of Dr. Rita Jain to the Board adds valuable clinical development and regulatory expertise as the company moves toward potential Phase 3 readiness. This strategic addition suggests management is appropriately planning ahead for later-stage development while maintaining focus on successfully completing the current Phase 2 trial.

• Topline data from Phase 2 LOTUS trial of AVTX-009 for the treatment of hidradenitis suppurativa expected mid-2026
• Rita Jain, M.D. appointed to Board of Directors
• Cash and short-term investments of approximately $113 million as of June 30, 2025 expected to provide runway into 2028
  

WAYNE, Pa., Aug. 07, 2025 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (Nasdaq: AVTX), a clinical stage biotechnology company fully dedicated to developing IL-1β-based treatments for immune-mediated inflammatory diseases, today announced business updates and financial results for the second quarter of 2025.

“The team has made tremendous progress on the execution of the Phase 2 LOTUS trial in hidradenitis suppurativa (HS). We have enrolled over three-quarters of the planned patients and are on track to complete enrollment by year end with top-line results expected mid-2026,” said Dr. Garry Neil, Chief Executive Officer. “We are focused on executing the LOTUS trial and advancing toward Phase 3 readiness.”

Recent Corporate Highlights and Upcoming Anticipated Milestones:

• Phase 2 LOTUS trial: The global study design includes approximately 222 adults with HS to evaluate the efficacy and safety of subcutaneous bi-weekly and monthly dosing regimens compared to placebo.
  • Topline data expected in mid-2026.
• Appointed Rita Jain, M.D. to the Board of Directors. Dr. Jain brings extensive experience spanning clinical development, regulatory strategy, and executive leadership at development-stage biopharma companies.
  

Second Quarter 2025 Financial Update:

• Cash, cash equivalents and short-term investments were $113.3 million as of June 30, 2025. Net cash used in operating activities was $20.8 million for the six months ended June 30, 2025. The Company’s current cash, cash equivalents and short-term investments are expected to fund operations into 2028.
  
• Research and development expenses were $14.1 million for the second quarter of 2025, an increase of $9.5 million from the second quarter of 2024, driven by costs related to and supporting the Phase 2 LOTUS trial.
  
• General and administrative expenses were $5.2 million for the second quarter of 2025, an increase of $0.7 million from the second quarter of 2024, primarily driven by stock-based compensation expense.
  
• Net loss was $20.8 million for the second quarter of 2025, as compared to net income of $98.5 million for the second quarter of 2024. The difference was driven by a $109.5 million change in other expenses in the prior period primarily related to the warrants issued in the March 2024 private placement, all of which were fully exercised in 2024. Additionally, research and development expenses increased $9.5 million, as discussed above. Basic and diluted net loss per share was $1.92 for the second quarter of 2025 compared to basic net income per share of $4.21, based on 10,829,760 weighted average common shares outstanding and 1,034,130 weighted average basic common shares outstanding, respectively. Diluted net loss per share for the second quarter of 2024 was $14.07, based on 7,653,302 weighted average diluted common shares outstanding.
  

Consolidated Balance Sheets
(In thousands, except share and per share data)

		June 30, 2025				December 31, 2024
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	42,290			$	134,546
Short-term investments			70,972				—
Prepaid expenses and other current assets			1,903				4,325
Restricted cash, current portion			20				19
Total current assets			115,185				138,890
Property and equipment, net			686				1,209
Goodwill			10,502				10,502
Restricted cash, net of current portion			210				131
Total assets		$	126,583			$	150,732
Liabilities, mezzanine equity and stockholders’ equity
Current liabilities:
Accounts payable		$	2,366			$	283
Accrued expenses and other current liabilities			6,523				6,317
Derivative liability, current			370				360
Total current liabilities			9,259				6,960
Royalty obligation			2,000				2,000
Deferred tax liability, net			293				270
Derivative liability, non-current			10,260				8,120
Other long-term liabilities			197				350
Total liabilities			22,009				17,700
Mezzanine equity:
Series D Preferred Stock—$0.001 par value; 1 share of Series D Preferred Stock authorized at June 30, 2025 and December 31, 2024; 1 share of Series D Preferred Stock issued and outstanding at June 30, 2025 and December 31, 2024			—				—
Series E Preferred Stock—$0.001 par value; 1 share of Series E Preferred Stock authorized at June 30, 2025 and December 31, 2024; 1 share of Series E Preferred Stock issued and outstanding at June 30, 2025 and December 31, 2024			—				—
Stockholders’ equity:
Common stock—$0.001 par value; 200,000,000 shares authorized at June 30, 2025 and December 31, 2024; 10,837,356 and 10,471,934 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively			11				10
Series C Preferred Stock—$0.001 par value; 34,326 shares of Series C Preferred Stock authorized at June 30, 2025 and December 31, 2024; 24,696 and 24,896 shares of Series C Preferred Stock issued and outstanding at June 30, 2025 and December 31, 2024, respectively			—				—
Additional paid-in capital			508,774				503,285
Accumulated other comprehensive loss			(34	)			—
Accumulated deficit			(404,177	)			(370,263	)
Total stockholders’ equity			104,574				133,032
Total liabilities, mezzanine equity and stockholders’ equity		$	126,583			$	150,732

The consolidated balance sheets as of June 30, 2025 and December 31, 2024 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.

Consolidated Statements of Operations

(In thousands, except per share data)

			Three Months Ended										Six Months Ended
			June 30,										June 30,
					2025				2024					2025				2024
Operating expenses:
Cost of product sales				$	—			$	343				$	—			$	263
Research and development					14,074				4,601					23,195				6,716
General and administrative					5,242				4,528					10,789				7,721
Acquired in-process research and development					—				103					—				27,641
Total operating expenses					19,316				9,575					33,984				42,341
Loss from operations					(19,316	)			(9,575		)			(33,984	)			(42,341	)
Other (expense) income:
Change in fair value of derivative liability					(2,530	)			(5,040		)			(2,150	)			(5,160	)
Interest income, net					1,102				1,039					2,249				1,138
Excess of initial warrant fair value over private placement proceeds					—				—					—				(79,276	)
Change in fair value of warrant liability					—				112,046					—				112,046
Private placement transaction costs					—				—					—				(9,220	)
Other expense, net					(5	)			—					(5	)			—
Total other (expense) income, net					(1,433	)			108,045					94				19,528
(Loss) income before taxes					(20,749	)			98,470					(33,890	)			(22,813	)
Income tax expense					16				7					24				14
Net (loss) income				$	(20,765	)		$	98,463				$	(33,914	)		$	(22,827	)
Net loss (income) per share of common stock - basic				$	(1.92	)		$	4.21				$	(3.18	)		$	(24.11	)
Net loss per share of common stock - diluted				$	(1.92	)		$	(14.07		)		$	(3.18	)		$	(30.63	)
Weighted average common shares outstanding - basic					10,829,760				1,034,130					10,673,200				946,756
Weighted average common shares outstanding - diluted					10,829,760				7,653,302					10,673,200				4,402,640

The unaudited consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 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 clinical stage biotechnology company fully dedicated to developing IL-1β-based treatments for immune-mediated inflammatory diseases. Our lead asset, AVTX-009, is in a Phase 2 clinical trial for hidradenitis suppurativa (HS). We’re also exploring additional opportunities to make an impact in prevalent indications that have significant remaining unmet needs. 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 pro-inflammatory cytokine that plays a central role in the pathogenesis of a wide range of human diseases.¹ It activates immune cells that generate proinflammatory cytokines, including IL-6, TNF-α, and IL-17. Dysregulated IL-1β signaling is a major driver of inflammation, contributing to the progression of autoimmune disorders. IL-1β inhibition has proven effective in multiple immune mediated inflammatory diseases.^1-3

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, safety and tolerability of AVTX-009 in approximately 222 adults with moderate to severe hidradenitis suppurativa. Subjects will be randomized (1:1:1) to receive either one of two dosing regimens of AVTX-009 or placebo during a 16-week treatment phase. The primary efficacy endpoint is the proportion of subjects achieving Hidradenitis Suppurativa Clinical Response (HiSCR75) at Week 16. Secondary objectives include but are not limited to: the proportion of patients achieving HiSCR50 and HiSCR90 as well as change from baseline in: International HS Severity Score System (IHS4), draining fistula count, abscess and inflammatory nodule (AN) count, and patients achieving at least a 30% reduction on a numerical rating scale in Patient's Global Assessment of Skin Pain (PGA Skin Pain). For additional information this trial (NCT06603077), please visit www.clinicaltrials.gov or www.lotustrial.com.  

About Hidradenitis Suppurativa

Hidradenitis suppurativa (HS) is a chronic, progressive, often debilitating inflammatory skin disease that causes painful nodules, abscesses, and tunnels to form under the skin.^4-6,8 Areas commonly affected by HS include the nape of the neck, breasts, chest, armpits, abdomen, buttocks and anus, groin and genitals, and inner thighs.⁷ If not adequately and promptly treated, the chronic inflammation characteristic of HS may progress to tissue destruction and permanent scarring.^4-6,9 HS typically first presents in late adolescence or early adulthood and is estimated to affect 0.7–1.2% of the U.S. population, though some sources suggest the prevalence may be as high as 2–4%.^10,11,12

References:¹Dinarello CA. Immunol Rev. 2018;281(1):8-27. ²Kany S et al. Int J Mol Sci. 2019;20(23):6008. ³Kimball AB et al. Presented at: American Academy of Dermatology; March 8-12, 2024; San Diego, CA. ⁴Diaz MJ, et al. Curr Iss Mol Bio. 2023;45:4400-4415. ⁵Agnese ER, et al. Cureus. 2023;15(11):e49390. ⁶de Oliveira ASLE, et al. Biomolecules. 2022;12(10):1371. ⁷Ingram JR, et al. J Eur Acad Dermatol Venereol. 2022;36(9):1597-160. ⁸Sabat R, et al. The Lancet. 2025;405(10476):P420-438. ⁹Jemec GB. Clinicalpractice. Hidradenitis suppurativa. N Engl J Med. 2012;366(2):158–164. ¹⁰Garg A, Kirby JS, Lavian J, Lin G, Strunk A. Sex- and Age-Adjusted Population Analysis of Prevalence Estimates for Hidradenitis Suppurativa in the United States. JAMA Dermatol. 2017;153(8):760–764. doi:10.1001/jamadermatol.2017.0201. ¹¹Ingram, John R.British Journal of Dermatology. doi:10.1111/bjd.19435. ¹²Nguyen TV, et al. J Eur Acad Dermatol Venereol. 2021;35(1):50-61.

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; 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.

For media and investor inquiries

Christopher Sullivan, CFO
Avalo Therapeutics, Inc.
ir@avalotx.com
410-803-6793

Meru Advisors
Lauren Glaser
lglaser@meruadvisors.com

FAQ

What were Avalo Therapeutics (AVTX) key financial results for Q2 2025?

Avalo reported $113.3 million in cash and investments, a net loss of $20.8 million ($1.92 per share), and R&D expenses of $14.1 million. The company's cash runway extends into 2028.

When will Avalo's Phase 2 LOTUS trial for hidradenitis suppurativa report results?

Avalo expects to report topline data from the Phase 2 LOTUS trial in mid-2026. The trial has enrolled over 75% of the planned 222 adult patients.

How many patients are enrolled in AVTX's LOTUS trial?

The LOTUS trial is designed to include approximately 222 adults with hidradenitis suppurativa, with over 75% of patients already enrolled as of Q2 2025.

What is the cash runway for Avalo Therapeutics?

Avalo's current cash position of $113.3 million is expected to fund operations into 2028.

Who is the new board member at Avalo Therapeutics?

Rita Jain, M.D. was appointed to the Board of Directors, bringing extensive experience in clinical development, regulatory strategy, and executive leadership in development-stage biopharma companies.