Avalo Therapeutics Announces Inducement Grant to New Employee Under Nasdaq Listing Rule 5635(c)(4)

Rhea-AI Summary

Avalo Therapeutics (Nasdaq: AVTX) granted a stock option inducement award to a new employee under Nasdaq Listing Rule 5635(c)(4). The option covers 34,000 shares at an exercise price of $16.60 per share, matching the May 21, 2026 closing price, with four-year, service-based vesting.

News Market Reaction – AVTX

-2.02%

-2.02% News Effect

On the day this news was published, AVTX declined 2.02%, reflecting a moderate negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

Market Context

This announcement details a standard inducement stock option for 34,000 shares at an exercise price ...

Analysis

This announcement details a standard inducement stock option for 34,000 shares at an exercise price of $16.60, tied to a four-year vesting schedule under Nasdaq Listing Rule 5635(c)(4). It follows a series of larger catalysts, including positive Phase 2 LOTUS data and substantial equity raises supported by a $750,000,000 shelf. Investors tracking Avalo may focus more on clinical progress and capital deployment than on this routine compensation action.

Key Figures

Inducement option size: 34,000 shares Exercise price: $16.60 per share Initial vesting: 25% of shares +5 more

8 metrics

Inducement option size 34,000 shares Option grant to one new employee under Nasdaq Listing Rule 5635(c)(4)

Exercise price $16.60 per share Equal to AVTX closing price on grant date May 21, 2026

Initial vesting 25% of shares Vests on one-year anniversary of employee start date

Remaining vesting period 36 months Remaining 75% vests monthly over 36 months thereafter

Current share price $16.69 Pre-news market price from context data

52-week range $3.4313 – $24.27 52-week low and high before this announcement

Shelf registration size $750,000,000 Maximum aggregate offering amount under active Form S-3 shelf

Carried-forward shelf $326,585,963 Previously registered but unsold securities under Rule 415(a)(6)

Historical Context

5 past events · Latest: May 13 (Positive)

Pattern 5 events

Date	Event	Sentiment	24h Move	Catalyst
May 13	Earnings & updates	Positive	-0.5%	Q1 2026 results plus positive Phase 2 abdakibart data and large equity raise.
May 05	Offering priced	Neutral	+34.1%	Pricing of approximately $375M public offering of stock and pre-funded warrants.
May 05	Offering proposed	Neutral	+34.1%	Launch of proposed underwritten offering to fund abdakibart development and corporate needs.
May 05	Clinical trial data	Positive	+34.1%	Positive Phase 2 LOTUS topline results in hidradenitis suppurativa for abdakibart.
Apr 28	Milestone restructuring	Positive	-10.8%	Milestone buyout option to replace a larger future Phase 3 dosing milestone payment.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Pattern Detected

Stock reacted strongly positively to the May 5 Phase 2/financing cluster but showed mixed or negative reactions to other corporate and financial updates.

Recent Company History

Over the past month, Avalo reported positive Phase 2 LOTUS data for abdakibart on May 5, alongside proposed and priced equity offerings that drove a +34.13% move. On May 13, Q1 2026 results and additional positive trial commentary coincided with a modest -0.45% move. An April milestone buyout to restructure a future payment saw a -10.82% reaction. Against this backdrop, the current inducement option grant fits routine compensation activity rather than a major strategic shift.

Key Terms

nasdaq listing rule 5635(c)(4), inducement award, exercise price, vesting, +1 more

5 terms

nasdaq listing rule 5635(c)(4) regulatory

"as an inducement material to the employee entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4)."

NASDAQ Listing Rule 5635(c)(4) is a rule that requires a company to get approval from its shareholders before selling a large amount of its shares, usually over 20%. This helps protect investors by making sure the company doesn't flood the market with new shares without their say, which could lower the stock's value.

inducement award financial

"the Company granted an inducement award consisting of an option to purchase 34,000 shares"

An inducement award is a special cash or equity payment given to a new hire—often an executive or key employee—outside the company’s regular pay plans to persuade them to join. Think of it like a signing bonus that can align the new person’s goals with shareholders but also represents a cost and can reduce existing owners’ percentage of the company, so investors watch these awards for their impact on ownership and future performance.

exercise price financial

"has an exercise price of $16.60 per share, which is equal to the closing price"

The exercise price is the fixed amount at which you can buy or sell an asset, like a stock, when using an options contract. It matters because it helps determine whether exercising the option will be profitable or not, depending on the current market price. Think of it as the set price you agree on today to buy or sell later.

vesting financial

"The Option will vest as to 25% of the underlying shares of common stock on the one-year anniversary"

Vesting is the process by which you earn full ownership of something, like company stock or a retirement benefit, over time. It’s like earning the right to keep a gift piece by piece the longer you stay with a company, making sure employees stay committed before they receive all the benefits.

inducement award plan financial

"The Option is subject to the terms and conditions of Avalo’s 2025 Inducement Award Plan"

An inducement award plan is a package of pay, often including stock options or restricted shares, granted to a new employee or executive to attract them to join a company — think of it like a signing bonus paid partly in company stock. Investors care because these awards increase compensation expense and can dilute existing shareholders’ ownership, affecting earnings per share and incentives that shape company strategy.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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WAYNE, PA., May 22, 2026 (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 that the Company granted an inducement award consisting of an option to purchase 34,000 shares of its common stock to one new employee (the “Option”). The award was approved by the Compensation Committee of the Board of Directors as an inducement material to the employee entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4).

The Option was granted on May 21, 2026 and has an exercise price of $16.60 per share, which is equal to the closing price of Avalo’s common stock on the grant date. The Option will vest as to 25% of the underlying shares of common stock on the one-year anniversary of the employee’s start date of employment, and the balance of the underlying shares of common stock vesting monthly thereafter over 36 months, subject to the employee’s continued service relationship with Avalo through the applicable vesting dates. The Option is subject to the terms and conditions of Avalo’s 2025 Inducement Award Plan and award agreements thereunder.

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, abdakibart, is an anti-IL-1β monoclonal antibody (mAb). Positive topline data was recently reported for abdakibart in a Phase 2 clinical trial in 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 Abdakibart

Abdakibart 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

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.

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

or

Meru Advisors
Lauren Glaser
lglaser@meruadvisors.com

FAQ

What did Avalo Therapeutics (AVTX) announce about a new employee stock option grant on May 22, 2026?

Avalo Therapeutics announced an inducement stock option grant to a new employee covering 34,000 common shares. According to Avalo, the grant was approved by the Compensation Committee as a material inducement to employment under Nasdaq Listing Rule 5635(c)(4).

How many Avalo Therapeutics (AVTX) shares are included in the May 2026 inducement option grant?

The May 2026 inducement option grant includes options to purchase 34,000 shares of Avalo common stock. According to Avalo, this award was made under the company’s 2025 Inducement Award Plan as a hiring incentive for one new employee.

What is the exercise price of the Avalo Therapeutics (AVTX) inducement option granted on May 21, 2026?

The inducement option has an exercise price of $16.60 per Avalo share. According to Avalo, this price equals the closing price of Avalo’s common stock on May 21, 2026, the official grant date for the employee award.

What is the vesting schedule for Avalo Therapeutics’ May 2026 inducement stock option (AVTX)?

The inducement option vests 25% on the employee’s one-year work anniversary, with remaining shares vesting monthly over 36 months. According to Avalo, vesting requires the employee’s continued service through each applicable vesting date.

Under which plan and Nasdaq rule was Avalo Therapeutics’ May 2026 inducement grant (AVTX) issued?

The grant was issued under Avalo’s 2025 Inducement Award Plan pursuant to Nasdaq Listing Rule 5635(c)(4). According to Avalo, the Compensation Committee approved the option as a material inducement to the employee joining the company.