Avalo Therapeutics Reports First Quarter 2026 Financial Results and Recent Business Updates
Rhea-AI Summary
Avalo Therapeutics (Nasdaq: AVTX) reported Q1 2026 results and key business updates.
The company announced positive topline Phase 2 LOTUS data for abdakibart in hidradenitis suppurativa, completed a $431.3 million equity offering, and ended March 31, 2026 with $82 million in cash and investments, excluding the subsequent financing, which is expected to fund operations into 2029.
Q1 2026 net loss was $19.6 million on higher R&D and G&A expenses.
AI-generated analysis. Not financial advice.
Positive
- Phase 2 LOTUS trial met primary endpoint with 42.5% combined HiSCR75 vs 25.6% placebo at Week 16
- Statistically significant improvements across key secondary endpoints, including HiSCR50, IHS4, and draining tunnel count
- Completed equity offering with $431.3 million gross and approximately $405 million net proceeds
- Cash, cash equivalents and short-term investments of $82.0 million at March 31, 2026, excluding subsequent financing
- Combined cash resources are expected to fund operations into 2029
- Milestone buyout option may reduce future Phase 3 abdakibart milestone outlay from $15 million to $5.125 million
Negative
- Net loss increased to $19.6 million in Q1 2026 from $13.1 million in Q1 2025
- Total operating expenses rose to $20.9 million from $14.7 million year over year
- Research and development expenses grew to $14.0 million from $9.1 million
- General and administrative expenses increased to $6.9 million from $5.5 million
- Common shares outstanding rose to 24.6 million from 18.5 million, indicating dilution of existing holders
- Stockholders’ equity declined to $68.3 million at March 31, 2026 from $83.0 million at December 31, 2025
News Market Reaction – AVTX
On the day this news was published, AVTX declined 0.45%, reflecting a mild negative market reaction. Our momentum scanner triggered 2 alerts that day, indicating moderate trading interest and price volatility. This price movement removed approximately $5M from the company's valuation, bringing the market cap to $1.04B at that time.
Data tracked by StockTitan Argus on the day of publication.
Key Figures
Market Reality Check
Peers on Argus
AVTX was down 1.53% while only one momentum peer (ACTU) appeared, moving up 3.46%. With no other peers in the scanner and mixed directions, the move screens as stock-specific rather than a sector-wide biotech rotation.
Previous Earnings Reports
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Mar 23 | Annual results 2025 | Positive | +0.6% | Reported 2025 results with $98.3M cash and runway into 2028. |
| Nov 06 | Q3 2025 earnings | Positive | -6.3% | Q3 2025 update with LOTUS fully enrolled and $111.6M cash runway. |
| Aug 07 | Q2 2025 earnings | Neutral | +0.5% | Q2 2025 results showing higher R&D and $113.3M cash runway. |
| May 12 | Q1 2025 earnings | Neutral | -1.5% | Q1 2025 update with $125M cash and LOTUS trial progress. |
| Mar 20 | Annual results 2024 | Neutral | +2.9% | 2024 results highlighting $134.5M cash and ongoing LOTUS trial. |
Earnings updates have historically led to relatively modest moves, with mixed single-day reactions around cash runway and R&D spending.
Across the last five earnings-tagged releases from Mar 2025 through Mar 2026, Avalo repeatedly highlighted strong cash positions (e.g., $134.5M end-2024, $125M Q1 2025, $98.3M end-2025, $111.6M Q3 2025) and funding runways into 2027–2028, alongside rising R&D tied to the LOTUS trial. Price reactions were usually small, with one notable -6.26% drop on Q3 2025 results but otherwise low single-digit moves, suggesting earnings have not been major standalone catalysts compared with clinical and financing news.
Historical Comparison
Prior earnings-related releases over the past year moved AVTX by an average of about -0.76%, indicating generally muted single-day reactions to financial updates compared with larger moves seen on clinical and financing catalysts.
Earnings updates have tracked a shift from funding the LOTUS Phase 2 program toward today’s position: positive Phase 2 data in HS, rising R&D, and cash runway guidance extending from 2027–2028 previously out to 2029 with the recent financing.
Regulatory & Risk Context
An effective Form S-3 shelf filed on Jan 8, 2026 permits Avalo to issue up to $750,000,000 of various securities, with additional previously registered amounts carried forward. Recent 424B5 takedowns in May 2026 show the shelf being actively utilized to fund abdakibart’s development.
Market Pulse Summary
This announcement combines positive Phase 2 LOTUS results in hidradenitis suppurativa with Q1 2026 financials and a large equity financing. Key takeaways are the 42.5% HiSCR75 improvement versus 25.6% placebo, increased R&D spend of $14.0M, and cash plus a subsequent offering that management expects to fund operations into 2029. Investors may watch upcoming Phase 3 plans, ongoing use of the $750M shelf, and trends in quarterly cash burn and net loss.
Key Terms
phase 2 medical
registrational phase 3 medical
underwritten public offering financial
pre-funded warrants financial
hiscr75 medical
hiscr50 medical
derivative liability financial
AI-generated analysis. Not financial advice.
- Achieved positive topline results in Phase 2 LOTUS trial of abdakibart in moderate to severe hidradenitis suppurativa (HS) and plan to advance into a registrational phase 3 program
- Completed public offering of equity securities for gross proceeds of
$431.3 million - Cash, cash equivalents, and short-term investments of
$82 million as of March 31, 2026, not including the subsequent financing
WAYNE, Pa., May 13, 2026 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (Nasdaq: AVTX) (“Avalo”), a clinical stage biotechnology company fully dedicated to developing IL-1β-based treatments for immune-mediated inflammatory diseases, today announced business updates and first quarter 2026 financial results.
“The positive Phase 2 LOTUS trial results of abdakibart in HS, which demonstrated a deep and consistent clinical response across both HiSCR75 and HiSCR50 endpoints, mark the beginning of a transformative period for Avalo,” said Garry Neil, MD, Chief Executive Officer of Avalo. “With our recently secured financing, Avalo is well-positioned to advance abdakibart into a registrational phase 3 program. Our focus remains on delivering this innovative mechanism of action via a patient-friendly potential monthly dosing regimen to provide a much-needed new treatment option for those living with HS.”
Recent Corporate Highlights:
- On May 5, 2026, Avalo reported positive topline Phase 2 LOTUS results for abdakibart in adults with moderate to severe HS. The trial successfully met its primary endpoint at both doses studied (p=0.018 150mg, p=0.015 300mg and p=0.004, combined), demonstrating a
42.2% and42.9% absolute improvement in HiSCR75 response rates at Week 16, respectively (42.5% combined; placebo rate25.6% ). These results represented the highest absolute improvement in HiSCR75 and HiSCR50 reported in similarly sized (or larger) HS trials at each individual dose and on a combined dose basis. Abdakibart also demonstrated statistically significant benefit across the key secondary endpoints, including HiSCR50, change in IHS4, and change in draining tunnel count. - On May 7, 2026, Avalo completed an underwritten public offering of its common stock and pre-funded warrants to purchase shares of common stock for gross proceeds of
$431.3 million . - On April 26, 2026, Avalo entered into a Milestone Buyout Option and Amendment Agreement related to its March 2024 acquisition of AlmataBio, Inc. Under the agreement, Avalo paid the former AlmataBio securityholders
$2.25 million for an option, exercisable within 90 days of the effective date, to pay$5.125 million in cash or shares of Avalo common stock (or a combination) in lieu of the previously disclosed$15 million contingent milestone payment due upon dosing the first patient in a Phase 3 trial of abdakibart.
First Quarter 2026 Financial Update:
- Cash, cash equivalents and short-term investments were
$82.0 million as of March 31, 2026. Net cash used in operating activities was$17.7 million for the three months ended March 31, 2026. Subsequent to March 31, 2026, the Company completed an underwritten public offering of its common stock and pre-funded warrants for net proceeds of approximately$405.0 million . Our current cash, cash equivalents, and short-term investments are expected to fund operations into 2029. - Research and development expenses were
$14.0 million for the three months ended March 31, 2026, an increase of$4.9 million from the prior year, driven by costs related to and supporting the Phase 2 LOTUS trial. - General and administrative expenses were
$6.9 million for the three months ended March 31, 2026, an increase of$1.3 million from the prior year, primarily driven by headcount additions and stock-based compensation expense. - Net loss was
$19.6 million for the three months ended March 31, 2026, as compared to net loss of$13.1 million for the three months ended March 31, 2025. The difference was driven by a$6.2 million increase in operating expenses due to the$4.9 million increase in research and development expenses, as discussed above, and$1.3 million increase in general and administrative expenses, as discussed above. Basic and diluted net loss per share was$0.98 and$1.25 for the three months ended March 31, 2026 and 2025, based on 20,106,925 and 10,514,901 weighted average common shares outstanding, respectively.
Consolidated Balance Sheets
(In thousands, except share and per share data)
| March 31, 2026 | December 31, 2025 | ||||||
| (unaudited) | |||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 24,988 | $ | 15,858 | |||
| Short-term investments | 57,005 | 82,478 | |||||
| Prepaid expenses and other current assets | 6,685 | 6,913 | |||||
| Restricted cash, current portion | 147 | 37 | |||||
| Total current assets | 88,825 | 105,286 | |||||
| Property and equipment, net | 375 | 460 | |||||
| Goodwill | 10,502 | 10,502 | |||||
| Restricted cash, net of current portion | 183 | 210 | |||||
| Total assets | $ | 99,885 | $ | 116,458 | |||
| Liabilities, mezzanine equity and stockholders’ equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 356 | $ | 137 | |||
| Accrued expenses and other current liabilities | 11,243 | 12,803 | |||||
| Total current liabilities | 11,599 | 12,940 | |||||
| Royalty obligation | 2,000 | 2,000 | |||||
| Deferred tax liability, net | 446 | 434 | |||||
| Derivative liability, non-current | 17,520 | 18,000 | |||||
| Other long-term liabilities | — | 35 | |||||
| Total liabilities | 31,565 | 33,409 | |||||
| Mezzanine equity: | |||||||
| Series D Preferred Stock— | — | — | |||||
| Series E Preferred Stock— | — | — | |||||
| Stockholders’ equity: | |||||||
| Common stock— | 25 | 18 | |||||
| Series C Preferred Stock— | — | — | |||||
| Additional paid-in capital | 536,453 | 531,485 | |||||
| Accumulated other comprehensive (loss) income | (6 | ) | 68 | ||||
| Accumulated deficit | (468,152 | ) | (448,522 | ) | |||
| Total stockholders’ equity | 68,320 | 83,049 | |||||
| Total liabilities, mezzanine equity and stockholders’ equity | $ | 99,885 | $ | 116,458 | |||
The consolidated balance sheets as of March 31, 2026 and December 31, 2025 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 March 31, | |||||||
| 2026 | 2025 | ||||||
| Operating expenses: | |||||||
| Research and development | 14,047 | 9,123 | |||||
| General and administrative | 6,854 | 5,546 | |||||
| Total operating expenses | 20,901 | 14,669 | |||||
| Loss from operations | (20,901 | ) | (14,669 | ) | |||
| Other income: | |||||||
| Change in fair value of derivative liability | 480 | 380 | |||||
| Interest income, net | 803 | 1,148 | |||||
| Total other income, net | 1,283 | 1,528 | |||||
| Loss before taxes | (19,618 | ) | (13,141 | ) | |||
| Income tax expense | 12 | 8 | |||||
| Net loss | $ | (19,630 | ) | $ | (13,149 | ) | |
| Net loss per share of common stock, basic and diluted | $ | (0.98 | ) | $ | (1.25 | ) | |
| Weighted average common shares outstanding | 20,106,925 | 10,514,901 | |||||
The consolidated statements of operations for the three months ended March 31, 2026 and 2025 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, 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
About the LOTUS Trial
The LOTUS trial was a randomized, double-blind, placebo-controlled, parallel-group Phase 2 trial with two dose regimens to evaluate the efficacy, safety and tolerability of abdakibart in approximately 250 adults with moderate to severe hidradenitis suppurativa. Subjects were randomized (1:1:1) to receive either one of two dosing regimens of abdakibart 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 tunnel count, abscess and inflammatory nodule (AN) count, and patients achieving at least a
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–
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 includes forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995 and other federal securities laws. 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 our control), which could cause actual results to differ from the forward-looking statements. Such statements may include, without limitation, statements with respect to our 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: therapeutic potential, clinical benefits and safety profiles of abdakibart (AVTX-009); plans to advance abdakibart into a registrational phase 3 program; expectations regarding timing, success and data announcements of ongoing preclinical studies and clinical trials; drug development costs, reliance on investigators and enrollment of patients in clinical trials; and our plans to develop and commercialize our current and any future product candidates and the implementation of our business model and strategic plans for our business.
Any forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of risks, uncertainties and important factors that may cause actual events or results to differ materially from those expressed or implied by any forward-looking statements including, without limitation, risks associated with: the timing and anticipated results of our current and future preclinical studies and clinical trials, supply chain, strategy and future operations; the delay of any current and future preclinical studies or clinical trials or the development of our product candidates; the risk that the results of prior preclinical studies and clinical trials may not be predictive of future results in connection with current or future preclinical studies and clinical trials, including those for abdakibart; the risk that cross-trial comparisons may not be reliable as no head-to-head trials of abdakibart have been conducted; the timing and outcome of any interactions with regulatory authorities; obtaining, maintaining and protecting our intellectual property; the availability of funding sufficient for our operating expenses and capital expenditure requirements, 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 our filings with the Securities and Exchange Commission, available at www.sec.gov. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. In addition, any forward-looking statements represent our view only as of today and should not be relied upon as representing its views as of any subsequent date. You should not rely upon forward-looking statements as predictions of future events and actual results or events could differ materially from the plans, intentions and expectations disclosed herein. Except as required by applicable law, we expressly disclaim any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our 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
