Avalo Therapeutics (NASDAQ: AVTX) adopts optional milestone buyout structure
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Avalo Therapeutics, Inc. entered into a Milestone Buyout Option Agreement and amendment tied to its March 2024 acquisition of AlmataBio, Inc. The original $15 million contingent milestone payment, due upon dosing the first patient in a Phase 3 trial, has been restructured.
Avalo will pay $2.25 million to the former AlmataBio securityholders within five business days of April 26, 2026 and gains an option, exercisable within 90 days, to pay an additional $5.125 million in cash, common stock, or both, in full satisfaction of the milestone. If Avalo does not exercise this option, it would instead owe $12.75 million in cash or stock upon achievement of the Phase 3 dosing milestone.
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Insights
Avalo restructures a $15M milestone into a nearer-term buyout option.
Avalo Therapeutics has modified the contingent consideration from its AlmataBio acquisition. Instead of a single $15 million payment at first Phase 3 dosing, it will immediately pay $2.25 million for an option to settle the milestone on revised terms.
The option allows Avalo, within 90 days of April 26, 2026, to pay $5.125 million in cash, common stock, or a mix, fully satisfying the milestone. If the company declines, it would owe $12.75 million upon the Phase 3 dosing event, still in cash or stock.
This structure trades a smaller, earlier cash outlay for flexibility around a potentially larger later obligation, and introduces equity-settlement optionality. Actual financial impact will depend on whether Avalo exercises the option and the timing and outcome of the Phase 3 milestone event.
8-K Event Classification
3 items: 1.01, 7.01, 9.01
3 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 7.01
Regulation FD Disclosure
Disclosure
Material non-public information disclosed under Regulation Fair Disclosure, often investor presentations or guidance.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Original milestone payment: $15 million
Upfront option payment: $2.25 million
Optional buyout amount: $5.125 million
+3 more
6 metrics
Original milestone payment
$15 million
Contingent consideration due upon first patient dosed in Phase 3 trial
Upfront option payment
$2.25 million
Payable within five business days following April 26, 2026
Optional buyout amount
$5.125 million
Cash, common stock, or combination to fully satisfy milestone if option exercised
Alternative milestone payment
$12.75 million
Due in cash or stock if option not exercised and Phase 3 milestone achieved
Option exercise window
90 days
Period after April 26, 2026 during which Avalo may exercise buyout option
Lead asset trial phase
Phase 2
Abdakibart (AVTX-009) trial in hidradenitis suppurativa
Key Terms
Milestone Buyout Option Agreement, contingent consideration, Phase 3 trial, immune-mediated inflammatory diseases, +1 more
5 terms
Milestone Buyout Option Agreement financial
"entered into a Milestone Buyout Option Agreement and Amendment to Agreement and Plan of Merger"
contingent consideration financial
"the Company agreed, among other things, to pay contingent consideration in the amount of $15 million"
Contingent consideration is an additional payment agreed when one company buys another that will be paid later only if specific future targets are met, such as revenue, profit, or regulatory milestones. It matters to investors because it shifts risk between buyer and seller and affects the acquiring company's future cash flow and reported value — like promising a bonus after results are proven.
Phase 3 trial medical
"upon the first patient being dosed in a Phase 3 trial, regardless of indication"
A Phase 3 trial is a large, late-stage test of a new drug or medical treatment done on many people to make sure it really works and is safe. For investors, it matters because a successful Phase 3 usually means the company can ask regulators to sell the product and could earn lots of money, while failure can sharply reduce the company’s value.
immune-mediated inflammatory diseases medical
"developing IL-1β based treatments for immune-mediated inflammatory diseases"
Immune-mediated inflammatory diseases are chronic conditions in which the body's defense system mistakenly attacks healthy tissues, causing ongoing inflammation and organ damage — think of the immune system as a guard that starts targeting its own house. They matter to investors because they create long-term demand for treatments, influence drug development and regulatory decisions, and can generate steady revenue streams or clinical and approval risks depending on therapy effectiveness and safety.
forward-looking statements regulatory
"This press release may include forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995"
Forward-looking statements are predictions or plans that companies share about what they expect to happen in the future, like estimating sales or profits. They matter because they help investors understand a company's outlook, but since they are based on guesses and assumptions, they can sometimes be wrong.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 2026
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation)
| (Commission File Number) | (IRS Employer Identification No.) | |||||||
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (410 ) 522-8707
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Nasdaq Capital Market | ||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
On April 26, 2026 (the “Effective Date”), Avalo Therapeutics, Inc. (the “Company”) entered into a Milestone Buyout Option Agreement and Amendment to Agreement and Plan of Merger and Reorganization (the “Milestone Buyout and Amendment Agreement”). As previously disclosed, the Company, Project Athens Merger Sub, Inc., Second Project Athens Merger Sub, LLC, AlmataBio, Inc. (“AlmataBio”) and Patrick J. Crutcher, solely in his capacity as the representative agent and attorney-in-fact of the former holders of securities in AlmataBio (the “Securityholders’ Representative”) are parties to that certain Agreement and Plan of Merger and Reorganization, dated March 27, 2024 (the “Merger Agreement”). Pursuant to the Merger Agreement, the Company agreed, among other things, to pay contingent consideration in the amount of $15 million (the “Milestone Payment”) upon the first patient being dosed in a Phase 3 trial, regardless of indication (the “Milestone Event”).
Pursuant to the Milestone Buyout and Amendment Agreement, the parties have agreed, among other things, to amend the Milestone Payment and all related rights and obligations such that the Company will (i) pay $2.25 million to the Securityholders’ Representative within five (5) business days following the Effective Date and (ii) have the option, exercisable in its sole discretion within ninety (90) days following the Effective Date, to pay $5.125 million, payable in cash or Company common stock or a combination thereof, to the Securityholders’ Representative, in lieu of and in full satisfaction of the Milestone Payment (the “Milestone Buyout Option”). In the event the Company does not exercise the Milestone Buyout Option, the Company will be obligated to pay $12.75 million to the Securityholders’ Representative in either cash or Company common stock, in full satisfaction of the Milestone Payment upon achievement of the Milestone Event.
The foregoing description of the terms of the Milestone Buyout and Amendment Agreement is a general description only, does not purport to be a complete description of the rights and obligations of the parties thereunder and is qualified in its entirety by reference to the Milestone Buyout and Amendment Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein.
Item 7.01 Regulation FD Disclosure.
On April 28, 2026, the Company issued a press release to report the entry into the Milestone Buyout and Amendment Agreement, a copy of which is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Report on Form 8-K and Exhibit 99.1 attached hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
The following exhibits are being filed herewith:
| Exhibit No. | Description | |||||||
| 10.1 † | Milestone Buyout Option Agreement and Amendment to Agreement and Plan of Merger and Reorganization, effective upon April 26, 2026. | |||||||
| 99.1 | Press release, dated April 28, 2026. | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
† Portions of this exhibit (indicated by asterisks) were omitted in accordance with the rules of the Securities and Exchange Commission.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AVALO THERAPEUTICS, INC. | |||||||||||
| Date: April 28, 2026 | By: | /s/ Christopher Sullivan | |||||||||
| Christopher Sullivan | |||||||||||
| Chief Financial Officer | |||||||||||
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Exhibit 99.1
Avalo Therapeutics Purchases Optional Milestone Buyout
WAYNE, PA, April 28, 2026 — 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 that it has entered into a Milestone Buyout Option and Amendment Agreement (the “Buyout Agreement”) related to the company’s prior acquisition of AlmataBio, Inc. in March of 2024.
Pursuant to the Buyout Agreement, Avalo has agreed to pay $2.25 million to the former AlmataBio securityholders for an option, exercisable within 90 days of the effective date, to pay an additional $5.125 million in cash or shares of Avalo common stock, or a combination thereof in lieu of a previously disclosed $15 million contingent milestone payment due upon the first patient being dosed in a Phase 3 trial.
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 (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.
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.
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For media and investor inquiries
Christopher Sullivan, CFO
Avalo Therapeutics, Inc.
ir@avalotx.com
410-803-6793
Meru Advisors
Lauren Glaser
lglaser@meruadvisors.com
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FAQ
What milestone payment terms did Avalo Therapeutics (AVTX) originally agree to for the AlmataBio acquisition?
Avalo originally agreed to a $15 million contingent milestone payment to former AlmataBio securityholders. This payment would be due when the first patient is dosed in a Phase 3 trial, regardless of indication, reflecting a key development milestone for the acquired program.
How does the new Milestone Buyout Option Agreement change Avalo Therapeutics’ (AVTX) obligations?
Under the new agreement, Avalo will pay $2.25 million within five business days of April 26, 2026 and receives an option. That option lets Avalo pay $5.125 million in cash, common stock, or both, in full satisfaction of the original $15 million milestone obligation.
What happens if Avalo Therapeutics (AVTX) does not exercise the milestone buyout option?
If Avalo does not exercise the option within 90 days of April 26, 2026, it must pay $12.75 million. That payment, in cash or Avalo common stock, would be due upon achievement of the original milestone: dosing the first patient in a Phase 3 trial.
Over what period can Avalo Therapeutics (AVTX) exercise the milestone buyout option?
Avalo can exercise the milestone buyout option in its sole discretion within 90 days following April 26, 2026. During this window, the company may choose to settle the milestone by paying $5.125 million in cash, Avalo common stock, or a combination of both.
What disease areas is Avalo Therapeutics (AVTX) focused on after this AlmataBio milestone update?
Avalo remains focused on IL-1β-based treatments for immune-mediated inflammatory diseases. Its lead asset, abdakibart (AVTX-009), is in a Phase 2 trial for hidradenitis suppurativa, and the company is exploring additional prevalent indications with significant unmet medical needs.
Is the Avalo Therapeutics (AVTX) press release about the milestone buyout considered filed or furnished?
The press release describing the milestone buyout is furnished, not filed, under securities laws. It is included as Exhibit 99.1 and is not deemed filed for Section 18 liability or automatically incorporated into Securities Act or Exchange Act filings.