Avalo Therapeutics begins Phase 2 trial for HS treatment

WAYNE, Pa. and ROCKVILLE, Md. - Avalo Therapeutics, Inc. (NASDAQ: NASDAQ:AVTX) announced today that it has received the green light from the FDA to start its Phase 2 clinical trial for a new treatment aimed at hidradenitis suppurativa (HS), a chronic inflammatory skin condition. The trial, named LOTUS, will test the efficacy and safety of the company's drug candidate AVTX-009, an anti-IL-1β monoclonal antibody.

The LOTUS Trial is a randomized, double-blind, placebo-controlled, parallel-group study that will involve approximately 180 adults with moderate to severe HS. Participants will be divided into three groups to receive either one of two doses of AVTX-009 or a placebo.

The primary goal of the trial is to measure the proportion of subjects achieving a significant clinical response at Week 16, using the Hidradenitis Suppurativa Clinical Response (HiSCR75) score as a benchmark.

Dr. Garry Neil, CEO and Chairman of Avalo Therapeutics, expressed confidence in the potential of AVTX-009, citing its target specificity, half-life, and potency, which may lead to strong efficacy and convenient dosing for patients.

HS is characterized by painful skin lesions and significantly affects the quality of life of those who suffer from it. Estimates suggest that between 0.2-1.7% of the global population may be affected by this condition.

Current treatments are limited, and the exact cause of HS is not fully understood. However, IL-1β is known to play a crucial role in the inflammation associated with HS, making it a target for therapeutic intervention.

Avalo Therapeutics, a clinical-stage biotechnology company, focuses on the treatment of immune dysregulation and has a portfolio that includes AVTX-009 and two additional product candidates.

This announcement is based on a press release statement from Avalo Therapeutics. The company cautions that forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Avalo does not undertake any obligation to update forward-looking statements as required by law.

In other recent news, Avalo Therapeutics has been upgraded from Perform to Outperform by Oppenheimer, following the company's announcement of a significant acquisition and private placement financing. Avalo Therapeutics recently disclosed its plans to acquire AlmataBio, a private firm, and a private placement financing that could raise up to $185 million.

The deal includes an anti-IL-1β antibody, AVTX-009, initially developed by Eli Lilly (NYSE:LLY) and now being prepared for Phase 2 development to treat hidradenitis suppurativa, a chronic skin condition.

Oppenheimer's upgrade is based on the potential of AVTX-009, which they believe could lead the market in treating this condition. Despite the anticipation of topline data not being available until 2026, there is a possibility that AVTX-009 could also be evaluated for other inflammatory conditions such as ulcerative colitis. This potential expansion of the drug's indications is expected to provide additional updates and maintain investor interest.

Oppenheimer's optimism is reflected in the new price target of $35.00, indicating confidence in Avalo Therapeutics' strategic moves and the future of its newly acquired asset. These developments highlight the recent progress in Avalo Therapeutics' pursuit of developing treatments for inflammatory diseases.

InvestingPro Insights

As Avalo Therapeutics (NASDAQ: AVTX) embarks on its Phase 2 clinical trial for AVTX-009, the company's financial health and market performance provide essential context for investors monitoring the progress of this potentially groundbreaking treatment. According to recent data from InvestingPro, Avalo Therapeutics holds a market capitalization of approximately $13.6 million, indicative of its small-cap status in the biotechnology sector. Despite the optimism surrounding the clinical trial, the company's financial metrics raise concerns. It reported a significant revenue decline in the last twelve months as of Q1 2024, with a staggering drop of 91.65%, and a gross profit margin of -269.43%, emphasizing the challenges in achieving profitability.

Analyzing the company's stock performance, the 1-year price total return as of mid-2024 stands at -84.65%, reflecting investor skepticism and the inherent volatility of biotech stocks. However, it's important to note that there has been a strong return over the last month, with a 28.8% uptick, which could signal growing investor confidence or a response to recent company developments. These financial indicators, coupled with the InvestingPro Tips, suggest that while Avalo holds more cash than debt, it is also quickly burning through cash, with weak gross profit margins and is not expected to be profitable this year.

Investors interested in a deeper analysis of Avalo Therapeutics can explore additional insights on InvestingPro, which offers a comprehensive set of 13 InvestingPro Tips for AVTX at https://www.investing.com/pro/AVTX. For those considering an InvestingPro subscription, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking further valuable investment metrics and professional guidance.

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