avtx-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended September 30, 2024
OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 001-37590

AVALO THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)


Delaware (State of incorporation)			45-0705648 (I.R.S. Employer Identification No.)
540 Gaither Road, Suite 400 Rockville, Maryland 20850 (Address of principal executive offices)			(410) 522-8707 (Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.001 par value	AVTX	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.


Large accelerated filer ☐						Accelerated filer ☐
Non-accelerated filer ☑						Smaller reporting company ☑
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☑

As of November 6, 2024, the registrant had 10,393,954 shares of common stock outstanding.

AVALO THERAPEUTICS, INC.

FORM 10-Q

For the Quarter Ended September 30, 2024

TABLE OF CONTENTS

Page

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) for the Three and Nine Months Ended September 30, 2024 and 2023

Condensed Consolidated Statements of Preferred Stock and Changes in Stockholders’ Equity (Unaudited) for the Three and Nine Months Ended September 30, 2024 and 2023

Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended S eptember 30, 2024 and 2023

Notes to Unaudited Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

AVALO THERAPEUTICS, INC. and SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

Table of Contents


	September 30, 2024		December 31, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	81,858	$	7,415

Other receivables	998		136

Prepaid expenses and other current assets	3,251		843
Restricted cash, current portion	41		1
Total current assets	86,148		8,395
Property and equipment, net	1,674		1,965
Goodwill	10,502		10,502
Restricted cash, net of current portion	131		131
Total assets	$	98,455	$	20,993
Liabilities, mezzanine equity and stockholders’ equity
Current liabilities:
Accounts payable	$	1,811	$	446
Accrued expenses and other current liabilities	7,033		4,172
Warrant liability	46,830		—
Contingent consideration	5,000		—
Total current liabilities	60,674		4,618
Royalty obligation	2,000		2,000
Deferred tax liability, net	154		155
Derivative liability	11,810		5,550
Other long-term liabilities	1,083		1,366
Total liabilities	75,721		13,689
Mezzanine equity:
Series C Preferred Stock—$0.001 par value; 34,326 and 0 shares of Series C Preferred Stock authorized at September 30, 2024 and December 31, 2023, respectively; 13,710 and 0 shares of Series C Preferred Stock issued and outstanding at September 30, 2024 and December 31, 2023, respectively	1,658		—
Series D Preferred Stock—$0.001 par value; 1 and 0 shares of Series D Preferred Stock authorized at September 30, 2024 and December 31, 2023, respectively; 1 and 0 shares of Series D Preferred Stock issued and outstanding at September 30, 2024 and December 31, 2023, respectively	—		—
Series E Preferred Stock—$0.001 par value; 1 and 0 shares of Series E Preferred Stock authorized at September 30, 2024 and December 31, 2023, respectively; 1 and 0 shares of Series E Preferred Stock issued and outstanding at September 30, 2024 and December 31, 2023, respectively	—		—
Stockholders’ equity:
Common stock—$0.001 par value; 200,000,000 shares authorized at September 30, 2024 and December 31, 2023; 9,682,374 and 801,746 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively	10		1
Additional paid-in capital	355,990		342,437
Accumulated deficit	(334,924)		(335,134)
Total stockholders’ equity	21,076		7,304
Total liabilities, mezzanine equity and stockholders’ equity	$	98,455	$	20,993

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

AVALO THERAPEUTICS, INC. and SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

(In thousands, except per share data)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Revenues:
Product revenue, net	$	249	$	236	$	249	$	1,353

Total revenues, net	249		236		249		1,353

Operating expenses:
Cost of product sales	(714)		247		(453)		1,505
Research and development	9,538		1,249		16,254		11,917
Acquired in-process research and development	—		—		27,641		—
General and administrative	4,286		2,490		12,008		7,624

Total operating expenses	13,110		3,986		55,450		21,046
Loss from operations	(12,861)		(3,750)		(55,201)		(19,693)
Other income (expense):
Excess of initial warrant fair value over private placement proceeds	—		—		(79,276)		—
Change in fair value of warrant liability	36,025		—		148,071		—
Private placement transaction costs	—		—		(9,220)		—
Change in fair value of derivative liability	(1,100)		100		(6,260)		(120)
Interest income (expense), net	964		(1,553)		2,101		(3,498)
Other expense, net	(5)		(17)

SEC Form 10-Q filed by Avalo Therapeutics Inc.