avtx-20240630

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 June 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 August 5, 2024, the registrant had 1,034,130 shares of common stock outstanding.

AVALO THERAPEUTICS, INC.

FORM 10-Q

For the Quarter Ended June 30, 2024

TABLE OF CONTENTS

Page

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets as of June 3 0 , 2024 (Unaudited) and December 31, 2023

Condensed Consolidated Statements of Operations and Comprehensive Income (Los s ) (Unaudited) for the Three and Six Months Ended June 3 0 , 2024 and 2023

Condensed Consolidated Statements of Preferred Stock and Changes in Stockholders’ Deficit (Unaudited) for the Three and Six Months Ended June 3 0 , 2024 and 2023

Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 3 0 , 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


	June 30, 2024		December 31, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	93,426	$	7,415

Other receivables	33		136

Prepaid expenses and other current assets	2,435		843
Restricted cash, current portion	—		1
Total current assets	95,894		8,395
Property and equipment, net	1,780		1,965
Goodwill	10,502		10,502
Restricted cash, net of current portion	131		131
Total assets	$	108,307	$	20,993
Liabilities, mezzanine equity and stockholders’ (deficit) equity
Current liabilities:
Accounts payable	$	654	$	446
Accrued expenses and other current liabilities	7,888		4,172
Warrant liability	82,855		—
Contingent consideration	5,000		—
Total current liabilities	96,397		4,618
Royalty obligation	2,000		2,000
Deferred tax liability, net	168		155
Derivative liability	10,710		5,550
Other long-term liabilities	1,183		1,366
Total liabilities	110,458		13,689
Mezzanine equity:
Series C Preferred Stock—$0.001 par value; 34,326 and 0 shares of Series C Preferred Stock authorized at June 30, 2024 and December 31, 2023, respectively; 22,358 and 0 shares of Series C Preferred Stock issued and outstanding at June 30, 2024 and December 31, 2023, respectively	11,457		—
Series D Preferred Stock—$0.001 par value; 1 and 0 shares of Series D Preferred Stock authorized at June 30, 2024 and December 31, 2023, respectively; 1 and 0 shares of Series D Preferred Stock issued and outstanding at June 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 June 30, 2024 and December 31, 2023, respectively; 1 and 0 shares of Series E Preferred Stock issued and outstanding at June 30, 2024 and December 31, 2023, respectively	—		—
Stockholders’ (deficit) equity:
Common stock—$0.001 par value; 200,000,000 shares authorized at June 30, 2024 and December 31, 2023; 1,034,130 and 801,746 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	1		1
Additional paid-in capital	344,352		342,437
Accumulated deficit	(357,961)		(335,134)
Total stockholders’ (deficit) equity	(13,608)		7,304
Total liabilities, mezzanine equity and stockholders’ (deficit) equity	$	108,307	$	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				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Revenues:
Product revenue, net	$	—	$	643	$	—	$	1,117

Total revenues, net	—		643		—		1,117

Operating expenses:
Cost of product sales	343		708		263		1,259
Research and development	4,601		4,658		6,716		10,667
Acquired in-process research and development	103		—		27,641		—
General and administrative	4,528		2,427		7,721		5,134

Total operating expenses	9,575		7,793		42,341		17,060
	(9,575)		(7,150)		(42,341)		(15,943)
Other income (expense):
Excess of initial warrant fair value over private placement proceeds	—		—		(79,276)		—
Change in fair value of warrant liability	112,046		—		112,046		—
Private placement transaction costs	—		—		(9,220)		—
Change in fair value of derivative liability	(5,040)		(40)		(5,160)		(220)
Interest income (expense), net	1,039		(996)		1,138		(1,945)
Other expense, net	—		—		—		(25)
Total other income (expense), net	108,045		(1,036)		19,528		(2,190)
Income (loss) before taxes	98,470		(8,186)		(22,813)		(18,133)
Income tax expense	7		7		14		15
Net income (loss)	$	98,463	$	(8,193)	$	(22,827)	$	(18,148)
Net income (loss) per share of common stock1:
Basic	$	4.21	$	(140.73)	$	(24.11)	$	(338.85)
Diluted	$	(14.07)	$	(140.73)	$	(30.63)	$	(338.85)

1 Amounts for prior periods presented have been retroactively adjusted to reflect the 1-for-240 reverse stock split effected on December 28, 2023. See Note 1 for details.

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

AVALO THERAPEUTICS, INC. and SUBSIDIARIES

Condensed Consolidated Statements of Preferred Stock and Changes in Stockholders’ Deficit (Unaudited)

(In thousands, except share amounts)


	Preferred Stock		Common stock			Additional paid-in	Accumulated		Total stockholders’
	Shares	Amount	Shares	Amount			capital		deficit		(deficit) equity
Three Months Ended June 30, 2024
Balance, March 31, 2024	22,360	11,457	1,034,130	$	1		$	343,881	$	(456,424)	$	(112,542)
Stock-based compensation	—	—

SEC Form 10-Q filed by Avalo Therapeutics Inc.