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Avalo (AVTX) Up 45% on Deal to Divest Certain Pipeline Drugs
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Avalo Therapeutics’ (AVTX - Free Report) shares soared 45.5% on Tuesday after management announced that it had signed an agreement with AUG Therapeutics (“AUG”) for the sale of three compounds targeting rare diseases.
The three compounds, namely AVTX-801 (D-galactose), AVTX-802 (D-mannose), and AVTX-803 (L-fucose), are being developed for the treatment of congenital disorders of glycosylation (“CDGs”).
In return, AUG will pay $150,000 upfront to Avalo Therapeutics. AUG has also committed to making a contingent milestone payment of $15 million for each compound. However, the milestone payment is contingent on the compounds receiving FDA approval for a medical condition other than a rare pediatric disease.
In addition, if AUG receives any payments from the sale of priority review vouchers (“PRV”) granted by the FDA, Avalo will be entitled to receive up to 20% of those payments.
The sale, subject to customary closing conditions, is expected to be completed before this year’s end.
This transaction is likely to have a positive impact on the company’s cash flow. Management is currently focused on reducing the utilization of its internal resources on non-core assets. It will allow the company to focus on developing its immunology pipeline.
The divestiture of its non-core pipeline assets reduces Avalo’s pressure on its cash runway and provides it with an upside in the form of milestone payments if these candidates yield a potential success in clinical development and regulatory approvals. The stock was likely up in response to these factors.
In the year so far, shares of Avalo have plunged 97.6% compared with the industry’s 4.1% fall.
Image Source: Zacks Investment Research
The above sale was expected as the company had previously signed a non-binding letter of intent for the sale of the three compounds in July.
Currently, Avalo is facing liquidity issues. In July, management signed a forbearance agreement with its debt lenders, under which the parties agreed that an event of default had occurred due to a material adverse change in the Company’s business. The lenders agreed to refrain from executing the complete remedies available to them until Aug 15. Last month, Avalo signed a second forbearance agreement extending this forbearance period by a month to Sep 15.
In clinical development, Avalo currently has only one candidate AVTX-002, a monoclonal antibody directed against human LIGHT. In June, the company faced a major setback when management announced that AVTX-002 failed to reduce asthma-related events in patients with poorly controlled non-eosinophilic asthma (“NEA”) in the phase II PEAK study.
Despite failing to meet the study's primary endpoint, preliminary post-hoc analyses demonstrated a positive trend in the reduction of asthma-related events in patients treated with AVTX-002 over placebo within a substantial sub-population of patients with elevated baseline LIGHT levels.
Based on the above analysis, management continues to evaluate the PEAK study data. The company is also pursuing funding opportunities for the program and intends to inform about development details in the near future.
AVTX-002 has previously demonstrated proof of concept in COVID-19-induced acute respiratory distress syndrome, including a reduction in mortality and respiratory failure, as well as a positive signal in Crohn’s disease.
The company also intends to advance AVTX-008 to clinical development against several immune dysregulation disorders, subject to funding.
In the past 60 days, estimates for Annovis Bio’s 2023 loss per share have narrowed from $4.89 to $4.38. During the same period, the loss estimates per share for 2024 have improved from $3.18 to $2.77. Year to date, shares of Annovis have lost 17.0%.
Earnings of Annovis Bio beat estimates in three of the last four quarters while missing the mark on one occasion, witnessing an earnings surprise of 13.40% on average. In the last reported quarter, Annovis’ earnings beat estimates by 6.14%.
In the past 60 days, estimates for Aurinia Pharmaceuticals’ 2023 loss per share have improved from 71 cents to 58 cents. During the same period, the loss estimates per share for 2024 have narrowed down from 43 cents to 28 cents. Year to date, shares of Aurinia have surged 111.1%.
Earnings of Aurinia Pharmaceuticals beat estimates in each of the trailing four quarters, delivering an average earnings surprise of 45.61%. In the last reported quarter, Aurinia Pharmaceuticals’ earnings beat estimates by 60.00%.
In the past 60 days, estimates for Dynavax Technologies’ 2023 loss per share have improved from 51 cents to 24 cents. During the same period, the estimates per share for 2024 rose from a loss of 24 cents to earnings of 2 cents. Year to date, shares of Dynavax have risen 27.0%.
Earnings of Dynavax Technologies beat estimates in two of the trailing four quarters and missed in the remaining two, the average surprise being 25.78%. In the last reported quarter, Dynavax Technologies’ earnings beat estimates by 133.33%.
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Avalo (AVTX) Up 45% on Deal to Divest Certain Pipeline Drugs
Avalo Therapeutics’ (AVTX - Free Report) shares soared 45.5% on Tuesday after management announced that it had signed an agreement with AUG Therapeutics (“AUG”) for the sale of three compounds targeting rare diseases.
The three compounds, namely AVTX-801 (D-galactose), AVTX-802 (D-mannose), and AVTX-803 (L-fucose), are being developed for the treatment of congenital disorders of glycosylation (“CDGs”).
In return, AUG will pay $150,000 upfront to Avalo Therapeutics. AUG has also committed to making a contingent milestone payment of $15 million for each compound. However, the milestone payment is contingent on the compounds receiving FDA approval for a medical condition other than a rare pediatric disease.
In addition, if AUG receives any payments from the sale of priority review vouchers (“PRV”) granted by the FDA, Avalo will be entitled to receive up to 20% of those payments.
The sale, subject to customary closing conditions, is expected to be completed before this year’s end.
This transaction is likely to have a positive impact on the company’s cash flow. Management is currently focused on reducing the utilization of its internal resources on non-core assets. It will allow the company to focus on developing its immunology pipeline.
The divestiture of its non-core pipeline assets reduces Avalo’s pressure on its cash runway and provides it with an upside in the form of milestone payments if these candidates yield a potential success in clinical development and regulatory approvals. The stock was likely up in response to these factors.
In the year so far, shares of Avalo have plunged 97.6% compared with the industry’s 4.1% fall.
Image Source: Zacks Investment Research
The above sale was expected as the company had previously signed a non-binding letter of intent for the sale of the three compounds in July.
Currently, Avalo is facing liquidity issues. In July, management signed a forbearance agreement with its debt lenders, under which the parties agreed that an event of default had occurred due to a material adverse change in the Company’s business. The lenders agreed to refrain from executing the complete remedies available to them until Aug 15. Last month, Avalo signed a second forbearance agreement extending this forbearance period by a month to Sep 15.
In clinical development, Avalo currently has only one candidate AVTX-002, a monoclonal antibody directed against human LIGHT. In June, the company faced a major setback when management announced that AVTX-002 failed to reduce asthma-related events in patients with poorly controlled non-eosinophilic asthma (“NEA”) in the phase II PEAK study.
Despite failing to meet the study's primary endpoint, preliminary post-hoc analyses demonstrated a positive trend in the reduction of asthma-related events in patients treated with AVTX-002 over placebo within a substantial sub-population of patients with elevated baseline LIGHT levels.
Based on the above analysis, management continues to evaluate the PEAK study data. The company is also pursuing funding opportunities for the program and intends to inform about development details in the near future.
AVTX-002 has previously demonstrated proof of concept in COVID-19-induced acute respiratory distress syndrome, including a reduction in mortality and respiratory failure, as well as a positive signal in Crohn’s disease.
The company also intends to advance AVTX-008 to clinical development against several immune dysregulation disorders, subject to funding.
Avalo Therapeutics, Inc. Price
Avalo Therapeutics, Inc. price | Avalo Therapeutics, Inc. Quote
Zacks Rank & Stocks to Consider
Avalo currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the overall healthcare sector include Annovis Bio (ANVS - Free Report) , Aurinia Pharmaceuticals (AUPH - Free Report) and Dynavax Technologies (DVAX - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, estimates for Annovis Bio’s 2023 loss per share have narrowed from $4.89 to $4.38. During the same period, the loss estimates per share for 2024 have improved from $3.18 to $2.77. Year to date, shares of Annovis have lost 17.0%.
Earnings of Annovis Bio beat estimates in three of the last four quarters while missing the mark on one occasion, witnessing an earnings surprise of 13.40% on average. In the last reported quarter, Annovis’ earnings beat estimates by 6.14%.
In the past 60 days, estimates for Aurinia Pharmaceuticals’ 2023 loss per share have improved from 71 cents to 58 cents. During the same period, the loss estimates per share for 2024 have narrowed down from 43 cents to 28 cents. Year to date, shares of Aurinia have surged 111.1%.
Earnings of Aurinia Pharmaceuticals beat estimates in each of the trailing four quarters, delivering an average earnings surprise of 45.61%. In the last reported quarter, Aurinia Pharmaceuticals’ earnings beat estimates by 60.00%.
In the past 60 days, estimates for Dynavax Technologies’ 2023 loss per share have improved from 51 cents to 24 cents. During the same period, the estimates per share for 2024 rose from a loss of 24 cents to earnings of 2 cents. Year to date, shares of Dynavax have risen 27.0%.
Earnings of Dynavax Technologies beat estimates in two of the trailing four quarters and missed in the remaining two, the average surprise being 25.78%. In the last reported quarter, Dynavax Technologies’ earnings beat estimates by 133.33%.