Key Takeaways
Avalo Therapeutics Inc. (NASDAQ: AVTX) priced an underwritten public offering to raise approximately $375 million in gross proceeds, capitalizing on positive clinical trial data for its lead drug candidate.
"This de-risking data set gives us tremendous confidence to advance abdakibart into a pivotal phase 3 registrational program," Garry Neil, MD, Chief Executive Officer of Avalo Therapeutics, said in a statement regarding the trial results. "We aim to offer a truly innovative mechanism of action to the HS community."
The clinical-stage biotechnology company is offering 19,730,000 shares of common stock at $17.75 per share. In lieu of common stock for some investors, it is also offering pre-funded warrants to purchase 1,400,000 shares of common stock at $17.749 per warrant. Underwriters have a 30-day option to purchase up to an additional 3,169,500 shares.
The financing was announced shortly after the company reported its Phase 2 LOTUS trial for the drug abdakibart met its primary endpoint, causing shares to surge over 50% in after-hours trading. The offering, expected to close on May 7, 2026, provides the necessary capital to advance the drug into a Phase 3 trial.
The offering follows the release of positive topline results from Avalo's Phase 2 LOTUS trial evaluating abdakibart in adults with moderate to severe hidradenitis suppurativa (HS), a chronic inflammatory skin disease. The trial met its primary endpoint, demonstrating a statistically significant improvement in patients achieving Hidradenitis Suppurativa Clinical Response (HiSCR75) at week 16 compared to placebo (p=0.004 combined).
Abdakibart is an anti-IL-1β monoclonal antibody that showed a 42.5% combined absolute improvement in HiSCR75 response rates. The drug was also well-tolerated, with most adverse events being mild to moderate.
Avalo intends to use the net proceeds from the offering to fund the advancement of abdakibart through its Phase 3 topline data release, as well as for working capital and other corporate purposes. The company is focused on developing IL-1β-based treatments for immune-mediated inflammatory diseases.
Leerink Partners, TD Cowen and BofA Securities are acting as joint bookrunning managers for the offering.
The successful financing significantly de-risks the development path for abdakibart as a potential new treatment for thousands of patients suffering from HS. Investors will now be watching for the initiation of the Phase 3 registrational program and subsequent data readouts.
This article is for informational purposes only and does not constitute investment advice.
