Avalo Narrows Third-Quarter Loss After LOTUS Readout

The Tip Desk · November 11, 2026 · 3 min read

The clinical-stage biotech posted an $18.9 million net loss and $462.8 million of cash, cash equivalents and investments as of September 30, 2026.

Avalo Therapeutics (AVTX), a clinical-stage biotechnology company developing therapies targeting the IL-1β pathway for immune-mediated inflammatory diseases, reported a net loss of $18.9 million for the third quarter of 2026, down $11.7 million from the year-earlier quarter. Basic and diluted net loss was $0.34 a share, compared with $2.19 a share a year earlier, on 55,060,404 weighted average common shares outstanding versus 14,000,451.

The company said the narrower loss was driven mainly by a $4.2 million increase in operating expenses that was more than offset by the change in fair value related to the derivative liability. Operating expenses were $23.4 million in the quarter.

Research and development expenses were $15.0 million, up $1.4 million from the third quarter of 2025. Avalo attributed the increase primarily to higher CMC costs related to manufacturing activities for AVTX-010 and abdakibart, as well as higher stock-based compensation and salary costs. Those increases were partially offset by lower clinical expenses after the Phase 2 LOTUS trial and related activities decreased following the May 2026 topline data readout. General and administrative expenses were $8.4 million, up $2.8 million from a year earlier, primarily from stock-based compensation and salary costs.

R&D spending also fell sequentially from $23.4 million in the second quarter of 2026, a figure that had included a $10.0 million abdakibart development milestone.

Cash, cash equivalents and investments were $462.8 million as of September 30, 2026, down from $472.2 million as of June 30, 2026. Avalo said the balance is expected to fund operations into 2029. Net cash used in operating activities was $49.2 million for the nine months ended September 30, 2026.

The company continued preparations for a registrational Phase 3 program of abdakibart in hidradenitis suppurativa. It expects feedback from the U.S. Food and Drug Administration on its proposed development plan by year-end 2026 and plans to initiate the Phase 3 program in the first half of 2027. Chief Executive Officer Garry Neil said LOTUS provides a strong clinical foundation for advancing abdakibart toward registrational development in HS and that the company’s priority is to translate those findings into a rigorous Phase 3 program informed by upcoming regulatory feedback.

Avalo is also advancing AVTX-010, a next-generation, Fc-engineered, long-acting anti-IL-1β monoclonal antibody designed to extend half-life while preserving the pharmacology of abdakibart. The company anticipates an Investigational New Drug submission for AVTX-010 in the first half of 2027, with potential use in HS and other inflammatory diseases. Late-breaking LOTUS data were presented at the 2026 European Academy of Dermatology and Venereology Congress.

On the balance sheet as of September 30, 2026, cash and cash equivalents were $65.0 million, short-term investments were $328.0 million and long-term investments were $69.8 million. Total assets were $481.4 million. Common shares issued and outstanding were 53,923,083. Accumulated deficit was $523.5 million.

Avalo said its financial position allows it to pursue those development priorities with disciplined capital allocation tied to clear milestones. The next near-term catalyst it disclosed is FDA feedback on the proposed HS development plan by year-end 2026, ahead of planned Phase 3 initiation and the AVTX-010 IND in the first half of 2027.