Avalo Enters into Agreement to Sell Rare Disease Assets for Up to $45 Million

Rare Daily Staff

Avalo Therapeutics said it entered into a purchase agreement with AUG Therapeutics to sell its rights, title and interest in three rare disease assets for the treatment of congenital disorders of glycosylation.

The assets include AVTX-801, AVTX-802, and AVTX-803. AUG will pay an upfront payment of $150,000, as well as contingent milestone payments of $15 million for each compound if the first U.S. Food and Drug Administration approval is for an indication other than a Rare Pediatric Disease.

If the first approval is for a rare pediatric indication, it will pay up to 20 percent of the sale price of any priority review voucher granted to AUG by the FDA.

Under the agreement, AUG will assume up to $150,000 of certain liabilities incurred prior to the date of the purchase agreement and assume all costs relating to the three assets from the date of the purchase agreement.

The transaction is expected to close in the fourth quarter of 2023, subject to customary closing conditions, including obtaining certain third-party consents.

After shares tanked in June following the failure of lead asset AVTX-002 in a phase 2 clinical trial in asthma, Avalo began looking for ways to raise cash and in August decided to license or sell the preclinical assets to pay the principal under a loan agreement.

“In AUG’s hands, these programs could advance to provide reliable treatments for patients in need. This divestiture also reaffirms Avalo’s unwavering commitment to executing our strategic focus on our immunology assets, which we believe hold the greatest value and potential for our shareholders,” said Garry Neil, CEO and chairman of the board at Avalo Therapeutics. “This transaction will have an immediate positive impact on our cash flow and reduce the utilization of our internal resources for non-core assets, while also maintaining substantial upside potential for Avalo upon program success.”

Photo: Garry Neil, CEO and chairman of the board at Avalo Therapeutics