Avalo Looks to Sell Rare Disease Assets to Raise Cash
August 4, 2023
Rare Daily Staff
Avalo Therapeutics, a company focused on the treatment of immune dysregulation by developing therapies that target the LIGHT-signaling network, said it is looking to license or sell assets as it struggles to pay the principal under a loan and security agreement.
Shares fell to 19 cents on the news.
After cutting its pipeline in the spring of 2022, the company reported in June that its lead asset AVTX-002 failed in a phase 2 clinical trial. That sent its shares plummeting 88 percent.
Avalo had prepaid $6 million of principal under its loan and security agreement with the remaining principal payment of $15.2 million. On July 20, 2023, Avalo entered into a forbearance agreement with its debt lenders, pursuant to which the parties agreed that an event of default had occurred due to a material adverse change in the company’s business and the lenders agreed to forbear from enforcing its full remedies, including acceleration of the amounts due, until August 15, 2023, or earlier triggering event.
Avalo is considering out-licensing or sale of its non-core and potentially its core assets to increase focus and reduce future expenses. In July, Avalo entered into a non-binding letter of intent for the potential sale of three preclinical rare disease assets: AVTX-801 (D-galactose), AVTX-802 (D-mannose) and AVTX-803 (L-fucose), a fucose replacement for leukocyte adhesion deficiency type II (also known as SLC35C1-CDG), a congenital disorder of glycosylation.
Avalo believes that an opportunity remains for its lead asset AVTX-002 in asthma, particularly in a subset of patients with higher baseline LIGHT levels. It also has high confidence in its preclinical stage fully human BTLA agonist fusion protein (AVTX-008) to potentially treat a wide range of autoimmune diseases and are excited by the drug’s novel mechanism of action and potential usage in patients not responsive to anti-TNF therapy.
“The team is working tirelessly to determine the best path forward for these assets, including indication selection and funding to support development,” said Garry Neil, CEO and chairman of the board of Avalo.
Photo: Garry Neil, CEO and chairman of the board of Avalo.
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