STIFEL 2026 HEALTHCARE CONFERENCE - AVALO THERAPEUTICS INC

Financial Performance:

• Current cash runway estimated at $430 million following a reduction from $462 million post-Lotus trial, sufficient to fund operations through top-line Phase 3 data expected in late 2029.
• No debt mentioned; the company explicitly stated it is not currently seeking capital raises due to its strong balance sheet.
• Funding covers Phase 2 completion, the upcoming Phase 3 program, the new indication launch, and the Phase 1 program for ABTX-010.
• No specific revenue figures reported as the company remains in the clinical development stage without commercial products.

Guidance and Future Outlook:

• Phase 3 Start: Enrolment for the primary Phase 3 program in Hidradenitis Suppurativa (HS) is targeted for early 2029 following FDA feedback expected before year-end.
• Top-Line Data: Phase 3 HS data expected in late 2029; subsequent Phase 3 maintenance data would likely push registration approval into 2030/2031.
• Pipeline Milestones: IND filing and first-in-human studies for the extended PK candidate (ABTX-010) planned for the first half of 2029.
• New Indication: Announcement of a new therapeutic area outside dermatology (distinct from HS) scheduled for later this year, with clinical trials potentially starting early 2029.
• Market Projection: The HS market is projected to exceed $10 billion, driven by recognition of the ~3 million patient population in the U.S.

Business Segments and Product Lines:

• Lead Asset (Abdacobart): A high-affinity human anti-IL-1 beta monoclonal antibody; Phase 2 "LOTUS" trial results were positive with 43% of patients achieving HiSCR75 (lesion healing).
• Next-Gen Asset (ABTX-010): An internally engineered, PK-extended version of Abdocabart designed for longer dosing intervals (every 3-6 months); maintains high affinity while optimizing exposure.
• Indications: Primary focus is Hidradenitis Suppurativa (AHS); expanding into a new, un-crowded therapeutic area with strong clinical validation later this year.
• Trial Design: Phase 3 will consist of two placebo-controlled studies in moderate-to-severe HS patients, including a biologic-experienced cohort (~40%), utilizing HiSCR75 as the primary endpoint.

Market and Competitive Landscape:

• Competitors: Current landscape includes Humira, Cosentix, and Bemzelex; recent competitor data from AbbVie (Litikizumab) and Xura (Tulasocobar) readouts provided context.
• Differentiation: Abdocabart claims a 7-fold higher affinity for IL-1 beta compared to Litikizumab (a bispecific targeting IL-1α and IL-1β), potentially driving superior neutralization and efficacy.
• Efficacy Comparison: Abdocabart Phase 2 HiSCR75 (43%) significantly outperforms AbbVie's Phase 3 Litikizumab results (~30-33% treatment effect), attributed to higher potency and rigorous trial execution.
• Market Dynamics: Anticipated to be a multi-class market rather than monolithic; IL-1 beta blockade is positioned as a central upstream driver of inflammation affecting TNF and IL-17 pathways.

Risks and Challenges:

• Placebo Response: Elevated placebo rates (20-25%) in HS trials pose a significant risk to statistical significance; the company notes this is due to disease variability and difficulty in assessing lesions in sensitive areas.
• Data Consistency: Historical degradation from Phase 2 to Phase 3 is a concern; the company aims to mitigate this through rigorous patient selection, investigator training, and appropriate study powering.
• Safety Signals: Potential for neutropenia associated with IL-1 beta blockade exists, though the LOTUS trial showed no serious cases due to the high baseline neutrophil counts in HS patients.
• Regulatory Uncertainty: FDA feedback on the Phase 3 protocol and the potential acceptance of Phase 2 data as pivotal is pending.

Management Commentary and Tone:

• Confidence: Management expressed high confidence in translating Phase 2 efficacy to Phase 3, citing the trial's rigorous design, consistency across dosing arms, and robust data analysis.
• Strategic Positioning: CEO Gary Neal emphasized that while AbbVie's success validates the IL-1 beta hypothesis, their higher-affinity drug offers a clear opportunity to improve upon competitor results.
• Operational Readiness: Emphasis on being "well-capitalized" and having clinical teams, CROs, and supplies fully prepared to launch Phase 3 immediately upon protocol finalization.

Analyst Questions and Answers:

• Q: Comparison to Litikizumab's Phase 3 results: A: Acknowledged AbbVie's positive study but highlighted that their treatment effect size (~8% over placebo) was smaller than Abdocabart's (~43% total response), likely due to Abdocabart's superior potency and trial rigor.
• Q: Impact of high placebo rates (e.g., Xura failure): A: Disagreed with the notion of a "negative" trial solely due to placebo; attributed Xura's failure to insufficient drug effect size. Confirmed 20-25% is the new baseline but stressed that robust drug effects can overcome this with proper study design.
• Q: Phase 3 enrollment timeline: A: Anticipates smooth enrollment due to patient preference for Phase 3 over Phase 2 trials and the availability of trained investigators, with no significant site competition expected post-AbbVie's completion.
• Q: Cash runway specifics: A: Confirmed $430 million covers all activities through late 2029 top-line data, removing near-term dilution risk.

Other Key Points:

• LOTUS Trial Details: The Phase 2 study was the largest in HS history, utilizing strict imputation methods and analyzing two dosing regimens (600/300 monthly vs. 300/150 bi-weekly) which showed consistent efficacy.
• Mechanism of Action: IL-1 beta is identified as the central driver of tissue destruction and inflammation in HS, acting upstream of TNF and IL-17.
• Manufacturing: Successful manufacturing run completed for ABTX-010, with abbreviated toxicology programs approved to accelerate the IND filing.
• Future Presentations: Company indicated interest in reviewing detailed data from competitors (e.g., patient populations not in press releases) at future meetings like AAD.