CD160

Acquired AVTX-009, Phase-2 ready anti-IL-1β mAb, in March 2024 Increased cash position with private placement financing in March 2024 providing up to $185 million, including initial upfront investment of $115.6 million Topline results from planned Phase 2 trial of AVTX-009 in hidradenitis suppurativa expected in 2026 Expected cash runway into 2027 WAYNE, Pa. and ROCKVILLE, Md., March 29, 2024 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (Nasdaq: AVTX), today announced business updates and year-end financial results for 2023. “We are very excited about the acquisition of AVTX-009 and concurrent financing of up to $185 million, $115.6 million of which we received upfront. The progress we made in 2023 to strengthen our balance sheet helped enable these transactions. I am proud of the team’s efforts and continued dedication in executing our strategy focused on the treatment of inflammatory conditions,” said Dr. Garry Neil, Chief Executive Officer and Chairman of the Board. “Our focus in 2024 is executing operationally on the development of AVTX-009 for the treatment of hidradenitis suppurativa. Our experienced team is ready to hit the ground running on progressing the drug candidate and is motivated by the potential of developing a meaningful treatment for patients suffering from hidradenitis suppurativa, many of whom are searching for improved treatment options.” Corporate Updates On March 27, 2024, Avalo acquired AVTX-009, a Phase 2 ready anti-IL-1β mAb, through an acquisition of AlmataBio, Inc. The consideration included stock valued at $15 million, as well as a $7.5 million payment due upon closing of the private placement investment. Avalo is also required to pay development milestones to the former AlmataBio stockholders including $5 million due upon the first patient dosed in a Phase 2 trial in patients with hidradenitis suppurativa (HS) and $15 million due upon the first patient dosed in a Phase 3 trial, both of which are payable in cash, Avalo stock, or a combination thereof at the election of the former AlmataBio stockholders. On March 28, 2024, Avalo closed a private placement led by Commodore Capital and TCGX, with participation from BVF Partners, Deep Track Capital, OrbiMed, Petrichor, and RA Capital Management for gross proceeds of up to $185 million, including $115.6 million of initial upfront funding received at close. The upfront investment is expected to fund operations through Avalo’s planned Phase 2 data readout in hidradenitis suppurativa and into 2027. As part of the private placement, the Company issued (i) an aggregate of $115.6 million of non-voting convertible preferred stock and (ii) warrants to purchase Avalo’s common stock or an equivalent amount (as converted to common stock) of non-voting convertible preferred stock for an aggregate exercise price of $69.4 million. The warrants are exercisable for approximately $5.80 per underlying share of common stock until the earlier of five years from the date of issuance or 30 days after the public announcement of the first patient dosed in a Phase 2 trial of AVTX-009 in HS. On an as-converted basis and after accounting for the financing and acquisition (excluding the exercise of the warrants), the total number of shares of Avalo common stock outstanding would be approximately 23.4 million immediately after the closing of the transactions. Program Updates and Milestones: AVTX-009: Anti-IL-1β monoclonal antibody (mAb) targeting inflammatory diseases. Avalo intends to pursue the development of AVTX-009 in hidradenitis suppurativa and expects topline data from its planned Phase 2 trial in hidradenitis suppurativa in 2026. In addition to hidradenitis suppurativa, Avalo intends to develop AVTX-009 in at least one other chronic inflammatory indication. Quisovalimab (AVTX-002): Anti-LIGHT mAb targeting immune-inflammatory diseases. Avalo is conducting a strategic review of the quisovalimab program. AVTX-008: B and T Lymphocyte Attenuator (BTLA) agonist fusion protein targeting immune dysregulation disorders. Avalo is conducting a strategic review of the AVTX-008 program. 2023 Financial Update: As of December 31, 2023, Avalo had $7.4 million in cash and cash equivalents. We raised approximately $46.2 million of net proceeds from equity financings in 2023 and fully retired our original $35 million of debt with principal payments of $21.2 million, inclusive of the full payoff of the loan in September 2023. The decrease in net loss was primarily attributable to a $26.2 million decrease in operating expenses driven by significantly reduced research and development expenses and selling, general and administrative expenses partially offset by a decrease of $14.2 million in license and other revenue. The significant reduction of research and development expenses was driven by fewer development programs ongoing during 2023 (due to divestitures in both 2022 and 2023), the AVTX-002 trial reading out in June of 2023 with no new trials initiated in the second half of the year, and a reduction of manufacturing costs due to the timing of manufacturing runs. Selling, general and administrative expenses decreased due to a smaller infrastructure to support the focused pipeline, severance in 2022 that did not repeat, as well as cost savings initiatives. Net loss per share decreased as a result of the decrease in net loss and due to an increase in the shares outstanding. In March 2024, we closed a private placement financing for gross upfront proceeds of $115.6 million. Avalo estimates upfront net proceeds of approximately $105 million after deducting estimated transaction fees and expenses from both the private placement financing and the acquisition of AlmataBio. We expect future research and development expenses and cash used in operating activities to increase in 2024 as a result of our development plans to initiate and progress a Phase 2 trial in hidradenitis suppurativa. Topline results from this planned Phase 2 trial are expected in 2026 and the upfront funding is expected to fund operations through this data readout and into 2027. Consolidated Balance Sheets (In thousands, except share and per share data) December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 7,415 $ 13,172 Other receivables 136 1,919 Inventory, net — 20 Prepaid expenses and other current assets 843 1,290 Restricted cash, current portion 1 15 Total current assets 8,395 16,416 Property and equipment, net 1,965 2,411 Goodwill 10,502 14,409 Restricted cash, net of current portion 131 131 Total assets $ 20,993 $ 33,367 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 446 $ 2,882 Deferred revenue — 88 Accrued expenses and other current liabilities 4,172 13,214 Notes payable, current — 5,930 Total current liabilities 4,618 22,114 Notes payable, non-current — 13,486 Royalty obligation 2,000 2,000 Deferred tax liability, net 155 141 Derivative liability 5,550 4,830 Other long-term liabilities 1,366 1,711 Total liabilities 13,689 44,282 Stockholders’ equity (deficit) : Common stock—$0.001 par value; 200,000,000 shares authorized at December 31, 2023 and 2022; 801,7461 and 39,2941 shares issued and outstanding at December 31, 2023 and 2022, respectively 1 — Additional paid-in capital1 342,437 292,909 Accumulated deficit (335,134 ) (303,824 ) Total stockholders’ equity (deficit) 7,304 (10,915 ) Total liabilities and stockholders’ equity (deficit) $ 20,993 $ 33,367 1Amounts for prior periods presented have been retroactively adjusted to reflect the 1-for-240 reverse stock split effected on December 28, 2023. The consolidated balance sheets as of December 31, 2023 and 2022 have been derived from the audited financial statements, but do not include all of the information and footnotes required by accounting principles accepted in the United States for complete financial statements. Consolidated Statements of Operations (In thousands, except per share data) Year Ended December 31, 2023 2022 Revenues: Product revenue, net $ 1,408 $ 3,364 License and other revenue 516 14,687 Total revenues, net 1,924 18,051 Operating expenses: Cost of product sales 1,284 3,434 Research and development 13,784 31,308 Selling, general and administrative 10,300 20,711 Goodwill impairment 3,907 — Amortization expense — 38 Total operating expenses 29,275 55,491 (27,351 ) (37,440 ) Other expense: Interest expense, net (3,417 ) (4,170 ) Change in fair value of derivative liability (720 ) — Other expense, net (42 ) (20 ) Total other expense, net (4,179 ) (4,190 ) Loss before income taxes (31,530 ) (41,630 ) Income tax expense 14 28 Net loss $ (31,544 ) $ (41,658 ) Net loss per share of common stock, basic and diluted1 $ (114 ) $ (1,063 ) 1 Amounts for prior periods presented have been retroactively adjusted to reflect the 1-for-240 reverse stock split effected on December 28, 2023. The consolidated statements of operations for the year ended December 31, 2023 and 2022 have been derived from the audited financial statements, but do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. About AVTX-009 AVTX-009 is a humanized monoclonal antibody (IgG4) that binds to interleukin-1β (IL-1β) with high affinity and neutralizes its activity. IL-1β is a central driver in the inflammatory process. Overproduction or dysregulation of IL-1β is implicated in many autoimmune and inflammatory diseases. IL-1β is a major, validated target for therapeutic intervention. There is evidence that inhibition of IL-1β could be effective in hidradenitis suppurativa and a variety of inflammatory diseases in dermatology, gastroenterology, and rheumatology. About quisovalimab (AVTX-002) Quisovalimab is a fully human monoclonal antibody (mAb), directed against human LIGHT (Lymphotoxin-like, exhibits Inducible expression, and competes with Herpes Virus Glycoprotein D for Herpesvirus Entry Mediator (HVEM), a receptor expressed by T lymphocytes). There is increasing evidence that the dysregulation of the LIGHT-signaling network which includes LIGHT, its receptors HVEM and LTβR and the downstream checkpoint BTLA, is a disease-driving mechanism in autoimmune and inflammatory reactions in barrier organs. Therefore, we believe reducing LIGHT levels can moderate immune dysregulation in many acute and chronic inflammatory disorders. Quisovalimab previously demonstrated proof of concept in COVID-19 induced acute respiratory distress syndrome including reduction in mortality and respiratory failure, as well as a positive signal in patients with Crohn’s Disease. About AVTX-008 AVTX-008 is a fully human B and T Lymphocyte Attenuator (BTLA) agonist fusion protein in the IND-enabling stage. AVTX-008 is differentiated by having specific binding to BTLA, with no binding to LIGHT or CD160. AVTX-008 also has high-serum stability and solubility. About Avalo Therapeutics Avalo Therapeutics is a clinical stage biotechnology company focused on the treatment of immune dysregulation. Avalo’s lead asset is AVTX-009, an anti-IL-1β mAb, targeting inflammatory diseases. Avalo’s pipeline also includes quisovalimab (anti-LIGHT mAb) and AVTX-008 (BTLA agonist fusion protein). For more information about Avalo, please visit . Forward-Looking Statements This press release may include forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond Avalo’s control), which could cause actual results to differ from the forward-looking statements. Such statements may include, without limitation, statements with respect to Avalo’s plans, objectives, projections, expectations and intentions and other statements identified by words such as “projects,” “may,” “might,” “will,” “could,” “would,” “should,” “continue,” “seeks,” “aims,” “predicts,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “potential,” or similar expressions (including their use in the negative), or by discussions of future matters such as: the intended use of the proceeds from the private placement; integration of AVTX-009 into our operations; drug development costs, timing of trial results and other risks, including reliance on investigators and enrollment of patients in clinical trials; reliance on key personnel; regulatory risks; general economic and market risks and uncertainties, including those caused by the war in Ukraine and the Middle East; and those other risks detailed in Avalo’s filings with the Securities and Exchange Commission, available at . Actual results may differ from those set forth in the forward-looking statements. Except as required by applicable law, Avalo expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Avalo’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. For media and investor inquiries Christopher Sullivan, CFO Avalo Therapeutics, Inc. ir@avalotx.com 410-803-6793 or Chris Brinzey ICR Westwicke Chris.brinzey@westwicke.com 339-970-2843

在肿瘤和病原体抗原长期的刺激下，免疫系统的防御功能会变得低效，免疫细胞变得疲劳逐渐失去效应功能，称为免疫细胞耗竭。免疫细胞的耗竭受多因素调控，导致功能下降。而且耗竭状态常与无能、衰老、抑制状态有重叠部分，也伴随着这些状态的表型特征。三种免疫细胞耗竭表型总的来看，发生耗竭时细胞整体特征有：功能下降、受体平衡打破、代谢改变以及转录和表观遗传改变。1. NK细胞先天免疫主导者，同时具备适应性免疫细胞的特征。其表面表达多种激活与抑制受体，受体信号的相对平衡整合决定了NK细胞的效应功能。1）表达升高的分子抑制受体能够在免疫细胞发挥完效应后将其抑制，以维持正常免疫功能。耗竭的NK细胞上抑制受体表达水平升高：KLGR1，通过抑制AKT磷酸化，抑制NK细胞增殖。TIGIT，是共抑制或免疫检查点受体，能够抑制NK细胞活性。其他表达升高的抑制受体：KIRs、CD94/NKG2A、LIR、CD96、TIM-3、LAG-3也表达升高。2）表达降低的分子激活受体表达降低，如：NKG2D，能够结合细胞应激产生的配体，在多种癌症中表达降低。DNAM-1，DNAX辅助分子，特异性识别配体，调控NK细胞功能。D16，能够结合抗体Fc段，在乳腺癌患者NK细胞表达降低。细胞增殖相关分子表达降低：Ki67是增殖相关蛋白，其表达减少影响有丝分裂，使NK细胞增殖能力降低。Eome和T-bet是T-box转录因子，对NK细胞分化、成熟、功能至关重要。细胞因子及细胞毒素分泌减少：LAMP-1、IFNγ、TNF-α、PFP、Granzyme的分泌减少，使NK细胞功能受损。NK细胞耗竭并非单一受体改变导致，而是多种因素共同整合所介导。更详细的内容请参考NK细胞耗竭2. B细胞B细胞耗竭的本质是慢性、潜伏期病原体感染抑制了B细胞的功能。抑制效果甚至能在病原体消除后长期存在。（如丙型肝炎病毒感染将B细胞从基因水平转变为低增殖、低功能性丙肝抗原特异性B细胞）1）表达升高的分子B细胞耗竭同样有抑制受体表达升高：FCRL4、Siglec-6，在HIV感染后表达升高，通过诱导B细胞过度激活而导致耗竭。CD95，也称为Fas、FasR或凋亡抗原APO-1，可以介导凋亡，过度表达也与抗原型B细胞应答降低有关。FCRL4，能够抑制BCR介导钙动员及胞内蛋白的磷酸化，对BCR信号负性调控。还有其他表达升高的激活受体：LILR、CD38、CD70、CD32b（FcγRIIB）、CD85d、CD85j、CD86、PD-1粘附分子受体：CD11c趋化因子受体：CXCR3、CCR62）表达降低的分子激活受体表达降低：CD21，静息B细胞表达，是2型补体受体或补体C3d受体，能够介导B细胞与HIV-1的互相作用。在感染HIV后其表达降低，形成CD27-/CD21low组织样记忆(TLM)B细胞，相比正常B细胞的增殖能力减弱。其他激活受体：CD25、BAFF-R粘附分子受体：CD62L趋化因子受体：CXCR4、CXCR5、CCR7B细胞耗竭除了最常见的如HIV的慢性病毒感染之外，在寄生虫感染患者病例中也能观察到。3. T细胞T细胞耗竭是由慢性感染或癌症、以及高度炎症状态刺激引起的功能降低。耗竭的T细胞在生理状态上是完整的，并可通过检查点受体阻断等外部途径恢复功能。1）表达升高的分子抑制受体表达升高，且与耗竭的严重程度成正比：近年来越来越多的抑制受体被发现，如：KLRG1，同样抑制T细胞增殖。以及PD-1、LAG-3、BTLA、CD244、CD160、TIM-3、CTLA-4Treg细胞通过分泌各种细胞因子，介导T细胞耗竭，如：其分泌的IL-10可以通过STAT3或APC直接或间接作用于T细胞，减弱T细胞活化。2）表达降低的分子主要是细胞因子及毒素类物质分泌降低，如：IL-2、IFNγ、TNFα、PFP、Granzyme更详细的内容请参考T细胞耗竭（Exhaustion）不同免疫细胞耗竭表型共同点不同细胞耗竭状态下可有相同分子改变T细胞和NK细胞耗竭状态：TIGIT、LAG-3、TIM-3表达升高，INF-γ、TNF-α、PFP、Granzyme分泌减少三种免疫细胞耗竭状态下均可见PD-1表达异常升高。小结NK/B/T细胞耗竭是一种多状态叠加，是由抗原持续、长期、过度刺激引起，导致激活和抑制受体平衡破坏、细胞因子及细胞毒素分泌异常。而且耗竭也并非单纯的二元化状态，而是根据刺激因素的综合强度而表现出的不同严重程度。当单一疾病（癌症或病原体感染）引起 poly-lymphocyte exhaustion时，将是非常凶险的。了解不同免疫细胞耗竭分子的异同，有助于针对疾病制定最合适的治疗策略。参考资料Kaiser M et al. Immune Aging and Immunotherapy in Cancer. Int J Mol Sci. 2021 Jun 29;22(13):7016.Judge SJ et al. Characterizing the Dysfunctional NK Cell: Assessing the Clinical Relevance of Exhaustion, Anergy, and Senescence. Front Cell Infect Microbiol. 2020 Feb 13;10:49. doi: 10.3389/fcimb.2020.00049. PMID: 32117816; PMCID: PMC7031155.Moir S et al. Evidence for HIV-associated B cell exhaustion in a dysfunctional memory B cell compartment in HIV-infected viremic individuals. J Exp Med. 2008 Aug 4;205(8):1797-805.Pawelec G. Is There a Positive Side to T Cell Exhaustion? Front Immunol. 2019 Jan 29;10:111. doi: 10.3389/fimmu.2019.00111. PMID: 30761152; PMCID: PMC6362299.Illingworth J et al. Chronic exposure to Plasmodium falciparum is associated with phenotypic evidence of B and T cell exhaustion. J Immunol. 2013 Feb 1;190(3):1038-47.

WAYNE, Pa. and ROCKVILLE, Md., Dec. 27, 2023 (GLOBE NEWSWIRE) -- Avalo Therapeutics, Inc. (Nasdaq: AVTX) today announced a 1-for-240 reverse stock split of the Company’s common stock, par value $0.001, which will be effective at 5:00 pm Eastern Time on December 28, 2023. The Company’s common stock will trade on the Nasdaq Capital Market on a split-adjusted basis beginning on December 29, 2023, under the Company’s existing trading symbol “AVTX”. The Company is implementing the reverse stock split as planned to increase the per share price of its common stock to regain compliance with the listing requirements of the Nasdaq Capital Market. The new CUSIP number following the reverse stock split will be 05338F306. The reverse stock split will affect all stockholders uniformly and will not alter any stockholder’s percentage ownership interest in the Company, except to the extent that the reverse stock split results in any of the Company’s stockholders owning a fractional share as described below. The reverse stock split will reduce the number of shares of common stock issued and outstanding from approximately 192,386,419 to approximately 801,611. No fractional shares will be issued in connection with the reverse stock split. Each stockholder who would otherwise be entitled to receive a fraction of a share of the Company’s common stock will instead receive one whole share of common stock. As of the effective date of the reverse stock split, the number of shares of common stock available for issuance under the Company’s equity incentive plans and issuable upon the exercise of stock options and warrants outstanding immediately prior to the reverse stock split will be proportionately affected by the reverse stock split. The exercise prices of the Company’s outstanding options and warrants will be adjusted in accordance with their respective terms. There will be no change to the number of authorized shares or the par value per share. Equiniti, LLC (“EQ”) is acting as the exchange agent for the reverse stock split and will provide instructions to stockholders of record regarding the reverse stock split. EQ will be issuing, automatically and without the need for stockholder action, all of the post-split shares in paperless, “book-entry” form, and EQ will hold the shares in an account set up for the stockholder. Those stockholders holding common stock in “street name” will receive instructions from their brokers. About Avalo Therapeutics Avalo Therapeutics is a clinical stage biotechnology company focused on the treatment of immune dysregulation by developing therapies that target the LIGHT-signaling network. LIGHT and its signaling receptors, HVEM (TNFRSF14), and lymphotoxin β receptor (TNFRSF3), form an immune regulatory network with two co-receptors of herpesvirus entry mediator, checkpoint inhibitor B and T Lymphocyte Attenuator (BTLA), and CD160 (the LIGHT-signaling network). Accumulating evidence points to the dysregulation of the LIGHT network as a disease-driving mechanism in autoimmune and inflammatory reactions in barrier organs. Therefore, we believe reducing LIGHT levels can moderate immune dysregulation in many acute and chronic inflammatory disorders. Avalo has an experienced leadership team with decades of successful leadership in drug development in the biotech and pharma industry. The team is led by Dr. Garry Neil, MD, Chief Executive Officer and Chairman of the Board, who brings a wealth of experience leading teams who have successfully brought drugs to the market, including serving as Group President, Pharmaceutical R&D and Corporate VP of Science & Technology at Johnson & Johnson. Additionally, Dr. Neil served as Chairman of the Board of Arena Pharmaceuticals Inc., which was acquired by Pfizer Inc. for $6.7 billion in March of 2022. Dr. Neil currently serves on the board of directors of Celldex Therapeutics. For more information about Avalo, please visit www.avalotx.com. Forward-Looking Statements This press release may include forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond Avalo’s control), which could cause actual results to differ from the forward-looking statements. Such statements may include, without limitation, statements with respect to Avalo’s plans, objectives, projections, expectations and intentions and other statements identified by words such as “projects,” “may,” “might,” “will,” “could,” “would,” “should,” “continue,” “seeks,” “aims,” “predicts,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “potential,” or similar expressions (including their use in the negative), or by discussions of future matters such as: our ability to regain compliance with the listing requirements of the Nasdaq Capital Market; potential financing or other strategic transactions; the future financial and operational outlook; timing and success of trial results and regulatory review; potential attributes and benefits of product candidates; the development of product candidates or products; and other statements that are not historical. These statements are based upon the current beliefs and expectations of Avalo’s management but are subject to significant risks and uncertainties, including: Avalo's cash position and the need for it to raise additional capital in the near future; the results of our clinical and pre-clinical studies; drug development costs, timing and other risks, including reliance on investigators and enrollment of patients in clinical trials, which might be slowed by the COVID-19 pandemic; reliance on key personnel; regulatory risks; general economic and market risks and uncertainties, including those caused by the COVID-19 pandemic and the wars in Ukraine and the Middle East; and those other risks detailed in Avalo’s filings with the SEC. Actual results may differ from those set forth in the forward-looking statements. Except as required by applicable law, Avalo expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Avalo’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. For media and investor inquiries Christopher Sullivan, CFO Avalo Therapeutics, Inc. ir@avalotx.com410-803-6793 or Chris BrinzeyICR WestwickeChris.brinzey@westwicke.com339-970-2843