Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | May 08, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-37590 | |
Entity Registrant Name | AVALO THERAPEUTICS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 45-0705648 | |
Entity Address, Address Line One | 540 Gaither Road, Suite 400 | |
Entity Address, City or Town | Rockville | |
Entity Address, State or Province | MD | |
Entity Address, Postal Zip Code | 20850 | |
City Area Code | 410 | |
Local Phone Number | 522-8707 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Trading Symbol | AVTX | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 1,034,130 | |
Entity Central Index Key | 0001534120 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 110,177 | $ 7,415 |
Other receivables | 35 | 136 |
Prepaid expenses and other current assets | 997 | 843 |
Restricted cash, current portion | 4 | 1 |
Total current assets | 111,213 | 8,395 |
Property and equipment, net | 1,882 | 1,965 |
Goodwill | 10,502 | 10,502 |
Restricted cash, net of current portion | 131 | 131 |
Total assets | 123,728 | 20,993 |
Current liabilities: | ||
Accounts payable | 916 | 446 |
Accrued expenses and other current liabilities | 7,383 | 4,172 |
Warrant liability | 194,901 | 0 |
Contingent consideration | 12,500 | 0 |
Total current liabilities | 215,700 | 4,618 |
Royalty obligation | 2,000 | 2,000 |
Deferred tax liability, net | 162 | 155 |
Derivative liability | 5,670 | 5,550 |
Other long-term liabilities | 1,281 | 1,366 |
Total liabilities | 224,813 | 13,689 |
Mezzanine equity: | ||
Temporary equity, values issued | 11,457 | 0 |
Stockholders’ (deficit) equity: | ||
Common stock—$0.001 par value; 200,000,000 shares authorized at March 31, 2024 and December 31, 2023; 1,034,130 and 801,746 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 1 | 1 |
Additional paid-in capital | 343,881 | 342,437 |
Accumulated deficit | (456,424) | (335,134) |
Total stockholders’ (deficit) equity | (112,542) | 7,304 |
Total liabilities, mezzanine equity and stockholders’ (deficit) equity | 123,728 | 20,993 |
Series C Preferred Stock | ||
Mezzanine equity: | ||
Temporary equity, values issued | 11,457 | 0 |
Series D Preferred Stock | ||
Mezzanine equity: | ||
Temporary equity, values issued | 0 | 0 |
Series E Preferred Stock | ||
Mezzanine equity: | ||
Temporary equity, values issued | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 |
Temporary equity, par value per share (in dollars per share) | $ 0.001 | |
Temporary equity, shares authorized (in shares) | 5,000,000 | |
Temporary equity, shares outstanding (in shares) | 22,360 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 1,034,130 | 801,746 |
Common stock, shares outstanding (in shares) | 1,034,130 | 801,746 |
Series C Preferred Stock | ||
Temporary equity, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Temporary equity, shares authorized (in shares) | 34,326 | 0 |
Temporary equity, shares issued (in shares) | 22,358 | 0 |
Temporary equity, shares outstanding (in shares) | 22,358 | 0 |
Series D Preferred Stock | ||
Temporary equity, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Temporary equity, shares authorized (in shares) | 1 | 0 |
Temporary equity, shares issued (in shares) | 1 | 0 |
Temporary equity, shares outstanding (in shares) | 1 | 0 |
Series E Preferred Stock | ||
Temporary equity, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Temporary equity, shares authorized (in shares) | 1 | 0 |
Temporary equity, shares issued (in shares) | 1 | 0 |
Temporary equity, shares outstanding (in shares) | 1 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | ||
Revenues: | |||
Total revenues, net | $ 0 | $ 475 | |
Operating expenses: | |||
Cost of product sales | (80) | 551 | |
Research and development | 2,116 | 6,008 | |
Acquired in-process research and development | 27,538 | 0 | |
General and administrative | 3,193 | 2,708 | |
Total operating expenses | 32,767 | 9,267 | |
Total operating income (loss) | (32,767) | (8,792) | |
Other expense: | |||
Excess of warrant fair value over private placement proceeds | (79,276) | 0 | |
Private placement transaction costs | (9,220) | 0 | |
Change in fair value of derivative liability | (120) | (180) | |
Interest income, net | 100 | (949) | |
Other expense, net | 0 | (26) | |
Total other expense, net | (88,516) | (1,155) | |
Loss before taxes | (121,283) | (9,947) | |
Income tax expense | 7 | 8 | |
Net loss | (121,290) | (9,955) | |
Comprehensive loss | $ (121,290) | $ (9,955) | |
Net loss per share of common stock, basic (in dollars per share) | [1] | $ (141) | $ (204) |
Net loss per share of common stock, diluted (in dollars per share) | [1] | $ (141) | $ (204) |
Product revenue, net | |||
Revenues: | |||
Total revenues, net | $ 0 | $ 475 | |
[1] Amounts for prior periods presented have been retroactively adjusted to reflect the 1-for-240 reverse stock split effected on December 28, 2023. See Note 1 for details. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (Parenthetical) | Dec. 28, 2023 |
Income Statement [Abstract] | |
Stock split, conversion ratio | 0.0042 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Preferred Stock and Changes in Stockholders’ (Deficit) Equity (Unaudited) - USD ($) $ in Thousands | Total | Series C Preferred Stock | Series C Preferred Stock AlmataBio Transaction | Series C Preferred Stock Private Placement | Series D Preferred Stock | Series D Preferred Stock Private Placement | Series E Preferred Stock | Series E Preferred Stock Private Placement | Common stock | Additional paid-in capital | Accumulated deficit | ||
Balance at the beginning (in shares) at Dec. 31, 2022 | 39,294 | ||||||||||||
Balance at the beginning at Dec. 31, 2022 | $ (10,915) | $ 0 | [1] | $ 292,909 | [1] | $ (303,824) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Issuance of shares of common stock and warrants in underwritten public offering, net (in shares) | 15,709 | ||||||||||||
Issuance of shares of common stock and warrants in underwritten public offering, net | 13,748 | 13,748 | [1] | ||||||||||
Stock-based compensation | 855 | 855 | [1] | ||||||||||
Net loss | (9,955) | (9,955) | |||||||||||
Balance at the end (in shares) at Mar. 31, 2023 | 55,003 | ||||||||||||
Balance at the end at Mar. 31, 2023 | $ (6,267) | $ 0 | [1] | 307,512 | [1] | (313,779) | |||||||
Balance at the beginning (in shares) at Dec. 31, 2023 | 0 | 0 | 0 | 0 | |||||||||
Balance at the beginning at Dec. 31, 2023 | $ 0 | $ 0 | $ 0 | $ 0 | |||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||||
Issuance of stock | 2,412 | 19,946 | 1 | 1 | |||||||||
Issuance of Series C Preferred Stock pursuant to Almata Transaction | $ 11,457 | ||||||||||||
Balance at the end at Mar. 31, 2024 | $ 11,457 | $ 11,457 | $ 0 | $ 0 | |||||||||
Balance at the end (in shares) at Mar. 31, 2024 | 22,360 | 22,358 | 1 | 1 | |||||||||
Balance at the beginning (in shares) at Dec. 31, 2023 | 801,746 | 801,746 | |||||||||||
Balance at the beginning at Dec. 31, 2023 | $ 7,304 | $ 1 | 342,437 | (335,134) | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Impact of reverse split fractional share round-up (in shares) | 60,779 | ||||||||||||
Issuance of common stock and preferred stock as part of Almata Transaction (in shares) | 171,605 | ||||||||||||
Issuance of common stock pursuant to Almata Transaction | 815 | 815 | |||||||||||
Stock-based compensation | 629 | 629 | |||||||||||
Net loss | $ (121,290) | (121,290) | |||||||||||
Balance at the end (in shares) at Mar. 31, 2024 | 1,034,130 | 1,034,130 | |||||||||||
Balance at the end at Mar. 31, 2024 | $ (112,542) | $ 1 | $ 343,881 | $ (456,424) | |||||||||
[1]Amounts for prior periods presented have been retroactively adjusted to reflect the 1-for-240 reverse stock split effected on December 28, 2023. See Note 1 for details. |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | |
Operating activities | ||
Net loss | $ (121,290) | $ (9,955) |
Adjustments to reconcile net loss used in operating activities: | ||
Depreciation and amortization | 34 | 33 |
Stock-based compensation | 629 | 855 |
Acquired in-process research and development | 27,538 | 0 |
Excess of warrant fair value over private placement proceeds | 79,276 | 0 |
Transaction costs paid pursuant to private placement | 7,013 | 0 |
Transaction costs payable upon exercise of warrants issued in private placement | 1,734 | 0 |
Change in fair value of derivative liability | 120 | 180 |
Accretion of debt discount | 0 | 350 |
Deferred taxes | 7 | 8 |
Changes in assets and liabilities: | ||
Other receivables | 101 | 1,062 |
Inventory, net | 0 | 1 |
Prepaid expenses and other assets | (154) | (337) |
Lease incentive | 158 | 0 |
Accounts payable | 470 | 2,683 |
Deferred revenue | 0 | 22 |
Accrued expenses and other liabilities | (1,652) | (4,941) |
Lease liability, net | (186) | (13) |
Net cash used in operating activities | (6,202) | (10,052) |
Investing activities | ||
Cash assumed from Almata Transaction | 356 | 0 |
Leasehold improvements | 0 | (158) |
Disposal of property and equipment | 0 | 25 |
Net cash provided by (used in) investing activities | 356 | (133) |
Financing activities | ||
Proceeds from private placement investment, gross | 115,625 | 0 |
Transaction costs paid pursuant to private placement | (7,013) | 0 |
Proceeds from issuance of common stock and pre-funded warrants in underwritten public offering, net | 0 | 13,748 |
Net cash provided by financing activities | 108,612 | 13,748 |
Increase in cash, cash equivalents and restricted cash | 102,766 | 3,563 |
Cash, cash equivalents, and restricted cash at beginning of period | 7,546 | 13,318 |
Cash, cash equivalents, and restricted cash at end of period | 110,312 | 16,881 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 0 | 704 |
Supplemental disclosures of non-cash activities | ||
Issuance of common stock and Series C Preferred Stock pursuant to Almata Transaction | 12,727 | 0 |
Cash and cash equivalents | 110,177 | 16,687 |
Restricted cash, current | 4 | 63 |
Restricted cash, non-current | 131 | 131 |
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Total | $ 110,312 | $ 16,881 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Preferred Stock and Changes in Stockholders’ (Deficit) Equity (Unaudited) (Parenthetical) | Dec. 28, 2023 |
Statement of Stockholders' Equity [Abstract] | |
Stock split, conversion ratio | 0.0042 |
Business
Business | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | Business Avalo Therapeutics, Inc. (the “Company,” “Avalo” or “we”) is a clinical stage biotechnology company focused on the treatment of immune dysregulation. Avalo’s lead asset is AVTX-009, an anti-IL-1β monoclonal antibody (“mAb”), targeting inflammatory diseases. Avalo’s pipeline also includes quisovalimab (anti-LIGHT mAb) and AVTX-008 (BTLA agonist fusion protein). Avalo was incorporated in Delaware and commenced operation in 2011, and completed its initial public offering in October 2015. On March 27, 2024, the Company acquired AVTX-009, a Phase 2-ready anti-IL-1β mAb, through a merger with AlmataBio, Inc. (“AlmataBio”) with and into its wholly owned subsidiary (the “Almata Transaction”). Additionally, on March 28, 2024, the Company closed a private placement investment for up to $185 million in gross proceeds, including initial upfront gross investment of $115.6 million. The upfront net proceeds were approximately $108.1 million after deducting transaction costs. The Company could receive up to an additional $69.4 million of gross proceeds upon the exercise of warrants issued in the financing. Liquidity Since inception, we have incurred significant operating and cash losses from operations. We have primarily funded our operations to date through sales of equity securities, out-licensing transactions and sales of assets. For the three months ended March 31, 2024, Avalo generated a net loss of $121.3 million and negative cash flows from operations of $6.2 million. As of March 31, 2024, Avalo had $110.2 million in cash and cash equivalents. In March 2024, the Company closed a private placement investment for up to $185 million in gross proceeds, including an initial upfront gross investment of $115.6 million. Net proceeds were $108.1 million after deducting transaction costs. The Company could receive up to an additional $69.4 million of gross proceeds upon the exercise of warrants issued in the financing. Based on our current operating plans, we expect that our existing cash and cash equivalents are sufficient to fund operations for at least twelve months from the filing date of this Quarterly Report on Form 10-Q and we expect current cash on hand to fund operations into 2027. The Company closely monitors its cash and cash equivalents and seeks to balance the level of cash and cash equivalents with our projected needs to allow us to withstand periods of uncertainty relative to the availability of funding on favorable terms. We may need to satisfy our future cash needs through sales of equity securities under the Company’s ATM program or otherwise, out-licensing transactions, strategic alliances/collaborations, sale of programs, and/or mergers and acquisitions. There can be no assurance that any financing or business development initiatives can be realized by the Company, or if realized, what the terms may be. Further, if the Company raises additional funds through collaborations, strategic alliances or licensing arrangements with third parties, the Company might have to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates. To the extent that we raise capital through the sale of equity, the ownership interest of our existing stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our stockholders. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Basis of Presentation and Significant Accounting Policies Basis of Presentation The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the Company’s financial position, results of operations, and cash flows. The condensed consolidated balance sheet at December 31, 2023 has been derived from audited financial statements at that date. The interim results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to instructions, rules, and regulations prescribed by the United States Securities and Exchange Commission (“SEC”). The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited condensed consolidated financial statements are read in conjunction with the December 31, 2023 audited consolidated financial statements. On December 28, 2023, Avalo effected a 1-for-240 reverse stock split of the outstanding shares of the Company’s common stock and began trading on a split-adjusted basis on December 29, 2023. The Company retroactively applied the reverse stock split to common share and per share amounts for periods prior to December 28, 2023, including the unaudited consolidated financial statements for the quarter ended March 31, 2023. Additionally, pursuant to their terms, a proportionate adjustment was made to the per share exercise price and number of shares issuable under all of the Company’s outstanding options and warrants, and the number of shares authorized for issuance pursuant to the Company’s equity incentive plans have been reduced proportionately. Avalo retroactively applied such adjustments in the notes to consolidated financial statements for periods presented prior to December 28, 2023, including the quarter ended March 31, 2023. The reverse stock split did not reduce the number of authorized shares of common and preferred stock and did not alter the par value. Unless otherwise indicated, all amounts in the following tables are in thousands except share and per share amounts. Significant Accounting Policies During the three months ended March 31, 2024, there were no significant changes to the Company’s summary of significant accounting policies contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 29, 2024, except for the policies related to asset acquisitions and warrant liability as described below. Asset Acquisitions The Company evaluates acquisitions of assets and other similar transactions to assess whether the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen test is met, the transaction is accounted for as an asset acquisition. If the screen test is not met, further determination is required as to whether the Company has acquired inputs and processes that have the ability to create outputs which would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets. Warrant Liability The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging |
Asset Acquisition
Asset Acquisition | 3 Months Ended |
Mar. 31, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
Asset Acquisition | Asset Acquisition Almata Transaction On March 27, 2024, the Company acquired AVTX-009, a Phase 2-ready anti-IL-1β mAb, through a merger with AlmataBio with and into its wholly owned subsidiary. The Company’s acquisition of AlmataBio was structured as a stock-for-stock transaction whereby all outstanding equity interests in AlmataBio were exchanged in a merger for a combination of the Company’s common stock and shares of the Company’s Series C Preferred Stock, resulting in the issuance of 171,605 shares of Company common stock and 2,412 shares of Series C Preferred Stock. Subject to Company stockholder approval, each share of Company Series C Preferred Stock (i) issued to former AlmataBio stockholders and ii) pursuant to the private placement investment will automatically convert to 1,000 shares of common stock, subject to certain beneficial ownership limitations. The Series C Preferred Stock holds no voting rights. In addition to the shares issued, a cash payment of $7.5 million was due to the former AlmataBio stockholders upon the closing of a private placement investment. The private placement closed on March 28, 2024 and the Company paid the $7.5 million in April 2024. The Company is also required to pay potential development milestone payments to the former AlmataBio stockholders, including $5.0 million due upon the first patient dosed in a Phase 2 trial in patients with HS for AVTX-009 and $15.0 million due upon the first patient dosed in a Phase 3 trial for AVTX-009, both of which are payable in cash, Avalo stock, or a combination thereof at the election of the former AlmataBio stockholders, subject to the terms and conditions of the definitive merger agreement. The Company has been determined to be the acquiring company for accounting purposes. In connection with the Almata Transaction, substantially all of the consideration paid is allocable to the fair value of acquired in-process research and development (“IPR&D”), specifically AVTX-009, and as such the acquisition is treated as an asset acquisition. The Company initially recognized AlmataBio’s assets and liabilities by allocating the accumulated cost of the acquisition based on their relative fair values, as estimated by management. The net assets acquired as of the transaction date have been combined with the assets, liabilities, and results of operations of the Company on consummation of the Almata Transaction. In accordance with ASC 730, Research and Development , the portion of the consideration allocated to the acquired IPR&D, specifically AVTX-009, based on its relative fair value, is included as an operating expense as there is no alternative future use. Below is a summary of the total consideration, assets acquired and the liabilities assumed in connection with the Almata Transaction (in thousands): Three Months Ended March 31, 2024 Stock consideration 1 $ 12,272 Milestone payment due upon close of private placement investment 2 7,500 Milestone payment due upon first patient dosed in a Phase 2 trial 2 5,000 Transaction costs 2,402 Total GAAP Purchase Price at Close $ 27,174 Acquired IPR&D $ 27,538 Cash 356 Accrued expenses and other current liabilities (720) Total net assets acquired and liabilities assumed $ 27,174 1 Equal to the aggregate common shares issued of 171,605 and the aggregate preferred shares issued of 2,412 (as-converted to 2,412,000 shares of common stock), multiplied by the Company’s closing stock price of $4.75 on March 27, 2024. 2 Avalo deemed these milestones probable and estimable as of the transaction close date and therefore included them as part of the GAAP purchase price at close. The first milestone payment due upon the close of the private placement investment was met on March 28, 2024 and was paid on April 1, 2024. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue The Company’s license and supply agreement for Millipred ® , an oral prednisolone indicated across a wide variety of inflammatory conditions, ended on September 30, 2023, and therefore there was no net product revenues for the three months ended March 31, 2024. Avalo considered Millipred ® a non-core asset. Historically, the Company sold Millipred ® in the United States primarily through wholesale distributors, who accounted for substantially all of the Company’s net product revenues and trade receivables. For the three months ended March 31, 2023, the Company recognized net product revenue of $0.5 million. The Company will continue to monitor estimates for commercial liabilities, such as sales returns. As additional information becomes available, the Company could recognize expense (or a benefit) for differences between actuals or updated estimates to the reserves previously recognized. Pursuant the Millipred ® license and supply agreement, Avalo was required to pay the supplier fifty percent of the net profit of the Millipred ® product following each calendar quarter, subject to a $0.5 million quarterly minimum payment dependent on Avalo reaching certain net profit amounts as stipulated in the agreement. The profit share commenced on July 1, 2021 and ended on September 30, 2023. Within twenty-five months of September 30, 2023, the net profit share is subject to a reconciliation process where estimated deductions to arrive at net profit will be trued-up to actuals and could result in Avalo owing additional amounts to the supplier or vice versa, which would be recognized in cost of product sales. Aytu BioScience, Inc. (“Aytu”), to which the Company sold its rights, title, and interests in assets relating to certain commercialized products in 2019 (the “Aytu Transaction”), managed Millipred ® commercial operations until August 31, 2021 pursuant to transition service agreements, which included managing the third-party logistics provider. As a result, Aytu collected cash on behalf of Avalo for revenue generated by sales of Millipred ® |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share The Company had two classes of stock outstanding during the three months ended March 31, 2024, common stock and preferred stock, and had only common stock outstanding during the three months ended March 31, 2023. The Company computes net loss per share using the two-class method, as the Series C Preferred Stock participates in distributions with the Company’s common stock. The two-class method of computing net loss per share is an earnings allocation formula that determines net loss for common stock and any participating securities according to dividends declared and participation rights in undistributed earnings. As the Company is in a net loss position for the three months ended March 31, 2024, the two-class method of computing net loss per share results in no allocation of undistributed losses to participating securities. Basic net loss per share for common stock is computed by dividing the sum of distributed earnings by the weighted average number of shares outstanding for the period. The weighted average number of common shares outstanding as of March 31, 2023 includes the weighted average effect of pre-funded warrants, the exercise of which required nominal consideration for the delivery of the shares of common stock. There were no pre-funded warrants outstanding as of March 31, 2024. Diluted net loss per share may include the potential dilutive effect of common stock equivalents as if such securities were converted or exercised during the period, when the effect is dilutive. Common stock equivalents include: (i) outstanding stock options and restricted stock units, which are included under the “treasury stock method” when dilutive; (ii) common stock to be issued upon the exercise of outstanding warrants, which are included under the “treasury stock method” when dilutive, and (iii) preferred stock under the if-converted method. Because the impact of these items is anti-dilutive during periods of net loss, there is no difference between basic and diluted loss per common share for periods with net losses. The following tables set forth the computation of basic and diluted net loss per share of common stock for the three months ended March 31, 2024 and March 31, 2023 (in thousands, except share and per share amounts): Three Months Ended March 31, 2024 Common stock Net loss $ (121,290) Weighted average shares 859,381 Basic and diluted net loss per share $ (141) As the Company is in a net loss position as of March 31, 2024, the two-class method of computing net loss per share results in no allocation of undistributed losses to participating securities. As such, there is no allocation of undistributed losses to the Series C Preferred Stock outstanding for the three months ended March 31, 2024, and therefore the preferred stock is not reflected in the above table. Three Months Ended March 31, 2023 Common stock Net loss $ (9,955) Weighted average shares 48,845 Basic and diluted net loss per share $ (204) The following outstanding securities have been excluded from the computation of diluted weighted shares outstanding for the three months ended March 31, 2024 and 2023, as they could have been anti-dilutive: Three Months Ended March 31, 2024 2023 Stock options 7,543 7,558 Warrants on common stock 1 11,969,063 17,254 Series C Preferred Stock (as-converted to common stock) 2 22,357,897 — 1 The weighted average number of common shares outstanding for the three months ended March 31, 2023 includes the weighted average outstanding pre-funded warrants for the period because their exercise price was nominal. There were no pre-funded warrants outstanding as of March 31, 2024. 2 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value standard also establishes a three‑level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows: • Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market. • Level 2—inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model‑derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability. • Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability. The following table presents, for each of the fair value hierarchy levels required under ASC 820, the Company’s assets and liabilities that are measured at fair value on a recurring basis (in thousands): March 31, 2024 Fair Value Measurements Using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (Level 1) (Level 2) (Level 3) Assets Investments in money market funds* $ 104,776 $ — $ — Liabilities Derivative liability $ — $ — $ 5,670 Warrant liability $ — $ — 194,901 December 31, 2023 Fair Value Measurements Using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (Level 1) (Level 2) (Level 3) Assets Investments in money market funds* $ 7,077 $ — $ — Liabilities Derivative liability $ — $ — $ 5,550 *Investments in money market funds are reflected in cash and cash equivalents on the accompanying unaudited condensed consolidated balance sheets. As of March 31, 2024, the Company’s financial instruments included cash and cash equivalents, restricted cash, other receivables, prepaid and other current assets, accounts payable, accrued expenses and other current liabilities, derivative liability, and warrant liability. As of December 31, 2023, the Company’s financial instruments included cash and cash equivalents, restricted cash, accounts receivable, other receivables, prepaid and other current assets, accounts payable, accrued expenses and other current liabilities, and derivative liability. The carrying amounts reported in the accompanying unaudited condensed consolidated financial statements for cash and cash equivalents, restricted cash, accounts receivable, other receivables, prepaid and other current assets, accounts payable, and accrued expenses and other current liabilities approximate their respective fair values because of the short-term nature of these accounts. Level 3 Valuation The table presented below is a summary of changes in the fair value of the Company’s Level 3 valuations for the warrant liability and derivative liability for the three months ended March 31, 2024: Warrant liability Derivative liability Total Balance at December 31, 2023 $ — $ 5,550 $ 5,550 Initial valuation of warrant liability 194,901 — 194,901 Change in fair value — 120 120 Balance at March 31, 2024 $ 194,901 $ 5,670 $ 200,571 Warrant liability Derivative liability Total Balance at December 31, 2022 $ — $ 4,830 $ 4,830 Initial valuation of warrant liability — — — Change in fair value — 180 180 Balance at March 31, 2023 $ — $ 5,010 $ 5,010 Warrant liability On March 28, 2024, the Company closed a private placement investment with institutional investors in which the investors received (i) 19,946 shares of non-voting convertible preferred stock (the “Series C Preferred Stock”) and (ii) warrants to purchase up to an aggregate of 11,967,526 shares of Avalo’s common stock (or a number of shares of Series C Preferred Stock convertible into the number of shares of common stock the warrant is then exercisable into). Refer to Note 10 - Capital Structure and sub-header “Q1 2024 Financing” for more information regarding the warrants. The Company determined that the warrants do not satisfy the conditions to be accounted for as equity instruments. As the warrants do not meet the equity contract scope exception, the Company classified the warrants as a derivative liability upon issuance. The Company’s warrant liability is measured at fair value each reporting period utilizing the Black-Scholes option pricing model, which requires assumptions including the value of the stock on the measurement date, exercise price, expected term, expected volatility, and the risk-free interest rate. Certain assumptions, including the expected term and expected volatility, are subjective and require judgment to develop. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our warrant liability could be materially different. The closing stock price of Avalo’s common stock on March 28, 2024, which was the date the transaction closed, as well as the last trading day of the first quarter of 2024, was the main driver of the fair value of the warrant liability. Future increases or decreases to the stock price at each reporting period will drive increases or decreases, respectively, to the fair value of the warrant liability. The expected term was estimated based on when the Company expects the first patient dosed in a Phase 2 trial of AVTX-009 in hidradenitis suppurativa (the “Dosing Date”), to occur. If the Dosing Date occurs earlier or later than expected, then the expected term will decrease or increase, respectively, which may decrease or increase, respectively, the value of the warrant liability. Expected volatility is based on a blend between the Company’s historical volatility and the volatility of comparable peer companies. The risk-free interest rate was based on the implied yield available on U.S. treasury securities with a maturity equivalent to the expected term. The warrant liability was classified as a Level 3 instrument as its value was based on unobservable market inputs. The inputs utilized include the following: As of March 31, 2024 Common stock price $ 21.75 Expected term (in years) 0.5 Expected volatility 109 % Risk-free rate 5.35 % Exercise price $ 5.796933 Dividend yield rate — % The initial measurement of the warrant liability of $194.9 million exceeded the proceeds received from the private placement investment of $115.6 million, which resulted in a $79.3 million loss recognized in other expense, net. Subsequently, the warrants are carried at fair value with changes in fair value recognized in the Company’s consolidated statements of operations and comprehensive loss until either exercised or expired. Derivative liability In the fourth quarter of 2022, Avalo sold its economic rights to future milestone and royalty payments for previously out-licensed assets AVTX-501, AVTX-007, and AVTX-611 to ES Therapeutics, LLC (“ES”), an affiliate of Armistice, in exchange for $5.0 million (the “ES Transaction”). At the time of the transaction, Armistice was a significant stockholder of the Company and whose chief investment officer, Steven Boyd, and managing director, Keith Maher, served on Avalo’s Board until August 8, 2022. The ES Transaction was approved in accordance with Avalo’s related party transaction policy. The economic rights sold include (a) rights to a milestone payment of $20.0 million upon the filing and acceptance of an NDA for AVTX-501 pursuant to an agreement with Janssen Pharmaceutics, Inc., (the “AVTX-501 Milestone”) and (b) rights to any future milestone payments and royalties relating to AVTX-007 under a license agreement with Apollo AP43 Limited, including up to $6.25 million of development milestones, up to $67.5 million in sales-based milestones, and royalty payments of a low single digit percentage of annual net sales (which percentage increases to another low single digit percentage if annual net sales exceed a specified threshold) (the “AVTX-007 Milestones and Royalties”). In addition, Avalo waived all its rights to AVTX-611 sales-based payments of up to $20.0 million that were payable by ES. The exchange of the economic rights of the AVTX-501 Milestone and AVTX-007 Milestones and Royalties for cash meets the definition of a derivative instrument. The fair value of the derivative liability is determined using a combination of a scenario-based method and an option pricing method (implemented using a Monte Carlo simulation). The significant inputs including probabilities of success, expected timing, and forecasted sales as well as market-based inputs for volatility, risk-adjusted discount rates and allowance for counterparty credit risk are unobservable and based on the best information available to Avalo. Certain information used in the valuation is inherently limited in nature and could differ from Janssen and Apollo’s internal estimates. The fair value of the derivative liability as of the transaction date was approximately $4.8 million, of which $3.5 million was attributable to the AVTX-501 Milestone and $1.3 million was attributable to the AVTX-007 Milestones and Royalties. Subsequent to the transaction date, at each reporting period, the derivative liability is remeasured at fair value. As of March 31, 2024, the fair value of the derivative liability was $5.7 million, of which $3.8 million was attributable to the AVTX-501 Milestone and $1.9 million was attributable to the AVTX-007 Milestones and Royalties. For the three months ended March 31, 2024, the $0.1 million change in fair value was recognized in other expense, net in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. The fair value of the AVTX-501 Milestone was primarily driven by an approximate 23% probability of success to reach the milestone in approximately 3.6 years. The fair value of AVTX-007 Milestones and Royalties was primarily driven by an approximate 17% probability of success, time to commercialization of approximately 4.6 years, and sales forecasts with peak annual net sales reaching $300 million. As discussed above, these unobservable inputs were estimated by Avalo based on limited publicly available information and therefore could differ from Janssen and Apollo’s internal development plans. Any changes to these inputs may result in significant changes to the fair value measurement. Notably, the probability of success is the largest driver of the fair value and therefore changes to such input would likely result in significant changes to such fair value. In the event that Janssen and/or Apollo are required to make payment(s) to ES Therapeutics pursuant to the underlying agreements, Avalo will recognize revenue under its existing contracts with those customers for that amount when it is no longer probable there would be a significant revenue reversal with any differences between the fair value of the derivative liability related to that payment immediately prior to the revenue recognition and revenue recognized to be recorded as other expense. However, given Avalo is no longer entitled to collect these payments, the potential ultimate settlement of the payments in the future from Janssen and/or Apollo to ES Therapeutics (and the future mark-to-market activity each reporting period) will not impact Avalo’s future cash flows. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Leases | Leases Avalo currently occupies two leased properties, both of which serve as administrative office space. The Company determined that both of these leases are operating leases based on the lease classification test performed at lease commencement. The annual base rent for the Company’s office located in Rockville, Maryland is $0.2 million, subject to annual 2.5% increases over the term of the lease. The applicable lease provided for a rent abatement for a period of 12 months following the Company’s date of occupancy. The lease has an initial term of 10 years from the date the Company made its first annual fixed rent payment, which occurred in January 2020. The Company has the option to extend the lease two times, each for a period of five years, and may terminate the lease as of the sixth anniversary of the first annual fixed rent payment, upon the payment of a termination fee. The initial annual base rent for the Company’s office located in Chesterbrook, Pennsylvania is $0.2 million and the annual operating expenses are approximately $0.1 million. The annual base rent is subject to periodic increases of approximately 2.4% over the term of the lease. The lease has an initial term of 5.25 years from the lease commencement on December 1, 2021. The weighted average remaining term of the operating leases at March 31, 2024 was 4.4 years. Supplemental balance sheet information related to the leased properties include (in thousands): As of March 31, 2024 December 31, 2023 Property and equipment, net $ 1,280 $ 1,329 Accrued expenses and other current liabilities $ 545 $ 537 Other long-term liabilities 1,281 1,366 Total operating lease liabilities $ 1,826 $ 1,903 The operating lease right-of-use (“ROU”) assets are included in property and equipment, net and the lease liabilities are included in accrued expenses and other current liabilities and other long-term liabilities in our unaudited condensed consolidated balance sheets. The Company utilized a weighted average discount rate of 9.1% to determine the present value of the lease payments. The components of lease expense for the three months ended March 31, 2024 and 2023 were as follows (in thousands): Three Months Ended March 31, 2024 2023 Operating lease cost* $ 108 $ 120 *Includes short-term leases, which are immaterial. The following table shows a maturity analysis of the operating lease liabilities as of March 31, 2024 (in thousands): Undiscounted Cash Flows April 1, 2024 through December 31, 2024 $ 407 2025 553 2026 563 2027 259 2028 201 2029 207 Thereafter 17 Total lease payments $ 2,207 Less implied interest (381) Total $ 1,826 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2024 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities as of March 31, 2024 and December 31, 2023 consisted of the following (in thousands): As of March 31, 2024 December 31, 2023 Research and development $ 329 $ 352 Compensation and benefits 752 580 General and administrative (including asset acquisition related transaction costs) 1,934 830 Private placement investment transaction costs 2,034 — Commercial operations 1,789 1,873 Lease liability, current 545 537 Total accrued expenses and other current liabilities $ 7,383 $ 4,172 |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Notes Payable | Notes Payable On June 4, 2021, the Company entered into a $35.0 million venture loan and security agreement (the “Loan Agreement”) with Horizon Technology Finance Corporation (“Horizon”) and Powerscourt Investments XXV, LP (“Powerscourt”, and together with Horizon, the “Lenders”). Between June and September of 2021, the Company borrowed the full $35.0 million (the “Note”) available under the Loan Agreement. In the second quarter of 2022, the Company, as collectively agreed upon with the Lenders, prepaid $15.0 million of principal and accrued interest. In June of 2023, the Company, as collectively agreed upon with the Lenders, prepaid $6.0 million of principal. On September 22, 2023, the Company and the Lenders entered into a Payoff Letter (the “Payoff Letter”), pursuant to which the Company repaid all outstanding principal, inclusive of the final payment fee, and interest under the Loan Agreement in the aggregate amount of $14.3 million. As a result of the payment, all obligations of the parties under the Loan Agreement were deemed satisfied and terminated. |
Capital Structure
Capital Structure | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Capital Structure | Capital Structure Pursuant to the Company’s amended and restated certificate of incorporation, the Company is authorized to issue two classes of stock, common stock and preferred stock. At March 31, 2024, the total number of shares of capital stock the Company was authorized to issue was 205,000,000, of which 200,000,000 was common stock and 5,000,000 was preferred stock. All shares of common and preferred stock have a par value of $0.001 per share. Almata Transaction On March 27, 2024, the Company acquired AlmataBio in which the former AlmataBio stockholders received (i) 171,605 shares of the Company’s common stock and (ii) 2,412 shares of the Company’s Series C Preferred Stock. Subject to the Requisite Stockholder Approval, the date Company shareholders approve the issuance of common stock for conversion of Series C Preferred Stock and for exercise of warrants, each share of the Series C Preferred Stock issued to former AlmataBio stockholders will automatically convert to 1,000 shares of common stock, subject to certain beneficial ownership limitations. The Series C Preferred Stock holds no voting rights. Refer to Note 3 - Asset Acquisition for more information regarding the acquisition and refer to sub-header “Series C Preferred Stock” within the “Q1 2024 Financing” section below for more information regarding the Series C Preferred Stock issued pursuant to the Almata Transaction. Q1 2024 Financing On March 28, 2024, the Company closed a private placement investment with institutional investors in which the investors received (i) 19,946 shares of non-voting convertible preferred stock, the Series C Preferred Stock, and (ii) warrants to purchase up to an aggregate of 11,967,526 shares of Avalo’s common stock (or a number of shares of Series C Preferred Stock convertible into the number of shares of common stock the warrant is then exercisable into), resulting in upfront gross proceeds of $115.6 million. Net proceeds were $108.1 million after deducting transaction costs. The Company could receive up to an additional $69.4 million of gross proceeds upon the exercise of the warrants. Warrants on common stock or Series C Preferred Stock issued in Q1 2024 Financing The warrants are exercisable via gross physical settlement for $5.796933 per underlying share of common stock (or a number of shares of Series C Preferred Stock convertible into the number of shares of common stock the warrant is then exercisable into). The warrants will become exercisable on (i) March 28, 2024, if exercised for shares of Series C Preferred Stock, or (ii) upon receipt of Requisite Stockholder Approval if exercised for shares of common stock. The warrants will expire on the earlier of (y) the fifth anniversary of the date of issuance or (z) the Dosing Date (as defined in Note 6 - Fair Value Measurements), provided that if the Requisite Stockholder Approval has not been received by the Dosing Date, then the warrants will expire on the earlier of the (A) the fifth anniversary of the date of issuance or (B) thirty-first day following receipt of the Requisite Stockholder Approval. The warrants include anti-dilution protection provisions. The Company determined that the warrants do not satisfy the conditions to be accounted for as equity instruments. As the warrants do not meet the equity contract scope exception, the Company classified the warrants as a derivative liability upon issuance. The initial measurement of the warrant at fair value exceeded the proceeds received such that the difference between the initial fair value of the warrants and net upfront cash proceeds is recognized in the income statement as a loss. Subsequently, the warrants are carried at fair value with changes in fair value recognized in the Company’s unaudited consolidated statements of operations and comprehensive loss until either exercised or expired. The valuation of the warrants is considered under Level 3 of the fair value hierarchy due to the need to use assumptions in the valuation that are both significant to the fair value measurement and unobservable. See Note 6 - Fair Value Measurement for a description of the warrant’s valuation methodology. No warrants were exercised for the quarterly period ended on March 31, 2024. Upon exercise of the warrants, the Company will pay an additional amount of transaction costs to a third-party financial institution, based on 2.5% gross proceeds received from the exercise. As the warrants are in the money as of the quarterly period ended March 31, 2024, the Company has recognized $1.7 million for transaction costs within other expense, net. The Company also incurred an additional $7.5 million of transaction costs related to the private placement investment which were expensed within other expense, net. Series C Preferred Stock issued in the Almata Transaction and Q1 2024 Financing As of March 31, 2024, the Company had 5,000,000 shares of Preferred Stock authorized, of which 34,326 have been designated as Series C Preferred Stock. As of March 31, 2024, there were 22,358 shares of Series C Preferred Stock outstanding, with a par value of $0.001 per share. The Series C Preferred Stock have no voting rights, no liquidation preference, and are not redeemable. In the event of any liquidation, dissolution or winding up of the Company, Series C Preferred Stock are entitled to be paid out of the assets with the Company legally available for distribution to its stockholders on an as-converted and pari-passu basis with common stock. The Series C Preferred Stock is subject to broad-based weighted average anti-dilution protection for certain issuances of common stock and securities convertible into common stock. The Series C Preferred Stock are entitled to receive dividends equal to and in the same form, and in the same manner, based on the then-current conversion ratio as dividends actually paid on shares of the common stock, when, as and if such dividends are paid on shares of the common stock. Upon Requisite Stockholder Approval, each share of Series C Preferred Stock (i) issued to the former AlmataBio stockholders (as discussed above) and (ii) pursuant to the private placement investment will automatically convert to 1,000 shares of common stock, subject to certain beneficial ownership limitations. The Series C Preferred Stock is contingently redeemable outside the control of the Company such that the Series C Preferred Stock is recognized outside of permanent equity. The carrying value of Series C Preferred Stock issued to the former AlmataBio stockholders pursuant to the Almata Transaction of $11.5 million is recognized outside of stockholder’s (deficit) equity on the Company’s unaudited consolidated balance sheet. No amounts were allocated to the Series C Preferred Stock issued pursuant to the Q1 2024 Financing because the initial fair value of the warrants exceeded gross proceeds received for the issuance of the private placement bundle that included both Series C Preferred Stock and warrants. The Series C Preferred Stock is not remeasured to redemption value until the shares are probable of becoming redeemable for cash. As of March 31, 2024, the Company expects to have sufficient authorized and unissued shares to settle the Series C Preferred Stock upon Requisite Stockholder Approval, and therefore it is not probable that the Series C Preferred Stock would be redeemable for cash as of the balance sheet date. As of March 31, 2024, no Series C Preferred Stock were converted to common stock. Series D and Series E Preferred Stock issued in the Q1 2024 Financing As a condition to the Q1 2024 Financing, a single Series D Preferred Stock and a single Series E Preferred Stock were issued to two institutional investors that participated in the private placement. Both the Series D and the Series E Preferred Stock have a par value and liquidation preference of $0.001 per share. The Series D and Series E Preferred Stock do not have voting rights, are not entitled to dividends, and are not convertible into common stock. The holders of the Series D and Series E Preferred Stock have the option to require the Company to redeem their shares at a price equal to the par value at any time. The Company retains the right to redeem the Series D and Series E Preferred Stock at a price equal to the par value if the holder owns less than a certain threshold of the Company’s outstanding common stock. While the Series D and Series E Preferred Stock do not provide the holders with substantive economics, the Series D and Series E Preferred Stock were issued solely to allow for the institutional investors to appoint a director to the Company’s board of directors. Common Stock Warrants At March 31, 2024, the following common stock warrants were outstanding: Number of common shares Exercise price Expiration underlying warrants per share date 1,389 $ 36,000 June 2024 148 $ 7,488 June 2031 11,967,526 $ 5.80 (1) (1) 11,969,063 (1) The warrants will become exercisable (i) on March 28, 2024, if exercised for shares of Series C Preferred Stock, or (ii) upon receipt of Requisite Stockholder Approval, the date Company shareholders approve the issuance of common stock for conversion of Series C Preferred Stock and for exercise of warrants, if exercised for shares of common stock. The warrants will expire on the earlier of (y) the fifth anniversary of the date of issuance or (z) the thirty-first day following the Dosing Date, provided that if the Requisite Stockholder Approval has not been received by the Dosing Date, then the warrants will expire on the earlier of the (A) the fifth anniversary of the date of issuance or (B) thirty-first day following receipt of the Requisite Stockholder Approval. The warrants include anti-dilution protection provisions. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation 2016 Equity Incentive Plan In April 2016, our board of directors adopted the 2016 Equity Incentive Plan, which was approved by our stockholders in May 2016 and which was subsequently amended and restated in May 2018 and August 2019 with the approval of our board of directors and our stockholders (the “2016 Third Amended Plan”). During the term of the 2016 Third Amended Plan, the share reserve will automatically increase on the first trading day in January of each calendar year ending on (and including) January 1, 2026, by an amount equal to 4% of the total number of outstanding shares of common stock of the Company on the last trading day in December of the prior calendar year. On January 1, 2024, pursuant to the terms of the 2016 Third Amended Plan, an additional 32,070 shares were made available for issuance. As of March 31, 2024, there were 32,520 shares available for future issuance under the 2016 Third Amended Plan. Option grants expire after ten years. Employee options typically vest over four years. Employees typically receive a new hire option grant, as well as an annual grant in the first or second quarter of each year. Options granted to directors typically vest either immediately or over a period of one Three Months Ended March 31, 2024 2023 Research and development $ 269 $ 326 General and administrative 360 529 Total stock-based compensation $ 629 $ 855 Stock options with service-based vesting conditions The Company has granted options that contain service-based vesting conditions. The compensation cost for these options is recognized on a straight-line basis over the vesting periods. A summary of option activity for the three months ended March 31, 2024 is as follows: Options Outstanding Number of shares Weighted average exercise price per share Weighted average grant date fair value per share Weighted average remaining contractual term (in years) Balance at December 31, 2023 7,211 $ 3,192 $ 1,930 8.3 Granted — $ — $ — Forfeited (13) $ 660 $ 473 Expired (3) $ 11,232 $ 6,444 Balance at March 31, 2024 7,195 $ 3,192 $ 1,936 8.0 Exercisable at March 31, 2024 4,058 $ 4,791 $ 2,803 7.4 The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. As of March 31, 2024, the aggregate intrinsic value of options outstanding was minimal. There were 545 options that vested during the three months ended March 31, 2024 with a weighted average exercise price of $1,598 per share. The total grant date fair value of shares which vested during the three months ended March 31, 2024 was $0.6 million. The Company recognized stock-based compensation expense of $0.6 million related to stock options with service-based vesting conditions for the three months ended March 31, 2024. At March 31, 2024, there was $2.2 million of total unrecognized compensation cost related to unvested service-based vesting condition awards. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.4 years. Stock-based compensation assumptions There were no stock options granted in the three months ended March 31, 2024. Stock options with market-based vesting conditions As of March 31, 2024, there were 348 exercisable stock options that contained market-based vesting conditions (that had been previously satisfied). The options have a weighted average share price per share of $9,488 and a weighted average remaining contractual term of 0.2 years. There were no stock options with market-based vesting conditions granted, exercised, or forfeited for the three months ended March 31, 2024. Employee Stock Purchase Plan On April 5, 2016, the Company’s board of directors approved the 2016 Employee Stock Purchase Plan (the “ESPP”). The ESPP was approved by the Company’s stockholders and became effective on May 18, 2016 (the “ESPP Effective Date”). Under the ESPP, eligible employees can purchase common stock through accumulated payroll deductions at such times as are established by the administrator. The ESPP is administered by the compensation committee of the Company’s board of directors. Under the ESPP, eligible employees may purchase stock at 85% of the lower of the fair market value of a share of the Company’s common stock (i) on the first day of an offering period or (ii) on the purchase date. Eligible employees may contribute up to 15% of their earnings during the offering period. The Company’s board of directors may establish a maximum number of shares of the Company’s common stock that may be purchased by any participant, or all participants in the aggregate, during each offering or offering period. Under the ESPP, a participant may not accrue rights to purchase more than $25,000 of the fair market value of the Company’s common stock for each calendar year in which such right is outstanding. The Company initially reserved and authorized up to 174 shares of common stock for issuance under the ESPP. On January 1 of each calendar year, the aggregate number of shares that may be issued under the ESPP automatically increases by a number equal to the lesser of (i) 1% of the total number of shares of the Company’s capital stock outstanding on December 31 of the preceding calendar year, (ii) 174 shares of the Company’s common stock, or (iii) a number of shares of the Company’s common stock as determined by the Company’s board of directors or compensation committee. On January 1, 2024, the number of shares available for issuance under the ESPP increased by 174. As of March 31, 2024, 958 shares remained available for issuance. In accordance with the guidance in ASC 718-50, Employee Share Purchase Plans , the ability to purchase shares of the Company’s common stock at the lower of the offering date price or the purchase date price represents an option and, therefore, the ESPP is a compensatory plan under this guidance. Accordingly, stock-based compensation expense is determined based on the option’s grant-date fair value and is recognized over the requisite service period of the option. The Company used the Black-Scholes valuation model and recognized minimal stock-based compensation expense for the three months ended March 31, 2024. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recognized minimal income tax expense for the three months ended March 31, 2024 and 2023 due to the significant valuation allowance against the Company’s deferred tax assets and the current and prior period losses. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation Litigation - General The Company may become party to various contractual disputes, litigation, and potential claims arising in the ordinary course of business. Reserves are established in connection with such matters when a loss is probable and the amount of such loss can be reasonably estimated. The Company currently does not believe that the resolution of such matters will have a material adverse effect on its financial position or results of operations except as otherwise disclosed in this report. Dispute Notice Settlement On August 14, 2023, the Company received a notice from Apollo AP43 Limited alleging that the Company was in breach of the license agreement between them dated July 29, 2022 by virtue of owing $0.8 million to a service provider under the terms of that license. On January 25, 2024, the Company and Apollo entered into a settlement and release agreement, pursuant to which Avalo agreed to pay Apollo $0.2 million to settle the dispute and Apollo released Avalo from any and all liabilities or claims relating to the dispute that Apollo may have against Avalo from the date of the license agreement through the date of the settlement and release agreement. The Company recognized the $0.2 million settlement within accrued expenses and other current liabilities as of December 2023 and made the $0.2 million settlement payment in the first quarter of 2024. Possible Future Milestone Payments for In-Licensed Compounds General Avalo is a party to license and development agreements with various third parties, which contain future payment obligations such as royalties and milestone payments. The Company recognizes a liability (and related expense) for each milestone if and when such milestone is probable and can be reasonably estimated. As typical in the biotechnology industry, each milestone has unique risks that the Company evaluates when determining the probability of achieving each milestone and the probability of success evolves over time as the programs progress and additional information is obtained. The Company considers numerous factors when evaluating whether a given milestone is probable including (but not limited to) the regulatory pathway, development plan, ability to dedicate sufficient funding to reach a given milestone and the probability of success. AVTX-009 Agreements On March 27, 2024, Avalo obtained the rights to an anti-IL-1β mAb (AVTX-009), including the world-wide exclusive license from Eli Lilly and Company (the “Lilly License Agreement”), pursuant to its acquisition of AlmataBio. AlmataBio had previously purchased the rights, title and interest in the asset from Leap Therapeutics, Inc. (“Leap”) in 2023. Avalo is required to pay up to $70 million based on the achievement of specified development and regulatory milestones. Upon commercialization, the Company is required to pay sales-based milestones aggregating up to $720 million. Additionally, Avalo is required to pay royalties during a country-by-country royalty term equal to a mid-single digit-to-low double digit of Avalo or its sublicensees’ annual net sales. No expense related to these AVTX-009 agreements was recognized in the three months ended March 31, 2024. There has been no cumulative expense recognized as of March 31, 2024 related to the milestones under these AVTX-009 agreements. The Company will continue to monitor the milestones at each reporting period. Refer to the sub-header below entitled “Acquisition Related and Other Contingent Liabilities” for information regarding future development milestones that are payable to the former AlmataBio stockholders. AVTX-002 KKC License Agreement On March 25, 2021, the Company entered into a license agreement with Kyowa Kirin Co., Ltd. (“KKC”) for exclusive worldwide rights to develop, manufacture and commercialize AVTX-002, KKC’s first-in-class fully human anti-LIGHT (TNFSF14) monoclonal antibody for all indications (the “KKC License Agreement”). The KKC License Agreement replaced the Amended and Restated Clinical Development and Option Agreement between the Company and KKC dated May 28, 2020. Under the KKC License Agreement, the Company paid KKC an upfront license fee of $10.0 million, which we recognized within research and development expenses in 2021. The Company is also required to pay KKC up to an aggregate of $112.5 million based on the achievement of specified development and regulatory milestones. Upon commercialization, the Company is required to pay KKC sales-based milestones aggregating up to $75.0 million tied to the achievement of annual net sales targets. Additionally, the Company is required to pay KKC royalties during a country-by-country royalty term equal to a mid-teen percentage of annual net sales. The Company is required to pay KKC a double-digit percentage (less than 30%) of the payments that the Company receives from any sublicensing of its rights under the KKC License Agreement, subject to certain exclusions. Avalo is responsible for the development and commercialization of AVTX-002 in all indications worldwide (other than the option in the KKC License Agreement that, upon exercise by KKC, allows KKC to develop, manufacture and commercialize AVTX-002 in Japan). In addition to the KKC License Agreement, Avalo is subject to additional royalties upon commercialization of up to an amount of less than 10% of net sales. No expense related to the KKC License Agreement was recognized in the three months ended March 31, 2024. There has been no cumulative expense recognized as of March 31, 2024 related to the milestones under the KKC License Agreement. The Company will continue to monitor the milestones at each reporting period. AVTX-008 Sanford Burnham Prebys License Agreement On June 22, 2021, the Company entered into an Exclusive Patent License Agreement with Sanford Burnham Prebys Medical Discovery Institute (the “Sanford Burnham Prebys License Agreement”) under which the Company obtained an exclusive license to a portfolio of issued patents and patent applications covering an immune checkpoint program (AVTX-008). Under the terms of the Sanford Burnham Prebys License Agreement, the Company incurred an upfront license fee of $0.4 million, as well as patent costs of $0.5 million, which we recognized within research and development expenses and within general and administrative expenses, respectively, in 2021. The Company is required to pay Sanford Burnham Prebys up to an aggregate of $24.2 million based on achievement of specified development and regulatory milestones. Upon commercialization, the Company is required to pay Sanford Burnham Prebys sales-based milestone payments aggregating up to $50.0 million tied to annual net sales targets. Additionally, the Company is required to pay Sanford Burnham Prebys royalties during a country-by-country royalty term equal to a low-to-mid single digit percentage of annual net sales. The Company is also required to pay Sanford Burnham Prebys a tiered low-double digit percentage of the payments that Avalo receives from sublicensing of its rights under the Sanford Burnham Prebys License Agreement, subject to certain exclusions. Avalo is fully responsible for the development and commercialization of the program. No material expense related to the Sanford Burnham Prebys License Agreement was recognized in the three months ended March 31, 2024. There has been no cumulative expense recognized as of March 31, 2024 related to the milestones under this license agreement. The Company will continue to monitor the milestones at each reporting period. AVTX-006 Astellas License Agreement The Company has an exclusive license agreement with OSI Pharmaceuticals, LLC, an indirect wholly owned subsidiary of Astellas Pharma, Inc. (“Astellas”), for the worldwide development and commercialization of the novel, second generation mTORC1/2 inhibitor (AVTX-006). Under the terms of the license agreement, there was an upfront license fee of $0.5 million. The Company is required to pay Astellas up to an aggregate of $5.5 million based on the achievement of specified development and regulatory milestones. The Company is also required to pay Astellas a tiered mid-to-high single digit percentage of the payments that Avalo receives from any sublicensing of its rights under the Astellas license agreement, subject to certain exclusions. Upon commercialization, the Company is required to pay Astellas royalties during a country-by-country royalty term equal to a tiered mid-to-high single digit percentage of annual net sales. Avalo is fully responsible for the development and commercialization of the program. No expense related to this license agreement was recognized in the three months ended March 31, 2024. There has been $0.5 million of cumulative expense recognized as of March 31, 2024 related to the milestones under this license agreement. The Company will continue to monitor the remaining milestones at each reporting period. Possible Future Milestone Proceeds for Out-Licensed Compounds AVTX-301 Out-License On May 28, 2021, the Company out-licensed its rights in respect of its non-core asset, AVTX-301, to Alto Neuroscience, Inc. (“Alto”). The Company initially in-licensed the compound from an affiliate of Merck & Co., Inc. in 2013. Under the out-license agreement, the Company received a mid-six digit upfront payment from Alto, which we recognized as license revenue in 2021. The Company is also eligible to receive up to an aggregate of $18.6 million based on the achievement of specified development, regulatory and commercial sales milestones. Additionally, the Company is entitled to a less than single digit percentage royalty based on annual net sales. Alto is fully responsible for the development and commercialization of the program. The Company had not recognized any milestones as of March 31, 2024. AVTX-406 License Assignment On June 9, 2021, the Company assigned its rights, title, interest, and obligations under an in-license covering its non-core asset, AVTX-406, to ES, a wholly owned subsidiary of Armistice, who was a significant stockholder of the Company at the time of the financing and whose chief investment officer, Steven Boyd, and managing director, Keith Maher, served on Avalo’s Board until August 8, 2022. The transaction with ES was approved in accordance with Avalo’s related party transaction policy. Under the assignment agreement, the Company received a low-six digit upfront payment from ES, which we recognized as license revenue in 2021. The Company is also eligible to receive up to an aggregate of $6.0 million based on the achievement of specified development and regulatory milestones. Upon commercialization, the Company is eligible to receive sales-based milestone payments aggregating up to $20.0 million tied to annual net sales targets. ES is fully responsible for the development and commercialization of the program. The Company had not recognized any milestones as of March 31, 2024. AVTX-800 Series Asset Sale On October 27, 2023, the Company sold its rights, title and interests in assets relating to the 800 Series to AUG. Pursuant to the Purchase Agreement with AUG, the Company received an upfront payment of $0.2 million. Additionally, AUG assumed aggregate liabilities of $0.4 million, which included certain liabilities incurred prior to the date of the Purchase Agreement, costs due and payable between the date of the Purchase Agreement and the closing date, and obligations under 800 Series contracts assumed by AUG. Avalo is also entitled to a contingent milestone payment of 20% of certain amounts, if any, granted to AUG upon sale of any priority review voucher related to the 800 Series compounds granted to AUG by the FDA, net of any selling costs, or $15.0 million for each compound (for a potential aggregate of $45.0 million) if the first FDA approval is for any indication other than a Rare Pediatric Disease (as defined in the Purchase Agreement). The Company had not recognized any revenue related to the milestones as of March 31, 2024. Acquisition Related and Other Contingent Liabilities Almata Transaction Possible Future Milestone Payments On March 27, 2024, the Company acquired AVTX-009 through its acquisition of AlmataBio. The Company agreed to an aggregate milestone payment of $7.5 million in cash due upon the closing of the private placement investment (which closed on March 28, 2024), a second aggregate milestone payment of $5.0 million due upon the first patient being dosed in a Phase 2 trial for the indication of hidradenitis suppurative and a third aggregate milestone payment of $15.0 million due upon the first patient being dosed in a Phase 3 trial (regardless of indication). The former Almata stockholders have the option to elect to have the second and third milestone payments be paid in cash, shares of Avalo common stock or a combination thereof. The Company recognized the $7.5 million initial milestone payment as a current liability within contingent consideration as of March 31, 2024 and paid this milestone on April 1, 2024. In addition, as of March 31, 2024, the Company concluded the second milestone payment was probable and therefore recognized the $5.0 million milestone as a current liability within contingent consideration as of March 31, 2024. The Company will continue to monitor the third milestone each reporting period. Aevi Merger Possible Future Milestone Payments In the first quarter of 2020, the Company consummated its merger with Aevi Genomic Medicine Inc. (“Aevi”), in which Avalo acquired the rights to AVTX-002, AVTX-006 and AVTX-007 (the “Merger” or the “Aevi Merger”). A portion of the consideration for the Aevi Merger included two future contingent development milestones worth up to an additional $6.5 million, payable in either shares of Avalo’s common stock or cash, at the election of Avalo. The first milestone was the enrollment of a patient in a Phase 2 study related to AVTX-002 (for treatment of pediatric onset Crohn’s disease), AVTX-006 (for treatment of any indication) or AVTX-007 (for treatment of any indication) prior to February 3, 2022, which would have resulted in a milestone payment of $2.0 million. The Company did not meet the first milestone prior to February 3, 2022. Therefore, no contingent consideration related to this milestone was recognized as of March 31, 2024 and no future contingent consideration will be recognized. The second milestone is the receipt of an NDA approval for either AVTX-006 or AVTX-007 from the FDA on or prior to February 3, 2025. If this milestone is met, the Company is required to make a milestone payment of $4.5 million. The contingent consideration related to the second development milestone will be recognized if and when such milestone is probable and can be reasonably estimated. No contingent consideration related to the second development milestone had been recognized as of March 31, 2024. The Company will continue to monitor the second milestone each reporting period. AVTX-006 Royalty Agreement with Certain Related Parties In July 2019, Aevi entered into a royalty agreement, and liabilities thereunder were assumed by Avalo upon close of the Aevi Merger in February 2020. The royalty agreement provided certain investors, including LeoGroup Private Investment Access, LLC on behalf of Garry Neil, the Company’s Chief Executive Officer and Chairman of the Board, and Mike Cola, the Company’s former Chief Executive Officer (collectively, the “Investors”), a royalty stream, in exchange for a one-time aggregate payment of $2.0 million (the “Royalty Agreement”). Pursuant to the Royalty Agreement, the Investors will be entitled collectively to an aggregate amount equal to a low-single digit percentage of the aggregate net sales of the Company’s second generation mTORC1/2 inhibitor, AVTX-006. At any time beginning three years after the date of the first public launch of AVTX-006, Avalo may exercise, at its sole discretion, a buyout option that terminates any further obligations under the Royalty Agreement in exchange for a payment to the Investors of an aggregate of 75% of the net present value of the royalty payments. A majority of the independent members of the board of directors and the audit committee of Aevi approved the Royalty Agreement. Avalo assumed this Royalty Agreement upon closing of the Aevi Merger and it is recorded as a royalty obligation within the Company's accompanying unaudited condensed consolidated balance sheet as of March 31, 2024 and December 31, 2023. Because there is a significant related party relationship between the Company and the Investors, the Company has treated its obligation to make royalty payments under the Royalty Agreement as an implicit obligation to repay the funds advanced by the Investors. As the Company makes royalty payments in accordance with the Royalty Agreement, it will reduce the liability balance. At the time that such royalty payments become probable and estimable, and if such amounts exceed the liability balance, the Company will impute interest accordingly on a prospective basis based on such estimates, which will result in a corresponding increase in the liability balance. Karbinal Royalty Make-Whole Provision In 2018, in connection with the acquisition of certain commercialized products, the Company entered into a supply and distribution agreement (the “Karbinal Agreement”) with TRIS Pharma Inc. (“TRIS”). As part of the Karbinal Agreement, the Company had an annual minimum sales commitment, which is based on a commercial year that spans from August 1 through July 31, of 70,000 units through 2025. The Company was required to pay TRIS a royalty make whole payment (“Make-Whole Payments”) of $30 for each unit under the 70,000 units annual minimum sales commitment through 2025. As a part of the Aytu transaction, the Company assigned all its payment obligations, including the Make-Whole Payments, under the Karbinal Agreement (collectively, the “TRIS Obligations”) to Aytu. However, under the original license agreement, the Company could ultimately be liable for the TRIS Obligations to the extent Aytu fails to make the required payments. The future Make-Whole Payments to be made by Aytu are unknown as the amount owed to TRIS is dependent on the number of units sold. |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the Company’s financial position, results of operations, and cash flows. The condensed consolidated balance sheet at December 31, 2023 has been derived from audited financial statements at that date. The interim results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to instructions, rules, and regulations prescribed by the United States Securities and Exchange Commission (“SEC”). The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited condensed consolidated financial statements are read in conjunction with the December 31, 2023 audited consolidated financial statements. On December 28, 2023, Avalo effected a 1-for-240 reverse stock split of the outstanding shares of the Company’s common stock and began trading on a split-adjusted basis on December 29, 2023. The Company retroactively applied the reverse stock split to common share and per share amounts for periods prior to December 28, 2023, including the unaudited consolidated financial statements for the quarter ended March 31, 2023. Additionally, pursuant to their terms, a proportionate adjustment was made to the per share exercise price and number of shares issuable under all of the Company’s outstanding options and warrants, and the number of shares authorized for issuance pursuant to the Company’s equity incentive plans have been reduced proportionately. Avalo retroactively applied such adjustments in the notes to consolidated financial statements for periods presented prior to December 28, 2023, including the quarter ended March 31, 2023. The reverse stock split did not reduce the number of authorized shares of common and preferred stock and did not alter the par value. Unless otherwise indicated, all amounts in the following tables are in thousands except share and per share amounts. |
Asset Acquisitions | Asset Acquisitions The Company evaluates acquisitions of assets and other similar transactions to assess whether the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen test is met, the transaction is accounted for as an asset acquisition. If the screen test is not met, further determination is required as to whether the Company has acquired inputs and processes that have the ability to create outputs which would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets. |
Warrant Liability | Warrant Liability The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging |
Asset Acquisition (Tables)
Asset Acquisition (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Asset Acquisition | Below is a summary of the total consideration, assets acquired and the liabilities assumed in connection with the Almata Transaction (in thousands): Three Months Ended March 31, 2024 Stock consideration 1 $ 12,272 Milestone payment due upon close of private placement investment 2 7,500 Milestone payment due upon first patient dosed in a Phase 2 trial 2 5,000 Transaction costs 2,402 Total GAAP Purchase Price at Close $ 27,174 Acquired IPR&D $ 27,538 Cash 356 Accrued expenses and other current liabilities (720) Total net assets acquired and liabilities assumed $ 27,174 1 Equal to the aggregate common shares issued of 171,605 and the aggregate preferred shares issued of 2,412 (as-converted to 2,412,000 shares of common stock), multiplied by the Company’s closing stock price of $4.75 on March 27, 2024. 2 Avalo deemed these milestones probable and estimable as of the transaction close date and therefore included them as part of the GAAP purchase price at close. The first milestone payment due upon the close of the private placement investment was met on March 28, 2024 and was paid on April 1, 2024. |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Net Loss Per Share | The following tables set forth the computation of basic and diluted net loss per share of common stock for the three months ended March 31, 2024 and March 31, 2023 (in thousands, except share and per share amounts): Three Months Ended March 31, 2024 Common stock Net loss $ (121,290) Weighted average shares 859,381 Basic and diluted net loss per share $ (141) As the Company is in a net loss position as of March 31, 2024, the two-class method of computing net loss per share results in no allocation of undistributed losses to participating securities. As such, there is no allocation of undistributed losses to the Series C Preferred Stock outstanding for the three months ended March 31, 2024, and therefore the preferred stock is not reflected in the above table. Three Months Ended March 31, 2023 Common stock Net loss $ (9,955) Weighted average shares 48,845 Basic and diluted net loss per share $ (204) |
Schedule of Anti-dilutive Securities | The following outstanding securities have been excluded from the computation of diluted weighted shares outstanding for the three months ended March 31, 2024 and 2023, as they could have been anti-dilutive: Three Months Ended March 31, 2024 2023 Stock options 7,543 7,558 Warrants on common stock 1 11,969,063 17,254 Series C Preferred Stock (as-converted to common stock) 2 22,357,897 — 1 The weighted average number of common shares outstanding for the three months ended March 31, 2023 includes the weighted average outstanding pre-funded warrants for the period because their exercise price was nominal. There were no pre-funded warrants outstanding as of March 31, 2024. 2 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities that are Measured at Fair Value on a Recurring Basis | The following table presents, for each of the fair value hierarchy levels required under ASC 820, the Company’s assets and liabilities that are measured at fair value on a recurring basis (in thousands): March 31, 2024 Fair Value Measurements Using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (Level 1) (Level 2) (Level 3) Assets Investments in money market funds* $ 104,776 $ — $ — Liabilities Derivative liability $ — $ — $ 5,670 Warrant liability $ — $ — 194,901 December 31, 2023 Fair Value Measurements Using Quoted prices in active markets for identical assets Significant other observable inputs Significant unobservable inputs (Level 1) (Level 2) (Level 3) Assets Investments in money market funds* $ 7,077 $ — $ — Liabilities Derivative liability $ — $ — $ 5,550 *Investments in money market funds are reflected in cash and cash equivalents on the accompanying unaudited condensed consolidated balance sheets. |
Schedule of Changes in the Fair Value | The table presented below is a summary of changes in the fair value of the Company’s Level 3 valuations for the warrant liability and derivative liability for the three months ended March 31, 2024: Warrant liability Derivative liability Total Balance at December 31, 2023 $ — $ 5,550 $ 5,550 Initial valuation of warrant liability 194,901 — 194,901 Change in fair value — 120 120 Balance at March 31, 2024 $ 194,901 $ 5,670 $ 200,571 Warrant liability Derivative liability Total Balance at December 31, 2022 $ — $ 4,830 $ 4,830 Initial valuation of warrant liability — — — Change in fair value — 180 180 Balance at March 31, 2023 $ — $ 5,010 $ 5,010 |
Fair Value Measurement Inputs and Valuation Techniques | The warrant liability was classified as a Level 3 instrument as its value was based on unobservable market inputs. The inputs utilized include the following: As of March 31, 2024 Common stock price $ 21.75 Expected term (in years) 0.5 Expected volatility 109 % Risk-free rate 5.35 % Exercise price $ 5.796933 Dividend yield rate — % |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Schedule of Assets and Liabilities Lessee | Supplemental balance sheet information related to the leased properties include (in thousands): As of March 31, 2024 December 31, 2023 Property and equipment, net $ 1,280 $ 1,329 Accrued expenses and other current liabilities $ 545 $ 537 Other long-term liabilities 1,281 1,366 Total operating lease liabilities $ 1,826 $ 1,903 |
Schedule of Lease Cost | The components of lease expense for the three months ended March 31, 2024 and 2023 were as follows (in thousands): Three Months Ended March 31, 2024 2023 Operating lease cost* $ 108 $ 120 |
Schedule of Operating Lease Liability | The following table shows a maturity analysis of the operating lease liabilities as of March 31, 2024 (in thousands): Undiscounted Cash Flows April 1, 2024 through December 31, 2024 $ 407 2025 553 2026 563 2027 259 2028 201 2029 207 Thereafter 17 Total lease payments $ 2,207 Less implied interest (381) Total $ 1,826 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities as of March 31, 2024 and December 31, 2023 consisted of the following (in thousands): As of March 31, 2024 December 31, 2023 Research and development $ 329 $ 352 Compensation and benefits 752 580 General and administrative (including asset acquisition related transaction costs) 1,934 830 Private placement investment transaction costs 2,034 — Commercial operations 1,789 1,873 Lease liability, current 545 537 Total accrued expenses and other current liabilities $ 7,383 $ 4,172 |
Capital Structure (Tables)
Capital Structure (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Schedule of Outstanding Common Stock Warrants | At March 31, 2024, the following common stock warrants were outstanding: Number of common shares Exercise price Expiration underlying warrants per share date 1,389 $ 36,000 June 2024 148 $ 7,488 June 2031 11,967,526 $ 5.80 (1) (1) 11,969,063 (1) The warrants will become exercisable (i) on March 28, 2024, if exercised for shares of Series C Preferred Stock, or (ii) upon receipt of Requisite Stockholder Approval, the date Company shareholders approve the issuance of common stock for conversion of Series C Preferred Stock and for exercise of warrants, if exercised for shares of common stock. The warrants will expire on the earlier of (y) the fifth anniversary of the date of issuance or (z) the thirty-first day following the Dosing Date, provided that if the Requisite Stockholder Approval has not been received by the Dosing Date, then the warrants will expire on the earlier of the (A) the fifth anniversary of the date of issuance or (B) thirty-first day following receipt of the Requisite Stockholder Approval. The warrants include anti-dilution protection provisions. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock-based Compensation Expense | The amount of stock-based compensation expense recognized for the three months ended March 31, 2024 and 2023 was as follows (in thousands): Three Months Ended March 31, 2024 2023 Research and development $ 269 $ 326 General and administrative 360 529 Total stock-based compensation $ 629 $ 855 |
Schedule of Option Activity | A summary of option activity for the three months ended March 31, 2024 is as follows: Options Outstanding Number of shares Weighted average exercise price per share Weighted average grant date fair value per share Weighted average remaining contractual term (in years) Balance at December 31, 2023 7,211 $ 3,192 $ 1,930 8.3 Granted — $ — $ — Forfeited (13) $ 660 $ 473 Expired (3) $ 11,232 $ 6,444 Balance at March 31, 2024 7,195 $ 3,192 $ 1,936 8.0 Exercisable at March 31, 2024 4,058 $ 4,791 $ 2,803 7.4 |
Business (Details)
Business (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Mar. 28, 2024 | Mar. 31, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Debt Instrument [Line Items] | |||||
Proceeds from issuance of common stock | $ 108,100 | ||||
Net loss | $ 121,283 | $ 9,947 | |||
Net cash used in operating activities | (6,202) | (10,052) | |||
Cash and cash equivalents | $ 110,177 | 110,177 | 16,687 | $ 7,415 | |
Proceeds from sale of shares pursuant to common stock private placement, net | 115,625 | $ 0 | |||
Private Placement | |||||
Debt Instrument [Line Items] | |||||
Net proceeds | 185,000 | 185,000 | |||
Proceeds from sale of shares pursuant to common stock private placement, net | 108,100 | 108,100 | |||
Private Placement | Preferred Stock | |||||
Debt Instrument [Line Items] | |||||
Net proceeds | 115,600 | 115,600 | |||
Private Placement | Warrant liability | |||||
Debt Instrument [Line Items] | |||||
Fair value of warrant | $ 69,400 | $ 69,400 | $ 69,400 |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Details) | Dec. 28, 2023 |
Accounting Policies [Abstract] | |
Stock split, conversion ratio | 0.0042 |
Asset Acquisition - Narrative (
Asset Acquisition - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Mar. 28, 2024 | Mar. 27, 2024 | Apr. 30, 2024 | Mar. 31, 2024 | |
Private Placement | ||||
Asset Acquisition, Contingent Consideration [Line Items] | ||||
Preferred Stock, convertible, shares issuable in common stock (in shares) | 1,000 | 1,000 | ||
AlmataBio Transaction | ||||
Asset Acquisition, Contingent Consideration [Line Items] | ||||
Common stock shares issued (in shares) | 171,605 | |||
Shares issuable in common stock (in shares) | 2,412 | |||
Payments to acquire productive assets | $ 7,500 | $ 7,500 | ||
AlmataBio Transaction | Subsequent Event | ||||
Asset Acquisition, Contingent Consideration [Line Items] | ||||
Payments to acquire productive assets | $ 7,500 | |||
AlmataBio Transaction | Milestone One | ||||
Asset Acquisition, Contingent Consideration [Line Items] | ||||
Milestone payment due upon first patient dosed in a Phase 2 trial | 5,000 | |||
AlmataBio Transaction | Milestone Two | ||||
Asset Acquisition, Contingent Consideration [Line Items] | ||||
Milestone payment due upon first patient dosed in a Phase 2 trial | $ 15,000 |
Asset Acquisition - Schedule of
Asset Acquisition - Schedule of Total Consideration, Assets and the Liabilities (Details) - AlmataBio Transaction - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 28, 2024 | Mar. 27, 2024 | Mar. 31, 2024 | |
Asset Acquisition, Contingent Consideration [Line Items] | |||
Stock consideration | $ 12,272 | ||
Milestone payment due upon close of private placement investment | $ 7,500 | 7,500 | |
Milestone payment due upon first patient dosed in a Phase 2 trial | 5,000 | ||
Transaction costs | 2,402 | ||
Total GAAP Purchase Price at Close | 27,174 | ||
Acquired IPR&D | 27,538 | ||
Cash | 356 | ||
Accrued expenses and other current liabilities | (720) | ||
Total net assets acquired and liabilities assumed | $ 27,174 | ||
Common stock shares issued (in shares) | 171,605 | ||
Shares issuable in common stock (in shares) | 2,412 | ||
Convertible preferred stock, shares issued upon conversion (in shares) | 2,412,000 | ||
Closing stock price (in dollars per share) | $ 4.75 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Jul. 01, 2021 | Dec. 31, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 0 | $ 475 | ||
Discontinued Operations, Disposed of by Sale | Pediatric Portfolio | ||||
Disaggregation of Revenue [Line Items] | ||||
Other long-term debt | 600 | |||
Discontinued Operations, Disposed of by Sale | Pediatric Portfolio | Forecast | ||||
Disaggregation of Revenue [Line Items] | ||||
Proceeds from divestiture of businesses | $ 1,000 | |||
Product revenue, net | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 0 | $ 475 | ||
Millipred | Teva | ||||
Disaggregation of Revenue [Line Items] | ||||
Percent of net profit for installment payments | 50% | |||
Installment payment | $ 500 |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | ||
Earnings Per Share [Abstract] | |||
Net loss | $ (121,290) | $ (9,955) | |
Weighted average shares, basic (in shares) | 859,381 | 48,845 | |
Weighted average shares, diluted (in shares) | 48,845 | ||
Basic net loss per share (in dollars per share) | [1] | $ (141) | $ (204) |
Diluted net loss per share (in dollars per share) | [1] | $ (141) | $ (204) |
[1] Amounts for prior periods presented have been retroactively adjusted to reflect the 1-for-240 reverse stock split effected on December 28, 2023. See Note 1 for details. |
Net Loss Per Share - Schedule_2
Net Loss Per Share - Schedule of Anti-dilutive Securities (Details) - shares | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 27, 2024 | |
Stock options | |||
Anti-dilutive securities | |||
Anti-dilutive securities excluded from the computation of diluted weighted shares outstanding (in shares) | 7,543 | 7,558 | |
Warrants on common stock | |||
Anti-dilutive securities | |||
Anti-dilutive securities excluded from the computation of diluted weighted shares outstanding (in shares) | 11,969,063 | 17,254 | |
Series C Preferred Stock (as-converted to common stock) | |||
Anti-dilutive securities | |||
Anti-dilutive securities excluded from the computation of diluted weighted shares outstanding (in shares) | 22,357,897 | 0 | |
Preferred Stock, convertible, shares issuable in common stock (in shares) | 1,000 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Assets and Liabilities That Are Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Derivative liability | Derivative liability |
Recurring Basis | Quoted prices in active markets for identical assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments in money market funds | $ 104,776 | $ 7,077 |
Derivative liability | 0 | 0 |
Warrant liability | 0 | |
Recurring Basis | Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments in money market funds | 0 | 0 |
Derivative liability | 0 | 0 |
Warrant liability | 0 | |
Recurring Basis | Significant unobservable inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments in money market funds | 0 | 0 |
Derivative liability | 5,670 | $ 5,550 |
Warrant liability | $ 194,901 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Changes in the Fair Value (Details) - Level 3 - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Beginning balance | $ 5,550 | $ 4,830 |
Initial valuation of warrant liability | 194,901 | 0 |
Change in fair value | 120 | 180 |
Ending balance | 200,571 | 5,010 |
Warrant liability | ||
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Beginning balance | 0 | 0 |
Initial valuation of warrant liability | 194,901 | 0 |
Change in fair value | 0 | 0 |
Ending balance | 194,901 | 0 |
Derivative liability | ||
Fair Value, Assets Measured on Recurring Basis [Roll Forward] | ||
Beginning balance | 5,550 | 4,830 |
Initial valuation of warrant liability | 0 | 0 |
Change in fair value | 120 | 180 |
Ending balance | $ 5,670 | $ 5,010 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) $ in Thousands | 3 Months Ended | |||
Mar. 28, 2024 USD ($) shares | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Net proceeds from the sale | $ 79,300 | $ 79,276 | $ 0 | |
Change in fair value of derivative liability | 120 | $ 180 | ||
AVTX-501 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Maximum aggregate milestone payment | $ 20,000 | |||
AVTX-007 | Milestone One | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Maximum aggregate milestone payment | 6,250 | |||
AVTX-007 | Milestone Two | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Maximum aggregate milestone payment | 67,500 | |||
AVTX-611 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Maximum aggregate milestone payment | 20,000 | |||
Derivative liability | AVTX-501 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Initial valuation of warrant liability | 3,800 | $ 3,500 | ||
Derivative liability | AVTX-501 | Measurement Input, Probability Of Success | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative liability, measurement input | 0.23 | |||
Derivative liability | AVTX-501 | Expected term (in years) | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative liability, measurement input, term | 3 years 7 months 6 days | |||
Derivative liability | AVTX-007 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Initial valuation of warrant liability | 1,900 | $ 1,300 | ||
Derivative liability | AVTX-007 | Measurement Input, Probability Of Success | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative liability, measurement input | 0.17 | |||
Derivative liability | AVTX-007 | Expected term (in years) | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative liability, measurement input, term | 4 years 7 months 6 days | |||
Derivative liability | AVTX-007 | Measurement Input, Sales Forecast Peak | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Derivative liability, measurement input | 300,000 | |||
Derivative liability | AVTX-501 And AVTX-007 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Initial valuation of warrant liability | $ 5,700 | $ 4,800 | ||
ES | Derivative liability | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Initial valuation of warrant liability | $ 5,000 | |||
Warrant liability | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Initial valuation of warrant liability | 194,900 | |||
Proceeds from issuance of warrants | $ 115,600 | |||
Warrant liability | Private Placement | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Sale of stock (in shares) | shares | 11,967,526 | |||
Series C Preferred Stock | Private Placement | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Sale of stock (in shares) | shares | 19,946 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Measurement Inputs and Valuation Techniques (Details) - Level 3 - Warrant liability | Mar. 31, 2024 $ / shares |
Level 3 Valuation | |
Common stock price (in dollars per share) | $ 21.75 |
Exercise price per share (in dollars per share) | $ 5.796933 |
Expected term (in years) | |
Level 3 Valuation | |
Warrants liability measurement input | 0.5 |
Expected volatility | |
Level 3 Valuation | |
Warrants liability measurement input | 1.09 |
Risk-free rate | |
Level 3 Valuation | |
Warrants liability measurement input | 0.0535 |
Dividend yield rate | |
Level 3 Valuation | |
Warrants liability measurement input | 0 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2024 USD ($) renewal_option property | |
Lessee, Lease, Description [Line Items] | |
Number of leased properties | property | 2 |
Remaining lease team | 4 years 4 months 24 days |
Discount rate | 9.10% |
Building | Maryland | |
Lessee, Lease, Description [Line Items] | |
Annual base rent | $ 0.2 |
Annual rent increase (as a percent) | 2.50% |
Rent abatement period | 12 months |
Lease term of contract | 10 years |
Number of renewal options | renewal_option | 2 |
Renewal term | 5 years |
Building | Pennsylvania | |
Lessee, Lease, Description [Line Items] | |
Annual rent increase (as a percent) | 2.40% |
Lease term of contract | 5 years 3 months |
Lessee, operating lease, annual base rent | $ 0.2 |
Operating lease, expense | $ 0.1 |
Leases - Schedule of Assets and
Leases - Schedule of Assets and Liabilities Lessee (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Leases [Abstract] | ||
Property and equipment, net | $ 1,280 | $ 1,329 |
Accrued expenses and other current liabilities | 545 | 537 |
Other long-term liabilities | 1,281 | 1,366 |
Total operating lease liabilities | $ 1,826 | $ 1,903 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property and equipment, net | Property and equipment, net |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other long-term liabilities | Other long-term liabilities |
Leases - Schedule of Lease Cost
Leases - Schedule of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Leases [Abstract] | ||
Operating lease cost | $ 108 | $ 120 |
Leases - Schedule of Operating
Leases - Schedule of Operating Lease Liability (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Leases [Abstract] | ||
April 1, 2024 through December 31, 2024 | $ 407 | |
2025 | 553 | |
2026 | 563 | |
2027 | 259 | |
2028 | 201 | |
2029 | 207 | |
Thereafter | 17 | |
Total lease payments | 2,207 | |
Less implied interest | (381) | |
Total | $ 1,826 | $ 1,903 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Research and development | $ 329 | $ 352 |
Compensation and benefits | 752 | 580 |
General and administrative (including asset acquisition related transaction costs) | 1,934 | 830 |
Private placement investment transaction costs | 2,034 | 0 |
Commercial operations | 1,789 | 1,873 |
Lease liability, current | 545 | 537 |
Total accrued expenses and other current liabilities | $ 7,383 | $ 4,172 |
Notes Payable - Narrative (Deta
Notes Payable - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | |||||
Sep. 22, 2023 | Jun. 04, 2021 | Jun. 30, 2023 | Mar. 31, 2024 | Sep. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | |
Line of Credit Facility [Line Items] | |||||||
Accretion of debt discount | $ 0 | $ 350 | |||||
Horizon & Powerscourt Notes | Notes Payable | |||||||
Line of Credit Facility [Line Items] | |||||||
Principal amount | $ 35,000 | ||||||
Principal payments on Notes | $ 14,300 | $ 6,000 | $ 15,000 | ||||
Horizon & Powerscourt Notes | Notes Payable | Warrant liability | |||||||
Line of Credit Facility [Line Items] | |||||||
Sale of stock (in shares) | 148 | ||||||
Exercise price per share (in dollars per share) | $ 7,488 | ||||||
Warrants or rights exercisable term | 10 years | ||||||
Accretion of debt discount | $ 900 |
Capital Structure - Narrative (
Capital Structure - Narrative (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||||
Mar. 28, 2024 USD ($) shares | Mar. 27, 2024 shares | Mar. 31, 2024 USD ($) class_of_stock $ / shares shares | Mar. 31, 2024 USD ($) class_of_stock $ / shares shares | Mar. 31, 2023 USD ($) | Dec. 31, 2023 $ / shares shares | |
Common Stock Warrants | ||||||
Number of classes of stock authorized (in shares) | class_of_stock | 2 | 2 | ||||
Number of shares of capital stock authorized to issue (in shares) | 205,000,000 | 205,000,000 | ||||
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 | 200,000,000 | |||
Temporary equity, shares authorized (in shares) | 5,000,000 | 5,000,000 | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||
Temporary equity, par value per share (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||
Proceeds from sale of shares pursuant to common stock private placement, net | $ | $ 115,625 | $ 0 | ||||
Private placement transaction costs | $ | $ 9,220 | $ 0 | ||||
Temporary equity, shares outstanding (in shares) | 22,360 | 22,360 | 0 | |||
Other Expense | ||||||
Common Stock Warrants | ||||||
Private placement transaction costs | $ | $ 1,700 | |||||
Warrant liability | Level 3 | ||||||
Common Stock Warrants | ||||||
Exercise price per share (in dollars per share) | $ / shares | $ 5.796933 | $ 5.796933 | ||||
Series C Preferred Stock | ||||||
Common Stock Warrants | ||||||
Temporary equity, shares authorized (in shares) | 34,326 | 34,326 | 0 | |||
Temporary equity, par value per share (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||
Temporary equity, shares outstanding (in shares) | 22,358 | 22,358 | 0 | |||
Series D Preferred Stock | ||||||
Common Stock Warrants | ||||||
Temporary equity, shares authorized (in shares) | 1 | 1 | 0 | |||
Temporary equity, par value per share (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||
Temporary equity, shares outstanding (in shares) | 1 | 1 | 0 | |||
Temporary equity, liquidation preference (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||
Series E Preferred Stock | ||||||
Common Stock Warrants | ||||||
Temporary equity, shares authorized (in shares) | 1 | 1 | 0 | |||
Temporary equity, par value per share (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||
Temporary equity, shares outstanding (in shares) | 1 | 1 | 0 | |||
Temporary equity, liquidation preference (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||
Private Placement | ||||||
Common Stock Warrants | ||||||
Preferred Stock, convertible, shares issuable in common stock (in shares) | 1,000 | 1,000 | 1,000 | |||
Net proceeds | $ | $ 185,000 | $ 185,000 | ||||
Proceeds from sale of shares pursuant to common stock private placement, net | $ | $ 108,100 | 108,100 | ||||
Transactions costs, percentage of gross proceeds | 2.50% | |||||
Private Placement | Other Expense | ||||||
Common Stock Warrants | ||||||
Private placement transaction costs | $ | $ 7,500 | |||||
Private Placement | Warrant liability | ||||||
Common Stock Warrants | ||||||
Sale of stock (in shares) | 11,967,526 | |||||
Fair value of warrant | $ | $ 69,400 | 69,400 | 69,400 | |||
Private Placement | Preferred Stock | ||||||
Common Stock Warrants | ||||||
Net proceeds | $ | $ 115,600 | $ 115,600 | ||||
Private Placement | Series C Preferred Stock | ||||||
Common Stock Warrants | ||||||
Sale of stock (in shares) | 19,946 | |||||
AlmataBio Transaction | ||||||
Common Stock Warrants | ||||||
Common stock shares issued (in shares) | 171,605 | |||||
Shares issuable in common stock (in shares) | 2,412 | |||||
AlmataBio Transaction | Series C Preferred Stock | ||||||
Common Stock Warrants | ||||||
Issuance of Series C Preferred Stock pursuant to Almata Transaction | $ | $ 11,457 |
Capital Structure - Schedule of
Capital Structure - Schedule of Outstanding Common Stock Warrants (Details) - Common Stock | Mar. 31, 2024 $ / shares shares |
Common Stock Warrants | |
Number of shares available under warrant (in shares) | 11,969,063 |
Common Stock Warrants Expiration Date Of June 2024 | |
Common Stock Warrants | |
Number of shares available under warrant (in shares) | 1,389 |
Exercise price per share (in dollars per share) | $ / shares | $ 36,000 |
Common Stock Warrants Expiration June 2031 | |
Common Stock Warrants | |
Number of shares available under warrant (in shares) | 148 |
Exercise price per share (in dollars per share) | $ / shares | $ 7,488 |
Common Stock Warrants Expiration February 2024 | |
Common Stock Warrants | |
Number of shares available under warrant (in shares) | 11,967,526 |
Exercise price per share (in dollars per share) | $ / shares | $ 5.80 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jan. 01, 2024 | Jan. 01, 2023 | Apr. 05, 2016 | Mar. 31, 2024 | Mar. 31, 2023 | Jun. 30, 2023 | Dec. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total stock-based compensation | $ 629 | $ 855 | |||||
Employee Stock Purchase Plan (ESPP) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Common stock remaining for future issuance (in shares) | 958 | ||||||
Purchase price of common stock, percentage | 85% | ||||||
Maximum portion of earning an employee may contribute to the ESPP Plan | 15% | ||||||
Maximum annual amount of fair market value of the company's common stock that a participant may accrue the rights to purchase | $ 25 | ||||||
Shares of common stock for future issuance (in shares) | 174 | ||||||
Automatic increase to shares authorized as percentage of outstanding stock at end of preceding year | 1% | ||||||
Service Based Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options vested (in shares) | 545 | ||||||
Weighted average exercise price (in dollars per share) | $ 1,598 | ||||||
Fair value of options vested in period | $ 600 | ||||||
Total stock-based compensation | 600 | ||||||
Compensation not yet recognized | $ 2,200 | ||||||
Period for recognition | 1 year 4 months 24 days | ||||||
Exercisable stock options (in shares) | 7,195 | 7,211 | |||||
Weighted average share price (in dollars per share) | $ 3,192 | $ 3,192 | |||||
Weighted average remaining contractual term | 8 years | 8 years 3 months 18 days | |||||
Market Based Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Exercisable stock options (in shares) | 348 | ||||||
Weighted average share price (in dollars per share) | $ 9,488 | ||||||
Weighted average remaining contractual term | 2 months 12 days | ||||||
Exercise of stock options (in shares) | 0 | ||||||
Forfeited (in shares) | 0 | ||||||
Granted (in shares) | 0 | ||||||
2016 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Annual share reserve increase | 4% | ||||||
Increase in number of shares reserved for issuance (in shares) | 32,070 | ||||||
Common stock remaining for future issuance (in shares) | 32,520 | ||||||
2016 Plan | Equity Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award expiration period | 10 years | ||||||
2016 Plan | Equity Option | Maximum | Director | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting period | 3 years | ||||||
2016 Plan | Equity Option | Maximum | Employee | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting period | 4 years | ||||||
2016 Plan | Equity Option | Minimum | Director | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting period | 1 year | ||||||
Employee Stock Purchase Plan (ESPP) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Increase in number of shares reserved for issuance (in shares) | 174 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | $ 629 | $ 855 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | 269 | 326 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation | $ 360 | $ 529 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Option Activity (Details) - Service Based Options - $ / shares | 3 Months Ended | 6 Months Ended |
Mar. 31, 2024 | Jun. 30, 2023 | |
Number of shares | ||
Balance, beginning of period (in shares) | 7,211 | |
Granted (in shares) | 0 | |
Forfeited (in shares) | (13) | |
Expired (in shares) | (3) | |
Balance, ending of period (in shares) | 7,195 | |
Exercisable (in shares) | 4,058 | |
Weighted average exercise price per share | ||
Balance, beginning of period (in dollars per share) | $ 3,192 | |
Granted (in dollars per share) | 0 | |
Forfeitures (in dollars per share) | 660 | |
Expired (in dollars per share) | 11,232 | |
Balance, ending of period (in dollars per share) | 3,192 | |
Exercisable (in dollars per share) | 4,791 | |
Weighted average grant date fair value per share | ||
Balance, beginning of period (in dollars per share) | 1,930 | |
Granted (in dollars per share) | 0 | |
Forfeited (in dollars per share) | 473 | |
Expired (in dollars per share) | 6,444 | |
Balance, ending of period (in dollars per share) | 1,936 | |
Exercisable (in dollars per share) | $ 2,803 | |
Weighted average remaining contractual term (in years) | ||
Weighted average remaining contractual term | 8 years | 8 years 3 months 18 days |
Exercisable | 7 years 4 months 24 days |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||
Mar. 28, 2024 USD ($) | Oct. 27, 2023 USD ($) | Jul. 31, 2019 USD ($) | Mar. 31, 2024 USD ($) | Mar. 31, 2020 USD ($) milestone | Dec. 31, 2018 unit $ / shares | Dec. 31, 2023 USD ($) | Aug. 14, 2023 USD ($) | Jun. 22, 2021 USD ($) | Jun. 09, 2021 USD ($) | May 28, 2021 USD ($) | Mar. 25, 2021 USD ($) | Feb. 03, 2020 USD ($) | |
Other Commitments [Line Items] | |||||||||||||
Accrued expenses and other current liabilities | $ 7,383,000 | $ 4,172,000 | |||||||||||
Contingent consideration | 12,500,000 | 0 | |||||||||||
Payment received | $ 2,000,000 | ||||||||||||
Period after public launch to terminate agreement | 3 years | ||||||||||||
Percentage of net present value of royalty payments | 75% | ||||||||||||
Aevi | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Milestone payment | 0 | ||||||||||||
AlmataBio Transaction | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Payments to acquire productive assets | $ 7,500,000 | 7,500,000 | |||||||||||
Milestone payment due upon first patient dosed in a Phase 2 trial | 5,000,000 | ||||||||||||
Aevi | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Number of milestones | milestone | 2 | ||||||||||||
Milestone payment due upon first patient dosed in a Phase 2 trial | $ 6,500,000 | ||||||||||||
Milestone One | AlmataBio Transaction | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Milestone payment due upon first patient dosed in a Phase 2 trial | 5,000,000 | ||||||||||||
Milestone One | Aevi | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Milestone payment due upon first patient dosed in a Phase 2 trial | $ 2,000,000 | ||||||||||||
Milestone One | AVTX-009 | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Contingent consideration | 7,500,000 | ||||||||||||
Milestone Two | AlmataBio Transaction | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Milestone payment due upon first patient dosed in a Phase 2 trial | $ 15,000,000 | ||||||||||||
Milestone Two | Aevi | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Milestone payment due upon first patient dosed in a Phase 2 trial | $ 4,500,000 | ||||||||||||
Milestone Two | AVTX-009 | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Contingent consideration | 5,000,000 | ||||||||||||
Lilly License Agreement | AVTX-009 Lilly License Agreement | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Milestone payments | 70,000,000 | ||||||||||||
Lilly License Agreement | AVTX-009 Lilly License Agreement | Milestone One | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Maximum aggregate milestone payment | 720,000,000 | ||||||||||||
Kyowa Kirin Co., Ltd. (KKC) | AVTX-002 KKC License Agreement | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Upfront license fee | $ 10,000,000 | ||||||||||||
Percent of payments received from sublicensing | 30% | ||||||||||||
Research and development expense | 0 | ||||||||||||
Cumulative expense recognized to date | 0 | ||||||||||||
Kyowa Kirin Co., Ltd. (KKC) | AVTX-002 KKC License Agreement | Milestone One | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Maximum aggregate milestone payment | $ 112,500,000 | ||||||||||||
Kyowa Kirin Co., Ltd. (KKC) | AVTX-002 KKC License Agreement | Milestone Two | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Maximum aggregate milestone payment | $ 75,000,000 | ||||||||||||
Sanford Burnham Prebys Medical Discovery Institute | AVTX-008 Sanford Burnham Prebys License Agreement | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Upfront license fee | $ 400,000 | ||||||||||||
Research and development expense | 0 | ||||||||||||
Cumulative expense recognized to date | 0 | ||||||||||||
Patent costs | 500,000 | ||||||||||||
Sanford Burnham Prebys Medical Discovery Institute | AVTX-008 Sanford Burnham Prebys License Agreement | Milestone One | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Maximum aggregate milestone payment | 24,200,000 | ||||||||||||
Sanford Burnham Prebys Medical Discovery Institute | AVTX-008 Sanford Burnham Prebys License Agreement | Milestone Two | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Maximum aggregate milestone payment | $ 50,000,000 | ||||||||||||
Astellas Pharma, Inc. (Astellas) | AVTX-006 Astellas License Agreement | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Maximum aggregate milestone payment | 5,500,000 | ||||||||||||
Upfront license fee | 500,000 | ||||||||||||
Research and development expense | 0 | ||||||||||||
Cumulative expense recognized to date | 500,000 | ||||||||||||
ES | AVTX-406 License Assignment | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Revenue recognized from milestones to date | 0 | ||||||||||||
ES | Milestone One | AVTX-406 License Assignment | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Maximum proceeds from milestones | $ 6,000,000 | ||||||||||||
ES | Milestone Two | AVTX-406 License Assignment | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Maximum proceeds from milestones | $ 20,000,000 | ||||||||||||
Alto | AVTX-301 Out-License | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Maximum proceeds from milestones | $ 18,600,000 | ||||||||||||
Revenue recognized from milestones to date | 0 | ||||||||||||
AUG Therapeutics, LLC | Purchase Agreement | AVTX-800 Series Asset Sale | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Upfront payment paid | $ 200,000 | ||||||||||||
Asset acquisition consideration transferred, liabilities | $ 400,000 | ||||||||||||
Contingent milestone upfront payment percentage | 0.20 | ||||||||||||
Contingent milestone payment | $ 15,000,000 | ||||||||||||
Maximum potential payments | $ 45,000,000 | ||||||||||||
TRIS Pharma | Karbinal Agreement | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Minimum quantity required | unit | 70,000 | ||||||||||||
Make whole payment per unit (in dollars per share) | $ / shares | $ 30 | ||||||||||||
Apollo AP43 Limited | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Payments for legal settlements | $ 200,000 | ||||||||||||
Accrued expenses and other current liabilities | $ 200,000 | ||||||||||||
Apollo AP43 Limited | Maximum | |||||||||||||
Other Commitments [Line Items] | |||||||||||||
Estimate of possible loss | $ 800,000 |