Avalo Therapeutics reported a net loss of $30.6 million for the third quarter of 2025, a sharp reversal from the $23.0 million profit posted in the same period a year earlier. The loss was driven by a $13.6 million increase in research and development expenses, largely attributable to the Phase 2 LOTUS trial for hidradenitis suppurativa, and a $12.5 million non‑cash charge related to the fair‑value change of a derivative liability. The company also recorded a $5.6 million increase in general and administrative costs, mainly due to higher stock‑based compensation and a $47.3 million impact from warrants exercised in 2024.
The company posted a basic loss per share of $2.19, missing the consensus estimate of $1.67. The miss reflects the combined effect of higher R&D spending, the derivative liability adjustment, and the warrant‑related expense, all of which were not offset by any revenue—Avalo reported zero revenue for the quarter, consistent with its pre‑revenue status. Compared with Q2 2025, R&D costs fell slightly from $14.1 million to $13.6 million, while G&A costs rose from $5.2 million to $5.6 million, underscoring the company’s continued investment in its lead asset and the growing cost of equity‑based incentives.
Cash, cash equivalents, and short‑term investments totaled $111.6 million as of September 30 2025, a figure that the company said would fund operations through 2028. This runway is longer than the $125 million cash balance reported at the end of March 2025, and it provides a cushion for the upcoming data readout in mid‑2026 and subsequent Phase 3 planning. The company’s management emphasized that the extended liquidity position allows it to maintain its R&D pace without immediate financing pressure.
Enrollment in the LOTUS trial was completed on October 29 2025, and the company is now focused on trial completion and data readout. CEO Dr. Garry Neil noted that “now that enrollment is complete, we are fully focused on completing the LOTUS trial, preparing for the data readout in mid‑2026, and progressing our Phase 3 planning.” The data readout will be a critical milestone for the company’s lead antibody, AVTX‑009, and will inform the design and timing of the next‑phase studies.
The earnings miss and loss highlight the trade‑off between aggressive clinical development and short‑term profitability. While the company’s cash runway remains robust, the lack of revenue and the swing to a loss underscore the high cost of bringing a novel biologic to market. Investors and analysts will likely focus on the company’s ability to translate the LOTUS data into a viable product and to manage the cost trajectory as it moves toward Phase 3.
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