On Thursday, BTIG initiated coverage on Avalo Therapeutics Inc. (NASDAQ:AVTX), awarding the stock a Buy rating and setting a price target of $40.00. According to InvestingPro data, this target represents significant upside potential from the current price of $9.28, though the stock has faced headwinds, declining over 21% in the past six months.
The firm identified the company's IL-1β monoclonal antibody, AVTX-009, as having best-in-class features that may lead to preferred positioning in the market for several large inflammation and immunology (I&I) indications.
The lead efforts of Avalo Therapeutics are currently focused on hidradenitis suppurativa (HS), a chronic skin condition. BTIG anticipates a significant market opportunity for more active treatment options in this area, even considering the expected establishment of key IL-17A/F inhibitors such as bimekizumab and sonelokimab.
The analysis by BTIG referenced AbbVie (NYSE:ABBV)'s lutikizumab as providing important proof of concept for the IL-1 class in HS, noting its Phase 2 induction efficacy. According to BTIG, lutikizumab's results place it ahead of the incumbent market leader Bimzelx. AVTX-009 is believed to possess the potential to show even greater activity than lutikizumab due to its potency and selectivity, which could be advantageous in a market projected to expand from approximately $2 billion per year to over $10 billion per year by the mid-2030s.
BTIG's outlook on the market dynamics for HS suggests that the introduction of additional treatment options with distinct features may not result in a zero-sum scenario. This view is based on observations from more mature I&I markets such as psoriasis. The firm also highlighted the potential for IL-1β activity in other autoimmune diseases, including ulcerative colitis and atopic dermatitis, supported by results from the CANTOS trial.
AVTX-009 is currently undergoing a Phase 2b trial for HS, with top-line data expected in 2026. BTIG pointed out that with Avalo Therapeutics' current enterprise value under $200 million and guidance indicating a cash runway extending to at least 2027, there is significant upside potential for the stock ahead of the trial data release.
InvestingPro subscribers can access 12 additional investment tips and comprehensive financial health metrics for AVTX, including detailed profitability analysis and growth forecasts, essential for evaluating early-stage biotech investments.
In other recent news, Avalo Therapeutics has secured a significant $69.4 million in gross proceeds from a full warrant exercise, bringing the total proceeds from the transaction to $185 million. The company is currently focusing on the Phase 2 LOTUS trial for the treatment of hidradenitis suppurativa, with the newfound funds set to aid in exploring additional inflammatory indications for their AVTX-009 program. This financial boost is expected to extend Avalo’s cash runway into 2027.
Furthermore, Avalo has initiated the Phase 2 LOTUS trial, testing the efficacy of AVTX-009 on hidradenitis suppurativa, a chronic skin condition. The trial is set to involve around 180 participants, with top-line data expected in 2026.
In addition, Oppenheimer maintained an Outperform rating on Avalo Therapeutics, underlining the potential of AVTX-009 and the company's strategic initiatives. Avalo has also regained compliance with Nasdaq's Market Value of Listed Securities Standard, marking a noteworthy achievement following a previous notification of non-compliance. Lastly, Avalo Therapeutics has expanded its equity incentive and employee stock purchase plans, with amendments approved by its stockholders.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.