Avalo Therapeutics Inc.’s (NASDAQ:AVTX) completed enrollment of the Phase 2 LOTUS trial of AVTX-009, the company’s lead drug candidate.
The global trial includes approximately 250 adults with moderate to severe hidradenitis suppurativa to evaluate the efficacy and safety of subcutaneous bi-weekly and monthly dosing regimens compared to placebo.
Topline data is expected in mid-2026.
Analyst Take
Cantor hosted Avalo Therapeutics management. Cantor highlights that if the stock fails stock could sink around 85-90%.
Analyst Agarwal sees stock upside even if the HiSCR75 change is around 18%-19%, but the upside is capped as some investors may see the Phase 3 trial as a risk due to efficacy downgrade from Phase 2 to Phase 3.
HiSCR75 (Hidradenitis Suppurativa Clinical Response 75) is defined as greater than or equal to 75 % reduction in the total abscess and inflammatory nodule count from baseline, with no increase in the number of abscesses or draining tunnels.
If the change is between 20-25%, the stock could jump rally 100-150%, and if it falls, the range of 25-30%, Avalo Therapeutics’ stock could skyrocket over 200%.
Cantor mentions MoonLake Immunotherapeutics (NASDAQ:MLTX) reached a market cap of $2 billion-$2.5 billion after Phase 2 data, that also when there was skepticism regarding the size of the Hidradenitis Suppurativa market.
Cantor analyst Prakhar Agarwal notes that the stock has underperformed when compared to the State Street SPDR S&P Biotech ETF (XBI), which has jumped 2%.
Year-to-date, Avalo Therapeutics’ stock fell around 13%.
Agarwal cited that Novartis AG’s (NYSE:NVS) MAS825, IL-1b/IL-18 bispecific for hidradenitis suppurativa, was flagged as a negative for IL-1b thesis. Cantor says modest MAS825 efficacy could be due to lower potency or underdosing.
He also cites some investor concerns around the management talking down efficacy expectations for Avalo’s Phase 2 in hidradenitis suppurativa. Agarwal added that instead Avalo’s management seemed confident and expects that AVTX009 will show comparable or better than AbbVie Inc’s (NYSE:ABBV) lutikizumab.
The company’s management ‘flagged superior affinity’ for AVTX009 as the biggest competitive advantage, which should lead to a stronger IL-1b inhibition for AVTX009 for a longer time.
Cantor maintains the Overweight rating for Avalo Therapeutics.
Other Analyst Ratings
AVTX has seen a positive trend in analyst ratings recently, with firms such as Guggenheim and HC Wainwright & Co. initiating coverage and reiterating a ‘Buy’ rating.
On February 2, Guggenheim initiated coverage on AVTX and set a target price of $50.00, the highest target set in the recent months, indicating a bullish outlook for the company.
Earlier, on January 15, HC Wainwright & Co. reiterated a ‘Buy’ rating, maintaining a $25.00 target that was first established in September. Mizuho also initiated coverage on AVTX in December, giving an ‘Outperform’ rating with a $39.00 target.
Meanwhile, BTIG reiterated a ‘Buy’ rating on September 29, setting a target at $40.00.
Price Action: AVTX stock is up 4.57% at $15.80 at the last check on Monday, according to Benzinga Pro data.
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