Avalo Therapeutics entered into a milestone buyout option and amendment agreement with former AlmataBio securityholders on April 26, 2026. The deal requires Avalo to pay $2.25 million and grants the securityholders an option exercisable within 90 days to receive an additional $5.125 million in cash, shares, or a combination of both. Exercising the option would replace a previously disclosed $15 million contingent milestone payment that was due when the first patient was dosed in a Phase 3 trial of the company’s lead asset, abdakibart (AVTX‑009).
The buyout structure gives Avalo a more predictable cash‑flow profile. By paying a smaller upfront amount, the company can defer a larger potential payment and retain the flexibility to assess the progress of the Phase 3 program before deciding whether to exercise the option. If the option is not exercised, the remaining obligation is $12.75 million, still below the original $15 million commitment, thereby reducing financial risk associated with the trial milestones. This arrangement also allows Avalo to manage its cash burn more effectively while preserving capital for future development and potential financing needs.
The agreement is part of the March 2024 acquisition of AlmataBio, which brought abdakibart into Avalo’s pipeline. The company’s financial position—$98 million in cash, cash equivalents, and short‑term investments as of December 31, 2025—provides a runway into 2028, but additional capital may be required to support the Phase 3 program. The buyout option is therefore a strategic financial housekeeping measure that aligns Avalo’s capital structure with its clinical development timeline and mitigates the risk of a large milestone payout if the trial does not meet its milestones. The company’s S‑3 shelf authorization for up to $750 million in securities further supports its ability to raise capital if needed.
Management emphasized that the buyout provides “cost certainty and flexibility around the milestone obligation” and helps the company “manage its cash flow while still securing the potential for future growth through AlmataBio’s assets.” The move signals a cautious approach to capital allocation, balancing the need to fund ongoing clinical work with the desire to avoid a sizable cash outlay that could strain the company’s limited resources.
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