AVTX · Avalo Therapeutics
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $10.13
Note written ·
Price against the kill line
23.4% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $10.13, on record since 11 November 2026. The shares are down 61.1% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $10.13, 19% above the last close (11 November 2026), would show the shares leading the S&P 500 and prove this call wrong.
Research onlyNot in the portfolio.
Key figures from the filings · Health Care
Quarter to 31 December 2025, filed 23 March 2026
- Revenue, latest quarter ($M)
- 0.1
- Revenue, change on a year (%)
- −69.3
- Operating margin (%)
- −33461.0
- Net cash, cash less debt ($M)
- 463
All filed numbers
What Avalo Therapeutics reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 0.1 | −69.3 | −33461.0 |
| first filed | 0.0 | −100.0 | — |
| first filed | 0.2 | −66.4 | −6932.8 |
| first filed | 0.2 | +5.5 | −5165.1 |
| Pre-tax income ($M) | −18.9 |
| Net income ($M) four quarters: −88.7 | −18.9 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +293.3 |
| Operating cash flow ($M) | −63.5 |
| Capital spending ($M) | Not reported |
| Free cash flow ($M) | Not available |
| Cash and short-term investments ($M) | 463 |
| Debt ($M) | None reported |
| Net cash, cash less debt ($M) no debt reported | 463 |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | Not reported |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 437 |
| Market value ($M) | 449 |
| Enterprise value, market value plus net debt ($M) no debt reported | −14.1 |
| Enterprise value to sales (×) | Not available |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 1.0 |
| Free-cash-flow yield (%) | Not available |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 20.7% of shares outstanding sold short, 13.0 days of average trading to cover, +4.9% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $1.0M |
| 12 monthsfrom | $0 | $8.3M |
The thesis
Avalo Therapeutics' abdakibart, an antibody for hidradenitis suppurativa (HS, a painful chronic skin disease), keeps a funded Phase 3 plan, but the shares have not recovered from AbbVie's rival Phase 3 data, and the case now turns on the FDA's feedback on the Phase 3 design. The shares closed at $7.16 on 10 November 2026, 68.7% below the 52-week high of $22.87 and 63.2% lower over three months, according to adjusted daily closes.
The third-quarter report of 5 November 2026 left the plan intact. Avalo reported cash, cash equivalents and investments of $462.8 million at 30 September 2026 and kept its runway guidance into 2029, and it still plans to start Phase 3 in HS in the first half of 2027. Avalo's Q3 loss per share was $0.34 against an analyst estimate of $0.61, according to news reports.
The same day Avalo filed a $200 million at-the-market sales agreement with Jefferies and a new universal registration statement. The story is well known: the competitor data of 22 October 2026 and the analyst resets that followed are well known, and the new facts since 29 October 2026 are financing paperwork and a further target cut from Wedbush. A clean FDA agreement on Phase 3, the one event that would reverse the repricing, has not been disclosed.
Bullish and bearish views on Avalo Therapeutics, Inc.
The bull case on Avalo Therapeutics, Inc. (AVTX), in brief: Phase 2 efficacy is strong against placebo. The bear case: financing capacity has been added.
Bull case
- Phase 2 efficacy is strong against placebo. Avalo's 5 May 2026 release reported Week-16 HiSCR75 (a 75% improvement in HS clinical response) of 42.2% and 42.9% in the two abdakibart groups against 25.6% for placebo in the 253-patient LOTUS trial. AbbVie's lutikizumab reached 31.4% against 23.4% for placebo in its Phase 3 on 22 October 2026, though the two are different trials.
- Cash funds the stated plan. Avalo reported $462.8 million at 30 September 2026 in its 5 November 2026 results and reaffirmed funding into 2029. In its May 2026 offering the company priced shares at $17.75.
- Analysts still carry targets far above the price. Wedbush kept Outperform on 6 November 2026 while lowering its target to $20 from $22. Leerink Partners initiated with Outperform and a $38 target on 6 July 2026.
- A second asset is advancing. Avalo's Q3 release described AVTX-010, a long-acting anti-interleukin-1 beta antibody, as heading toward an Investigational New Drug filing in the first half of 2027.
Bear case
- Financing capacity has been added. On 5 November 2026 Avalo replaced its TD Cowen sales agreement with a Jefferies agreement allowing up to $200 million of common stock sales, with a commission of up to 3%, and filed a registration statement. Avalo is not obliged to sell any amount, and the filings reviewed show no sales under the facility.
- Analyst targets keep falling. Wedbush lowered its target twice in two weeks, to $22 on 23 October 2026 and $20 on 5 November 2026. H.C. Wainwright and Guggenheim cut to Neutral on 23 October 2026, and BofA Securities adjusted its target on 6 November 2026.
- The FDA outcome is still open. Management placed the end-of-Phase-2 meeting in the second half of 2026. Company news through 10 November 2026 reports no outcome.
- Differentiation is unproven. LOTUS compared abdakibart with placebo only, so comparison with approved HS antibodies rests on cross-trial reading.
- Insiders have pre-scheduled sales. At least two officer Rule 10b5-1 plans (adopted 13 November 2025 and 18 May 2026) are live, so sales can print without new company information.
Price setup
The shares closed at $7.16 on 10 November 2026 and at $7.12 on 28 October 2026, so the price has held in a narrow range since the sell-off. The Nasdaq last sale was $7.07 on 4 November 2026, as stated in the 5 November 2026 registration statement. The 14-day relative strength index (RSI), a momentum gauge where readings under 30 mark heavy selling, was 18.4 on 10 November 2026.
The 52-week high of $22.87 is the reference for the damage. Weighted average shares were 43,602,044 in Q2 2026 against average daily volume near 1.16 million, so news can move the price in wide increments.
Crowding evidence is limited to supply: the $200 million sales agreement and the live insider plans. No earnings date falls in the next 30 days.
Catalysts ahead
- ~November to December 2026 (est.): Investor conference appearances announced 2 November 2026. Management comments on FDA feedback and the Phase 3 design are the first company views since the Q3 report.
- H2 2026 (guided): End-of-Phase-2 meeting with the FDA. An agreed Phase 3 design supports the first-half 2027 start; a request for more work would weaken the funded-development case.
- ~30 June 2027 (est.): End of the guided window for Phase 3 initiation in hidradenitis suppurativa. A start inside the window keeps management's timetable; a later start breaks it.
What would change the view
A daily close above $10.13, 19% above the last close (11 November 2026), would show the shares leading the S&P 500 and prove this call wrong.
What it trades with
Avalo trades on its own clinical and regulatory news. The sharpest recent move came from AbbVie's lutikizumab data on 22 October 2026, so other HS programs and the HS antibody class are the nearest comparison. Clinical-stage biotech shares as a group respond to financing conditions, and the new at-the-market facility ties Avalo to that backdrop.
The evidence, claim by claim (8)
- Cash, cash equivalents and investments were $462.8 million at 30 September 2026; the company maintained funding of operations into 2029 and a Phase 3 start in hidradenitis suppurativa in the first half of 2027. Avalo Q3 2026 results release (Form 8-K), 5 November 2026 · as of
- Avalo replaced its TD Cowen sales agreement with a Jefferies at-the-market agreement for up to $200 million of common stock, commission up to 3%, effective 5 November 2026. Panabee summary of Form 8-K, 5 November 2026 · as of
- The Nasdaq last reported sale price of AVTX was $7.07 on 4 November 2026. Avalo Form S-3ASR, 5 November 2026 · as of
- Wedbush maintained Outperform and lowered its target to $20 from $22. Benzinga, 6 November 2026 · as of
- Avalo Q3 2026 loss per share was $0.34 against an analyst estimate of $0.61. Benzinga, 5 November 2026 · as of
- AbbVie's Phase 3 INTREPID trial of lutikizumab met its Week-16 HiSCR75 endpoint at 31.4% versus 23.4% for placebo. AbbVie press release, 22 October 2026 · as of
- Phase 2 LOTUS Week-16 HiSCR75 was 42.2% and 42.9% in the two abdakibart groups versus 25.6% for placebo in 253 patients. Avalo LOTUS topline release, 5 May 2026 · as of
- Adjusted daily close was $7.16, 68.7% below the 52-week high of $22.87, with a 14-day RSI of 18.4 and a three-month price change of −63.2%. Adjusted daily closes · as of
Sources
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