Avalo Therapeutics agrees to pay $2.25 million for option on $15 million AlmataBio milestone

Avalo Therapeutics, Inc. (Nasdaq: AVTX) said on April 28, 2026 that it signed a Milestone Buyout Option Agreement that changes what it owes the former holders of AlmataBio, Inc. securities from its March 2024 acquisition of that company. Avalo agreed to pay $2.25 million up front for an option to settle a $15 million contingent payment for $5.125 million in cash, stock or both. The company reported the agreement, effective April 26, 2026, in a Form 8-K and a press release.

What the old deal required

Under the Agreement and Plan of Merger and Reorganization dated March 27, 2024, Avalo agreed to pay contingent consideration of $15 million, called the Milestone Payment, when the first patient is dosed in a Phase 3 trial, in any indication. The parties to that merger agreement were Avalo, Project Athens Merger Sub, Inc., Second Project Athens Merger Sub, LLC, AlmataBio and Patrick J. Crutcher, who acts solely as the Securityholders' Representative and attorney-in-fact of the former AlmataBio securityholders.

The new terms

Avalo will pay $2.25 million to the Securityholders' Representative within five business days after April 26, 2026. In the exhibit, that payment is reduced by the legal fees of Lowenstein Sandler LLP, counsel for the representative, which Avalo pays directly to the firm and counts against the $2.25 million.

Avalo then holds an option, exercisable at its sole discretion within ninety days after the effective date, to pay $5.125 million in cash, Avalo common stock or a combination. Paying that amount would satisfy the Milestone Payment in full. If Avalo does not exercise the option, it will owe $12.75 million in cash or stock, in full satisfaction of the milestone, if the milestone event occurs.

The option window runs 90 days, and the timing of the company's own data matters. The 10-K, filed March 23, 2026, says the Phase 2 LOTUS trial of abdakibart in hidradenitis suppurativa finished enrolling about 250 adults in October 2025 and that topline data are expected in the second quarter of 2026, which falls inside that window.

If Avalo pays in stock

Stock would be priced at the volume weighted average price over 20 trading days, and no holder may receive shares that would push its beneficial ownership above 19.9% of Avalo's outstanding common stock. Cash would cover the rest.

Any stock paid would need a resale registration statement on Form S-3 or a similar short-form within seventy-five days after issuance. A missed filing deadline costs 1.0% of the value of each affected holder's stock for the first day and for each thirty-day period after, paid in cash. The same 1.0% applies if the statement is not declared effective on time.

Cash and losses

The 10-K shows a net loss of $78.3 million for 2025, up from $35.1 million for 2024, and net cash used in operating activities of $51.5 million for 2025. As of December 31, 2025, Avalo had $98.3 million in cash, cash equivalents and short-term investments. The company says that balance is expected to fund operations into 2028. Its going concern evaluation concludes that existing resources are sufficient for at least twelve months from the 10-K filing date, so the auditor's report carries no going concern doubt. The 10-K warns, however, that delays in clinical programs may affect its cash runway and require additional financing.

The $2.25 million is paid whether or not Avalo later exercises the option.

About Avalo

Avalo describes itself as a clinical stage biotechnology company developing IL-1β-based treatments for immune-mediated inflammatory diseases. Its lead asset, abdakibart (AVTX-009), is an anti-IL-1β monoclonal antibody. The company says it is also planning its Phase 3 trial or trials.

Christopher Sullivan, Chief Financial Officer, signed the 8-K and is the investor contact in the release.

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