Executive Summary

Q2 2025 was an execution-heavy quarter: Avalo enrolled over three-quarters of LOTUS trial patients, reiterated topline mid-2026, and extended cash runway into 2028, supported by $113.3M in cash and short-term investments as of June 30, 2025 .
Operating investment stepped up: R&D rose to $14.1M (from $9.1M in Q1), driving a net loss of $20.8M and diluted EPS of $(1.92) .
Against S&P Global consensus, EPS missed by ~$0.52 in Q2 (consensus $(1.40) vs actual $(1.92)), reflecting accelerated LOTUS spend; revenue was modeled at $0 and not disclosed in Q2 materials .
Narrative catalyst: increased trial scope (approx. 222 patients vs 180 prior) and >75% enrollment, with targeted completion by year-end—advancing toward Phase 3 readiness .
Year-over-year comparability remains distorted by 2024 warrant fair value dynamics; Q2 2024 reported net income of $98.5M largely from warrant liability fair value change, not operations .

What Went Well and What Went Wrong

What Went Well

LOTUS execution ahead of plan: “We have enrolled over three-quarters of the planned patients and are on track to complete enrollment by year end with top-line results expected mid-2026” — CEO Dr. Garry Neil .
Cash runway extension: Cash and short-term investments of $113.3M provide runway into 2028, enhancing financing visibility through key readouts .
Strategic human capital: Appointment of Rita Jain, M.D. (ex-ChemoCentryx, Akebia; current boards: Celldex, AnaptysBio) adds clinical and regulatory depth for HS and broader immunology opportunities .

What Went Wrong

EPS miss relative to consensus: Q2 2025 diluted EPS $(1.92) vs S&P Global consensus $(1.40), driven by higher LOTUS-related R&D; Q1 miss was smaller at $(1.25) vs $(1.06)* .
Operating spend inflects: R&D rose to $14.1M (Q1: $9.1M; Q2 2024: $4.6M), and G&A remained elevated ($5.2M), reflecting trial execution and stock comp .
Balance sheet derivative liabilities ticked up: Non-current derivative liability increased to $10.26M (from $8.12M at year-end), adding non-operating volatility .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Total Revenues ($USD Millions)	$0.00	N/A (not disclosed)	N/A (not disclosed)
R&D Expense ($USD Millions)	$4.60	$9.12	$14.07
G&A Expense ($USD Millions)	$4.53	$5.55	$5.24
Net (Loss)/Income ($USD Millions)	$98.46	$(13.15)	$(20.77)
Diluted EPS ($)	$(14.07)	$(1.25)	$(1.92)
Cash & ST Investments ($USD Millions)	$93.43 cash only	$125.00 cash only	$113.30 combined

Notes: Q2 2024 net income and EPS reflect warrant liability fair value changes, not operating profitability . Q1/Q2 2025 revenue was not presented in the statements of operations in the company’s press release/8-K materials .

Segment breakdown: Not applicable (clinical-stage, no commercial segments).

KPIs

KPI	Q2 2024	Q1 2025	Q2 2025
LOTUS Trial Size (planned patients)	~180	~180	~222
LOTUS Enrollment Progress	Not disclosed	“begun to meaningfully climb the enrollment curve”	≥75% enrolled; on track to complete by year-end
Topline Timing	2H 2024 first patient planned	2026	Mid-2026

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Cash Runway	As of Q1 2025	Into at least 2027; optionality to extend into 2028	Into 2028	Raised
LOTUS Topline Timing	As of Q1 2025	2026	Mid-2026	Window narrowed (maintained timing)
LOTUS Trial Size	As of Q1 2025	~180 patients	~222 patients	Increased scope
LOTUS Enrollment	As of Q1 2025	Not disclosed	>75% enrolled; complete by YE 2025	New disclosure
Second Indication	As of Q1 2025	Evaluating; timing cautious given markets	Focus on LOTUS, advancing toward Phase 3 readiness	Deferred cadence (capital discipline)

Earnings Call Themes & Trends

No Q2 2025 earnings call transcript was available in the document set; themes derived from press releases and 8-Ks.

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
R&D Execution (LOTUS)	IND activated (Jul 2024); first patient enrolled (Oct 2024); progressing; 2026 topline	>75% enrolled; scope increased to ~222; topline mid-2026	Acceleration and scale-up
Cash Runway	~$135M YE cash; runway into ≥2027	$113.3M as of Q2; runway into 2028	Improved runway despite higher spend
Regulatory/Clinical	IND active; trial initiation	On track to complete enrollment by YE 2025	Milestones on schedule
OpEx Discipline	Q1: cautious on 2nd indication timing to preserve capital	Focused on LOTUS; Phase 3 readiness	Tight focus on core
Leadership Strengthening	Added CSO (Jennifer Riley) ; CMO/CLO in 2024	Added Rita Jain, M.D., to Board	Governance and clinical guidance enhanced

Management Commentary

“We have enrolled over three-quarters of the planned patients and are on track to complete enrollment by year end with top-line results expected mid-2026.” — Dr. Garry Neil, CEO .
“We are focused on executing the LOTUS trial and advancing toward Phase 3 readiness.” — Dr. Garry Neil, CEO .
“We are cognizant of current market conditions… Changes to the timing of implementing these secondary development activities could extend cash runway into 2028.” — Dr. Garry Neil, CEO (Q1) .
“AVTX-009's proven mechanism of action… potential to become a best-in-disease treatment in HS…” — Dr. Rita Jain, Board appointee .

Q&A Highlights

No Q2 2025 earnings call transcript was available; no Q&A themes or clarifications could be sourced from company transcripts in the document set.

Estimates Context

EPS vs S&P Global consensus: Q2 2025 consensus $(1.40)* vs actual diluted EPS $(1.92) → bold miss of $(0.52). Q1 2025 consensus $(1.06) vs actual $(1.25) → miss of $(0.19)*.
Revenue consensus modeled at $0 for both Q1 and Q2 2025*, consistent with clinical-stage status; revenue was not disclosed in Q2 materials.
Values marked with * are retrieved from S&P Global.

Metric	Q1 2025	Q2 2025
Primary EPS Consensus Mean ($)	(1.06)*	(1.40)*
Primary EPS - # of Estimates	6*	7*
Actual Diluted EPS ($)	(1.25)	(1.92)
Surprise ($)	(0.19)*	(0.52)*
Revenue Consensus Mean ($USD Millions)	0.00*	0.00*
Revenue - # of Estimates	6*	7*

Key Takeaways for Investors

LOTUS pacing and scale are the crux: ≥75% enrollment and expanded ~222-patient design increase statistical power and de-risk topline mid-2026 readout path .
Cash runway into 2028 provides strategic flexibility to reach Phase 2 data and prepare for Phase 3 without near-term financing pressure, a notable positive in current biotech markets .
Near-term financial prints will remain loss-making as R&D ramps; expect continued EPS pressure versus consensus while LOTUS costs peak .
Governance/clinical depth improved with Dr. Jain’s appointment, supportive of regulatory interactions and indication prioritization .
Year-over-year comparisons are noisy due to 2024 warrant liability fair value impacts; focus on operating drivers (R&D cadence, enrollment milestones) rather than GAAP volatility .
Trading setup: incremental enrollment updates and the YE completion milestone are catalysts; any signal on second indication timing and Phase 3 readiness could re-rate risk perceptions .
Medium-term thesis hinges on HS efficacy (HiSCR endpoints) and differentiation potential of IL-1β inhibition in HS; successful topline could unlock value across broader inflammatory indications .

Citations:
Q2 2025 press release and 8-K ; Q1 2025 press release and 8-K ; Q2 2024 press release and 8-K ; FY 2024 press release and 8-K ; Board appointment .
Estimates: Values marked with * are retrieved from S&P Global.

Avalo Therapeutics, Inc. (AVTX)·Q2 2025 Earnings Summary