Executive Summary

Q3 2025 was execution-heavy: Avalo completed enrollment in the ~250‑patient Phase 2 LOTUS trial for AVTX‑009 in hidradenitis suppurativa (HS); topline data remains expected mid‑2026 .
Financially, Avalo reported a net loss of $30.6M and diluted EPS of $(2.19); versus Wall Street, EPS missed consensus by ~$0.53 (actual $(2.19) vs consensus $(1.66)); revenue was $0, in line with consensus $0.0 . EPS consensus values from S&P Global.*
Cash, cash equivalents and short‑term investments were $111.6M at quarter‑end, supporting runway into 2028, unchanged from prior quarter commentary .
Stock‑relevant narrative: completion of LOTUS enrollment, clear cash runway, and unchanged mid‑2026 HS topline timing; valuation will hinge on Phase 2 data probability, cash preservation, and any partnering optionality .

What Went Well and What Went Wrong

What Went Well

Completed LOTUS enrollment ahead of plan at ~250 patients (above the ~222 target), with topline mid‑2026; CEO emphasized transition from enrollment to completion and Phase 3 planning: “we’re fully focused on completing the LOTUS trial… and progressing our Phase 3 planning” .
Strengthened leadership: appointed Kevin Lind to the Board; added a Chief Business Officer and SVP HR to bolster BD and organizational scalability .
Liquidity intact: $111.6M cash/short‑term investments and runway into 2028; net cash used in operations YTD was $37.2M, consistent with disciplined spend toward LOTUS completion .

What Went Wrong

EPS missed consensus: actual $(2.19) vs S&P Global consensus $(1.66), driven by non‑cash derivative liability fair value changes and higher R&D for LOTUS; no revenue to offset fixed costs * .
Operating expenses rose: R&D $13.6M (+$4.1M YoY) and G&A $5.6M (+$1.3M YoY) reflecting trial execution and stock‑based compensation .
Other expense swing: $47.3M YoY adverse change primarily related to prior‑year warrant accounting tailwinds in 2024 no longer present; this amplified the net loss YoY .

Financial Results

Core P&L and EPS vs Prior Periods and Estimates

Metric	Q1 2025	Q2 2025	Q3 2025
Total Revenues ($USD)	—	—	$0
Net Income ($USD)	$(13.15)M	$(20.77)M	$(30.63)M
Diluted EPS ($USD)	$(1.25)	$(1.92)	$(2.19)
Total Operating Expenses ($USD)	$14.67M	$19.32M	$19.20M

Notes:

Q3 2025 vs Q3 2024: Net loss $(30.6)M vs net income $23.0M; basic EPS $(2.19) vs $0.98; the YoY swing was primarily driven by the absence of 2024 warrant liability fair value gains and higher R&D spend .
Revenues remained de minimis/zero in Q3; Q3 2024 had $0.249M product revenue .

EPS vs Wall Street (S&P Global)

Metric	Q3 2025
EPS Actual ($)	$(2.19)
EPS Consensus Mean ($)	$(1.65875)*
Surprise ($)	$(0.53) miss*
# EPS Estimates	8*
Revenue Actual ($)	$0
Revenue Consensus Mean ($)	$0.0*
# Revenue Estimates	8*

Values marked with * retrieved from S&P Global.

Operating Expense Detail

Metric	Q1 2025	Q2 2025	Q3 2025
Research & Development ($USD)	$9.12M	$14.07M	$13.62M
General & Administrative ($USD)	$5.55M	$5.24M	$5.58M
Cost of Product Sales ($USD)	—	$0	$0

Liquidity

Metric	Q1 2025	Q2 2025	Q3 2025
Cash & Cash Equivalents ($USD)	$125.05M	$42.29M	$26.96M
Short‑Term Investments ($USD)	—	$70.97M	$84.65M
Cash + ST Investments ($USD)	$125.05M	$113.26M	$111.62M

KPIs and Cash Burn

KPI	Q1 2025	Q2 2025	Q3 2025
Net Cash Used in Operating Activities (period‑to‑date)	$9.5M (Q1)	$20.8M (6M YTD)	$37.2M (9M YTD)
LOTUS Enrollment Status	Initiated/enrolling	>75% enrolled; completion by YE25	Enrollment completed (~250 patients)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
LOTUS Topline Timing	HS Phase 2	“2026” (Q1 2025)	“Mid‑2026” (Q2/Q3 2025)	Maintained (refined timing)
Cash Runway	Corporate	“Into at least 2027; optionality to extend into 2028” (Q1 2025)	“Into 2028” (Q2/Q3 2025)	Raised/extended
LOTUS Enrollment	HS Phase 2	“>75% enrolled; complete by YE25” (Q2 2025)	“Enrollment completed (~250 patients)” (Q3 2025)	Milestone achieved

No revenue, margin, OpEx or tax rate guidance was provided; focus remained on clinical milestones and cash runway .

Earnings Call Themes & Trends

No Q3 2025 earnings call transcript was available in the document set. We searched earnings call transcripts dated Oct 25–Nov 20, 2025 and found none for AVTX.

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
R&D Execution (LOTUS HS)	Q1: Enrollment building; on track for 2026 topline . Q2: >75% enrolled; YE25 completion .	Enrollment completed; ~250 pts; topline mid‑2026 .	Positive execution; timeline maintained
Capital & Runway	Q1: $125M cash; runway ≥2027; optionality to 2028 . Q2: $113M cash+STI; runway into 2028 .	$111.6M cash+STI; runway into 2028 .	Stable; sufficient to data readout
Leadership/Organization	Q1: Board chair appointed . Q2: New board member (Rita Jain, M.D.) .	Kevin Lind appointed; CBO & SVP HR added .	Strengthening capabilities
Regulatory/Clinical	Q1–Q2: Continued Phase 2 execution; no regulatory events .	Completion of Phase 2 enrollment; Phase 3 planning mentioned .	Advancing program maturity
Financial Volatility (Derivatives/Warrants)	Q1: Prior‑year warrant effects drove outsized losses in 1Q24 . Q2: Prior‑year derivative/warrant accounting drove 2Q24 income .	Q3: Adverse YoY swing; $47.3M change in “other” vs 3Q24 .	Normalizing from 2024 non‑cash items

Management Commentary

CEO (Q3 PR): “Now that enrollment is complete, we’re fully focused on completing the LOTUS trial, preparing for the data readout in mid‑2026, and progressing our Phase 3 planning” .
CEO (Enrollment PR): “We are encouraged by the strong investigator and patient engagement… With AVTX‑009’s high‑affinity inhibition of IL‑1β, we believe we are one step closer to offering a differentiated, potentially best‑in‑disease, treatment option…” .
Q3 PR on liquidity and spend: Cash/short‑term investments $111.6M; runway into 2028; R&D increase driven by LOTUS; G&A increase driven by stock‑based comp .

Q&A Highlights

No earnings call transcript was found for Q3 2025; therefore, no Q&A was available. We searched for AVTX earnings call transcripts for the period Oct 25–Nov 20, 2025 and found none.

Estimates Context

EPS: Q3 actual $(2.19) vs S&P Global consensus $(1.65875) → miss of $(0.53). We expect analysts to reflect higher non‑cash derivative liability volatility and sustained trial R&D spend into 2026. Values retrieved from S&P Global.*
Revenue: Actual $0 vs consensus $0.0 (in line). Values retrieved from S&P Global.*

Key Takeaways for Investors

Clinical execution de‑risks operational risk: LOTUS enrollment completion and unchanged mid‑2026 topline keep the HS program on schedule; next catalysts are data and Phase 3 planning updates .
Cash runway into 2028 supports an unfinanced path through Phase 2 readout; burn is primarily trial‑driven and should taper post‑completion activities; monitor quarterly burn vs YTD trajectory ($37.2M through Q3) .
EPS miss was largely non‑cash and accounting‑driven (derivative liability) plus elevated trial R&D; fundamental value hinges on clinical outcomes rather than near‑term EPS .
Organizational upgrades (Board, CBO, SVP HR) signal preparation for Phase 3 and potential BD activity; watch for partnering or second‑indication announcements post‑data .
Near‑term trading: stock likely reacts to continued clinical milestone clarity and any Phase 3 design disclosures; absence of revenue keeps sentiment tightly linked to HS probability of success .
Medium‑term thesis: if AVTX‑009 achieves robust HiSCR endpoints (HiSCR75 primary), HS market has meaningful unmet need; IL‑1β mechanism could position 009 as differentiated in HS and potentially other IMIDs .
Risk monitoring: derivative liability valuation swings continue to create P&L noise; no revenue base; program concentration risk in HS until second indication moves forward .