Why Microcap Biotech Firm Avalo Therapeutics Stock Is Trading Higher Today?

Avalo Therapeutics Inc AVTX shares are trading higher after the company agreed to sell its rights, title, and interest in assets relating to AVTX-801 (D-galactose), AVTX-802 (D-mannose) and AVTX-803 (L-fucose) to AUG Therapeutics.

AUG will pay an upfront payment of $150,000, as well as, for each compound, make a contingent milestone payment of $15 million (for a potential aggregate of $45 million) if the first FDA approval is for an indication other than a Rare Pediatric Disease, or up to 20% of certain payments, if any, granted to AUG upon any sale of any priority review voucher granted to AUG by the FDA.

Additionally, AUG will assume up to $150,000 of certain liabilities incurred before the Purchase Agreement date. The transaction is expected to close in Q4 of 2023.

"This divestiture also reaffirms Avalo's unwavering commitment to executing our strategic focus on our immunology assets, which we believe hold the greatest value and potential for our shareholders," stated Garry Neil, CEO and Chairman of Avalo Therapeutics. 

"This transaction will have an immediate positive impact on our cash flow and reduce the utilization of our internal resources for non-core assets while also maintaining substantial upside potential for Avalo upon program success," Neil added.

Price Action: AVTX shares are up 25.60% at $0.11 on the last check Tuesday.