Oppenheimer cuts Avalo Therapeutics price target on trial concerns

Investing.com reports that Oppenheimer has reduced its price target on Avalo Therapeutics Inc. (NASDAQ: AVTX) to $16 from $35, while keeping an Outperform rating. The company's stock is currently trading at $6.61, down 40% in the past week. The downgrade is due to concerns stemming from AbbVie's Phase 3 trial results for lutikizumab in hidradenitis suppurativa, which shares a mechanism of action with Avalo's lead asset, abdakibart.

Both drugs inhibit IL-1β. However, AbbVie's lutikizumab delivered an eight-percentage-point placebo-adjusted benefit on the INTREPID trial's Week 16 HiSCR75 primary endpoint, which fell short of the 21-point separation seen in its Phase 2 phase and about half that of UCB's Bimzelx. Oppenheimer cites that Avalo's planned all-comer Phase 3 trial should more closely mirror its Phase 2 population.

The firm notes that Avalo's stock has declined to near-cash levels, with the company holding more cash than debt on its balance sheet, as indicated by a current ratio of 19.31. Technical indicators suggest the stock is oversold and near its 52-week low of $6.53. Despite the downgrade, Oppenheimer remains constructive on Avalo Therapeutics shares pending further INTREPID results.

Avalo Therapeutics has also received mixed analyst updates, with Guggenheim downgrading the stock to Neutral and H.C. Wainwright maintaining a Buy rating with a $30.00 price target.