Avalo Therapeutics to sell 12M shares at $5.80 in private placement

Concurrent with the acquisition, Avalo entered into a definitive agreement for the sale of preferred stock and warrants in a private placement led by Commodore Capital and TCGX, with participation from BVF Partners, Deep Track Capital, OrbiMed, Petrichor, and RA Capital Management. The private placement will provide up to $185M in gross proceeds, including an initial gross upfront investment of $115.6M. After deducting estimated transaction costs from both the private placement financing and the acquisition of AlmataBio, Avalo expects net upfront proceeds to be approximately $105M. The private placement is expected to close on March 28, subject to the satisfaction of customary closing conditions. Concurrently, Avalo entered into a definitive agreement for a private placement investment with institutional investors to raise up to $185M in which the investors will be issued an aggregate of $115.6M of non-voting convertible preferred stock, resulting in the issuance of approximately 19,900 shares of non-voting convertible preferred stock and warrants to purchase up to an aggregate of approximately 12M shares of Avalo’s common stock or an equivalent amount of non-voting convertible preferred stock, subject to the terms and conditions set forth in the warrant agreement, for an aggregate exercise price of $69.4M. The warrants are exercisable for approximately $5.80 per underlying share of common stock until the earlier of five years from the date of issuance or 30 days after the public announcement of the first patient dosed in a Phase 2 trial of AVTX-009 in HS. After deducting estimated transaction costs from both the private placement financing and the acquisition of AlmataBio, Avalo expects net upfront proceeds to be approximately $105M. The estimated transaction costs do not include the $7.5M cash payment due to former AlmataBio stockholders upon the initial closing of the private placement investment. The private placement is expected to close on March 28, subject to the satisfaction of customary closing conditions. Subject to and upon Avalo stockholder approval, each share of Avalo non-voting convertible preferred stock issued to former AlmataBio stockholders and issued pursuant to the private placement investment will automatically convert to 1,000 shares of Avalo common stock, subject to certain beneficial ownership limitations. The non-voting convertible preferred stock holds no voting rights. The acquisition was approved by the board of directors of Avalo and by the board of directors and stockholders of AlmataBio, Inc. The closings of the transactions are not subject to the approval of Avalo stockholders. On an as-converted basis and after accounting for these transactions, the total number of shares of Avalo common stock outstanding would be approximately 23.4M immediately after the closing of the transactions.