Avalo Therapeutics Reports Material Agreement, Delisting Notice

Ticker: AVTX · Form: 8-K · Filed: Mar 28, 2024 · CIK: 1534120

Avalo Therapeutics, INC. 8-K Filing Summary
FieldDetail
CompanyAvalo Therapeutics, INC. (AVTX)
Form Type8-K
Filed DateMar 28, 2024
Risk Levelhigh
Pages14
Reading Time17 min
Key Dollar Amounts$0.001, $15 million, $7.5 million, $5.0 million, $15.0 million
Sentimentmixed

Sentiment: mixed

Topics: material-agreement, delisting-notice, corporate-actions

Related Tickers: AVTX

TL;DR

Avalo's in a major deal, might get delisted, and sold some stock. Big changes ahead.

AI Summary

Avalo Therapeutics, Inc. announced on March 27, 2024, that it entered into a Material Definitive Agreement. The company also provided updates on the completion of an acquisition or disposition of assets, a notice of delisting or failure to meet listing standards, unregistered sales of equity securities, and changes in directors and officers. Additionally, there were amendments to its articles of incorporation or bylaws and other events reported.

Why It Matters

This 8-K filing indicates significant corporate actions, including potential delisting, which could impact investor confidence and stock liquidity.

Risk Assessment

Risk Level: high — The notice of delisting or failure to satisfy continued listing rules presents a significant risk to the company's public trading status.

Key Players & Entities

FAQ

What was the nature of the Material Definitive Agreement entered into by Avalo Therapeutics?

The filing indicates the entry into a Material Definitive Agreement, but the specific details of this agreement are not provided in the provided text.

What is the reason for the notice of delisting or failure to satisfy a continued listing rule?

The filing states there is a 'Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing,' but the specific rule or standard not met is not detailed in the provided text.

When did Avalo Therapeutics change its name from Cerecor Inc.?

Avalo Therapeutics, Inc. changed its name from Cerecor Inc. on November 2, 2011.

What is Avalo Therapeutics' fiscal year end?

Avalo Therapeutics, Inc.'s fiscal year ends on December 31.

What is the primary business of Avalo Therapeutics?

Avalo Therapeutics, Inc. is in the Pharmaceutical Preparations industry, SIC code 2834.

Filing Stats: 4,286 words · 17 min read · ~14 pages · Grade level 13.3 · Accepted 2024-03-28 06:08:13

Key Financial Figures

Filing Documents

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement. Agreement and Plan of Merger and Reorganization On March 27, 2024, Avalo Therapeutics, Inc. (the "Company") entered into an agreement and plan of merger and reorganization (the "Merger Agreement"), with Project Athens Merger Sub, Inc. ("Merger Sub"), Second Project Athens Merger Sub, LLC ("Second Merger Sub") and AlmataBio, Inc. ("Almata"). Pursuant to the Merger Agreement on March 27, 2024, Merger Sub merged with and into Almata, with Almata continuing as the surviving entity, and immediately thereafter Almata merged with and into Second Merger Sub (collectively, the "Merger"), with Second Merger Sub as the surviving entity and a wholly owned subsidiary of the Company (the "Subsidiary"). Current officers of the Company will serve as officers of the Subsidiary. No person affiliated with Almata serves as an officer or employee of the Company or the Subsidiary following completion of the Merger. As consideration for the Merger, the Company issued to the Almata stockholders an aggregate of 171,605 shares of the Company's common stock, $0.001 par value per share (the "Common Stock") and an aggregate of 2,412 shares of Series C Preferred Stock (as defined and described in Item 5.03 below), valued at approximately $15 million in the aggregate. The shares of Common Stock and Series C Preferred Stock issued pursuant to the Merger Agreement were issued in a transaction exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), in reliance on Section 4(a)(2) thereof. Such shares may not be offered or sold in the United States absent registration or exemption from registration under the Securities Act and any applicable state securities laws. Pursuant to the Merger Agreement, the Company has agreed to an aggregate milestone payment of $7.5 million in cash due upon the closing of the Private Placement (as defined below), a second aggregate milestone payment of $5.0 million due upon

01 Completion of Acquisition or Disposition of Assets

Item 2.01 Completion of Acquisition or Disposition of Assets. On March 27, 2024, the Company completed its acquisition of Almata. The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.

01 Material Modifications to Rights of Security Holders

Item 3.01 Material Modifications to Rights of Security Holders. To the extent required by Item 3.01 of Form 8-K, the information set forth in Item 5.03 is incorporated herein by reference.

02 Unregistered Sales of Equity Securities

Item 3.02 Unregistered Sales of Equity Securities. The information contained in Item 1.01 under the headers "Agreement and Plan of Merger and Reorganization" and "Securities Purchase Agreement" is incorporated herein by reference. Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. As reported in Item 1.01 above, on March 27, 2024, Jonathan Goldman was appointed to the Board. Jonathan Goldman will serve as a director until the 2024 Annual Meeting of Stockholders or until his successor is duly elected and qualified. In addition, in connection with the transactions described herein, the Company increased the size of the Board to nine members and appointed each of Aaron Kantoff and Samantha Truex, effective as of the closing of the Private Placement, estimated to be on March 28, 2024, with Mr. Kantoff being designated by the holder of Series D Preferred Stock. Except as set forth in the preceding sentence, there no arrangements or understandings between any of Jonathan Goldman, Aaron Kantoff or Samantha Truex and any other person pursuant to which they were selected as a director of the Company, and there is no family relationship between any of Jonathan Goldman, Aaron Kantoff or Samantha Truex and any of the Company's other directors or executive officers. Each of Jonathan Goldman, Aaron Kantoff and Samantha Truex will be eligible for Board compensation pursuant to the Company's Non-Employee Director Compensation Plan. In connection with the appointment of Jonathan Goldman, Aaron Kantoff and Samantha Truex as directors, each of them will enter into the Company's standard form of indemnification agreement, a copy of which is filed as Exhibit 10.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 2022. There are no related party transactions between any of Jonathan Goldman, Aaron Kantoff or Samantha Truex and the Company, and the

03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. On March 27, 2024, in connection with the Merger and the Private Placement, the Company filed Certificates of Designation to its Amended and Restated Certificate of Incorporation, as amended (the "Certificates of Designation"), with the Secretary of State of the State of Delaware for the purpose of designating the Series C non-voting convertible preferred stock, $0.001 par value per share ( "Series C Preferred Stock"), Series D non-voting preferred stock, $0.001 par 3 value per share ("Series D Preferred Stock"), and Series E non-voting preferred stock, $0.001 par value per share ("Series E Preferred Stock"). Each share of Series C Preferred Stock is initially convertible into 1,000 shares of Common Stock, subject to adjustment as described below. The Series C Preferred Stock will convert automatically on the second trading day after the receipt of the Required Stockholder Approval in accordance with Nasdaq rules, subject to Beneficial Ownership Limitation described below. No fractional shares will be issued upon conversion; rather any fractional share will be rounded up to the next whole share. In all cases, conversion of the Series C Preferred Stock will be subject to the Beneficial Ownership Limitation. The "Beneficial Ownership Limitation" prevents the conversion of any portion of a holder's Series C Preferred Stock if such conversion would cause the holder , together with its affiliates, to beneficially own more than 9.99% (or 4.99% in the case of certain Purchasers) of the outstanding shares of Common Stock after giving effect to the conversion. Except as required by the Delaware General Corporation Law and the Certificates of Designation, the Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock have no voting rights. The Series C Preferred Stock is entitled to receive dividends (on an as-if-converted-to-Common-Stock basis) equal to and in

01 Other Information

Item 8.01 Other Information. 4 On March 27, 2024, the Company issued a press release to report the closing of the Merger, and the entry into the Securities Purchase Agreement, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference. On March 27, 2024, the Company posted on its website an updated investor presentation (the "Investor Presentation"). The Investor Presentation will be used from time to time in meetings with investors. A copy of the Investor Presentation is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

01 Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits. (a) Financial statements of business acquired. The financial statements required by this Item, with respect to the Merger described in Item 2.01 herein, are expected to be filed as soon as practicable, and in any event not later than 71 days after the date on which this Current Report on Form 8-K is required to be filed related to Item 2.01. (b) Pro forma financial information. The pro forma financial information required by this Item, with respect to the Merger described in Item 2.01 herein, are expected to be filed as soon as practicable, and in any event not later than 71 days after the date on which this Current Report on Form 8-K is required to be filed related to Item 2.01.

Forward Looking Statements

Forward Looking Statements. Any statements in this Current Report about the future expectations, plans and prospects of the Company, including without limitation, statements regarding: the Merger, stockholder approval of the conversion of the Series C Preferred Stock and exercise of the Warrant, the filing of a resale registration statement pursuant to the Registration Rights Agreement, if any, and the timing thereof, the closing and timing of the Private Placement and other statements containing the words "anticipate," "believe," "continue," "could," "estimate," "expect," "hypothesize," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "would," and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to those set forth under the caption "Risk Factors" in the Company's most recent Annual Report on Form 10-K filed with the SEC, as supplemented by its subsequent Quarterly Reports on Form 10-Q and in other filings that makes with the SEC. In addition, any forward-looking statements included in this Current Report represent the Company's views only as of the date hereof and should not be relied upon as representing its views as of any subsequent date. The Company specifically disclaims any intention to update any forward-looking statements included in this Current Report. No Offer or Solicitation; Important Information About the Merger and Where to Find It. This Current Report on Form 8-K is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Merger and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of the Company, nor shall there be any sale of any such securities in any state o

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