Piper Sandler bullish on Avalo Therapeutics, initiates with an Overweight

As previously reported, Piper Sandler initiated coverage of Avalo Therapeutics (AVTX) with an Overweight rating and $48 price target. The firm believes it is currently undervalued with a market cap of about $70M and has AVTX-009, a differentiated anti-IL-1beta mAb in hand with key upcoming Phase 2 LOTUS readout in 2026. Accordingly, Piper has a high probability of success for AVTX-009 development in hidradenitis suppurativa with clear IL-1beta mechanistic rationale and a large market opportunity. Moreover, Avalo is trading at a significant discount vs MoonLake Immunotherapeutics (MLTX), which has a market cap of $2.7B and is a key contender in the HS landscape. With this, AVTX-009 is already de-risked in HS, and thus the firm has strong conviction for its success in Phase 2 LOTUS with differentiated Q2W/Q4W dosing.