Quarterly report [Sections 13 or 15(d)]

Net Loss Per Share

Net Loss Per Share

3 Months Ended

Mar. 31, 2025

The Company had two classes of stock outstanding during the three months ended March 31, 2025 and March 31, 2024, common stock and preferred stock. The Company computes net loss per share using the two-class method, as the Series C Preferred Stock participates in distributions with the Company’s common stock. The two-class method of computing net loss per share is an earnings allocation formula that determines net loss for common stock and any participating securities according to dividends declared and participation rights in undistributed earnings. As the Company is in a net loss position for the three months ended March 31, 2025 and 2024, the two-class method of calculating net loss per share results in no allocation of undistributed losses to participating securities.

Basic net loss per share for common stock is computed by dividing the sum of distributed and undistributed earnings by the weighted average number of shares outstanding for the period.

Diluted net loss per share includes the potential dilutive effect of common stock equivalents as if such securities were converted or exercised during the period, when the effect is dilutive. Common stock equivalents include: (i) outstanding stock options and restricted stock units, which are included under the “treasury stock method” when dilutive; (ii) common stock to be issued upon the exercise of outstanding warrants, which are included under the “treasury stock method” when dilutive, and (iii) preferred stock under the if-converted method. While the impact of these items are generally anti-dilutive during periods of net loss, the Company will determine whether the common stock equivalents should be included in diluted loss per share pursuant to sequencing rules.

The following tables set forth the computation of basic and diluted net loss per share of common stock for the three months ended March 31, 2025 and March 31, 2024 (in thousands, except share and per share amounts):


	Three Months Ended March 31, 2025
	Common stock


Net loss	$	(13,149)


Weighted average shares	10,514,901
Basic and diluted net loss per share	$	(1.25)


	Three Months Ended March 31, 2024
	Common stock

Net loss	$	(121,290)
Weighted average shares	859,381
Basic and diluted net loss per share	$	(141.14)

The following outstanding securities have been excluded from the computation of diluted weighted shares outstanding for the three months ended March 31, 2025 and 2024, as they could have been anti-dilutive:


	Three Months Ended
	March 31,
	20252	2024
Stock options	3,831,749	7,543
Warrants on common stock	148	11,969,063
Series C Preferred Stock (as-convertible to common stock)1	24,695,920	22,357,897
Restricted Stock Units	421,397	—

1 Each share of the Company’s Series C Preferred Stock is convertible to 1,000 shares of common stock, subject to certain beneficial ownership limitations.

2 Pursuant to the AlmataBio Transaction, the Company is required to pay potential development milestone payments to the former AlmataBio stockholders in cash or Avalo stock at the election of the former AlmataBio stockholders; refer to Notes 3 and 9 for more information. In the event of a settlement in shares, the number of Avalo shares delivered will vary based on the Company’s stock price. These additional shares are not included in the computation of basic and diluted net loss per share for the three months ended March 31, 2025 and 2024 pursuant to the guidance on contingently issuable shares.