De-Risked LOTUS Phase 2 Design and Monthly Dosing Support Reiterated Buy on Avalo Therapeutics

Avalo Therapeutics, the Healthcare sector company, was revisited by a Wall Street analyst today. Analyst Mitchell Kapoor from H.C. Wainwright reiterated a Buy rating on the stock and has a $25.00 price target.

Mitchell Kapoor has given his Buy rating due to a combination of factors that, in his view, create a favorable risk-reward profile for Avalo Therapeutics. He highlights that the upcoming Phase 2 LOTUS readout in hidradenitis suppurativa (HS), expected in 2Q26, is de-risked by an over-enrolled intent-to-treat population and a plan to disclose comprehensive Week 16 data, including key secondary endpoints, which should minimize uncertainty for investors. The trial has been deliberately structured to limit placebo inflation—particularly by capping background antibiotic use and enforcing appropriate biologic washout periods—thereby improving the clarity and credibility of any efficacy signal that emerges. Kapoor also notes that the dosing strategy could provide an early signal of drug activity by Week 4, which, if observed, would support the underlying pharmacology and could accelerate investor confidence after the data release.
Furthermore, Kapoor underscores the strategic importance of a once-monthly dosing regimen, arguing that if efficacy on monthly dosing is competitive, it could drive better long-term treatment adherence and commercial differentiation. He also points to the potential for directional efficacy signals in IL-17-experienced patients, which, even without formal statistical power, could shape how the drug is positioned in treatment sequencing for a high-need subgroup. In framing expectations, he emphasizes placebo-adjusted treatment effects rather than absolute response rates and aligns assumptions with prior IL-1β benchmarks, while pushing back on concerns raised by AbbVie’s mixed dose-response as more consistent with a plateau than problematic biology. Taken together, these trial design elements, readout strategy, and competitive positioning support his reiterated Buy rating and 12-month price target of $25.

In another report released on January 2, BTIG also maintained a Buy rating on the stock with a $40.00 price target.