Document

DEF 14A 1 def14a-2022.htm DEF 14A Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant þ

Filed by a Party other than the Registrant ¨

Check the appropriate box:

¨ Preliminary Proxy Statement

¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ Definitive Proxy Statement

¨ Definitive Additional Materials

¨ Soliciting Material Pursuant to § 240.14a-12

AVALO THERAPEUTICS, INC.

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box)

þ No fee required.

¨ Fee paid previously with preliminary materials.

¨ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

540 Gaither Road, Suite 400
Rockville, Maryland 20850

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On June 14, 2022

Dear Stockholder of Avalo Therapeutics, Inc.:

You are cordially invited to attend the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) of Avalo Therapeutics, Inc., a Delaware corporation (the “Company”), which will be held on Tuesday, June 14, 2022, at 9:30 a.m. Eastern Time. The Annual Meeting will be a virtual stockholder meeting via live audio webcast, with no physical in-person meeting. You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/AVTX2022. You will also be able to vote your shares electronically at the Annual Meeting.

At the Annual Meeting, stockholders will vote:

1.To elect the seven directors nominated by our board of directors (the “Board”) and named herein to hold office for a one-year term until the 2023 Annual Meeting of Stockholders;

2.To approve an amendment to our Certificate of Incorporation to effect a reverse stock split of the Company’s common stock at a ratio of between 1-for-5 and 1-for-20 as determined by our Board;

3.To approve, on a nonbinding advisory basis, a “Say-on-Pay” resolution regarding the compensation of our named executive officers;

4.To approve, on a nonbinding advisory basis, the frequency of future advisory votes on “Say-on-Pay” resolutions regarding the Company’s executive compensation;

5.To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022; and

6.To conduct any other business properly brought before the Annual Meeting.

This Notice and the Proxy Statement will serve as your guide to the business to be conducted at the Annual Meeting and provide detail on the virtual meeting format.

The record date for the Annual Meeting is April 20, 2022. Only stockholders of record at the close of business on that date are entitled to receive notice of and vote at the Annual Meeting or any adjournment or postponement thereof.

Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope that you will vote as soon as possible. Please review the instructions on each of your voting options described in the Important Notice Regarding Availability of Proxy Materials. Additional instructions on how to vote can be found on pages 1 through 6 of the Proxy Statement.

Important Notice Regarding the Availability of Proxy Materials for the Annual Stockholders’ Meeting to Be Held on June 14, 2022 at 9:30 a.m. Eastern Time.

The 2022 Notice of Annual Meeting of Stockholders, Proxy Statement and 2021 Annual Report to Stockholders are available at www.proxyvote.com.


By Order of the Board of Directors,
/s/ Garry Neil, M.D.
Garry Neil, M.D.
Chief Executive Officer

Rockville, Maryland

April 25, 2022

You are cordially invited to attend the virtual Annual Meeting. Whether or not you expect to attend the Annual Meeting, please complete, date, sign and return the proxy mailed to you, or vote by Internet as instructed in these materials, as promptly as possible in order to ensure your representation at the Annual Meeting. A return envelope (which is postage prepaid if mailed in the United States) has been provided for your convenience. Even if you have voted by proxy, you may still vote over the Internet during the Annual Meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy issued in your name from that record holder. You may revoke your proxy in the manner described in the Proxy Statement at any time before it has been voted at the Annual Meeting.

TABLE OF CONTENTS


QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING			1
INFORMATION REGARDING THE BOARD AND CORPORATE GOVERNANCE			7
Independence of The Board of Directors			7
Board Leadership Structure			7
Role of the Board in Risk Oversight			8
Meetings of The Board of Directors			8
Information Regarding Committees of the Board of Directors			8
Audit Committee			9
Compensation Committee			10
Nominating and Corporate Governance Committee			11
Other Board Committees			11
Stockholder Communications with The Board Of Directors			11
Code of Ethics			11
Corporate Governance Guidelines			12
Board Diversity			12
PROPOSAL 1: ELECTION OF DIRECTORS			14
DIRECTOR COMPENSATION			18
PROPOSAL 2: APPROVAL OF REVERSE STOCK SPLIT			21
PROPOSAL 3: ADVISORY (NONBINDING) VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION			27
PROPOSAL 4: ADVISORY (NONBINDING) VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION			28
PROPOSAL 5: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			29
Principal Accountant Fees and Services			30
Pre-Approval Policies and Procedures			30
EQUITY COMPENSATION PLAN INFORMATION			31
EXECUTIVE COMPENSATION			32
Executive Officers			32
Summary Compensation Table			33
Employment Agreements and Potential Payments Upon Certain Events			35
Outstanding Equity Awards at Fiscal Year End			40
TRANSACTIONS WITH RELATED PERSONS			41
Related-Person Transactions Policy and Procedures			41
Certain Related-Person Transactions			42
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			45
HOUSEHOLDING OF PROXY MATERIALS			48
OTHER MATTERS			48
APPENDIX A			49


BOARD DIVERSITY MATRIX (as of April 20, 2022)
Total Number of Directors	7
	Female	Male	Non-Binary	Did Not Disclose Gender
Part I: Gender Identity
Directors	2	3	—	2
Part II: Demographic Background
African American or Black	—	—	—	—
Alaskan Native or Native American	—	—	—	—
Asian	—	—	—	—
Hispanic or Latinx	—	—	—	—
Native Hawaiian or Pacific Islander	—	—	—	—
White	2	3	—	—
Two or More Races or Ethnicities	—	—	—	—
LGBTQ+	—	—	—	—
Did Not Disclose Demographic Background	2


Name	Fees Earned or Paid in Cash(1) ($)	Option Awards(2) ($)	Other Compensation ($)	Total ($)	Option Awards Held at December 31, 2021 (#)
Current Non-Employee Directors:
Steven Boyd(3)	$—	$—	$—	$—	—
June Almenoff, M.D., Ph.D.(4)	$7,440	$130,650	$—	$138,090	80,737
Mitchell Chan(5)	$4,945	$106,359	$—	$111,304	80,000
Gilla Kaplan, Ph.D.	$—	$153,984	$—	$153,984	133,527
Keith Maher, M.D.(6)	$—	$—	$—	$—	—
Joseph Miller(7)	$—	$138,421	$—	$138,421	386,894
Magnus Persson, M.D., Ph.D.	$34,780	$133,201	$—	$167,981	283,325
Former Non-Employee Directors:
Sol Barer, Ph.D.(8)	$35,521	$98,421	$—	$133,942	1,577,500
Suzanne Bruhn, Ph.D.(9)	$29,093	$120,921	$8,407	$158,421	121,884
Phil Gutry(10)	$41,996	$118,821	$5,604	$166,421	225,599


	Prior to Reverse Stock Split	After 1-for-20 Reverse Stock Split	After 1-for-5 Reverse Stock Split
Common stock outstanding(1)	112,794,203	5,639,711	22,558,841
Common stock issuable pursuant to outstanding equity awards	17,188,415	859,517	3,437,770
Common stock issuable pursuant to outstanding warrants	5,774,267	288,720	1,154,861


	Fiscal Year Ended December 31,
	2021		2020
Audit fees(1)	$	775,000	$	655,500
Audit-related fees(2)	18,000		18,000
Tax fees(3)	74,609		46,909
All other fees(4)	1,995		1,995
Total	$	869,604	$	722,404

(1) Audit fees consisted of audit work performed in the audit of our financial statements, as well as work that generally only the independent registered public accounting firm can reasonably be expected to provide, such as accounting consultations billed as audit services, and consents and assistance with and review of documents filed with the SEC.
(2) Audit-related fees consist of consulting and advisory fees related to potential acquisitions and strategic transactions and audit fees related to acquired entities.
(3) Tax services principally include tax compliance, tax advice and tax planning.
(4) All other fees consisted of all other products and services provided by the independent registered public accounting firm that are not reflected in any of the previous categories, such as the use of online accounting research tools.


	(A)		(B)		(C)
Plan category	Number of Securities to be Issued Upon Exercise of Outstanding Options and Vesting of Restricted Stock Units (#)		Weighted-Average Exercise Price of Outstanding Options ($)		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans, excluding securities reflected in column (A) (#)
Equity compensation plans approved by stockholders	10,787,228		$3.58	(1)	1,570,867	(2)
Equity compensation plans not approved by stockholders	2,875,000	(3)	$3.95		—
Total	13,662,228		$3.66	(1)	1,570,867


Name and Principal Position	Year	Salary	Non-Equity Incentive Plan Compensation(4)	Option Awards(5)	Total
Michael Cola(1) Former Chief Executive Officer and former principal executive officer	2021	$35,568	$325,500	$2,332,743	$2,693,811
	2020	$79,228	$378,000	$3,363,078	$3,820,306

Schond Greenway(2) Former Chief Financial Officer and former principal financial officer	2021	$293,269	$141,708	$1,241,608	$1,676,585
	2020	$—	$—	$—	$—

H. Jeffrey Wilkins, M.D.(3) Former Chief Medical Officer	2021	$425,000	$165,580	$659,405	$1,249,985
	2020	$335,534	$178,000	$974,244	$1,487,778


Name						2021 Base Salary
Michael Cola(1)						$500,000
Schond Greenway(2)						$350,000
H. Jeffrey Wilkins, M.D.(3)						$425,000


Name	Grant Date	Award Type	Unexercised Options Exercisable (#)	Unexercised Options Unexercisable (#)		Option Exercise Price ($)	Option Expiration Date
Michael Cola	2/3/2020	Stock Option(1)	550,000	650,000	(1)	$3.98	2/3/2030
	6/18/2020	Stock Option(2)	84,322	—	(2)	$2.51	6/18/2030
	7/1/2020	Stock Option(2)	64,683	—	(2)	$2.56	7/1/2030
	10/1/2020	Stock Option(2)	76,674	—	(2)	$2.24	10/1/2030
	1/4/2021	Stock Option(2)	64,798	—	(2)	$2.64	1/4/2031
	1/26/2021	Stock Option(1)	—	850,000	(1)	$3.32	1/26/2031
	4/1/2021	Stock Option(2)	70,881	—	(2)	$3.05	4/1/2031
	7/1/2021	Stock Option(2)	51,740	—	(2)	$3.39	7/1/2031
	10/1/2021	Stock Option(2)	78,116	—	(2)	$2.25	10/1/2031

Schond Greenway	3/1/2021	Stock Option(3)	—	500,000	(3)	$3.73	3/1/2031

H. Jeffrey Wilkins M.D.	2/4/2020	Stock Option(4)	171,875	203,125	(4)	$4.09	2/4/2030
	1/26/2020	Stock Option(4)	—	300,000	(4)	$3.32	1/26/2031


	Beneficial Ownership (1)
Beneficial Owner	Number of Shares	Percent of Total
5% Stockholders:
Armistice Capital Master Fund Ltd. (2)	51,576,000	44.2%
Nantahala Capital Management, LLC (3)	8,513,917	7.5%
Point72 Asset Management, L.P. (4)	6,012,676	5.3%

Directors, Director Nominees, and Named Executive Officers:
Steven Boyd (2)	51,988,442	44.5%
June Almenoff, M.D., Ph.D. (5)	3,722	*
Mitchell Chan	—	*
Gilla Kaplan, Ph.D. (6)	130,552	*
Garry Neil, M.D. (7)	638,973	*
Keith Maher, M.D.	—	*
Joseph Miller (8)	420,320	*
Magnus Persson, M.D., Ph.D. (9)	301,793	*
Michael Cola (10)	2,716,960	2.4%
Schond Greenway (11)	243,446	*
H. Jeffrey Wilkins, M.D. (12)	352,483	*

All current executive officers and directors as a group	53,657,806	45.4%

*Less than one percent.


			AVALO THERAPEUTICS, INC.

By:
Name:
Title:

SEC Form DEF 14A filed by Avalo Therapeutics Inc.