On September 22, 2023, Avalo Therapeutics, Inc. and the institutional investor parties to the Venture Loan and Security Agreement issued on June 4, 2021 entered into a Payoff Letter, pursuant to which the Company repaid all outstanding principal inclusive of the final payment fee and interest on the Note in the aggregate amount of $14,251,320. As a result of the payment, all obligations of the parties under the Note and Note Amendment are deemed satisfied. Additionally, the security interest in the Company?s assets under the Note and the Note Amendment was extinguished and the Cash Deposit requirement was negated.

As previously disclosed, as of July 20, 2023, the Holders asserted that a default and event of default had occurred due to a material adverse change in the Company?s business. Also as previously disclosed, in connection with the Existing Default, the Company entered into three forbearance agreements with the Holders, pursuant to which the Holders agreed to forbear from enforcing their full remedies related to the Existing Default until October 15, 2023. As part of the Forbearance Agreements, the Company agreed to maintain cash on deposit in deposit accounts subject to an Account Control Agreement (as defined in the Note) in favor of the Collateral Agent (as defined in the first Forbearance Agreement) in an amount not less than the sum of $3,000,000, and the Company agreed to amend the Note to grant to the Holders a security interest in the Company?s owned patents and trademarks.