Key Highlights

● Avalo traded around $7.77 in the early afternoon on October 22.

● AbbVie's lutikizumab showed only a modest benefit in hidradenitis suppurativa.

● Cantor said investors fear abdakibart could show a similar drop in efficacy.

● A Wedbush analyst said Avalo's high-affinity antibody is more robust.

Avalo Therapeutics (NASDAQ:AVTX) plunged on Thursday, October 22, 2026, landing among the worst performers on the Russell 2000 after a rival trial from AbbVie (NYSE:ABBV) sparked fears about Avalo's lead program.

According to market data, the shares traded around $7.77 in the early afternoon, while another source put the stock at about $7.43. Reports differed on the size of the move, but both showed a steep drop for a company valued at roughly $663 million.

The read-through from AbbVie

AbbVie's experimental drug lutikizumab showed a modest benefit over placebo in hidradenitis suppurativa, a painful chronic skin disease, and the benefit was smaller than analysts at Cantor had expected.

That mattered for Avalo because its own drug, abdakibart, is an antibody that targets IL-1 beta, an inflammatory signaling protein, and is being developed for the same condition. Lutikizumab also works through the IL-1 pathway, so investors treated AbbVie's results as a preview of what the approach might deliver.

According to Cantor, investors fear abdakibart could show a similar drop in efficacy. In other words, if one drug hitting this pathway produced only modest results, the market questioned whether another would do much better.

Not everyone sees it the same way

A Wedbush analyst offered a more nuanced view. He said AbbVie's modest efficacy raises questions about the IL-1 beta approach, but in his view Avalo's high-affinity antibody is more robust. That distinction, if borne out in Avalo's own trials, could separate the two programs.

Still, on Thursday the market sold first. Small biotech companies built around a single lead program are especially sensitive to competitor data, because a setback for a similar drug can quickly reset expectations for an entire class of treatments.

Winners and losers from the same data

The AbbVie results cut both ways. MoonLake Immunotherapeutics (NASDAQ:MLTX), which is developing sonelokimab for hidradenitis suppurativa through a different biological pathway, soared on the same news as investors bet that weaker competition could benefit its drug. The AbbVie data was seen as underwhelming.

The divergence highlighted how investors are sorting biotech companies by mechanism rather than by disease alone.

A strong day for health care overall

Avalo's slump went against the grain of the wider health care sector, which closed at a record high on Thursday as investors rotated out of AI and chip stocks. The selloff in tech followed the heavy spending plans from Meta Platforms (NASDAQ:META) and Lam Research (NASDAQ:LRCX)'s supply-constrained outlook.

The Nasdaq Composite fell 694 points to 26,008.86, its steepest drop since June 5, and the S&P 500 lost 93.74 points to 7,663.43, its worst day since July. The Russell 2000 edged up 3.01 points to 2,784.03, and about two of every three S&P 500 stocks rose, according to market reports. A strong Treasury rally pushed the 10-year yield back below a closely watched threshold for the first time since September 22.

Avalo Faces Pressure to Differentiate Abdakibart

Investors will look for a response from Avalo on how abdakibart differs from lutikizumab and for any update on the timing of its own clinical data in hidradenitis suppurativa. Further analyst notes in the coming days will show whether the market's read-through from AbbVie's trial holds up, or whether views like the Wedbush analyst's gain traction. The full details of AbbVie's results will also be scrutinized for clues about the IL-1 pathway, and thinly traded small-cap biotech stocks can remain volatile while that debate plays out.