Why did AVTX's Q3 earnings fall short of forecasts?

Avalo Therapeutics Inc. (AVTX) experienced a significant shortfall in its Q3 earnings, missing the consensus estimate by a substantial margin. The company reported an adjusted loss of $14.07 per share for the quarter, which was considerably higher than the same quarter last year's loss of $141.60 per share. This indicates a concerning trend of escalating losses within the company. Furthermore, the reported revenue for the quarter was zero, which is a critical factor in the company's earnings calculation. Analysts had expected zero revenue, which means that the actual figures aligned with expectations; however, the company's net income calculation is influenced by various factors, including research and development costs, operational expenses, and any potential income from partnerships or milestones. The company's shares had fallen by 14.4% this quarter, reflecting investor disappointment and market skepticism about AVTX's financial prospects. The mean earnings estimate of analysts had fallen by approximately 3,426.3% in the last three months, indicating a widespread downgrade in expectations among analysts covering the company. In summary, AVTX's Q3 earnings fell short of forecasts due to a combination of factors including increased losses, zero revenue recognition and negative return on equity and net margin.