Avalyn Pharma — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported a net loss of $29.7 million for the third quarter of 2026, an increase from $23.6 million in the same period of 2025.
• Research and development (R&D) expenses totaled $25.5 million for the quarter, up from $22.1 million in the third quarter of 2025.
• General and administrative (G&A) expenses were $7.6 million for the quarter, compared to $3.2 million in the third quarter of 2025.
• Cash, cash equivalents, and marketable securities stood at $386.6 million as of September 30, 2026, up from $138.4 million as of December 31, 2025.
• Total operating expenses for the nine months ended September 30, 2026, were $92.3 million, compared to $65.8 million for the same period in 2025.
• Net loss for the nine months ended September 30, 2026, was $85.5 million, compared to $61.3 million in the prior year period.
• Interest income for the quarter was $3.8 million, compared to $1.8 million in the third quarter of 2025.

Guidance and Future Outlook:

• Cash runway is projected to extend into 2029 based on current cash, cash equivalents, and marketable securities.
• Topline data from the MIST Phase 2b trial of AP01 is anticipated in the second half of 2027.
• Topline data from the AURA Phase 2 trial of AP02 is anticipated in late 2027.
• Results from the Phase 1 healthy volunteer study of AP03 are anticipated in the second half of 2027.
• Management expects a transformational 2027 with data anticipated across all three programs.

Business Segments and Product Lines:

• AP01 (inhaled pirfenidone): Presented data modeling drug distribution in healthy and idiopathic pulmonary fibrosis (IPF) lungs at the European Respiratory Society (ERS) International Congress 2026; the global Phase 2b MIST trial in patients with progressive pulmonary fibrosis (PPF) is ongoing.
• AP02 (inhaled nintedanib): Published Phase 1 data in Respiratory Research demonstrating favorable safety, tolerability, and lung lining fluid exposures compared to oral nintedanib; the global Phase 2 AURA trial in IPF patients is ongoing with planned enrollment of 160 patients.
• AP03 (inhaled combination of pirfenidone and nintedanib): Initiated a Phase 1 randomized, double-blinded, placebo-controlled study in healthy volunteers to assess safety, tolerability, and pharmacokinetics; the study is cleared to proceed in Australia and is expected to enroll at least 32 participants.
• Board Appointment: Robert J. Meyer, MD, a former senior U.S. FDA leader and pulmonary physician, was appointed to the Board of Directors in September.

Market and Competitive Landscape:

• The company is pioneering inhaled therapies to transform the treatment paradigm for serious, rare respiratory diseases, specifically pulmonary fibrosis.
• AP02 data suggests the potential to achieve substantially higher lung exposure and markedly lower systemic exposure compared to oral nintedanib.
• The company aims to establish a new standard of care by delivering effective, well-tolerated treatments as monotherapies and in combination.

Risks and Challenges:

• Clinical trial risks include potential delays in enrollment, site activation, or assessment of results, as well as the possibility of unexpected safety or efficacy data.
• Risks include the potential for earlier results not to be indicative of future results and the need for additional financing.
• Market and economic volatility, as well as risks related to protecting intellectual property, are noted as potential challenges.

Management Commentary and Tone:

• CEO Lyn Baranowski expressed pride in the progress made across the portfolio and confidence in the potential of inhaled therapies to transform the standard of care.
• Management described the balance sheet as strong and the team as dedicated, positioning the company to deliver on key milestones in 2027.
• The tone emphasized the advancement of monotherapy programs through later stages and the strategic expansion via the first-in-human study of the combination program AP03.

Other Key Points:

• The company ended the third quarter of 2026 with $386.6 million in cash, cash equivalents, and marketable securities.
• AP01 distribution modeling demonstrated robust delivery to sites of fibrotic remodeling even in advanced fibrosis cases.
• AP02 was generally well-tolerated across Phase 1 studies with no serious adverse events reported.
• The Phase 1 study of AP03 will evaluate single ascending doses (SAD) and multiple ascending doses (MAD), starting with a combination dose of 50 mg pirfenidone plus 2 mg nintedanib.
• Total assets increased to $399.3 million as of September 30, 2026, from $148.9 million as of December 31, 2025.
• Total liabilities were $29.0 million as of September 30, 2026, compared to $15.3 million as of December 31, 2025.