Avalyn Pharma Inc.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Recent Sales of Unregistered Equity Securities

Set forth below is information regarding securities we have issued within the past three years that were not registered under the Securities Act.

Series C Preferred Stock Financing

In September 2023 and January 2024, we issued and sold to certain investors an aggregate of 239,016,017 shares of Series C-1 convertible preferred stock at a price per share of $0.7323, for an aggregate purchase price of approximately $175.0 million, and issued an aggregate of 24,207,788 shares of Series C-2 convertible preferred stock upon conversion of outstanding convertible notes.

Series D Preferred Stock Financing

In April 2025, the Company entered into the Series D Preferred Stock Purchase Agreement with multiple investors, pursuant to which it agreed to issue up to 126,346,412 shares of Series D Preferred Stock at a price of $0.7963 per share, for aggregate gross proceeds of $100.4 million.

Grants and Exercises of Stock Options

Since January 2023 we have granted certain employees, consultants, and directors options to purchase an aggregate of 4,040,357 shares of our common stock under our 2022 Equity Incentive Plan, or the 2022 Plan, at exercise prices ranging from $4.62 to $11.74 per share.

Since January 2023, 12,063 stock options have been exercised under our 2012 Plan at a weighted average purchase price of $4.19 per share.

Since January 2023, 11,064 stock options have been exercised under our 2022 Plan at a weighted average purchase price of $4.71 per share.

Since inception of the 2026 Equity Incentive Plan, or the 2026 Plan, on April 28, 2026, we have granted certain employees, consultants, and directors options to purchase an aggregate of 2,387,705 shares of our common stock under our 2026 Plan at exercise price per share equal to $18.00 per share. During this period, no stock options have been exercised.

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. Unless otherwise specified above, we believe these transactions were exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act (and Regulation D or Regulation S promulgated thereunder) or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or under benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed on the share certificates issued in these transactions. All recipients had adequate access, through their relationships with us, to information about us. The sales of these securities were made without any general solicitation or advertising.

(b) Use of Proceeds from our Initial Public Offering

On April 29, 2026, the SEC declared effective our registration statement on Form S-1 (File No. 333-294932), as amended, or the Registration Statement, filed in connection with our IPO. Pursuant to the Registration Statement, we registered the offer and sale of 16,666,667 shares of our common stock with a maximum aggregate offering price of approximately $300.0 million. Morgan Stanley, Jefferies, Evercore ISI, and Guggenheim Securities acted as representatives of the underwriters for the IPO.

We received net proceeds of approximately $316.1 million from the sale of 19,166,667 shares of common stock at a price of $18.00 per share, which included 2,500,000 shares of common stock sold pursuant to the underwriters' exercise of their option to purchase additional shares. None of the expenses associated with the IPO were paid to directors, officers, persons owning 10% or more of any class of equity securities, or to our affiliates.

There has been no material change in the expected use of the net proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b) of the Securities Act on April 30, 2026.

(c) Issuer Repurchases of Securities

None.