Avalyn Pharma Inc.
For the period ended Jun 30, 2026. Filed Aug 12, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 12, 2026
AVLN$29.15+9.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-06-03.
0001193125-26-254623
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-12.
0001193125-26-345820
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 112 previous paragraphs and 125 current paragraphs.
86 unchanged; 21 reworded; 9 added; 5 removed; 0 previous and 9 current paragraphs rearranged.
Tables are not compared: 4 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Our lead product candidate, AP01 (inhaled pirfenidone), is an optimized inhaled formulation of pirfenidone currently being evaluated in MIST, a global Phase 2b clinical trial in patients with PPF. AP01 has indicated encouraging tolerability and clinical activity in the ATLAS Phase 1b trial in patients with IPF and ongoing, multi-year SAIL open-label extension study in IPF and PPF patients, with long-term data supporting the potential to preserve lung function while improving tolerability relative to historical oral pirfenidone data. MIST is a randomized, double-blind, placebo-controlled trial evaluating two doses of AP01 in patients with PPF. This 52-week trial is designed to assess safety and efficacy of AP01, with a primary endpoint of change in lung function measured by forced vital capacity, or FVC. The study overenrolled, with a total of 398 patients randomized 2:1:2 into three treatment cohorts. Topline clinical data are anticipated in the second half of 2027.
Current report
Our second product candidate, AP02 (inhaled nintedanib), is an optimized inhaled formulation of nintedanib. We have completed a Phase 1 single-ascending dose, or SAD, trial in healthy volunteers and patients with IPF and a Phase 1 SAD and multiple-ascending dose, or MAD, trial in healthy volunteers. AP02 is currently being evaluated in AURA, a global Phase 2 clinical trial in patients with IPF. AURA is a randomized, double-blind study evaluating two doses of AP02 dosed twice daily in patients with IPF. The 12-week study, which is designed to enroll 160 patients, will assess safety and efficacy as measured by FVC. Topline data are anticipated in late 2027.
Current report
We are also advancing AP03, an inhaled fixed-dose combination of pirfenidone and nintedanib, designed to deliver multiple antifibrotic mechanisms through a single lung-targeted platform. A Phase 1 study of AP03 remains on track to initiate by the end of 2026.
Current report
Comparison of the Six Months Ended June 30, 2026 and 2025
Current report
Research and development expenses increased by $14.4 million to $47.6 million for the six months ended June 30, 2026, from $33.2 million for the six months ended June 30, 2025. The increase in research and development expenses was primarily attributable to:
Current report
$0.2 million increase of direct costs associated with our AP03 program, driven by scale-up activities; and
Current report
General and administrative expenses increased by $4.3 million to $11.6 million for the six months ended June 30, 2026, from $7.3 million for the six months ended June 30, 2025. The increase in general and administrative expenses was primarily attributable to:
Current report
Other income increased by $0.8 million and $0.6 million for the three and six months ended June 30, 2026, respectively, to $2.4 million from $1.6 million and $3.4 million from $2.8 million, respectively. The increase was primarily driven by income earned on the proceeds from the IPO, partially offset by the impact of lower federal funds rates.
Current report
Net cash provided by financing activities was $89.8 million for the six months ended June 30, 2025, consisting entirely of net proceeds from the issuance of Series D convertible preferred stock of $89.9 million.
Removed paragraphs (5)
Previous report
Research and Development Expenses
Previous report
General and Administrative Expenses
Previous report
Research and Development Expenses
Previous report
General and Administrative Expenses
Previous report
Other income decreased by $0.2 million for the three months ended March 31, 2026, to $1.0 million from $1.2 million, primarily driven by decreases in interest income from marketable securities related to a lower federal funds rate.
Reworded paragraphs (21)
Previous wording
Since our inception in 2011, we have incurred significant operating losses and have not generated any revenue. On May 1, 2026, we completed our IPO, pursuant to which we issued and sold 19,166,667 shares of common stock, which included 2,500,000 shares of common stock sold pursuant to the underwriters' exercise of their option to purchase additional shares. The aggregate net proceeds received by us from the IPO were approximately $316.1 million, after deducting underwriter discounts and commissions, as well as other estimated offering costs of $4.8 million. To date, we have funded our operations primarily with aggregate gross proceeds of $733.8 million from the sale and issuance of our common stock, preferred stock, and convertible notes, as well as the proceeds from our IPO and Term Loan (as hereinafter defined).
Current wording
Since our inception in 2011, we have incurred significant operating losses and have not generated any revenue. On May 1, 2026, we completed our IPO, pursuant to which we issued and sold 19,166,667 shares of common stock, which included 2,500,000 shares of common stock sold pursuant to the underwriters' exercise of their option to purchase additional shares. The aggregate net proceeds received by us from the IPO were approximately $316.6 million, after deducting underwriter discounts and commissions, as well as offering costs of $4.2 million. To date, we have funded our operations primarily with aggregate gross proceeds of $733.8 million from the sale and issuance of our common stock, preferred stock, and convertible notes, as well as the proceeds from our IPO and Term Loan (as hereinafter defined).
Previous wording
Due to our significant research, development, and manufacturing expenditures related to the clinical trials, we have accumulated substantial losses and negative cash flows since our inception, including net losses of $26.9 million and $17.5 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, we had an accumulated deficit of $292.2 million.
Current wording
Due to our significant research, development, and manufacturing expenditures related to the clinical trials, we have accumulated substantial losses and negative cash flows since our inception, including net losses of $28.9 million and $20.2 million for the three months ended June 30, 2026 and 2025, respectively, and net losses of $55.8 million and $37.7 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, we had an accumulated deficit of $321.2 million.
Previous wording
As of March 31, 2026, we had cash, cash equivalents, and marketable securities of $123.1 million. We believe, based on our current operating plans, that our cash, cash equivalents and investments in marketable securities, including the net proceeds from our IPO, will enable us to fund our operating expenses and capital expenditures into 2029. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See the sections titled “—Liquidity and Capital Resources” and “Risk Factors—Risks Related to Our Financial Condition and Need for Additional Capital” included elsewhere in this Quarterly Report.
Current wording
As of June 30, 2026, we had cash, cash equivalents, and marketable securities of $413.5 million. We believe, based on our current operating plans, that our cash, cash equivalents and investments in marketable securities will enable us to fund our operating expenses and capital expenditures into 2029. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See the sections titled “—Liquidity and Capital Resources” and “Risk Factors—Risks Related to Our Financial Condition and Need for Additional Capital” included elsewhere in this Quarterly Report.
Previous wording
As consideration for the PARI License Agreement, we paid a non-refundable up-front initial payment of 400 thousand EUR ($0.4 million). To date, we have met one developmental milestone, for which the payment of 500 thousand EUR ($0.6 million) was expensed to research and development when the milestone was met. There were no regulatory milestones achieved during the year ended December 31, 2025, nor the three months ended March 31, 2026 .
Current wording
As consideration for the PARI License Agreement, we paid a non-refundable up-front initial payment of 400 thousand EUR ($0.4 million). To date, we have met one developmental milestone, for which the payment of 500 thousand EUR ($0.6 million) was expensed to research and development when the milestone was met. There were no regulatory milestones achieved during the year ended December 31, 2025, nor the six months ended June 30, 2026.
Previous wording
Research and development expenses increased by $7.6 million to $22.9 million for the three months ended March 31, 2026, from $15.3 million for the three months ended March 31, 2025. The increase in research and development expenses was primarily attributed to:
Current wording
Research and development expenses increased by $6.8 million to $24.7 million for the three months ended June 30, 2026, from $17.9 million for the three months ended June 30, 2025. The increase in research and development expenses was primarily attributable to:
Previous wording
$2.2 million increase of direct costs associated with our AP01 program costs driven by the progression of the Phase 2b clinical trial and ongoing OLE trial;
Current wording
$1.1 million increase of direct costs associated with our AP01 program costs driven by the progression of the Phase 2b clinical trial and ongoing OLE trial;
Previous wording
$4.0 million increase of direct costs associated with our AP02 program costs driven by the progression of the Phase 2 clinical trial;
Current wording
$3.6 million increase of direct costs associated with our AP02 program costs driven by the progression of the Phase 2 clinical trial;
Previous wording
$0.1 million decrease of direct costs associated with our AP03 program, primarily due to the timing of expenses related to IND-enabling activities and scale-up activities.
Current wording
$0.3 million increase of direct costs associated with our AP03 program, primarily due to the timing of expenses related to IND-enabling activities and scale-up activities; and
Previous wording
an increase in unallocated research and development expenses, primarily attributable to a $1.5 million increase in personnel-related expenses as a result of an increase in headcount, facility and depreciation expense, and other research and development related costs, driven by an increase in general research and development costs related to conference and scientific communication activities, as well as patient advocacy initiatives; and was partially offset by
Current wording
an increase in unallocated research and development expenses, primarily attributable to a $1.8 million increase in personnel-related expenses as a result of an increase in headcount.
Previous wording
General and administrative expenses increased by $1.6 million to $5.0 million for the three months ended March 31, 2026, from $3.4 million for the three months ended March 31, 2025. The increase in general and administrative expenses was primarily attributable to:
Current wording
General and administrative expenses increased by $2.7 million to $6.6 million for the three months ended June 30, 2026, from $3.9 million for the three months ended June 30, 2025. The increase in general and administrative expenses was primarily attributable to:
Previous wording
$1.2 million increase in personnel-related expenses, including stock-based compensation, driven by the increase of G&A headcount to support expanded research and development activities and overall corporate operations;
Current wording
$1.4 million increase in personnel-related expenses, including stock-based compensation, driven by the increase of G&A headcount to support expanded research and development activities and overall corporate operations;
Previous wording
$0.2 million increase in professional services and fees primarily driven by external legal and general G&A consulting costs; and
Current wording
$0.8 million increase in professional services and fees primarily driven by external legal and general G&A consulting costs to support public company operations; and
Previous wording
$0.2 million increase in facility expenses primarily associated with our office sublease entered in September 2025.
Current wording
$0.5 million increase in facility expenses primarily associated with our office sublease entered in September 2025.
Previous wording
To date, we have funded our operations primarily from the sale of proceeds of preferred stock, convertible notes, and common stock as a result of our IPO, as well as through proceeds received from our Term Loan. As of March 31, 2026, we had $123.1 million in cash, cash equivalents, and marketable securities. In February 2026, we entered into a loan and security agreement with Banc of California, or the Lender, for the issuance of a term loan facility with an aggregate principal amount of up to $30.0 million. The interest rate on amounts borrowed will be equal to the greater of the prime rate then in effect, or 5.00%. The maturity date for the loan is June 30, 2030. To date, $15.0 million has been borrowed under the Term Loan Facility. In connection with the LSA, we issued warrants to the Lender to purchase 22,500 shares of our common stock. On May 1, 2026, we completed our IPO, pursuant to which we issued and sold 19,166,667 shares of common stock, resulting in net proceeds of approximately $316.1 million. To date, we have received aggregate gross proceeds of $733.8 million from the sale of our preferred stock, convertible notes, and common stock.
Current wording
To date, we have funded our operations primarily from the sale of proceeds of preferred stock, convertible notes, and common stock as a result of our IPO, as well as through proceeds received from our Term Loan. As of June 30, 2026, we had $413.5 million in cash, cash equivalents, and marketable securities. In February 2026, we entered into a loan and security agreement with Banc of California, or the Lender, for the issuance of a term loan facility with an aggregate principal amount of up to $30.0 million. The interest rate on amounts borrowed will be equal to the greater of the prime rate then in effect, or 5.00%. The maturity date for the loan is June 30, 2030. To date, $15.0 million has been borrowed under the Term Loan Facility. In connection with the LSA, we issued warrants to the Lender to purchase 22,500 shares of our common stock. On May 1, 2026, we completed our IPO, pursuant to which we issued and sold 19,166,667 shares of common stock, resulting in net proceeds of approximately $316.6 million. To date, we have received aggregate gross proceeds of $733.8 million from the sale of our preferred stock, convertible notes, and common stock.
Previous wording
For the three months ended March 31, 2026, net cash used in operating activities was $29.8 million, which was primarily due to our net loss of $26.9 million, changes in our operating assets and liabilities of $4.1 million, and $1.1 million of non-cash charges related to stock-based compensation, depreciation, non-cash operating lease expense, and accretion of premiums on marketable securities.
Current wording
For the six months ended June 30, 2026, net cash used in operating activities was $56.0 million, which was primarily due to our net loss of $55.8 million, changes in our operating assets and liabilities of $4.1 million, and $4.0 million of non-cash charges related to stock-based compensation, depreciation, non-cash operating lease expense, and accretion of premiums on marketable securities.
Previous wording
For the three months ended March 31, 2025. net cash used in operating activities was $19.3 million, which was primarily due to our net loss of $17.5 million, changes in our operating assets and liabilities of $1.8 million, and $5 thousand of non-cash charges related to stock-based compensation, depreciation, non-cash operating lease expense, and accretion of premiums on marketable securities.
Current wording
For the six months ended June 30, 2025, net cash used in operating activities was $40.0 million, which was primarily due to our net loss of $37.7 million, changes in our operating assets and liabilities of $2.9 million, and $0.0 million of non-cash charges related to stock-based compensation, depreciation, non-cash operating lease expense, and accretion of premiums on marketable securities.
Previous wording
Net cash provided by investing activities was $55.0 million for the three months ended March 31, 2026, which was primarily driven by sales and maturities of marketable securities of $55.3 million, partially offset by purchases of property and equipment of $0.3 million.
Current wording
Net cash used in investing activities was $63.7 million for the six months ended June 30, 2026, which was primarily driven by purchases of marketable securities and property and equipment of $134.8 million and $0.6 million, respectively, offset by sales and maturities of marketable securities of $71.7 million.
Previous wording
Net cash provided by investing activities was $24.1 million for the three months ended March 31, 2025, which was primarily driven by net purchases and maturities of marketable securities of $24.1 million, partially offset by purchases of property and equipment of $8 thousand.
Current wording
Net cash used in investing activities was $12.6 million for the six months ended June 30, 2025, driven by net purchases and maturities of marketable securities of $12.6 million.
Previous wording
Net cash provided by financing activities was $14.8 million for the three months ended March 31, 2026, which was related to the drawdown of the term loan facility, net of debt issuance costs.
Current wording
Net cash provided by financing activities was $331.5 million for the six months ended June 30, 2026, which was related to net proceeds of $316.6 million from the sale of common stock in the IPO and the drawdown of the term loan facility, net of debt issuance costs.
Previous wording
In February 2026, the we entered into a debt facility with Banc of California. $15.0 million has been borrowed under the facility and the additional $15.0 million is available for draw down through December 31, 2027. For more information on the Company's Term Loan facility, refer to Note 14, Term Loan, in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Current wording
In February 2026, we entered into a debt facility with Banc of California. $15.0 million has been borrowed under the facility and the additional $15.0 million is available for drawdown through December 31, 2027. For more information on the Company's Term Loan facility, refer to Note 13, Term Loan, in our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Previous wording
In September 2025, we relocated our headquarters and executed a non-cancelable operating sublease in Boston, Massachusetts, or the Boston Sublease. Total fixed payments in connection with the Boston Sublease will be $1.9 million over the term of the agreement ending in 2029. This includes our share of facility operating expenses, real-estate taxes, but excludes our share of property management fees that are reimbursable to the landlord under the lease.
Current wording
In September 2025, we relocated our headquarters and executed a non-cancelable operating sublease in Boston, Massachusetts, or the Boston Sublease. Total fixed payments in connection with the Boston Sublease are $1.9 million over the term of the agreement ending in January 2029. In June 2026, we amended the Boston Sublease to expand the subleased premises, resulting in additional fixed payment obligations of $0.9 million over the remaining term of the agreement. This includes our share of facility operating expenses, real-estate taxes, but excludes our share of property management fees that are reimbursable to the landlord under the lease.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
The following table summarizes our results of operations (in thousands):
Current report — wording carried from elsewhere
The following table summarizes our research and development expenses (in thousands):
Current report — wording carried from elsewhere
$3.3 million increase of direct costs associated with our AP01 program costs driven by the progression of the Phase 2b clinical trial and ongoing OLE trial;
Current report — wording carried from elsewhere
$7.6 million increase of direct costs associated with our AP02 program costs driven by the progression of the Phase 2 clinical trial;
Current report — wording carried from elsewhere
an increase in unallocated research and development expenses, primarily attributable to a $3.2 million increase in personnel-related expenses as a result of an increase in headcount.
Current report — wording carried from elsewhere
The following table summarizes our general and administrative expenses (in thousands):
Current report — wording carried from elsewhere
$2.5 million increase in personnel-related expenses, including stock-based compensation, driven by the increase of G&A headcount to support expanded research and development activities and overall corporate operations;
Current report — wording carried from elsewhere
$1.1 million increase in professional services and fees primarily driven by general G&A consulting costs to support public company operations; and
Current report — wording carried from elsewhere
$0.7 million increase in facility expenses associated with our office sublease entered in September 2025.