Avalyn Pharma Inc. Common Stock Morgan Stanley 24th Annual Global Healthcare Conference

Sure, happy to. Hi, everybody, I am Lyn Baranowski, and thanks to those of you that I know. I am looking forward to getting to know those of you that I do not. I am the CEO. Our company was founded in 2017 with a Series A. I joined in 2022 as the CEO. We are focused entirely in pulmonary fibrosis. This is one of the rare deadly diseases that affects an unbelievably high number of patients in the U.S. There is massive unmet need. We might get into some of that today. We are capitalized to deliver some clinical stage catalysts. We have three different assets, either in the clinic or moving into the clinic, with data readouts from each of the three programs in the second half of next year.

Did an IPO a few months ago with Morgan Stanley's help, and just really delighted to be well-capitalized and hopefully geared up to make a big difference for these patients that we are trying to serve.

Oh, for sure. It's a great question. Thank you. Let me start maybe on the patient side and the clinical side, and then actually maybe I'll ask Doug to comment on the commercial opportunity here, which really sits in parallel with that. From an unmet needs perspective, we're talking about, as I said, a rare deadly disease. Life expectancy with pulmonary fibrosis is about 3-5 years, so it's actually worse than most forms of cancer. I'm going to say that again. Pulmonary fibrosis survival is worse than most forms of cancer. We do have the three drugs approved on the market today, but I think what is really unbelievably shocking to understand is how few patients with this deadly disease are benefiting from any of the oral drugs.

If you took a snapshot of the U.S. market on any given day, it's roughly about one-third of patients that are taking any of the oral drugs. Another third of patients have tried and failed an oral, and another third of patients haven't even bothered trying, because these drugs that exist, they only slow the rate of lung function decline that patients have, and unfortunately, as oral agents, they layer on top of that already very difficult disease profile and the symptoms of the disease. They layer on top really difficult symptoms. We're talking about GI side effects from the drugs that cause massive levels of discontinuation. Oral pirfenidone causes nausea and vomiting. Nintedanib is an oral drug, causes really unrelenting diarrhea.

Over the course of a year, most patients that take an oral cycle off those oral drugs really pretty quickly, within a few months usually. At the end of the year, you'll look at sales data, and it's the case that Ofev, which is the largest drug in this market, is effectively reaching less than 10% of patients in the U.S. because of how difficult it is for patients to tolerate. It leaves most patients with this incredibly sad disease really unable to take anything for it, and we think we can do something about that, but we'll come to that. Maybe on the commercial side, Doug can maybe walk you through the market opportunity here.

Yeah. The current market is defined in terms of the dollarized value of branded products is north of $4 billion, with Ofev being the leader. That is, as Lynn mentioned, less than a 10% market share. Jascayd is the newer entrant. That is BI's next generation product that was approved about a year ago. That priced at the range of around $200,000 per annual course of therapy. To give you a sense, the brands of Ofev and Esbriet were around $150,000. Looking at the total addressable market, it is north of $42 billion, and that assumes every patient is on the lowest brand price of $150,000.

I think with the Jascayd launch, and we look at that, and just as a real quick example, the profile of Jascayd is similar efficacy as the two orals, being oral pirfenidone and nintedanib, with slightly better tolerability, still with diarrhea and other AEs. That product, according to the IMS prescription data, is annualizing at about over $2 billion in gross sales. I think it really just speaks to the opportunity, in particular on tolerability. If you can improve that, you can really unlock a lot of potential in this field.

Yeah. It is magical from my perspective, because this is an opportunity for us to do a lot of good for a lot of patients, make a huge difference in their disease, and there is a massive amount of commercial value to be unlocked.

Sure, yeah. A fun question to address. When we think about inhalers, I always start my thought process with thinking about the patients that we are trying to treat. There are lots of different kinds of inhalers out there. For these patients, these patients are old, they are sick, they are frail. If I had one with me, they would have very limited breathing capacity, and they have a ton of issues with cough as part of the symptoms of their disease. Those patients are going to have a hard time with certain types of inhalers. That is one variable. We have to really think carefully about what patients can actually inhale. Part two is we want to think about the drugs. Certain drugs require certain volume inhalers. Pirfenidone requires a larger volume of an inhaler to be able to dose the drug adequately.

Then finally, when we work on putting a drug in an inhaler, you really want to think carefully about the particle size that you generate, because you really need to be able to reach the correct part of the lung and the right tissues. That has to do with the particle size, it has to do with the flow rate. There is a lot of particle engineering that goes into thinking about how to formulate the drug in the right way, in the right device, for the right patient. You really put all those three factors together, and with those three factors in mind, we chose to develop these two lead programs that we have in this handheld nebulizer that you are talking about. It is a handheld nebulizer that we have licensed from a company in Germany called PARI.