BVF PARTNERS L P/IL - 13 Dec 2024 Form 4 Insider Report for PALVELLA THERAPEUTICS, INC. (PVLA)

Footnote F1

This Form 4 is filed jointly by Biotechnology Value Fund, L.P. ("BVF"), Biotechnology Value Fund II, L.P. ("BVF2"), Biotechnology Value Trading Fund OS LP ("Trading Fund OS"), BVF Partners OS Ltd. ("Partners OS"), BVF I GP LLC ("BVF GP"), BVF II GP LLC ("BVF2 GP"), BVF GP Holdings LLC ("BVF GPH"), BVF Partners L.P. ("Partners"), BVF Inc. and Mark N. Lampert (collectively, the "Reporting Persons"). Each of the Reporting Persons is a member of a group for purposes of Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act") that previously collectively beneficially owned over 10% of the Issuer's outstanding shares of Common Stock (the "Common Stock"). Each of the Reporting Persons disclaims beneficial ownership of the securities reported herein except to the extent of his or its pecuniary interest therein.

Footnote F2

On December 13, 2024, Palvella Therapeutics, Inc., formerly known as Pieris Pharmaceuticals, Inc. (the "Issuer"), completed a reverse merger transaction (the "Merger") with Palvella Therapeutics, Inc. ("Former Palvella") pursuant to that certain Agreement and Plan of Merger, dated as of July 23, 2024 (the "Merger Agreement"). In connection with the Merger, the Reporting Persons acquired an aggregate of 438,929 shares of Common Stock in exchange for all of the Former Palvella capital stock owned of record by the Reporting Persons.

Footnote F3

Securities owned directly by BVF. As the general partner of BVF, BVF GP may be deemed to beneficially own the securities owned directly by BVF. As the sole member of BVF GP, BVF GPH may be deemed to beneficially own the securities owned directly by BVF. As the investment manager of BVF, Partners may be deemed to beneficially own the securities owned directly by BVF. As the investment adviser and general partner of Partners, BVF Inc. may be deemed to beneficially own the securities owned directly by BVF. As a director and officer of BVF Inc., Mr. Lampert may be deemed to beneficially own the securities owned directly by BVF.

Footnote F4

Securities owned directly by BVF2. As the general partner of BVF2, BVF2 GP may be deemed to beneficially own the securities owned directly by BVF2. As the sole member of BVF2 GP, BVF GPH may be deemed to beneficially own the securities owned directly by BVF2. As the investment manager of BVF2, Partners may be deemed to beneficially own the securities owned directly by BVF2. As the investment adviser and general partner of Partners, BVF Inc. may be deemed to beneficially own the securities owned directly by BVF2. As a director and officer of BVF Inc., Mr. Lampert may be deemed to beneficially own the securities owned directly by BVF2.

Footnote F5

Securities owned directly by Trading Fund OS. As the general partner of Trading Fund OS, Partners OS may be deemed to beneficially own the securities owned directly by Trading Fund OS. As the investment manager of Trading Fund OS and the sole member of Partners OS, Partners may be deemed to beneficially own the securities owned directly by Trading Fund OS. As the investment adviser and general partner of Partners, BVF Inc. may be deemed to beneficially own the securities owned directly by Trading Fund OS. As a director and officer of BVF Inc., Mr. Lampert may be deemed to beneficially own the securities owned directly by Trading Fund OS.

Footnote F6

The Reporting Persons hold an aggregate of 85 shares of Series A Convertible Preferred Stock (the "Series A Preferred Stock"), which are convertible into an aggregate of 1,133 shares of Common Stock. Each share of Series A Preferred Stock is convertible at any time, at the holder's option, into 13.34 shares of Common Stock, except that the Series A Preferred Stock may not be converted if, after such conversion, the holder thereof (together with such holder's affiliates, and any other person whose beneficial ownership of Common Stock would be aggregated with the holder's ownership for purposes of Section 13(d) of the Exchange Act and the applicable regulations of the SEC, including any "group" of which the holder is a member) would beneficially own a number of shares of Common Stock in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of the Common Stock. The Series A Preferred Stock has no expiration date.

Footnote F7

The Reporting Persons hold an aggregate of 4,026 shares of Series B Convertible Preferred Stock (the "Series B Preferred Stock"), which are convertible into an aggregate of 53,706 shares of Common Stock. Each share of Series B Preferred Stock is convertible at any time, at the holder's option, into 13.34 shares of Common Stock, except that the Series B Preferred Stock may not be converted if, after such conversion, the holder thereof (together with such holder's affiliates, and any other person whose beneficial ownership of Common Stock would be aggregated with the holder's ownership for purposes of Section 13(d) of the Exchange Act and the applicable regulations of the SEC, including any "group" of which the holder is a member) would beneficially own shares of Common Stock in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of the Common Stock. The Series B Preferred Stock has no expiration date.

Footnote F8

The Reporting Persons hold an aggregate of 3,506 shares of Series C Convertible Preferred Stock (the "Series C Preferred Stock"), which are convertible into an aggregate of 46,770 shares of Common Stock. Each share of Series C Preferred Stock is convertible at any time, at the holder's option, into 13.34 shares of Common Stock, except that the Series C Preferred Stock may not be converted if, after such conversion, the holder thereof (together with such holder's affiliates, and any other person whose beneficial ownership of Common Stock would be aggregated with the holder's ownership for purposes of Section 13(d) of the Exchange Act and the applicable regulations of the SEC, including any "group" of which the holder is a member) would beneficially own shares of Common Stock in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of the Common Stock. The Series C Preferred Stock has no expiration date.

Footnote F9

The Reporting Persons hold an aggregate of 3,000 shares of Series D Convertible Preferred Stock (the "Series D Preferred Stock"), which are convertible into an aggregate of 40,020 shares of Common Stock. Each share of Series D Preferred Stock is convertible at any time, at the holder's option, into 13.34 shares of Common Stock, except that the Series D Preferred Stock may not be converted if, after such conversion, the holder thereof (together with such holder's affiliates, and any other person whose beneficial ownership of Common Stock would be aggregated with the holder's ownership for purposes of Section 13(d) of the Exchange Act and the applicable regulations of the SEC, including any "group" of which the holder is a member) would beneficially own shares of Common Stock in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of the Common Stock. The Series D Preferred Stock has no expiration date.

Footnote F10

The Reporting Persons hold an aggregate of 4,698 shares of Series E Convertible Preferred Stock (the "Series E Preferred Stock"), which are convertible into an aggregate of 62,671 shares of Common Stock. Each share of Series E Preferred Stock is convertible at any time, at the holder's option, into 13.34 shares of Common Stock, except that the Series E Preferred Stock may not be converted if, after such conversion, the holder thereof (together with such holder's affiliates, and any other person whose beneficial ownership of Common Stock would be aggregated with the holder's ownership for purposes of Section 13(d) of the Exchange Act and the applicable regulations of the SEC, including any "group" of which the holder is a member) would beneficially own shares of Common Stock in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of the Common Stock. The Series E Preferred Stock has no expiration date.

Footnote F11

Reflects an eighty-for-one reverse stock split of the Issuer's issued and outstanding Common Stock, effective as of April 18, 2024.