Q2 2025 Palvella Therapeutics Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the Palvella second quarter 2025 financial results and corporate update conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one-one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one-one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Bohan Way, Vice President of Corporate Development. Please go ahead.

Speaker #2: Good day, and thank you for standing by. Welcome to the Palvella second quarter 2025 financial results and corporate update conference call. At this time, all participants are in a listen-only mode.

Speaker #2: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press *11 on your telephone.

Speaker #2: You will then hear an automated message advising that your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded.

Speaker #2: I would now like to hand the conference over to your speaker today, Bohan Wei, Vice President of Corporate Development. Please go ahead.

Operator: Thank you, Operator. Good morning, and thank you for joining the Palvella Therapeutics Q2 2025 financial results and corporate update call. As a reminder, our press release detailing today's announcements can be found in the investor section of our website at www.palvellatx.com. On today's call, we are joined by Wesley H. Kaupinen, our Chief Executive Officer, Jeff Martini, our Chief Scientific Officer, and Matthew E. Korenberg, our Chief Financial Officer. Before we begin, please note that today's remarks may include forward-looking statements regarding our development programs, regulatory strategy, commercial planning, and financial outlook. These statements are based on current assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings for a full discussion of these risk factors. I will now turn the call over to Wes.

Speaker #3: Thank you, Operator. Good morning, and thank you for joining the Palvella Therapeutics Q2 2025 financial results and corporate update call. As a reminder, our press release detailing today's announcements can be found in the investor section of our website at www.palvellatx.com.

Speaker #3: On today's call, we are joined by Wes Koppinen, our Chief Executive Officer; Jeff Martini, our Chief Scientific Officer; and Matt Korenberg, our Chief Financial Officer.

Speaker #3: Before we begin, please note that today's remarks may include forward-looking statements regarding our development programs regulatory strategy, commercial planning, and financial outlook. These statements are based on current assumptions and are subject to risks and uncertainties that could cause actual results to differ materially.

Speaker #3: Please refer to our SEC filings for a full discussion of these risk factors. And now, I'll turn the call over to Wes.

Wesley H. Kaupinen: Thank you, Bohan. Good morning, everyone, and thank you all for joining today's call. Palvella is now nine months into our journey as a publicly traded company, and I want to state at the outset of this call that the Palvella management team and I are as energized as we've ever been about executing on our vision of building an enduring rare disease biopharmaceutical company that is the leader in developing and commercializing therapies for serious genetic skin diseases with no FDA-approved therapies. Our substantial progress in Q2 of this year on our late-stage rare disease pipeline and our QTORIN™ platform pipeline development positions us for what I believe will be a transformative period over the next several months. Between now and the end of Q1 2026, we have four anticipated high-impact milestones, each of which we're making significant progress against. Number one, microcystic lymphatic malformations.

Speaker #4: Thank you, Bohan. Good morning, everyone, and thank you all for joining today's call. Palvella is now nine months into our journey as a publicly traded company, and I want to state at the outset of this call that the Palvella management team and I are as energized as we've ever been about executing on our vision of building an enduring, rare disease biopharmaceutical company that is the leader in developing and commercializing therapies for serious genetic skin diseases with no FDA-approved therapies.

Speaker #4: Our substantial progress in the second quarter of this year on our late-stage rare disease pipeline and our QTORN platform pipeline development positions us for what I believe will be a transformative period over the next several months.

Speaker #4: Between now and the end of Q1 2026, we have four anticipated high-impact milestones each of which we're making significant progress against. Number one, microcystic lymphatic malformations, microcystic lymphatic malformations are a serious rare chronically debilitating and lifelong monogenic disease.

Wesley H. Kaupinen: Microcystic lymphatic malformations are a serious, rare, chronically debilitating, and lifelong monogenic disease. There are, unfortunately, no FDA-approved therapies for these patients. The genetics, disease biology, pathogenic tissue of interest, and natural history of microcystic lymphatic malformations have all been well characterized, making the disease an ideal disease target for Palvella to pursue. The PI3K genetic mutation biologically results in the hyperactivation of the mammalian-targeted rapamycin or mTOR pathway, which ultimately produces malformed vessels that protrude through the skin, as pictured here. We'll provide an update today on our Phase 3 SELVA clinical trial of QTORIN™ rapamycin, Palvella's breakthrough innovation designed to selectively inhibit the causative mTOR pathway in the pathogenic skin tissue in microcystic LMs. This program has received FDA's breakthrough therapy, fast track, and orphan drug designations for the treatment of microcystic LMs.

Speaker #4: There are, unfortunately, no FDA-approved therapies for these patients. However, genetics, disease biology, pathogenic tissue of interest, and the natural history of microcystic lymphatic malformations have all been well characterized, making the disease an ideal target for Palvella to pursue.

Speaker #4: The PI3K genetic mutation biologically results in the hyperactivation of the mammalian target of rapamycin, or mTOR, pathway, which ultimately produces malformed vessels that protrude through the skin, as pictured here.

Speaker #4: We'll provide an update today on our phase three silva study of QTORN rapamycin, Palvella's breakthrough innovation designed to selectively inhibit the causative mTOR pathway in the pathogenic skin tissue in microcystic LMs.

Speaker #4: This program has received the FDA's Breakthrough Therapy, Fast Track, and Orphan Drug designations for the treatment of microcystic LMs. In Q2, we announced that we exceeded our original target of 40 by enrolling 51 subjects, and we now remain on track to announce top-line results in Q1 of 2026.

Wesley H. Kaupinen: In Q2, we announced that we exceeded our original target of 40 by enrolling 51 subjects, and we now remain on track to announce top-line results in Q1 of 2026. Moving to number two, cutaneous venous malformations. The disease pathology of cutaneous venous malformations is similarly driven by the mTOR pathway, typically caused from mutations in either TY2 or KYK3CA, which leads to the disfiguring presentation of malformed veins in the skin, veins which can bleed, thrombose, ulcerate, and, due to the disease's proliferative nature, become increasingly problematic over the disease course. There are, unfortunately, no FDA-approved therapies for these patients. Our Phase 2 proof of concept study of QTORIN™ rapamycin, called TOIVA, continues enrollment at leading vascular anomaly centers across the U.S., and we anticipate top-line results in Q4 of this year.

Speaker #4: Moving to number two, cutaneous venous malformations. The disease pathology of cutaneous venous malformations is similarly driven by the mTOR pathway, typically caused from mutations in either TY2 or PIK3CA, which leads to the disfiguring presentation of malformed veins in the skin.

Speaker #4: Veins which can bleed thrombose, ulcerate, and due to the disease's proliferative nature, become increasingly problematic over the disease course. There are, unfortunately, no FDA-approved therapies for these patients.

Speaker #4: Our phase two proof of concept study of QTORN rapamycin, called Toiva, continues enrollment at leading vascular anomaly centers across the US, and we anticipate top-line results in Q4 of this year.

Wesley H. Kaupinen: Importantly, if approved, we believe, based on market research, that QTORIN™ rapamycin has the potential to be first-line therapy and standard of care for patients with both microcystic lymphatic malformations and cutaneous venous malformations. Moving to number three, our objective to expand QTORIN™ rapamycin into a third rare disease clinical indication. The scientific evidence continues to clearly point to QTORIN™ rapamycin's potential to be a pipeline in a product with clinical and commercial potential that extends beyond its potential in microcystic lymphatic malformations and cutaneous venous malformations and to additional vascular anomalies, genodermatoses, nonvascular neoplasms, and other clinical indications. In the second quarter, we made substantial progress on this objective, thanks in large part to thoughtful input from our medical and scientific advisors, many of whom we've had relationships with for nearly a decade.

Speaker #4: Importantly, if approved, we believe based on market research that QTORN rapamycin has the potential to be first-line therapy and standard of care for patients with both microcystic lymphatic malformations and cutaneous venous malformations.

Speaker #4: Moving to number three, our objective is to expand QTORN rapamycin into a third rare disease clinical indication. The scientific evidence continues to clearly point to QTORN rapamycin's potential to be a pipeline and a product, with clinical and commercial potential that extends beyond its potential in microcystic lymphatic malformations and cutaneous venous malformations, and to additional vascular anomalies, genodermatoses, non-vascular neoplasms, and other clinical indications.

Speaker #4: In the second quarter, we made substantial progress on this objective. Thanks in large part to thoughtful input from our medical and scientific advisors, many of whom we've had relationships with for nearly a decade.

Wesley H. Kaupinen: We remain on track to announce the third clinical indication before the end of this calendar year. Notably, an indication expansion strategy on our established lead product, QTORIN™ rapamycin, could enable entry into a new rare disease clinical indication and an attractive new orphan commercial market, and do so at a lower cost and a shorter time period when compared to the more traditional approach of starting a de novo pipeline program from concept. As a management team, we continue to proactively identify avenues for recognizing time-to-market and cost-to-market efficiencies, which could result in FDA-approved therapies for rare disease patients sooner and for shareholders a reduced capital-intensity business model when compared to strategies employed by other biotech companies. Moving to number four, our next QTORIN™ platform program.

Speaker #4: We remain on track to announce the third clinical indication before the end of this calendar year. Notably, an indication expansion strategy on our established lead product, QTORN rapamycin, could enable entry into a new rare disease clinical indication and an attractive new orphan commercial market.

Speaker #4: And do so at a lower cost, and a shorter time period when compared to the more traditional approach of starting a de novo pipeline program from concept.

Speaker #4: As a management team, we continue to proactively identify avenues for recognizing time-to-market and cost-to-market efficiencies, which could result in FDA-approved therapies for rare disease patients sooner, and for shareholders, a reduced capital intensity business model when compared to strategies employed by other biotech companies.

Speaker #4: Moving to number four, our next QTORN platform program. Our QTORN platform originated from many years of our internal R&D efforts, and we believe QTORN represents an exciting internal product development engine, which can reproducibly generate novel patented topical product candidates.

Wesley H. Kaupinen: Our QTORIN™ platform originated from many years of our internal R&D efforts, and we believe QTORIN™ represents an exciting internal product development engine which can reproducibly generate novel, patented, topical product candidates. The second product candidate from the QTORIN™ platform will be for a serious rare skin disease with no FDA-approved therapies. In the second quarter of this year, we achieved important key preclinical development milestones, and announcement of this program is planned for the second half of 2025. Similar to our indication expansion strategy on QTORIN™ rapamycin, we believe that by leveraging our established in-house QTORIN™ platform, this could enable entry into a new rare disease clinical indication and an attractive new orphan commercial market at a lower cost and a shorter time period when compared to the aforementioned traditional approach of starting a de novo preclinical pipeline program from concept.

Speaker #4: The second product candidate from the QTORN platform will be for a serious rare skin disease with no FDA-approved therapies. In the second quarter of this year, we achieved important key preclinical development milestones, and the announcement of this program is planned for the second half of 2025.

Speaker #4: Similar to our indication expansion strategy on QTORN rapamycin, we believe that by leveraging our established in-house QTORN platform, this could enable entry into a new rare disease clinical indication and an attractive new orphan commercial market at a lower cost and a shorter time period when compared to the aforementioned traditional approach of starting a de novo preclinical pipeline program from concept.

Wesley H. Kaupinen: Taken together, these four near-term high-impact milestones establish a steady cadence of clinical and pipeline milestones between now and the end of Q1 2026, setting the stage for a transformative period for Palvella. Momentum remains strong for QTORIN™ rapamycin for microcystic lymphatic malformations with key milestones achieved in the second quarter of this year. We successfully completed enrollment in the Phase 3 SELVA trial in June with 51 subjects, exceeding our original goal of 40 subjects by more than 25%. This milestone was made possible thanks to the dedicated efforts of our Phase 3 investigators and their research coordinators, our patient advocacy collaborators, the Palvella clinical operations team led by my colleagues, Kathy Goen and Emily Cook, and most importantly, the patients living with microcystic lymphatic malformations.

Speaker #4: Taken together, these four near-term high-impact milestones establish a steady cadence of clinical and pipeline milestones between now and the end of Q1 2026, setting the stage for a transformative period for Palvella.

Speaker #4: Momentum remains strong for QTORN rapamycin for microcystic lymphatic malformations with key milestones achieved in the second quarter of this year. We successfully completed enrollment in the phase three silva trial in June with 51 subjects.

Speaker #4: Exceeding our original goal of 40 subjects by more than 25%. This milestone was made possible thanks to the dedicated efforts of our phase three investigators and their research coordinators, our patient advocacy collaborators, the Palvella Clinical Operations Team, led by my colleague, Kathy Goen, and Emily Cook, and most importantly, the patients living with microcystic lymphatic malformations.

Wesley H. Kaupinen: With enrollment complete, the focus of our clinical operations team is to ensure participant compliance while maintaining the highest data quality standards ahead of the anticipated first quarter 2026 top-line readout. In parallel, we advance multiple value-building initiatives for the QTORIN™ rapamycin for microcystic LMs program in the second quarter. On the regulatory front, we received the first proceeds from our FDA orphan products grant to support the Phase 3 SELVA trial.

Speaker #4: With enrollment complete, the focus of our clinical operations team is to ensure participant compliance while maintaining the highest data quality standards ahead of the anticipated first-quarter 2026 top-line readout.

Speaker #4: In parallel, we advance multiple value-building initiatives for the QTORN rapamycin for microcystic LMs program in the second quarter. On the regulatory front, we received the first proceeds from our FDA orphan products grant to support the phase three silva trial.

Wesley H. Kaupinen: As background, Palvella's Phase 3 baseline controlled single-arm study underwent a rigorous grant review process at FDA, and we were pleased to be one of seven awardees in last year's grant cycle, which, over the life of the grant, could contribute up to $2.6 million in non-dilutive FDA funding. We have also started accelerating NDA activities in anticipation of the Phase 3 data in Q1 2026 and our strong desire to expedite our program to NDA submission and potential FDA approval, assuming a positive Phase 3 study. Importantly, from a regulatory oversight perspective, the Division of Dermatology and Dentistry continues to be led by Dr. Jill Lindstrom, a dermatologist and the Division Director.

Speaker #4: As background, Palvella's phase three baseline controlled single-arm study underwent a rigorous grant review process at FDA and we were pleased to be one of seven awardees in last year's grant cycle.

Speaker #4: Which, over their lifetime, contributes up to $2.6 million in non-dilutive FDA funding. We have also started accelerating NDA activities in anticipation of the Phase 3 data in Q1 2026, and our strong desire to expedite our program to NDA submission and potential FDA approval, assuming a positive Phase 3 study.

Speaker #4: Importantly, from a regulatory oversight perspective, the Division of Dermatology and Dentistry continues to be led by Dr. Jill Lindstrom, a dermatologist in the division director.

Wesley H. Kaupinen: While there continues to be changes across FDA, there has been consistency for Palvella in terms of, number one, the Dermatology and Dentistry Division's regulation of our program, and number two, the leadership of that division, in this case, Dr. Lindstrom. We have had a significant presence and visibility at major scientific meetings in the second quarter of this year. We were honored to have our longtime collaborator, Dr. Amy Powler, Chair of Dermatology at Northwestern, present the Phase 3 SELVA study design as well as the Phase 2 results at the 15th World Congress of Pediatric Dermatology. We also had a poster featured at the 82nd annual meeting of the Society of Investigative Dermatology, which summarized a rigorous claims-based method for estimating the diagnosed prevalence and annual incidence of microcystic lymphatic malformations in the U.S. The results of this analysis confirm Palvella's prior diagnosed U.S.

Speaker #4: While there continues to be changes across FDA, there has been consistency for Palvella in terms of, number one, the dermatology and dentistry division's regulation of our program, and number two, the leadership of that division, in this case, Dr. Lindstrom.

Speaker #4: We have had a significant presence and visibility at major scientific meetings in the second quarter of this year. We were honored to have our long-time collaborator, Dr. Amy Paller, Chair of Dermatology at Northwestern, present the Phase Three Silva study design, as well as the Phase Two results at the 15th World Congress of Pediatric Dermatology.

Speaker #4: We also had a poster featured at the 82nd Annual Meeting of the Society of Investigative Dermatology, which summarized a rigorous claims-based method for estimating the diagnosed prevalence and annual incidence of microcystic lymphatic malformations in the U.S.

Speaker #4: The results of this analysis confirmed Palvella's prior diagnosed U.S. prevalence estimates, which indicate a multi-billion dollar total addressable market opportunity in the United States.

Wesley H. Kaupinen: prevalence estimates, which indicate a multibillion-dollar total addressable market opportunity in the United States. Finally, in our last earnings call, we outlined our search for a Chief Commercial Officer while noting the desire to recruit a proven leader with experience launching novel therapies that were first to market in serious rare diseases. I was thrilled, and our entire team was thrilled to recruit Ashley Kline as our Chief Commercial Officer. Ashley is a proven commercial executive in the rare disease space. She is best known for leading the U.S. launch of Oxervate, a first-in-disease topical therapy for neurotrophic keratitis, a rare eye disease which previously had no FDA-approved therapies. Under Ashley Kline's leadership, Oxervate surpassed $500 million in annual U.S.

Speaker #4: Finally, in our last earnings call, we outlined our search for a chief commercial officer while noting the desire to recruit a proven leader with experience launching novel therapies that were first to market in serious rare diseases.

Speaker #4: I was thrilled, and our entire team was thrilled, to recruit Ashley Klein as our Chief Commercial Officer. Ashley is a proven commercial executive in the rare disease space. She is best known for leading the U.S. launch of OXERVATE, a first-in-disease topical therapy for neurotrophic keratitis, a rare eye disease that previously had no FDA-approved therapies.

Speaker #4: Under Ashley's leadership, OXERVATE surpassed $500 million in annual U.S. sales by year five of launch and achieved early profitability through an innovative, capital-efficient, high-touch launch strategy that emphasized high-impact physician outreach and education. Ultimately, the launch was established as one of the top-performing non-oncology orphan drugs of the past decade.

Wesley H. Kaupinen: sales by year five of launch and achieved early profitability through an innovative, capital-efficient, and high-touch launch strategy that emphasized high-impact physician outreach and education, and ultimately establishing that launch as one of the top-performing non-oncology orphan drugs of the past decade. Ashley brings a dynamic, results-driven, and importantly, patient-oriented approach, making her an excellent fit for Palvella. We look forward to many and significant continued contributions from Ashley on QTORIN™ rapamycin and our other rare disease programs. Momentum also continues to build for our QTORIN™ rapamycin for cutaneous venous malformations program. Beginning with our Phase 2 TOIVA clinical trial, we are pleased to have excellent study leadership in place with Dr. Megha Tollefson, a pediatric dermatologist from the Mayo Clinic who is serving as our principal investigator. Jeff Martini and I spoke earlier this week with Dr.

Speaker #4: Ashley brings a dynamic, results-driven, and importantly patient-oriented approach, making her an excellent fit for Palvella. We look forward to many significant contributions from Ashley on QTORN rapamycin and our other rare disease programs.

Speaker #4: Momentum also continues to build for our QTORN rapamycin for cutaneous venous malformations program. Beginning with our Phase Two Toiva study, we're pleased to have excellent study leadership in place.

Speaker #4: With Dr. Megatolfson, a pediatric dermatologist from the Mayo Clinic, who is serving as our principal investigator, Jeff Martini and I spoke earlier this week with Dr. Tolfson and she reiterated the debilitating nature of cutaneous venous malformations.

Wesley H. Kaupinen: Tollefson, and she reiterated the debilitating nature of cutaneous venous malformations, including the bleeding, disfigurement, and proliferative nature of the disease that can significantly impact patient quality of life. Our ongoing Phase 2 clinical trial is a proof of concept study with no statistical hierarchy of endpoints. The study is designed to enroll approximately 15 patients. All sites are now active and recruiting patients, including our most recently activated site, Johns Hopkins University, a leading vascular anomaly center who I spoke with earlier this week. Assuming completion of enrollment later this quarter, we remain on track to deliver top-line data in the fourth quarter of 2025. From a regulatory standpoint, this program benefits from the previously granted FDA fast track designation, reflecting both the seriousness of the disease and the urgent need for effective therapies.

Speaker #4: Including the bleeding, disfigurement, and proliferative nature of the disease that can significantly impact patient quality of life. Our ongoing phase two study is a proof of concept study with no statistical hierarchy of endpoints, the study is designed to enroll approximately 15 patients all sites are now active and recruiting patients, including our most recently activated site, Johns Hopkins University a leading vascular anomaly center who I spoke with earlier this week.

Speaker #4: Assuming completion of enrollment later this quarter, we remain on track to deliver top-line data in the fourth quarter of 2025, from a regulatory standpoint, this program benefits from the previously granted FDA fast track designation, reflecting both the seriousness of the disease and the urgent need for effective therapies.

Wesley H. Kaupinen: For all of our rare disease programs, in parallel to our clinical development efforts, we also conduct rigorous prospective epidemiologic studies to understand the number of patients afflicted with these rare diseases we hope to treat. In collaboration with key opinion leaders in venous malformations, we completed a nationally representative blinded real-world observational study estimating the U.S. annual prevalence of cutaneous VMs. With findings submitted to a peer-reviewed journal, we continue to estimate that greater than 75,000 patients in the U.S. have venous malformations, either cutaneous only or mixed cutaneous and internal disease. With that, I will now hand it over to our Chief Scientific Officer, Dr. Jeff Martini. Jeff?

Speaker #4: For all of our rare disease programs, in parallel to our clinical development efforts, we also conduct rigorous prospective epidemiologic studies to understand the number of patients afflicted with these rare diseases we hope to treat.

Speaker #4: In collaboration with key opinion leaders in venous malformations, we completed a nationally representative blinded real-world observational study estimating the U.S. annual prevalence of cutaneous VMs.

Speaker #4: With findings submitted to a peer-reviewed journal, we continued to estimate that more than 75,000 patients in the U.S. have venous malformations, either cutaneous only or mixed cutaneous and internal disease.

Speaker #4: With that, I will now hand it over to our Chief Scientific Officer, Dr. Jeff Martini. Jeff? Thank you, Wes. Clinicians are increasingly moving towards targeted medical therapy for venous malformations, reflecting a broader shift toward precision medicine in vascular anomalies and away from invasive, destructive approaches such as surgery and sclerotherapy.

Jeff Martini: Thank you, Wes. Clinicians are increasingly moving towards targeted medical therapy for venous malformations, reflecting a broader shift toward precision medicine in vascular anomalies and away from invasive, destructive approaches such as surgery and sclerotherapy. There are now more than 20 published papers supporting the use of rapamycin in venous malformations, with compelling evidence that mTOR inhibition can be effective in treating internal disease. There remains, however, a significant unmet need in addressing cutaneous venous malformations. The evolving treatment paradigm for venous malformations is increasingly moving toward targeted medical therapies. On the left, the schematic shows that venous malformations can be internal or in the skin. Internal lesions have been shown to respond to systemic mTOR inhibition, where the drug can access the molecular target.

Speaker #4: There are now more than 20 published papers supporting the use of rapamycin in venous malformations, with compelling evidence that mTOR inhibition can be effective in treating internal disease.

Speaker #4: There remains, however, a significant unmet need in addressing cutaneous venous malformations. The evolving treatment paradigm for venous malformations is increasingly moving toward targeted medical therapies.

Speaker #4: On the left, the schematic shows that venous malformations can be internal or in the skin. Internal lesions have been shown to respond to systemic mTOR inhibition, where the drug can access the molecular target.

Jeff Martini: On the other hand, cutaneous venous malformations within the dermis and epidermis remain largely unaddressed by oral therapy due to poor biodistribution of rapamycin to the skin. In our TOIVA study, we are selecting patients with significant cutaneous disease, which is the portion that will be evaluated for both safety and efficacy. On the right, we show representative clinical images of cutaneous venous malformations, a proliferative disease with a significant negative impact on quality of life. Cutaneous VMs are characterized by bleeding, thrombosis, ulceration, visible disfiguration, and proliferations. These manifestations contribute substantially to patient morbidity, which is often lifelong in nature. Next, I'd like to spend a few minutes talking about the future of R&D at Palvella. I speak with key opinion leaders on a weekly, often daily basis, about potential new applications of QTORIN™ rapamycin, and the excitement in the field is clear.

Speaker #4: On the other hand, cutaneous venous malformations within the dermis and epidermis remain largely unaddressed by oral therapy due to poor biodistribution of rapamycin to the skin.

Speaker #4: In our Toiva study, we are selecting patients with significant cutaneous disease, which is the portion that will be evaluated for both safety and efficacy.

Speaker #4: On the right, we show representative clinical images of cutaneous venous malformations, a proliferative disease with a significant negative impact on quality of life. Cutaneous VMs are characterized by bleeding, thrombosis, ulceration, visible disfiguration, and proliferations.

Speaker #4: These manifestations contribute substantially to patient morbidity which is often lifelong in nature. Next, I'd like to spend a few minutes talking about the future of R&D at Palvella.

Speaker #4: I speak with key opinion leaders on a weekly often daily basis about potential new applications of QTORN rapamycin and the excitement in the field is clear.

Jeff Martini: Over the years, there have been numerous publications demonstrating the potential of rapamycin to treat serious skin diseases, and the science is converging on the idea that there are many clinical applications beyond microcystic lymphatic malformations and cutaneous venous malformations. There have been more than 25 potential mTOR-driven skin diseases identified, including other vascular malformations, genodermatoses, and certain nonvascular neoplasms, the far majority of which currently do not have an FDA-approved therapy. I am genuinely encouraged about the future and the potential we have to positively impact patients' lives by expanding the applications of QTORIN™ rapamycin. For those who are interested in the science, I would encourage you to read the published papers in this space. It is a fascinating and rapidly advancing area of rare disease and dermatologic medicine. Looking ahead to the second half of 2025, we expect to announce two meaningful pipeline catalysts.

Speaker #4: Over the years, there have been numerous publications demonstrating the potential of rapamycin to treat serious skin diseases, and the science is converging on the idea that there are many clinical applications beyond microcystic lymphatic malformations and cutaneous venous malformations.

Speaker #4: There have been more than 25 potential mTOR-driven skin diseases identified, including other vascular malformations, genodermatoses, and certain non-vascular neoplasms. The far majority of which currently do not have an FDA-approved therapy.

Speaker #4: I'm genuinely encouraged about the future and the potential we have to positively impact patients' lives by expanding the applications of QTORN rapamycin. For those who are interested in the science, I'd encourage you to read the published papers in this space.

Speaker #4: It's a fascinating and rapidly advancing area of rare disease and dermatologic medicine. Looking ahead to the second half of 2025, we expect to announce two meaningful pipeline catalysts.

Jeff Martini: The first is the next mTOR-driven clinical indication for QTORIN™ rapamycin, a serious rare skin disease with no FDA-approved therapy. This reflects our strategy of QTORIN™ rapamycin's potential as a pipeline in a product targeting diseases that meet the Palvella criteria of being serious, rare, and lacking FDA-approved options. The second is a new QTORIN™ program outside the rapamycin mTOR inhibition pathway. Working with leading experts in the rare skin diseases, we have identified a target disease and a molecule that fit our rigorous selection process, strong biology, compelling commercial potential, and the potential to advance to a Phase 2 proof of concept in under 2.5 years with less than $10 million in R&D investment. Both programs are expected to be announced later this year and have potential eligibility for fast track designation and orphan drug designation, as well as new intellectual property.

Speaker #4: The first is the next mTOR-driven indication for QTORN rapamycin, a serious rare skin disease with no FDA-approved therapy. This reflects our strategy of QTORN rapamycin's potential as a pipeline in a product targeting diseases that meet the Palvella criteria of being serious, rare, and lacking FDA-approved options.

Speaker #4: The second is a new QTORN program outside the rapamycin mTOR inhibition pathway. Working with leading experts in the rare skin diseases, we've identified a target disease and a molecule that fit our rigorous selection process, strong biology, compelling commercial potential, and the potential to advance to a phase two proof of concept in under two and a half years with less than 10 million dollars in R&D investment.

Speaker #4: Both programs are expected to be announced later this year and have potential eligibility for fast track and orphan designations as well as new intellectual property.

Jeff Martini: Together, they underscore the scalability of the QTORIN™ platform and have meaningful value-creating R&D milestones. I will now turn the call over to Matthew E. Korenberg, our Chief Financial Officer, to walk through our second quarter financial results.

Speaker #4: Together, they underscore the scalability of the QTORN platform and add meaningful value-creating R&D milestones. I'll now turn the call over to Matt Korenberg, our Chief Financial Officer, to walk through our second quarter financial results.

Wesley H. Kaupinen: Thanks, Jeff. Turning to the numbers, Palvella finished the quarter with $70.4 million in cash equivalents as of June 30, 2025, providing us an approximately two-year runway that carries us into the second half of 2027. Total operating expense for the quarter, including R&D and G&A, was $9.3 million, which is fully aligned with our plan to drive the SELVA and TOIVA studies, expand the QTORIN™ platform, and build commercial readiness. We expect to exit 2025 with approximately $55 million in cash, maintaining the balance sheet strength needed to reach multiple data and regulatory milestones. Finally, in June 2025, Palvella was added to both the Russell 2000 and Russell 3000 indexes, broadening our institutional shareholder base and increasing visibility as we advance toward late-stage readouts. I'll turn the call back to Wes for his closing remarks and to open the line for questions. Thank you, Matt.

Speaker #5: Thanks, Jeff. Turning to the numbers, Palvella finished the quarter with 70.4 million in cash and equivalents as of June 30th, 2025. Providing us an approximately two-year runway that carries us into the second half of 2027.

Speaker #5: Total operating expense for the quarter, including R&D and G&A, was 9.3 million, which is fully aligned with our plan to drive the silva and Toiva studies expand the QTORN platform and build commercial readiness.

Speaker #5: We expect to exit 2025 with approximately 55 million in cash, maintaining the balance sheet strength needed to reach multiple data and regulatory milestones. Finally, in June 2025, Palvella was added to both the Russell 2000 and Russell 3000 indexes.

Speaker #5: Broadening our institutional shareholder base and increasing visibility as we advance toward late-stage readouts. Now I'll turn the call back to Wes for his closing remarks and to open the line for questions.

Speaker #4: Thank you, Matt. Palvella enters the second half of 2025 with the silva phase three study fully enrolled, the Toiva phase two study advancing, a strengthened leadership team and a solid cash position, funding us into the second half of 2027.

Wesley H. Kaupinen: Palvella enters the second half of 2025 with the SELVA Phase 3 study fully enrolled, the TOIVA Phase 2 study advancing, a strengthened leadership team, and a solid cash position funding us into the second half of 2027. We're executing against a clear strategic plan to deliver first-in-disease therapies and create meaningful value for the patients we serve and for shareholders. Let me reiterate the key takeaways and priorities we're executing next. In the second half of 2025, we plan to announce the third mTOR-driven clinical indication for QTORIN™ rapamycin, our lead product candidate. In the second half of 2025, we also plan to announce the second product candidate from our QTORIN™ platform. In Q4 2025, TOIVA Phase 2 top-line results in cutaneous venous malformations are anticipated, and in Q1 2026, our SELVA Phase 3 top-line results in microcystic lymphatic malformations are anticipated.

Speaker #4: We're executing against a clear strategic plan to deliver first-in-disease therapies and create meaningful value for the patients we serve and for shareholders. Let me reiterate, the key takeaways and priorities were executing next.

Speaker #4: In second half, 2025, we plan to announce the third mTOR-driven clinical indication for QTORN rapamycin, our lead product candidate. In second half, 2025, we also plan to announce the second product candidate from our QTORN platform, and Q4 2025, Toiva phase two top-line results, and cutaneous venous malformations are anticipated, and in Q1 2026, our silva phase three top-line results in microcystic lymphatic malformations are anticipated.

Wesley H. Kaupinen: In closing, our team remains highly committed and aligned when executing on our vision to be the leader in addressing rare serious skin diseases, our strategy of delivering novel therapies for diseases which currently have no FDA-approved treatments, and our mission, which is to relentlessly serve these patient populations afflicted with serious rare diseases. Operator, ready to open the line for questions. Thank you.

Speaker #4: In closing, our team remains highly committed and aligned on executing on our vision to be the leader in addressing rare serious skin diseases, our strategy of delivering novel therapies for diseases which currently have no FDA-approved treatments, and our mission, which is to relentlessly serve these patient populations afflicted with serious rare diseases.

Speaker #4: Operator, we're ready to open the line for questions. Thank you.

Operator: Certainly. As a reminder, to ask a question, please press star one-one on your touch-tone telephone and wait for your name to be announced. To withdraw your question, please press star one-one again. Please stand by while we compile our Q&A roster. Our first question will be coming from Ritu Boral of TD Cowen. Your line is open.

Speaker #1: Certainly, as a reminder to ask a question, please press *11 on your touchstone telephone and wait for your name to be announced. To withdraw your question, please press *11 again.

Speaker #1: Please stand by while we compile our Q&A roster. Our first question will be coming from Ritu Baral of TD Cohen. Your line is open.

Ritu Boral: Good morning, guys. Thanks for taking the question. Wes, I wanted to dig in a little bit on the implications of the 25% over-enrollment in the Phase 3 SELVA clinical trial. Can you tell us what that does to your powering assumption? Also, I guess, the heterogeneity of the patient pool that you have ended up with and how that might impact any sort of variance on the endpoints that you see. If this has any impact on how you view the market, oftentimes over-enrollment can be a tell on patient numbers, etc. Then finally, what you plan to release with top-line results in early next year. Thanks.

Speaker #6: Good morning, guys. Thanks for taking the question. Wes, I wanted to dig in a little bit on the implications of the 25% over-enrollment in the phase three silva study.

Speaker #6: Can you tell us what that does to your powering assumptions? And also, I guess, heterogeneity of the patient pool that you have ended up with and how that might impact any sort of variance on the endpoints that you see?

Speaker #6: If this has any impact on how you view the market, oftentimes, over-enrollment can be a tell on patient numbers, etc. And then finally, what you plan to release with top line in early next year.

Speaker #6: Thanks.

Wesley H. Kaupinen: Hey, Ritu. Good morning. Thanks so much for your questions. We were excited to be able to over-enroll this study. We had a lot of interest from our clinical sites. As you know, with these rare disease clinical studies, your clinical operations team is working hand in hand with investigators, encouraging them to recruit patients. It was really at the desire of the clinical sites and our physician collaborators to accommodate more patients coming into the study. We view this as a positive. It will allow us to have a larger data set to ultimately submit to the FDA as part of our NDA process. Then I will pass it over to Jeff to address your questions on what the over-enrollment does for powering, as well as what we have done from a protocol and patient selection perspective to attempt to smooth out any sort of heterogeneity that you mentioned.

Speaker #4: Hey, Ritu, good morning.

Speaker #5: Thanks so much for your questions. We were excited to be able to over-enroll this study; we had a lot of interest from our clinical sites as you know with these rare disease clinical studies, your clinical operations team is working hand in hand with investigators encouraging them to recruit patients.

Speaker #5: And so it was really at the desire of the clinical sites and our physician collaborators to accommodate more patients coming into the study. We view this as a positive; it will allow us to have a larger data set to ultimately submit to the FDA as part of our NDA process.

Speaker #5: And then I'll pass it over to Jeff to address your questions on what the over-enrollment does for powering as well as what we've done from a protocol and patient selective patient selection perspective to attempt to smooth out any sort of heterogeneity that you mentioned.

Wesley H. Kaupinen: Jeff?

Speaker #5: Jeff?

Jeff Martini: Thank you. Thank you, Wes. Thank you for the question, Ritu. From the powering assumptions, going into the study with 40 patients, based on our assumptions and design of the study, we were 99% powered. Increasing the number of subjects just increases the power beyond 99%. To address your question on heterogeneity, there is really no impact to the overall program because all our patients, regardless of the first patient in or the 51st patient, are evaluated and screened through the inclusion-exclusion criteria by both the clinicians and then an independent medical assessment.

Speaker #4: Yeah, thank you. Thank you, Wes. Thank you for the question, Ritu. So from the powering assumptions, going into the study with 40 patients, based on our assumptions and designing the study, we were 99% powered.

Speaker #4: So, increasing the number of subjects just increases the power beyond 99%. To address your question on heterogeneity, there's really no impact to the overall program because all the patients, regardless of the first patient in or the 51st patient, are evaluated and screened through the inclusion-exclusion criteria by both the clinicians and then an independent medical assessment.

Wesley H. Kaupinen: Great. Ritu, I will pick up your last question there, which was on any sort of market implications. Our guidance on the market opportunity is we estimate there is more than 30,000 diagnosed patients in the U.S. with microcystic lymphatic malformations. We have done some preliminary market research with Ashley Kline on board. We will continue that between now and leading into approval. In our market research testing on a large sample size, 98% of physicians surveyed indicated that QTORIN™ rapamycin would be first-line therapy for microcystic lymphatic malformations. As part of that market research study, we, of course, presented our product profile, which included our Phase 2 data, as well as some of the pictures from the Phase 2 results.

Speaker #5: Great. And Ritu, I'll pick up your last question there, which was on any sort of market implications. Our guidance on the market opportunity is we estimate there's more than 30,000 diagnosed patients in the US with microcystic lymphatic malformations.

Speaker #5: We've done some preliminary market research with Ashley on board; we'll continue that between now and leading into approval. In our market research testing on a large sample size, 98% of physicians surveyed indicated that QTORN rapamycin would be first-line therapy for microcystic lymphatic malformations.

Speaker #5: As part of that market research study, we, of course, presented our product profile, which included our Phase 2 data, as well as some of the pictures from the Phase 2 results.

Ritu Boral: Oh, and the last thing, guys, just what you plan to release with the top-line results.

Speaker #6: Oh, and the last thing, guys. Just what do you plan to release with the top line?

Wesley H. Kaupinen: Top line will be in Q1 of 2026. The plan there is clearly to report on the primary endpoint as well as report on potential other endpoints. We will also report top line on safety and tolerability, Ritu.

Speaker #5: Yeah, so top line will be in Q1 of 2026. The plan there is clearly to report on the primary endpoint as well as report on potential other endpoints.

Speaker #5: We will also report top line on safety and tolerability, Ritu.

Ritu Boral: Can you specify what secondary would be released at the same time at this point?

Speaker #6: Can you specify what secondary would be released at the same time at this point?

Wesley H. Kaupinen: Yeah. That's something that we'll be providing guidance on, Ritu, at a later date.

Speaker #5: Yeah, that's something that we'll be providing guidance on, Ritu, at a later date.

Ritu Boral: Understood. Thanks for taking all the questions.

Speaker #6: Understood. Thanks for taking all the questions.

Wesley H. Kaupinen: Yes, thank you.

Speaker #5: Yes, thank you.

Operator: Thank you. Our next question will be coming from Whitney Ijim of Canaccord Genuity. Your line is open, Whitney.

Speaker #1: Thank you. And our next question will be coming from Whitney Ijen of Canacor Genuity, your line is open, Whitney.

Whitney Ijim: Hey, good morning, guys. Thanks for taking the questions. First one is just on dosing for CVM in particular as it relates to the size of the lesions. I guess, first, can you talk about the relative size of the lesions in CVM versus MLM? Then, how does that translate into a dosing difference as we think about read-through of MLM data to CVM?

Speaker #7: Hey, good morning, guys. Thanks for taking the questions. First one is just on dosing for CVM in particular. As it relates to the size of the lesions, I guess first, can you talk about the relative size of the lesions in CVM versus MLM and then how does that translate into a dosing difference as we think about read-through of MLM data to CVM?

Wesley H. Kaupinen: Yeah. Hey, Whitney. Thank you for the questions. Thanks for being on today's call. We'll pass it over to Jeff to talk about dosing as well as size of lesions. Jeff?

Speaker #5: Yeah, hey, Whitney. Thank you for the questions. Thanks for being on today's call. We'll pass it over to Jeff to talk about dosing as well as size of lesions.

Speaker #5: Jeff?

Jeff Martini: Thanks for, Wes, and thanks for the question, Whitney. The dosing, we will start first with the pump that we use. One actuation of the pump is a two-fingertip unit of QTORIN™ rapamycin 3.9% anhydrous gel. That allows a coverage of about 200 centimeters squared. For both of our clinical trials, we allow up to 400 centimeters squared for each of the indications.

Speaker #4: Yeah, thanks, Wes, and thanks for the question, Whitney. So the dosing we'll start first with the pump that we use. One actuation of the pump is a two-fingertip unit of QTORN rapamycin 3.9% anhydrous gel.

Speaker #4: That allows a coverage of about 200 centimeters squared for both of our clinical trials. We allow up to 400 centimeters squared for each of the indications.

Whitney Ijim: Got it. Okay. That's helpful. Ahead of the announcement of the new programs later this year, I guess, can you talk a little bit more about the criteria that you apply as it relates to QTORIN™ rapamycin? I know you said kind of mTOR-driven and no other approved therapies. Are there any other kind of key criteria or boxes to check? In particular, wondering if epidemiology or U.S. patient numbers, if there's any kind of set cutoff on that.

Speaker #7: Got it. Okay, that's helpful. And then ahead of the announcement of the new programs later this year, I guess can you talk a little bit more about the criteria that you apply as it relates to QTORN rapamycin?

Speaker #7: I know you said kind of mTOR-driven, and no other approved therapies. Are there any other kind of key criteria or boxes to check? And in particular, wondering if epidemiology or US patient numbers, if there's any kind of set cutoff on that?

Wesley H. Kaupinen: Thanks, Whitney. You summarized it well. We really strongly prefer these diseases where there is no FDA-approved therapies. We believe that translates to a high unmet need for these patients. Those are the type of patient populations that we want to serve. We like diseases that are considered serious, which means they have a significant impact on daily quality of life. If we are able to prove that out with the FDA, of course, we are eligible for designations like fast track and breakthrough, which allow us to advance these programs to patients in a more expeditious manner. From an epi perspective, historically, we have given a lot of weight to that in our disease selection. We typically prefer epi that is orphan, not ultra-orphan.

Speaker #5: Yeah, thanks, Whitney. You summarized it well. We really strongly prefer these diseases where there's no FDA-approved therapies. We believe that translates to a high unmet need for these patients.

Speaker #5: Those are the type of patient populations that we want to serve. We like diseases that are considered serious, which means they have a significant impact on daily quality of life.

Speaker #5: If we're able to prove that out with the FDA, of course, we're eligible for designations like fast track and breakthrough, which allow us to advance these programs to patients in a more expeditious manner.

Speaker #5: From an EPI perspective, historically, we've we've given a lot of weight to that in our disease selection. We typically prefer EPI that is orphan not ultra-orphan.

Wesley H. Kaupinen: We are usually not in these disease states where there might only be 1,000 or 2,000 patients, but rather disease states that are more analogous to the type of prevalence you see in diseases like microcystic lymphatic malformations.

Speaker #5: So we're usually not in these disease states where there might only be a thousand or two thousand patients. But rather disease states that are more analogous to the type of prevalence you see in diseases like microcystic lymphatic malformations.

Whitney Ijim: Perfect. That's helpful. Thanks so much.

Speaker #7: Perfect, that's helpful. Thanks so much.

Operator: Our next question will be coming from Annabelle Cimimi of Thieful. Your line is open.

Speaker #1: And our next question will be coming from Annabelle Simimi of Thieful. Your line is open.

Annabelle Cimimi: Hi there. Thanks for taking my questions. I had a few. You mentioned your focus right now for the SELVA trial is just ensuring compliance. How are you ensuring compliance for those patients? I just want to understand if there is something that is being the 24-week trial. Is that going to be more difficult for them, or is the efficacy large enough for it to be self-insuring, let us just say?

Speaker #8: Hi there. Thanks for taking my questions. Had a few. Just, you know, you mentioned you know your focus right now for the silva trial is just ensuring compliance.

Speaker #8: How are you ensuring compliance for those patients and just want to understand if there's something that's being the 24-week trial is that going to be more difficult for them or is the efficacy large enough for it to be self-insuring?

Speaker #8: Let's just say.

Wesley H. Kaupinen: Yeah. Hey, Annabelle. Great questions. To answer the second question first, I will bring you and everyone else back to the formulation development we did all the way back in, call it, the 2017-2018 time period. We really worked deliberately to make this formulation patient-friendly. Everything from the excipients that were selected with rapamycin and the tolerability profile of those excipients to the packaging of QTORIN™ rapamycin in our measured dose pump, which we also think is a preferred packaging relative to tubes. With QD dosing administered once daily at nighttime, we do not anticipate this being more difficult for patients, particularly relative to some other topical therapies that are a bit more cumbersome, if you will, for the patients to administer. From a compliance point of view, one of the strengths of Palvella for many years has been our clinical operations team.

Speaker #5: Yeah, hey, Annabelle. Great questions. You know the answer to the second question first. I'll bring you and everyone else back to the formulation development we did all the way back and call it the 2017-2018 time period.

Speaker #5: We really worked deliberately to make this formulation patient-friendly. Everything from the excipients that were selected with rapamycin and the tolerability profile of those excipients to the packaging of QTORN rapamycin in our measured dose pump, which we also think is a preferred packaging relative to tubes.

Speaker #5: So with QD dosing, administered once daily, at nighttime, we don't anticipate this being more difficult for patients, particularly relative to some other topical therapies that are a bit more cumbersome, if you will, for the patients to administer.

Speaker #5: From a compliance point of view, one of the strengths of Palvella for many years has been our clinical operations team, and I think that's borne out in just what a fabulous job they've done on the Silva trial.

Wesley H. Kaupinen: I think that is borne out in just what a fabulous job they have done on the SELVA trial. There is continued education of the clinical sites. We are in touch with those sites daily, reinforcing that those investigators really ensure patient compliance. We are often meeting every week with our clinical operations team every Monday to discuss the trial. I think supporting the sites with compliance and retention messaging is what has historically allowed us to see very good patient compliance in our trials.

Speaker #5: There is continued education of the clinical sites; we're in touch with those sites daily. Reinforcing that those investigators really ensure patient compliance. We're often meeting every week with our clinical operations team every Monday to discuss the trial.

Speaker #5: And so, I think supporting the sites with compliance and retention messaging is what has historically allowed us to see very good patient compliance in our trials.

Annabelle Cimimi: Okay, got it. I know a lot of people think about MLM being an indicator for CVM, but how do you think about it the other way around? You will come into the CVM data first. Is that going to be a reverse strong indicator, just further support that the QTORIN™ platform is really delivering drug deep into the dermis where it is? I guess, should we see CVM proof of concept as a good indicator for how MLM or consistency of data in MLM? I am just thinking about it the other way.

Speaker #8: Okay, got it. And I know a lot of people think about MLM being an indicator for CVM, but how do you think about it the other way around?

Speaker #8: You will come into the CVM data first. So is that going to be a reverse strong indicator just further support that the QTORN platform is really delivering drug deep into the dermis where it is?

Speaker #8: Like I guess should we see CVM proof of concept as a good indicator for how MLM or consistency of data in MLM? So I'm just thinking about it the other way.

Wesley H. Kaupinen: Great. Thanks for that question. We view these as very different diseases. Certainly, there is that shared causative biology with the mTOR pathway involved in both. But fundamentally, you have a different architecture of the malformed lymphatic vessels versus the malformed veins. I think that is one key difference. As Jeff Martini did a nice job highlighting in his presentation, there are different clinical signs that are measured between the two indications. So it is important to draw out the differences in the two. I think one other consistency, if you will, between the two is there has been significant use of off-label systemic rapamycin to treat internal lymphatic malformation and internal venous malformations. But fundamentally, what we have learned from our scientific collaborators and clinical collaborators is that there are significant differences between these two diseases.

Speaker #5: Yeah, great. Thanks for that question. We view these as very different diseases. Certainly, there's that shared causative biology with the mTOR pathway involved in both.

Speaker #5: But fundamentally, you have different architecture of the malformed lymphatic vessels versus the malformed veins. I think that that's one key difference. And as Jeff did a nice job highlighting in his presentation, there's different clinical signs that are measured between the two indications.

Speaker #5: So it's important to sort of draw out the differences between the two. I think one other consistency, if you will, between the two is there has been significant use of off-label systemic rapamycin to treat internal lymphatic malformation and internal venous malformations.

Speaker #5: But fundamentally, what we've learned from our scientific collaborators and clinical collaborators is that there are significant differences between these two diseases.

Annabelle Cimimi: Okay, got it. One last question, if you can indulge me. I know that you have done various population analyses for MLM. You are still talking about greater than 30,000, but I guess recently you have been talking maybe the range is higher, maybe the low end of the range is possibly 44,000. Can you talk about that and what are some of the other additional analyses that you are doing to truly identify what the size of this population is?

Speaker #8: Okay, got it. And one last question if we can indulge me. I know that you've done various population analyses for MLM, you're still talking about greater than 30,000, but you know I guess recently you've been talking maybe the range is higher, maybe the low end of the range is possibly 44,000.

Speaker #8: Can you talk about that and what are some of the other additional analyses that you're doing to truly identify what the size of this population is?

Wesley H. Kaupinen: Yeah, absolutely. You know, so we have done actually three epi studies. My personal view is that when you are an innovator in the rare disease area, you cannot be reliant upon the literature or one study from the literature to guide your epi. When I was at Insmet, we did real-world observation studies, which we have done here at Palvella Therapeutics. So across our three epi studies that we have done, the low-end range is the range we quote. That reflects conservatism by our management team. We will continue to get at that number to answer your question, Annabelle. Having Ashley Kline on board is going to allow us to continue to refine our market sizing leading into the U.S. launch of QTORIN™ rapamycin. Ashley has a very strong background in analytics. She trained at Bain Consulting, spent many years at Genentech.

Speaker #5: Yeah, absolutely. So we've done actually three EPI studies, and my personal view is that when you're an innovator in the rare disease area, you can't be reliant upon the literature or one study from the literature to guide your EPI.

Speaker #5: When I was at INSMED, we conducted real-world observation studies, which we've also implemented here at Palvella. Across our three EPI studies that we've completed, the low-end range is the range we quote.

Speaker #5: That reflects a conservatism by our management team. We'll continue to get at that number to answer your question, Annabelle. Having Ashley on board is going to allow us to continue to refine our market sizing leading into US launch.

Speaker #5: Of QTORN rapamycin, Ashley has a very strong background in analytics; she trained at Bain Consulting, spent many years at Genentech. So you're hitting on one of her key objectives which is continue to refine the sizing of the market from an EPI perspective as well as other key market dynamics.

Wesley H. Kaupinen: So you are hitting on one of her key objectives, which is to continue to refine the sizing of the market from an epi perspective, as well as other key market dynamics.

Annabelle Cimimi: Great. Thank you.

Speaker #8: Great, thank you.

Operator: Thank you. Our next question will be coming from Danielle Brill of Truist. Your line is open.

Speaker #1: And our next question will be coming from Danielle Brill of Truist. Your line is open.

Annabelle Cimimi: Good morning. Thanks so much for the questions and congrats on all the progress. I have a couple on TOIVA. Wes, you mentioned the trial is still recruiting. Can you just speak to the pace of enrollment there versus your internal expectations? What is the rate-limiting step to getting these patients enrolled? Can you help contextualize for us how the CVM data might compare to the MLM data in Phase 2? Given the genetic heterogeneity here, what magnitude of efficacy should we be looking for? Thanks so much.

Speaker #9: Hi, good morning. Thanks so much for the questions, and congrats on all the progress. So, I have a couple on Toiva. Wes, you mentioned the trial is still recruiting.

Speaker #9: Can you just speak to the pace of enrollment there versus your internal expectations? And I guess specifically what is the rate-limiting step to getting these patients enrolled?

Speaker #9: And then can you help contextualize for us how the CVM data might compare to the MLM data in phase two? Given the genetic heterogeneity here, what magnitude of efficacy should we be looking for?

Speaker #9: Thanks so much.

Wesley H. Kaupinen: Yeah, great. So on your first question on pace of enrollment, our goal has been to read this study out top-line in Q4. We now have all clinical sites active and recruiting. That's obviously a big lift by our clinical operations team. I think we've targeted the right leaders here from a clinical perspective to work with us in recruiting these studies. To address your second question on what is rate-limiting, we are going to great lengths, Danielle, to select the right patients for the CVM study. As Jeff outlined earlier in his presentation, there's really sort of three types, to simplify it a bit, of venous malformations patients. Patients that have disease exclusively on the skin, patients that have both disease on the skin and internally, and also patients that have exclusively internal disease.

Speaker #5: Yeah, great. So on your first question on pace of enrollment, you know our goal has been to read this study out top line in Q4.

Speaker #5: We now have all clinical sites active and recruiting. That's obviously a big lift by our clinical operations team. I think we've targeted the right leaders here from a clinical perspective to work with us in recruiting these studies.

Speaker #5: You know from a to address your second question on you know what is rate-limiting, we are going to great lengths, Danielle, to select the right patients for the CVM study.

Speaker #5: As Jeff outlined earlier in his presentation, there's really sort of three types to simplify it a bit of venous malformations patients, patients that have disease exclusively on the skin, patients that have both disease on the skin and internally and also patients that have exclusively internal disease.

Wesley H. Kaupinen: We are really focused with our investigators as well as our third-party eligibility consult team on selecting those patients that have disease manifesting in the skin, in the epidermis, the dermis, and oftentimes with the patients coming into the trial of the diseases on the stratum corneum, and it's presenting superficially. So sometimes there's differences with where a company wants to go with their drug commercially, which can eventually maybe be a much broader population. But for the purposes of the Phase 2 study, given its sample size of around 15 patients, we're really focused on getting the right patients into the study. To address your last question in terms of how we think about success in the cutaneous venous malformations Phase 2 study, I sort of go back to my experience at Insmet.

Speaker #5: We are really focused with our investigators as well as our third-party eligibility consult team on selecting those patients that have disease manifesting in the skin.

Speaker #5: In the epidermis, the dermis, and oftentimes with the patients coming into the trial, the disease is on the stratum corneum and it's presenting superficially.

Speaker #5: So sometimes there's differences with where a company wants to go with their drug commercially, which can eventually maybe be a much broader population. But for the purposes of the phase two study, given its sample size of around 15 patients, we're really focused on getting the right patients into the study.

Speaker #5: To address your last question in terms of how we think about success, in the cutaneous venous malformations Phase 2 study, sort of go back to my experience at INSMED. INSMED has an approved drug, two approved drugs now, but their first approved drug, Arikayce, which showed about a 29% efficacy rate in Phase 3.

Wesley H. Kaupinen: Insmet has an approved drug, two approved drugs now, but their first approved drug, EraCase, which showed about a 29% efficacy rate in Phase 3. That drug has been very successful commercially. So I think in these rare diseases where there's nothing, if you can show an effect in about 30% of patients, typically you have a drug, for the purposes of overlaying it on Palvella, that you would be at the FDA, you'd be advocating for breakthrough designation, and you'd be advocating to move it forward to a Phase 3 study, particularly if there's a clean safety profile compared to approaches like surgery and sclerotherapy, which are the destructive approaches used today by physician treaters.

Speaker #5: That drug has been very successful commercially. And so I think in these rare diseases where there's nothing, if you can show an effect in about 30% of patients, typically you have a drug for the purposes of overlaying it on Palvella that you would be at the FDA, you'd be advocating for breakthrough designation, and you'd be advocating to move it forward to a phase three study, particularly if there's a clean safety profile compared to approaches like surgery and sclerotherapy which are the destructive approaches used today by physician treaters.

Annabelle Cimimi: Perfect. Makes sense. Thanks again for the question.

Speaker #8: Perfect. Makes sense. Thanks again for the questions.

Operator: Our next question will be coming from Ryan Deschner of Raymond James. Ryan, your line is open.

Speaker #1: And our next question will be coming from Ryan Deshner of Raymond James. Ryan, your line is open.

Ryan Deschner: Thanks for the question and good morning. Can you remind us what age range you are targeting for an MLM label at this point? And can you tell us anything about what age range patients already enrolled in the SELVA trial are skewing toward? Then follow-up. Thanks.

Speaker #10: Thanks for the question and good morning. Can you remind us what age range you're targeting for an MLM label at this point? And can you tell us anything about what age range patients already enrolled in the silva trial trial are skewing toward and that have a follow-up?

Speaker #10: Thanks.

Wesley H. Kaupinen: Great. Ryan, thanks for being on. The age range for the Phase 3 SELVA clinical trial is three and above. Initially, we started with six and above. We requested to the FDA that we be allowed to dose patients who were younger than six in the Phase 3 clinical trial. That was something that our physician collaborators had suggested to us. The ability to treat these lesions early they viewed as potentially beneficial to these patients. On your second question, Ryan, we haven't given any data at this point around the range of ages or the mean or median ages, but we expect to do so later in the development of the program.

Speaker #5: Great. Ryan, thanks for being on. The age range for the phase three silva study is three and above. Initially, we started with six and above.

Speaker #5: We requested to the FDA that we be allowed to dose patients who are younger than six. In the phase three study, that was something that our physician collaborators had suggested to us.

Speaker #5: The ability to treat these lesions early is viewed as potentially beneficial to these patients. On your second question, Ryan, we haven't provided any data at this point.

Speaker #5: Around the kind of range of ages or the mean or median ages, but we expect to do so later in the development of the program.

Wesley H. Kaupinen: From a labeling perspective, the way we think about this is that the primary endpoints in the SELVA clinical trial, the primary analysis of the primary endpoint, will be patients six and above. We are not going to include any subjects that were three to five in that analysis. The reason is that this is the first time we have tested our drug in that three to five population. So as we think about a label, base case is label would be patient six and above. If we are able to see data in that three to five-year-old patient population suggesting safety and efficacy, you can expect that our management team will be at the FDA advocating for those three to five-year-olds and advocating that we have a label that reflects three and above.

Speaker #5: From a labeling perspective, the way we think about this is that the primary endpoints in the silva study, the primary analysis of the primary endpoint, will be patients six and above.

Speaker #5: We're not going to include any subjects that were three to five. In that analysis, reason is that this is the first time we've tested our drug in that three to five population.

Speaker #5: So as we think about a label, you know sort of base case is label would be patient six and above. If we're able to see data in that three to five-year-old patient population, suggesting safety and efficacy, you can expect that our management team will be at the FDA advocating for those three to five-year-olds.

Speaker #5: And advocating that we have a label that reflects three and above. But it's important that we develop the data for that three to five-year-old cohort, which we're doing now.

Wesley H. Kaupinen: But it is important that we develop the data for that three to five-year-old cohort, which we are doing now.

Ryan Deschner: Got it. Regarding the Phase 3 SELVA study in MLM, would the over-enrollment here be more a reflection of the high demand for good treatment for MLMs, or is it looking more like patient identification might be a little easier than expected based on actual prevalence?

Speaker #10: Got it. And then also regarding the Phase Three SILVA study, an MLM, would the over-enrollment here be more a reflection of the high demand for good treatment for MLMs, or is it looking more like patient identification might be a little easier than expected based on actual prevalence?

Wesley H. Kaupinen: Yeah, great question. I think the answer is both high demand and patient identification. I think, as you are aware, Ryan, these patients are typically diagnosed by the age of two or three. In particular, these fluid-filled vesicles or lymphatic cysts typically enable physicians to make a clear diagnosis of this disease. So I think it is both demand from the sites as well as improvements in patient identification. I will just add a third here, which is, having worked at multiple rare disease companies, it is very challenging to enroll these rare disease studies. And I think over time, we have developed a core competency with Kathy, who I mentioned earlier, and Emily Cook, and being able to execute these studies. And one of the ways in which we do that is we are not ultra-reliant upon large CROs.

Speaker #5: Yeah, great question. I think the answer is both. High demand and patient identification. I think you're aware, Ryan, these patients are typically diagnosed by the age of two or three.

Speaker #5: In particular, these fluid-filled vesicles or lymphatic cysts typically enable physicians to make a clear diagnosis of this disease. So I think it's both demand from the sites as well as improvements in patient identification.

Speaker #5: I'll just add a third here. Which is, you know having worked now at multiple rare disease companies, it's very challenging to enroll these rare disease studies.

Speaker #5: And I think over time, we've developed a core competency with Kathy who I mentioned earlier and Emily Cook and being able to execute these studies.

Speaker #5: And one of the ways in which we do that is we're not ultra-reliant upon large CROs. We built an internal team here and we are the ones who are really maintaining those relationships at the site.

Wesley H. Kaupinen: We built an internal team here, and we are the ones who are really maintaining those relationships at the site. So both the points you raised, but also the great execution by our clinical operations team.

Speaker #5: So, both the points you raised and the great execution by our clinical operations team.

Ryan Deschner: Got it. Thanks, Wes.

Speaker #10: Got Got it. Thanks, Wes.

Wesley H. Kaupinen: Thanks, Rav.

Speaker #5: Thanks, Ryan.

Operator: Our next question will come from Katherine Novak of Jones Trading. Your line is open.

Speaker #1: And our next question will come from Katherine Novak of Jones Trading. Your line is open.

Whitney Ijim: Hi. Morning. Thanks for taking my question. A couple on SELVA. For the last after last patient last visit, is there any follow-up, or can you go straight into data cleaning analysis? Then how approximately long would that cleaning and analysis take given that this is a single-arm study?

Speaker #9: Hi. Morning. Thanks for taking my question. A couple on silva. So for the last after last patient, last visit, is there any follow-up or can you go straight into data cleaning analysis?

Speaker #9: And then how approximately long would that cleaning and analysis take given this is a single-arm study?

Wesley H. Kaupinen: Yeah. Hey, Katherine. Good morning. In terms of the timelines from last patient last visit, you are absolutely right. You can go straight into data cleaning and analysis. In our studies historically, we have been able to do the data and cleaning analysis in a matter of weeks. In this case, we want to make sure we are prioritizing quality and in particular QC. We have looked at those timelines on a very detailed basis with our clinops team. This allows us to be in a position to read this study out in Q1 of 2026.

Speaker #5: Yeah, hey, Katherine. Good morning. In terms of the timelines from the last patient visit, you're absolutely right. You can go straight into data cleaning and analysis.

Speaker #5: You know, in our studies historically, we've been able to do the data cleaning and analysis in a matter of weeks. So, in this case, we want to make sure we're prioritizing quality and, in particular, QC.

Speaker #5: We've looked at those timelines on a very detailed basis with our clean ops team. And this allows us to be in a position to read this study out in Q1 of 2026.

Annabelle Cimimi: Okay, great. For the CVM Phase 2, I know you said that there is no statistical hierarchy of endpoints, but which endpoint are you thinking about when you think about taking forward into the Phase 3? I know that FDA has in the past expressed a preference for static measures over change scales. I am wondering how you are thinking about that when it comes to analyzing the Phase 2.

Speaker #9: Okay, great. And then for the CVM phase two, I know you've said that there's no statistical hierarchy of endpoints, but you know which endpoint are you thinking about?

Speaker #9: When you think about taking forward into the phase three, I know that FDA has in the past expressed a preference for static measures over change scales.

Speaker #9: And I'm wondering how you're thinking about that when it comes to analyzing the phase two.

Wesley H. Kaupinen: Yeah. Great. So, on the second comment made,

Speaker #5: Yeah, great. So on the second comment you made, it's very typical to do both dynamic change scales. What you're often preferred by physician collaborators who are true experts in these rare disease.

Bohan Way: is very typical to do both dynamic change scales, which are often preferred by physician collaborators who are true experts in these rare diseases, and static scales. In both of our studies, we have dynamic change scales and we have static severity scales. For the purposes of what our Phase 3 primary endpoint would be, we are going to analyze all the data post Phase 2. We are going to meet with our physician collaborators looking at that data. Ultimately, we will prioritize a primary and we will prioritize a hierarchy of secondary endpoints. Just to give a little bit of background on why you would not select a primary endpoint in Phase 2 is we are really pioneering new ground in these rare diseases. There have been no other companies that are constructing novel endpoints, really understanding disease burden, and then testing a novel therapeutic intervention.

Speaker #5: And static scales. So in both of our studies, we have dynamic change scales and we have static severity scales. For the purposes of what our Phase 3 primary endpoint would be, we're going to analyze all the data post Phase 2.

Speaker #5: We're going to meet with our physician collaborators, looking at that data and then ultimately we'll prioritize a primary and we'll prioritize a hierarchy of secondary endpoints.

Speaker #5: Just to give a little bit of background on why you wouldn't select a primary endpoint in Phase 2 is we are really pioneering new ground in these rare diseases.

Bohan Way: We think it is best in these proof of concept studies to look at a host of different endpoints, understand which of those endpoints may be sensitive to a treatment effect, and then very carefully review all of that data with physician experts. The next step, of course, is to collaboratively meet with the FDA. We have fast track designations, so we think they are motivated to see this program move forward, assuming Phase 2 success. It is through that iterative process that we would select a singular primary endpoint for Phase 3, but also a host of secondary endpoints that will contribute to the overall efficacy assessment.

Operator: Okay. Got it. Thanks, thanks for the clarification on the color.

Bohan Way: Sure. Thank you.

Operator: Our next question will come from Dev Prasad of Lucid Capital Markets. Your line is open.

Wesley H. Kaupinen: Hi, everyone. Thank you for taking our question. I have a question on the new Q2 program. For the two new programs that you plan to announce in the second half, what is your anticipated timeline for moving each into the clinic? Should we expect both to reach within the next 12 to 18 months, or will they be sequential?

Bohan Way: Yeah. Hey, Dev. Great. I'll start it off here, and then I'll ask Jeff Martini to comment as well. What we try to do once we announce a program is we try to charge towards the clinic for these rare disease patient populations who currently have nothing. So we'll give more definition around timelines for dosing first patient after these programs have been announced. There's some preliminary FDA interactions that we'd like to have as well. But certainly, looking at, call it, the second half of next year, we'd like to be in a position to initiate studies and start to develop that clinical evidence set on both of these programs. Jeff?

Jeff Martini: Yeah. Thanks, Dev. Really excited about these two new announcements later this year. For the new QTORIN™ rapamycin program, that would be one that will require an FDA conversation. But ultimately, that's one that would be closer to the clinic. For the new QTORIN™ program with the new molecule, we haven't guided on timing there, but we know it will be less than two years and less than $10 million for Phase 2 data.

Wesley H. Kaupinen: Great. I have another one on manufacturing. Given this small market, how are you approaching the commercial manufacturing? Will it be in-house versus PMO? Are there any capacity planning assumptions you are making right now?

Bohan Way: Yeah. Thanks for that question, Dev. So we have multiple commercial manufacturers that we've scaled up with. Those are U.S.-based manufacturers. Importantly, they are third-party CDMOs. We're not doing that in-house. And importantly, we're sourcing active pharmaceutical ingredient rapamycin from multiple, multiple sources there as well. From a capacity perspective, importantly, we brought on Jason Burdette as our Head of CMC and Technical Operations. Jason has scaled up and commercialized many, many programs, particularly given his role as Vice President of Technical Operations at Shire and other companies. So we do not, at this point, anticipate any capacity issues based on Jason's projections and the fact that we have planned for multiple commercial manufacturing partners.

Wesley H. Kaupinen: Great. Thank you for taking my questions.

Operator: Our next call question will be coming from Sam Slesky of LifeSky Capital. Your line is open.

Ritu Boral: Good morning, everyone. Thanks for taking the questions. I guess just as a quick refresher, could you remind us on the potential commercial strategy and MLMs as it relates to initial target centers? What proportion of MLM patients are kind of treated at those centers, thinking about build-out, sales reps needed, etc.?

Bohan Way: Yeah. Hey, Sam. Good morning, and thanks for being on the call. We are excited, at a top level, to commercialize on a standalone basis in the United States. That was part of the motivation to bring on Ashley Kline, which is to build a team. The claims analysis elucidated that about a third of our target market in microcystic lymphatic malformations are in 150 vascular anomaly centers. That represents a meaningful concentration of the market in a very few set of centers in the United States. There is approximately another 20% of the market, from the claims data, that is in approximately 200 additional academic centers. Putting those two together, a high concentration of patients in less than, call it, 500 centers in the U.S.

Bohan Way: We will build out sales, marketing, field marketing, and medical presence to make sure that we are really building a commercial engine that is high-performing and really serving the needs of physicians and patients. Ashley has got a pen to paper, Sam. We are doing some of that work now, and we will give more guidance on sizing of the commercial infrastructure at some point here soon.

Ritu Boral: Awesome. Thank you.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.