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Good day, and thank you for standing by. Welcome to the Palvella Therapeutics' Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Marcy Nanus, Vice President of Investor Relations and Corporate Affairs.

Thank you, operator. Good morning, and thank you for joining the Palvella Therapeutics' second quarter 2026 Financial Results And Corporate Update Call. As a reminder, our press release detailing today's announcements can be found in the Investors section of our website at www.palvellatx.com.

On today's call, I am joined by Wes Kaupinen, our Founder and Chief Executive Officer; Dr. Jeff Martini, our Chief Scientific Officer; and Matt 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.

And now I'll turn the call over to Wes.

Thanks, Marcy. Good morning, everyone, and thank you for joining us. The second quarter marked the culmination of many years of work to pioneer and accelerate the development of QTORIN rapamycin through 2 successful clinical studies in microcystic lymphatic malformations, a serious, rare, chronically debilitating lifelong genetic disease for which there are no FDA-approved therapies.

During the quarter, we achieved 3 important milestones. First, the compelling safety and efficacy results from our Phase III SELVA study, supported an in-person pre-NDA meeting with the FDA. Second, following that meeting, FDA granted Palvella rolling review, a feature available under Fast Track and Breakthrough Therapy Designation that is intended to expedite review and help bring important new therapies to patients earlier by allowing FDA to begin reviewing completed sections of the NDA before the full application is submitted. And third, thanks to the exceptional execution of the Palvella team, we completed the submission of the first module of our NDA.

These milestones have brought us meaningfully closer to achieving our most important near-term corporate objective, securing FDA approval for QTORIN rapamycin. I am pleased to report today that, #1, we remain on track to complete our NDA submission in the second half of this year. And #2, we also remain on track for potential FDA approval in the first half of 2027. In terms of launch readiness, we have continued assembling the leadership required to support a successful U.S. launch. We've recruited commercial and medical affairs leaders with deep experience in rare disease and dermatology launches, and I'm pleased to report that team has rapidly advanced key prelaunch activities.

In parallel, under the leadership of our Chief Scientific Officer, Dr. Jeff Martini, significant progress continues to be made across our late-stage pipeline and QTORIN platform. This includes our QTORIN rapamycin programs in cutaneous venous malformations and clinically significant angiokeratomas, both of which have been granted Fast Track Designation by the FDA as well as our QTORIN pitavastatin program in disseminated superficial actinic porokeratosis. Palvella stands today with both a late-stage rare disease pipeline and an internal product development engine powered by the QTORIN platform, designed to repeatably bring first-in-disease therapies to rare disease communities with significant unmet need and no approved treatment options today.

We are developing therapies for 4 serious rare skin diseases and vascular malformations that have been overlooked despite significant unmet need. These diseases have historically been underappreciated, not because their clinical burden is misunderstood, but because their true prevalence and incidence have been poorly characterized. On the top row, our data-driven epidemiologic work indicates that these indications each may represent multi-billion-dollar total addressable markets in the U.S. based on estimated diagnosed U.S. prevalence and the expectation for orphan pricing at launch, an estimated greater than 30,000 patients with microcystic LMs, greater than 75,000 patients with cutaneous venous malformations, greater than 50,000 with clinically significant angiokeratomas and greater than 50,000 patients estimated with disseminated superficial actinic porokeratosis.

In the middle row, at Palvella, we focus exclusively on diseases with no FDA-approved treatments and the potential for Palvella to pioneer first-in-disease therapies. We believe such a strategy is advantageous when compared to a more conventional biotech approach of pursuing incremental differentiation in competitive markets with well-resourced entrenched incumbents. For each of the diseases you see listed here, we believe, assuming continued clinical and regulatory execution, that we're on a trajectory to potentially introduce the first FDA-approved therapies for each of these indications.

Finally, physician market research further reinforces the potential for an attractive uptake curve at launch across all 4 indications. More than 80% of physicians surveyed indicated they would consider the QTORIN product candidate targeted for that indication as a first-line therapy, if approved.

Moving to QTORIN rapamycin. QTORIN rapamycin was designed as a pipeline-in-a-product, one product candidate with the potential to address multiple rare diseases in which hyperactivated mTOR signaling is a central pathogenic driver. We are now executing on that strategy across several indications. In the last couple of years, we've expanded the program from microcystic lymphatic malformations into cutaneous venous malformations and clinically significant angiokeratomas. We anticipate potential FDA approval for QTORIN rapamycin in cutaneous venous malformations in 2029 and clinically significant angiokeratomas in 2031, creating the potential for 2 significant indication expansions while the microcystic LM launch is still in its early years.

Later this year, we expect to announce a fourth indication with additional indications beyond the fourth indication already in planning by our R&D team. Overall, our pipeline-in-a-product strategy provides a highly efficient path to expand QTORIN rapamycin across multiple mTOR-driven skin diseases. Under our current development plan, potential approvals in multiple indications could expand QTORIN rapamycin's addressable U.S. patient population from more than 30,000 patients with microcystic lymphatic malformations to more than 300,000 patients across multiple mTOR-driven indications.

Our approach to launch readiness is informed by learnings from successful first-in-disease orphan drug launches, including Oxervate, VYJUVEK and TEPEZZA, which demonstrate how focused early execution across a small number of critical areas can meaningfully shape adoption. First, we have recruited experienced rare disease and dermatology leaders across commercial and medical affairs functions who are already executing prelaunch activities in the field. Second, the strength and consistency of our clinical data, together with physician market research that indicates strong interest in first-line use, support the potential for QTORIN rapamycin to become the first approved therapy for microcystic LMs and, if approved, a potential first-line treatment and future standard of care. Third, our teams are actively engaging physicians, including specialists at vascular anomaly centers, to deepen disease education and prepare treatment centers for a potential launch. Fourth, we are building the patient services infrastructure required to support patient access, coverage and treatment initiation following a potential approval.

Finally, our balance sheet, significantly strengthened in the first quarter through a $230 million capital raise, allows us to invest ahead of approval and build commercial readiness with urgency and strength. We are deeply grateful to the leading biotechnology investors who participated in that financing and whose support is enabling us to advance our mission of bringing QTORIN rapamycin and other QTORIN programs to patients. Taken together, these initiatives are designed to ensure that, if approved, QTORIN rapamycin reaches pediatric and adult patients living with microcystic lymphatic malformations as quickly and effectively as possible.

The core of Palvella's commercial and medical affairs leadership team is now assembled. We have recruited an exceptional team of leaders with deep experience across rare disease, dermatology, medical affairs, market access, sales, marketing and successful orphan drug launches while continuing to add talented professionals at all levels of the organization. They understand the critical requirements of a first-in-disease launch: building disease awareness, educating physicians, supporting patient identification, preparing treatment centers, establishing access pathways and enabling seamless treatment initiation following a potential approval.

Our senior leaders and I remain deeply involved in recruiting and selecting these teams, and we've augmented our own efforts by engaging world-class executive search firms to help us attract the very best talent. We have also increased our planned sales force at launch to approximately 40 sales reps, at the upper end of our prior guidance. We believe this additional investment will strengthen field coverage, physician education, patient identification and access support from day 1, ultimately helping pediatric and adult patients who may potentially benefit from QTORIN rapamycin, if approved, to access treatment as efficiently as possible.

Overall, I am grateful to work alongside Ashley, Jen, Kent, Vimal and Peter and the exceptional team they are continuing to build to advance the Palvella mission. Together, they bring passion, thoughtfulness and deep collective commercial and medical experience to a shared ambition, making the potential launch of QTORIN rapamycin the best launch any of us have been a part of, for patients, physicians and for the broader microcystic LM community.

We believe QTORIN rapamycin has the potential to become the first approved therapy, a first-line treatment and ultimately, a future standard of care for microcystic LMs based on 3 important attributes. First, QTORIN rapamycin is designed to address the causal mTOR pathway directly within the pathogenic tissue of interest. This targeted localized approach could be particularly compelling in a lifelong disease that may require chronic treatment. Second, the Phase III SELVA study delivered highly compelling results. The study met its primary endpoint, key secondary endpoint and all 4 prespecified secondary endpoints with high statistical significance, with 95% of patients demonstrating improvement on the primary endpoint at week 24.

Third, QTORIN rapamycin demonstrated a favorable safety profile. That profile is especially meaningful when contrasted with invasive procedures and off-label systemic approaches that carry substantial treatment burden, monitoring requirements and tolerability limitations. Taken together, the therapeutic approach, the consistency and strength of the SELVA results and the favorable safety profile provide what we believe is a foundation for QTORIN rapamycin to become the first approved therapy for microcystic LMs and, if approved, to establish a new first-line standard of care for pediatric and adult patients living with this serious lifelong disease.

Additional prelaunch activities are accelerating in terms of physician engagement. We have already engaged more than 200 of our initial 400 target clinics, while our broader reach extends well beyond that group through a meaningful presence at major medical congresses, vascular anomaly meetings and other scientific forums. Together, these efforts are deepening physician understanding of microcystic lymphatic malformations, including the underlying genetics, the causal role of mTOR signaling and the importance of timely diagnosis and treatment, while strengthening engagement within the vascular anomaly and dermatology communities.

We are also building what we believe can become a best-in-class patient services organization. We made the strategic decision to internalize our core patient support services, giving Palvella greater ownership of the patient experience and tighter coordination across patient access, reimbursement and treatment initiation. Our leadership team and initial hires bring deep recent experience launching a first-in-disease therapy for a serious rare skin disease, and we are actively expanding the team with additional top talent.

Our recent payer research confirms our earlier payer findings. Payers consistently recognize microcystic LMs as a serious rare vascular malformation with substantial unmet need and no FDA-approved therapies available today. Against that backdrop, our research indicates orphan drug pricing ranges are likely to be well supported with a favorable outlook for patient access and reimbursement. Finally, we're executing from a position of financial strength with approximately $250 million in cash at the end of the quarter, we are well capitalized through a potential FDA approval and a successful stand-alone commercial launch.

As I mentioned earlier, our NDA submission remains on track for the second half of 2026. Our application is supported by Breakthrough Therapy Designation, Fast Track Designation, Orphan Drug Designation and an FDA Orphan Product Grant. We're pursuing approval through the 505(b)(2) regulatory pathway, which allows us to leverage FDA's prior findings for rapamycin while supporting our application with the robust clinical data generated through our own development program. Our evidence package includes the positive Phase III and Phase II studies as well as real-world clinical evidence, and we intend to seek a broad label and traditional full approval.

Before moving on, I'd like to recognize and thank our NDA team, including our Head of Regulatory Affairs, Shama Munim, for their unwavering commitment to delivering a high-quality NDA submission and for executing with urgency, discipline and meticulous attention to detail. Their work reflects what makes Palvella special, a shared commitment to the patients and families we serve, a deep sense of purpose and an unwavering determination to achieve a potential near-term FDA approval and bring QTORIN rapamycin to patients as quickly as possible.

With that, I'll turn the call over to Jeff to discuss our rare disease pipeline programs.

Thank you, Wes. As you've heard this morning, Palvella has built tremendous momentum across the business. I'm very excited about the pipeline, including the data we have presented over the last quarter from both SELVA and TOIVA, the progress we are making in our clinically significant angiokeratoma and DSAP programs and the additional new program announcements later this year.

During the past quarter, we continued to strengthen our scientific presence at the major congresses, helping us expand disease awareness, deepen relationships with the treating community and support launch readiness. I want to highlight our participation at the ISSVA World Congress in May, where Palvella served as a platinum sponsor. Dr. Jim Treat delivered a late-breaking presentation that included results from both our Phase III SELVA study in microcystic lymphatic malformations and our Phase II TOIVA study in cutaneous venous malformations.

I'll begin with our lead program in microcystic lymphatic malformations. Before reviewing the data, I want to put these results in context. Microcystic lymphatic malformations is a serious condition that often presents in childhood and persists throughout a patient's life. These lesions cause leaking, bleeding, recurrent infections and substantial physical and emotional burden during some of the most formative years of a child's life. As a reminder, our previously reported Phase III SELVA study results demonstrated that 95% of patients improved on the mLM-IGA, our primary endpoint.

At ISSVA, Dr. Jim Treat presented the new analysis shown here, focused on children aged 6 to 11. What we observed was a rapid, large-magnitude treatment effect that was consistent across all 13 children studied. By week 24, the mean mLM-IGA improvement was 2.46 points, and every child in this cohort was rated as either much improved or very much improved. The photographs shown here help bring those numbers to life. They illustrate not only the magnitude of improvement that can be achieved with continued treatment, but also what that improvement may mean for a child living every day with a visible, symptomatic, lifelong disease.

Importantly, every patient in this cohort elected to continue treatment in the treatment extension, further supporting the potential role of QTORIN rapamycin in the chronic management of this disease. One key objective of SELVA was to better understand the natural variability of the disease and place the observed treatment response in that context. SELVA incorporated an innovative trial design with input from clinicians, patients and regulatory experts. Before treatment began, patients completed an 8-week run-in period, allowing us to prospectively assess changes in the disease without treatment in the same patients.

Photographs from both the run-in and treatment periods were then evaluated through a prespecified blinded independent review. During the untreated run-in period, disease severity remained essentially unchanged with a mean change in the mLM-MCSS of negative 0.1. This demonstrates that the disease did not spontaneously improve during the observation period. The mLM-MCSS was a key secondary endpoint in SELVA, and the improvement observed during treatment was highly statistically significant. Following 24 weeks of treatment with QTORIN rapamycin, blinded mean mLM-MCSS improved by 3.4 points, representing 48% of the maximum potential improvement from baseline.

Importantly, this design allowed us to contrast disease stability without treatment with the marked improvement observed after treatment, all based on blinded independent assessment. We believe these findings provide objective confirmation that the improvements observed in SELVA resulted from QTORIN rapamycin and further strengthen the overall body of evidence supporting the program. Cutaneous venous malformations represent a significant unmet need with more than 75,000 diagnosed patients in the United States and, importantly, no FDA-approved therapies. Recent publications continue to identify sirolimus or rapamycin as the most established medical therapy for internal venous malformations, reinforcing the rationale for QTORIN rapamycin.

As a reminder, our Phase II TOIVA study demonstrated that 73% of patients improved on the cVM-IGA, more than twice our predefined success threshold. Based on the positive data from TOIVA, our immediate priority is initiating the Phase III study. The planned next steps are clear. First, we expect to meet with FDA at our End of Phase II meeting to review the TOIVA data and finalize the pivotal study design. We will then initiate the Phase III study and remain on track to do so in the fourth quarter.

Before moving to the ISSVA data, I want to take a moment to address our Breakthrough Therapy Designation request. At the time of our submission, we included 12-week data, and FDA did not grant the designation based on our initial package. This does not impact the path forward in cutaneous venous malformations that I just laid out. We remain on track and enthusiastically committed to pursuing an approval in the cVM indication as quickly as possible. That said, we now have the complete 24-week efficacy data set and the final Phase II qualitative report, both of which will be reviewed at our planned End of Phase II meeting. Following our upcoming FDA interaction, we believe these additional data can support a substantially stronger Breakthrough Therapy Designation resubmission package following the initiation of the Phase III cVM study.

Turning to the ISSVA presentation, I want to review the additional data that Dr. Treat highlighted during his late-breaking presentation. He presented results for 2 key clinical signs of disease: lesion height or engorgement and overall appearance. Both are important manifestations of disease burden and arise directly from abnormal dilated venous channels within the skin. These visible manifestations can cause physical discomfort, interfere with daily activities and create a meaningful burden for patients. Improvements in both measures were evident at week 4, were statistically significant at every assessed time point and continued to improve through week 24.

The continued improvement through week 24 suggests that patients derive increasing benefit with exposure to drug over time. That is an important profile for a chronic disease in which long-term treatment is likely required. After reviewing the clinical data from TOIVA, I also spent time reading through the qualitative interviews from the 24-week study. For me, those interviews brought the data to life. I was genuinely moved by the impact QTORIN rapamycin had, and I want to share one of those quotes that particularly stood out to me, and there are many others like it. "It's definitely had a big impact. It's a lot easier to focus on school and have fun, hang out with friends and be in the moment when I'm not in as much pain."

We look forward to submitting these 24-week data and qualitative findings to FDA and reviewing them at our planned End of Phase II meeting to inform and support finalization of the Phase III study design.

We're also very excited about our clinically significant angiokeratoma program. This represents another natural extension of the QTORIN rapamycin pipeline-in-a-product strategy, addressing a serious rare lymphatic malformation affecting more than 50,000 diagnosed patients in the United States with no FDA-approved therapies. The first patients were dosed in April, and our Phase II LOTU study is evaluating QTORIN rapamycin in up to 15 patients. We look forward to presenting data from the study in the second half of 2027.

We have also seen strong enthusiasm from investigators at leading vascular anomaly and dermatology centers. Last week, an independent KOL call featuring Dr. [ Macario ] and Graig Suvannavejh further highlighted the significant unmet need and limitations of current treatment options. This is consistent with our physician research in which 96% of surveyed physicians indicated that they would incorporate QTORIN rapamycin into their practice. Importantly, we expect this program to follow a supplemental NDA pathway, providing another potential opportunity to efficiently expand QTORIN rapamycin following initial approval.

When we consider the scientific rationale, investigator enthusiasm, physician interest and potential supplemental NDA pathway, we believe this represents another important opportunity to address a serious rare disease with substantial unmet need. One of the capabilities we take great pride in is how closely our scientific team tracks advances across rare diseases. Through our network of medical and scientific experts, we are often among the first to hear about important scientific breakthroughs and emerging changes in clinical practice. We have also incorporated AI-enabled tools to continuously monitor developments in the scientific literature, intellectual property landscape as well as patterns of off-label systemic drug use. Together, these efforts deepen our understanding of disease biology and unmet need and help us to identify new opportunities for the QTORIN platform.

New literature published this quarter adds to the growing evidence around both the substantial unmet need in clinically significant angiokeratomas and the potential role of QTORIN rapamycin. These reports highlight that angiokeratomas can develop and proliferate during childhood and adolescence and may cause persistent bleeding, pain, pruritus, hyperkeratosis and substantial disease burden. The literature also underscores the limitations of current treatment, which remains largely dependent on destructive procedures, while identifying rapamycin as a potential therapeutic option. Together, these independent publications strengthen the scientific foundation for our QTORIN rapamycin program as we continue advancing this important indication.

Turning to DSAP. This remains a highly compelling program targeting a chronic, progressive, precancerous skin disease with no FDA-approved therapies. QTORIN pitavastatin is designed to be the first pathogenesis-directed therapy for DSAP by targeting the causal mevalonate pathway, and we remain on track for Phase II initiation in the fourth quarter of 2026. We also continue to see strong patient interest in this program, which underscores both the unmet need and the potential opportunity. We've already received a high level of inbound interest from patients seeking to participate in the study. The quotes on this slide are particularly powerful. One patient shared, "Thank you for doing the work you're doing. Our lives go dark after having this. It mentally and physically takes a toll. Life cannot be enjoyed the way it once was." Another said, "Looking for a breakthrough. This has been devastating." These statements highlight both the significant burden of disease and the strong desire for an effective FDA-approved treatment option.

With that, I'll turn the call over to Matt to review our financial results.

Thanks, Jeff. As of June 30, 2026, Palvella had approximately $251 million in cash, providing significant financial flexibility to invest in maximizing the potential launch of the company's first commercial product, if approved. In addition, our balance sheet provides sufficient capital to advance our entire pipeline during what we believe will be one of the most catalyst-rich periods in Palvella's history. Our strong cash position is a result of the successful financing completed in February. While our original objective was to raise $150 million, we ultimately raised $230 million, allowing us to invest in multiple high-return initiatives designed to derisk and strengthen our commercial launch.

Commercially, we have expanded our launch plans, including increasing our expected field force to approximately 40 sales reps and investing in several high-impact marketing and disease awareness initiatives. Within medical affairs, we've begun hiring medical science liaisons earlier than originally anticipated and now plan to build a larger team than initially envisioned. I've been personally involved in the recruiting process and have met every candidate that we've hired. I'm incredibly impressed with the quality of the candidates we've been able to hire, including individuals with rare disease experience at Horizon, Disc Medicine and other rare disease companies. Collectively, these commercial and medical affairs investments are intended to improve the initial launch performance and to deliver drug to patients sooner.

As a result of these incremental investments, we expect our targeted 2026 cash spend to increase modestly. We're now expecting approximately $85 million to $95 million in cash expenses this year. As we reflect back on our plans from earlier this year and the subsequent changes following our positive Phase III SELVA data and the subsequent successful financing, we now have more resources on the commercial and medical fronts. Our plans for pipeline expansion are accelerating, and we plan to increase our resources during our commercial marketing of QTORIN rapamycin, if approved. Factoring in all of these changes, we still expect to go into our launch with more capital on the balance sheet than originally expected to support the business.

With that, I can turn the call back over to Wes for some additional comments prior to opening the line for questions.

Thanks, Matt. In closing, what sets Palvella apart is both our exceptional team and our repeatable model for identifying, developing and commercializing first-in-disease therapies for serious rare diseases previously thought to be untreatable. Our model is unique. We focus on high unmet need, commercially attractive rare diseases with well-understood biology, emerging human proof-of-concept data that signals the potential for clinical benefit and meaningful unmet need.

We then apply the QTORIN platform to develop targeted localized therapies designed to optimize the risk-benefit profile while generating new and durable intellectual property. What gives me the greatest confidence in Palvella's future is the team executing this strategy. I have the privilege of working alongside a highly dedicated team of colleagues every day who bring deep scientific, clinical, regulatory, commercial and operational expertise, together with an extraordinary work ethic, a strong sense of urgency and an unwavering commitment to patients. Together, those capabilities enable us to advance innovative therapies toward FDA approval with greater speed, discipline and capital efficiency than traditional drug development approaches.

Our goal remains clear, to serve patients with serious rare skin diseases and vascular malformations for which there are no FDA-approved therapies while building Palvella into the leading rare disease biopharmaceutical company in this field. I'd like to thank our employees, patients, advocacy partners, external collaborators and our shareholders for their continued trust and support.

With that, operator, we will now open the line for questions.

[Operator Instructions] Our first question comes from Alexa Deemer at Cantor Fitzgerald.

This is Alexa Deemer on for Josh, and congrats on a great quarter. So perhaps you could elaborate a bit more about your ongoing efforts to identify MLM patients? And then are your recent findings in line with the initial estimates of around 30,000 diagnosed patients?

Great. Alexa, thanks for being on, and thanks for the questions. I can confirm that our recent findings are in line with previous estimates. Last year, we published a claims analysis at a medical congress that indicated somewhere between 45,000 and 95,000 diagnosed MLM patients in the U.S. Importantly, in that analysis that's published, there was also an estimated annual incidence of 1,500 or more newly diagnosed patients that will come into that pool. We like to be conservative in our approach on epi, so we can confirm that we believe there is greater than 30,000 diagnosed patients in the United States with microcystic lymphatic malformations.

And I appreciate you asking the question in terms of patient identification. The key there is to have your team in the field. We know where a lot of these patients are concentrated. This is a market that has experienced organic market development as a function of vascular anomaly centers emerging over the last 20 years that have high patient volumes. We know where those centers are. We know who the physicians are that take care of these patients. And so we're making efforts to be in front of those physicians at their sites, but also with a strong presence at medical congresses as well.

Our next question comes from Whitney Ijem at Canaccord Genuity.

Just first one on DSAP Phase II. Can you remind us of the target enrollment for that study? Sorry if I missed it, I was juggling calls. And I guess just given your comments on demand there so far, is there a scenario where that program could proceed more quickly than the angiokeratoma program just as we think about cadence of data readouts next year?

Yes. Thanks for those questions. Whitney, I'll start off with some comments and then ask Jeff to also add additional color. So on the DSAP Phase II study, we expect that to be about a 15-patient Phase II study. Will it proceed more quickly than angio? To speak about angio for 1 minute, we did start that trial ahead of original expectations. That trial started in the first half of this year, originally expectations for that were second half of this year. Our clinical operations team has done a great job engaging sites, screening patients, making sure we're getting the right patients into the study, and that study is anticipated to read out in the second half of next year. We'll firm up timelines in terms of the DSAP readout around the time of initiation of the Phase II study, which we expect to be sometime in the second half of this year.

And then just a quick follow-up. We conducted a KOL or a physician survey recently. And I guess from the feedback of that survey, there was about 60% of patients on average of the MLM patients managed by DSAPs who are actively seeking treatment for their MLM, with the main reasons why patients were not seeking treatment being just kind of like comments around not bothered, some are asymptomatic, et cetera. So I'm just curious, as you think about the greater than 30,000 number, is that focused specifically on those patients who would be kind of thought to be symptomatic enough to be seeking treatment? Or how should we kind of think about that headed into launch?

Yes. So our claims data show that there was 45,000 to 95,000 patients in clinical medicine, Whitney. We've said greater than 30,000 to be conservative. We know now as of about 10 years ago that there's been discoveries around the genetics and the causal biology of this disease. So microcystic lymphatic malformations are a proliferative disease that is progressive in nature. So patients who may have less burden from their daily disease, we believe are also very good candidates for QTORIN rapamycin if approved.

I think some of the data that Jeff showed earlier around pediatric patients who may be earlier in their disease cycle and those patients had very good responses. And we think that that approach applies to patients who may be less burdensome from a symptom perspective because if the disease is left -- goes untreated, it will predictably proliferate and progress and become more problematic. So that will be the approach that our medical affairs team takes, our commercial team. This is an approach that we've derived from our interactions with the thought leaders such as Jim Treat at Children's Hospital of Philadelphia, Mike Kelly at the Cleveland Clinic.

Our next question comes from Ritu Baral at TD Cowen.

Wes, I wanted to ask about the deployment strategy of the 40 reps that you mentioned across the vascular anomaly clinics. Do you guys currently have an estimate of how many identified vascular anomaly clinics there are, either now or at the time of the commercial launch since you mentioned more opening up? What percentage of the 35,000 conservatively diagnosed and documented patients are at the centers versus your strategy in the community setting? And how much that drove the sort of expansion of the rep number that you mentioned? And then I've got a follow-up about your hub.

Great. Ritu, thanks for the questions. To address your question on where the reps will be focused, we think of our market as 3 tiers. That first tier is about 400 centers. Those 400 centers, we estimate, based on claims data, have about 15,000 or more MLM patients under their management. Of those 400 centers, we'd say about half of those are going to be vascular anomaly centers. There's an excellent publication from Dr. Sally Cohen-Cutler that talks about the emergence of vascular anomaly centers from a few years ago, and we've been able to leverage that publication.

Reps will also, in addition to that, what we'll call the Tier 1, which is the high-volume centers, we will also have personal promotion with the reps into our Tier 2 and our Tier 3. So all segments of the market will receive personal promotion. I mentioned Peter Finlayson earlier on this call. Peter has a lot of experience in digital marketing. He's brought on 2 new hires who have just started, who are both very impressive. And so we are going to be deploying digital marketing approaches across not only that Tier 1 of 400 centers, but also the Tier 2 and the Tier 3.

In addition to personal promotion through the reps, we expect to be building an inside sales team. This is an approach and strategy that Ashley had at Dompe through the launch of Oxervate that she has described as a high return on investment activity in an orphan launch. And so under Kent Taylor's leadership, we're starting to assemble that team as well. I think Matt covered it with his comments, which is just to say, we're very well resourced for the launch. We continue to be disciplined in our capital allocation. But by deploying more reps at launch, a slightly larger medical team and a very strong marketing team, we think that sets us up for early launch success.

Great. And then on the hub and specifically reimbursement support plans that you have, what's the size of the force in the hub that you currently plan on being available to patients and your practices to help? And as you think about your pricing and your first insurance conversations, do you have a sort of list of likely suspects for either prior authorizations or potentially even, obviously, unapproved step-throughs that you think insurance may utilize?

Yes. Thanks for the question. So we've just recently brought on our leader for the patient services team. His name is Matt Giordano. Matt was previously at Krystal Biotech. He's working closely with Jennifer McDonough, who was also previously at Krystal. We're in the process of ensuring that that team is appropriately sized, similar to our guidance of 20 to 40 reps and how we landed on 40. Our internal thinking is to make sure that that team is resourced at the high end of the range. So we look forward to coming back with specifics on the size of that team.

On your second question, our payer research, thanks for flagging that question. We mentioned our payer research. We tested for that, Ritu. We would not expect at this point in time to have step-throughs of unapproved therapies. When there is the presence, if we're approved, of a drug that has 95% efficacy in Phase III and is taking this on-target, addressing the causal mTOR pathway and in-tissue, doing it in the skin approach. So we don't anticipate that based on our recent payer research.

Would prior auths really just be diagnosis?

Yes, we'll have some of that research that we're continuing to do. Oftentimes, payers in rare diseases can request prior auths. The key is to have that mapped out and have your patient access team and payer team be able to seamlessly navigate those prior auths. And I think there's a lot of precedent from the 3 precedents we mentioned, TEPEZZA, VYJUVEK and Oxervate, that we can model.

Our next question comes from Annabel Samimy at Stifel.

Congratulations on the progress. So you talked a lot about the MLM population size. Have you done the same for cVM? And what are the prospects for orphan designation for that indication? Is cVM a lot larger than the 75,000 that you've cited? And then separately, for MLM, I know that you have an OLE study ongoing. Is any of that data needed for completion of the filing? What can we expect as far as data trickling out from that study and just additional data releases through the year?

Annabel, thanks for the questions. I really appreciate you asking about the size of the cVM market. What I've found from my time at Insmed and Palvella is that what's in the literature is generally unreliable in terms of estimating epi. So we take data-driven approaches through real-world occurrence studies, through claims analysis to really appropriately size these markets. There's a recent publication in Orphanet Journal of Rare Diseases with Jack Gallagher as the first author that estimates that there's 135,000 cutaneous venous malformation patients in the United States. Again, applying some conservatism in our corporate deck, we talk about greater than 75,000.

What we do know about venous malformations is that it is the most common type of vascular malformation, more common than microcystic lymphatic malformations, for example, or more common than other forms of vascular malformations.

Your question around orphan designation, we do intend to pursue orphan designation for that indication. And then I'll pass it over to Jeff to talk about the OLE data and what will be incorporated in the filing as well as some of the additional opportunities to share data from the SELVA study.

Yes. Thank you, Annabel, for the question. Yes, we do have the ongoing open-label extension study as part of SELVA. So the patients that completed efficacy had the opportunity to stay on drug, and they remain on drug at this time. And we are going to be planning to submit a data cut from that as part of our safety update to the FDA after the original NDA goes in. So we're actively planning that now. We are having a large medical affairs and medical congress presence this summer and next year, we're planning all those activities now. So we continue to do new data cuts, continue to have different ways we're analyzing data, including some of the long-term safety data and PK and other data will be coming out at future medical congresses.

Got it. And if I could just ask for a follow-up on cVM. What are your expectations at this point for what a Phase III trial design will look like? And if you have to have a placebo-controlled arm, what are your prospects for enrollment now that the data is out and they see that this is a very effective drug?

Yes. Thanks for that question. We're meeting with the FDA. We plan to meet with them in the coming months here to have an End of Phase II meeting and to align on a Phase III study design. Annabel, I think whether that ends up being a placebo-controlled study or a non-placebo-controlled study, based on all the analysis we've done of the Phase II data, including some of these patient qualitative interviews that Jeff referenced, we think that we will demonstrate a robust and strong treatment effect of QTORIN rapamycin based, again, on the Phase II results, but also the acceptance of rapamycin/sirolimus as a targeted therapy addressing the underlying mTOR driver for these venous malformations. We expect to have FDA approval, based on the internal modeling that we've done of various study designs, Annabel, in the 2029 time frame for cutaneous venous malformations.

Our next question comes from Graig Suvannavejh at Mizuho.

This is Ryan on for Graig today. Maybe just the first question, focusing on angiokeratomas, maybe for Jeff. Can you talk a little bit how LOTU is coming along and maybe talk a little bit about some of the overlap in both the etiology and the symptomology in angiokeratomas relative to the more advanced programs in MLM and cVMs? And then maybe just as a second question for Wes. What's your sense of investor interest in the angiokeratoma program so far and the level of awareness that investors have regarding overlap with these other conditions?

Thanks for the question, Ryan. This is Jeff. So the status is we've started the study. We started earlier than originally planned. It's gone really well. I've had the opportunity to train all the clinicians on the study design and the endpoints. And I could say, anecdotally, there's a lot of enthusiasm for this trial. There's a lot of unmet need, and they are seeing these patients in their clinic, and they're not wanting to do some of the destructive procedures that I've talked about. They're destructive, they're painful and the disease often comes back. And that kind of goes into the second part of your question about the symptoms and the overlap.

We started the program in angiokeratomas because of the unmet need, but also because of the fact that there's a lot of biological and clinical overlap with the microcystic lymphatic malformations program. Angiokeratomas are a type of isolated lymphatic malformation. They have some of the same molecular markers. There are some differences with microcystic lymphatic malformations. There's -- bleeding is much more common in angiokeratomas. But overall, very, very symptomatic disease, significant unmet need, and we're seeing a lot of investigator interest as well as patient interest in the trial.

Yes, Ryan, thanks for both your questions. I'd say the level of awareness of these rare diseases that have no approved therapies is generally low. That's been my experience both at Palvella and at Insmed. I think where you start to see the level of awareness rise is when you run these studies, particularly Phase II studies. And if you're fortunate enough, like we've been fortunate in microcystic LMs and cVMs, to demonstrate a strong treatment effect, I think investor awareness rises over time. We do like to use the opportunity on these earnings calls to educate. Jeff did a great job, I thought, walking through the 3 papers in angiokeratomas and also the quotes that he had for patients who are interested in the porokeratosis program. So it's incumbent upon us to drive this disease state awareness with all of our stakeholders, but also execute these studies on a timely basis with urgency, advance our therapies, get them to patients who currently have nothing.

And then maybe just as a last question for me. Can you talk about the pursuit of the platform designation for QTORIN? Like what sort of data package you're going to put together for that? And how is that going to benefit both the ongoing programs and the programs that you plan to announce here?

Yes. Thanks, Ryan, for the question. We've followed others who have secured this FDA's Platform Designation. And similar to some of these other designations that we've secured, our interpretation is that the Platform Designation can serve to expedite therapies to patients. So Platform Designation should be available to Palvella in terms of submitting an application after our first approval for QTORIN rapamycin in microcystic lymphatic malformations. We believe the beneficiary of the Platform Designation would be future QTORIN product candidates such as QTORIN pitavastatin as well as the third product candidate that we're going to announce later this year. So we'll exit this year with QTORIN rapamycin, QTORIN pitavastatin and a third product candidate. Each of those formulations have similar characteristics in terms of the anhydrous gel base, in terms of some of the excipients, release characteristics, penetration characteristics. So we're excited to secure that first FDA approval in the first half of next year and then have a collaborative dialogue with the FDA about our eligibility for a Platform Designation.

Our next question comes from Ryan Deschner at Raymond James.

Two quick questions for me. One, have your expectations for what a potential label might look like in MLM evolved since your pre-NDA meeting with FDA in terms of age cutoff or otherwise? And did regulators cite specific areas from your initial cVM data package that need to be addressed or strengthened with more mature data in order to be granted or reconsidered for Breakthrough Designation?

Yes. Thanks for the questions, Ryan. No changes in the label conversations as a result of the pre-NDA meeting. We're going to pursue a broad label for microcystic lymphatic malformations, and we believe that should include patients at pediatric ages. We think that's best for patients, and we think we have strong data to support that as part of our NDA data package.

In terms of your question on the data package for cutaneous venous malformations, I think Jeff highlighted it nicely earlier, which is we'd like to submit more patient experience data. We'd like to submit patient interview transcripts. We think those will be additive to the cVM data package. They help regulatory agencies interpret the effect sizes and what those effect sizes really meant to patients. So this was a smart approach that Jeff implemented to do these qualitative interviews to understand disease burden at baseline, but also understand whether there was a change in disease burden following 12 weeks of therapy. So those will be core to a future breakthrough resubmission package as well as that 24-week data, which Jim Treat presented at ISSVA and Jeff highlighted on this call.

Our next question comes from Sam Slutsky at LifeSci Capital.

Just real quick, any updates on how you're thinking about pricing analogs for MLMs? And then can you just remind us on kind of the extended body surface area in MLM patients and kind of expectations for tube size and what it could cover, et cetera?

Yes. Sam, thanks for the question. On pricing analogs, we have 3 of those listed in our corporate deck: TEPEZZA, Oxervate and ARIKAYCE. We guided to a pricing range of $100,000 to $200,000 per patient per year in microcystic lymphatic malformations. I mentioned that we've done recent payer research. We can confirm that we would expect to have strong payer coverage in those pricing ranges of $100,000 to $200,000 per patient per year, and we'll come back to the market closer to the time of FDA approval with our launch price.

On your second question, will pass it over to Jeff.

Thanks, Sam, for the question on BSA and tube size. So microcystic lymphatic malformations are caused by somatic mutations in PIK3CA, which lead to mTOR over-activating and driving the disease. And because they're somatic in nature, they tend to be very localized in nature, usually in areas of high lymphatic density, often in the trunk or the groin area. As a result, the size of them is usually between 9 cm2 and 200 cm2 are the majority of patients with lymphatic malformations. They can be larger, but that's less common. So we've typically dosed the patients according to lesion size and not BSA, although we do have that data. But for lesion size, one actuation of our pump is enough to cover up to 200 cm2. So the product will be provided in a pump, which is enough to cover one actuation of the pump for a 30-day supply.

Our next question comes from Danielle Brill at Truist.

This is Alex on for Danielle. Question on the upcoming End of Phase II in cVM. Based on your experience with MLM, how does the presence of Breakthrough Designation impact the content and the tone of the End of Phase II meeting? Specifically how the FDA approaches whether or not a placebo arm is necessary? Just curious if the lack of Breakthrough Designation changes your calculus for how you approach the upcoming End of Phase II meeting.

Yes, Alex, thanks for the question. The absence of Breakthrough does not impact how we think about the End of Phase II meeting. We have a drug that in Phase II had a large effect size in a serious rare progressive disease where there's no FDA-approved therapies. I think one of the keys for the End of Phase II meeting in addition to stepping through that data and some of the newer data that Jeff has aggregated that the FDA hasn't seen is for the FDA to have an exchange with our key opinion leaders who treat these patients today and be able to hear their input on what they think is the most appropriate study design for a Phase III study.

We do know, thanks to the [ Fujino ] publication out of Japan, that there is no documented spontaneous progression in this disease. And so that will be a key point of discussion for our regulatory interactions. And as you and others have gathered, we have a very collaborative relationship with the agency. We're grateful in MLM for Breakthrough, Fast Track, Orphan Designation, Orphan Product Grant. We have Fast Track in cVM and angiokeratomas. So we're looking forward to working collaboratively to align on the right study design that efficiently brings this drug to patients.

This concludes the question-and-answer session. I would now like to turn it back to Wes Kaupinen for closing remarks.

Great. Thank you, operator, and thank you to everyone for your participation on today's call and for your continued strong interest in what we're building at Palvella. We look forward to updating you on our continued progress as we work to bring first-in-disease therapies to patients living with serious rare skin diseases and vascular malformations.

Operator, you may now conclude the call.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good morning, and thank you for being with us here today. My name is Elizabeth Webster, and I'm on the biotech equity research team at Goldman Sachs, and I'm joined by Wes Kaupinen, the Founder and CEO of Palvella Therapeutics.

So to start, Wes, help us level set here and provide a brief intro to the company and the QTORIN platform and your near-term catalyst path.

Great. Well, thank you, Elizabeth, for having me today at the Goldman Conference. I would like to start with the name Palvella. Palvella in Finnish means to serve. So the mission of our company is to serve patients that have serious rare skin diseases and vascular malformations that currently have no FDA-approved therapies. Our corporate strategy can be summed up in a word, which is, first, we want to be first for patients who do not have a single FDA-approved treatment. And our goal is to not only to develop but also to commercialize on a stand-alone basis and to bring those targeted therapies to these patients with rare skin diseases and vascular malformations.

Our vision is to build an enduring leader in the area of rare skin disease. We want to be the company that leads in this area. It's been estimated that there's approximately 600 rare skin diseases. Fewer than 2% of those have an FDA-approved therapy. So we view this area as high unmet need, but also importantly, low competitive intensity. So it has dynamics which we think are ideally suited for us to be the leader in the space. What we've built over the last many years is both a late-stage pipeline as well as a platform called QTORIN. Our lead product candidate is called QTORIN rapamycin.

We were excited earlier this year to announce positive Phase III data in a rare, serious, chronically debilitating disease called microcystic lymphatic malformations. It affects more than 30,000 patients. We estimate in the United States, no FDA-approved therapies. We met our primary endpoint, key secondary endpoint and all of our prespecified secondary endpoints. So we are on the cusp of filing our NDA, and that is the first clinical indication for QTORIN rapamycin. We believe it's a pipeline and a product and that there are many additional mTOR-driven skin disease that we're either currently pursuing, which we'll talk about or intend to pursue in the future.

We also have a platform called QTORIN. QTORIN allows us to reproducibly generate novel topical product candidates, which can be evaluated in these rare skin diseases. Very excited to have a strong capital base in place. Thanks to our investors, we closed last quarter with about $260 million in cash. So we have significant capital to take us through many of these key milestones, which I've already highlighted.

Great. Thank you. Super helpful overview. I just want to focus on the QTORIN platform before diving into the specific programs. And maybe just talk about how broad that could go and the kind of platform-driven capabilities that you have with that?

Sure. So we developed QTORIN internally. We own the platform. And really what it's designed to do is to reproducibly generate novel topical product candidates, which can be evaluated in serious rare skin diseases or vascular malformations. We've now tested over 15 molecules with the platform. And what we've shown is the ability to get high payloads of active molecules, so high concentrations into our anhydrous vehicle. That's a key feature of QTORIN. We're also able to take these APIs and deliver them to the lower layer of the skin to the dermis. And that's really important because many of the diseases we target manifest in that lower layer of the skin.

So the ability for the technology to deliver the drug at site of pathophysiology, we think, translates into a significant clinical benefit, similar to what we saw in our Phase III study. We also, with QTORIN, there are certain aspects of the technology that allow us to retain the drug in the skin. So we're oftentimes working with potent molecules where you want to see low levels of systemic absorption, not inflicting unwanted toxicities on patients that have localized skin diseases or localized vascular malformations. And with each product candidate that we bring into the platform, we filed new IP. That's formulation IP, method of use IP. The goal there is to get long-duration, defensible intellectual property claims.

So different than a lot of companies, the growth of Palvella does not depend upon external in-licensing and acquisition. We certainly spend some resources there. We're always evaluating those opportunities, but we think we have an internal product development engine where we can bring molecules into the platform, formulate these drugs and then evaluate them in these rare skin diseases, many of which in vascular malformations represent multibillion-dollar total addressable markets.

That was wonderful. Thank you. And moving to mLM, the microcystic lymphatic malformations. Walk us through the Phase III results that you've generated and highlights from the ISSVA World Congress and any other recent scientific meetings?

Sure. So we ran a Phase III study. This was designed to be a 40-patient study. This was a single-arm baseline controlled. We enrolled 51 patients into the study. Our clinical operations team did a fantastic job of over-enrolling the study. The study read out in Q1. Our primary endpoint was the Microcystic Lymphatic Malformation Investigator Global Assessment. Single item instrument, the scale ranges from negative 3, very much worse to plus 3 very much improved. And so the physician is scoring at the end of 24 weeks that lesion severity at the end of treatment compared to baseline, utilizing a baseline photo to help inform an objective assessment.

What we saw with the Phase III results, we met the primary endpoint, highly statistically significant, a key secondary endpoint, which was a blinded analysis of photos and all of our prespecified secondary endpoints. Most importantly, we saw that 95% of patients on the primary endpoint improved. 86% of patients achieved the high end of the scale, which is a plus 2 or a plus 3. So they were much or very much improved. We saw a low incidence of adverse events in the study and very low systemic absorption on average. So we're thrilled with the outcome of the Phase III study. We're grateful to the FDA for their collaboration.

This program post Phase II was granted breakthrough therapy designation. We also have Fast Track Designation, orphan designation. And the FDA has granted us capital through their small nondilutive pool called the FDA Orphan Drug Grant to support that Phase III study. You asked about ISSVA. ISSVA stands for the International Society for the Study of Vascular Anomalies. Their annual conference was held in Philadelphia just a couple of weeks ago. Jim Treat, who is a senior dermatologist at the Children's Hospital of Philadelphia. He's worked closely with us over many years in our Phase II study, our Phase III study. He presented a lot of new data on microcystic lymphatic malformations.

I'll just highlight 2 of the data points that he brought forward. Number one is we looked at our cohort of younger patients, that's patients aged 6 to 11 who are in the trial. That cohort, all 100% of patients were either much or very much improved. And we think about QTORIN rapamycin, given the genetic basis of the disease as not only a treatment, but also a chronic therapy. So one thing we evaluated in this younger cohort was what percentage of the patients rolled over and stayed on drug in the treatment extension period, and we saw 100% of patients stay on drug even after they achieved that much or very much improved outcome on the primary endpoint.

So we were excited with those results. We also presented results Jim did on leaking and bleeding. So one of the major clinical issues that these patients have when these genetically malformed lymphatic vessels protrude through the skin, they leak lymph fluid. It's called lymphorrhea. It can cause infections such as acute cellulitis, it can cause hospitalization. And we measured that clinical sign and the improvement on that clinical sign as part of our Phase III protocol. And there, we saw a large effect size on what's called the Microcystic Lymphatic Malformation Investigator Global Assessment for leaking and bleeding. So Jim did a great job highlighting not only the statistically significant results, but also the clinical meaningfulness to the patients.

Great. And just on the patients that rolled over into the extension period, I guess when we think about this being a chronic therapy, how long do you think patients will be on this therapy in the real-world setting?

Sure. So I'll start with the genetics of the disease. It is a PI3K mutation, mTOR is hyperactivated. The biological driver is constitutively active. It is turned on. And so even for patients who on our drug in our clinical studies showed large effect sizes, what we learned from our Phase II is that when therapy is withdrawn, the disease can come back, and it's because of that biological driver. So we think the right thing for the patient, which is to keep so that you're counteracting that causal biological driver.

If the patient has a treatment effect while on our drug, we want to try to maintain that treatment effect and not run the risk of withdrawing therapy, which could result in the return of the lymphorrhea, the leaking, the bleeding, the functionally debilitating aspects that come with these lesions.

Got it. Super helpful. And you're guiding to an NDA submission in the second half of this year and just completed the pre-NDA meeting. So any color you can provide on kind of how the meeting went and how you think you're positioned post that meeting? And then also the FDA's understanding of your endpoints, which you did so much work around.

Sure. So the FDA has been very supportive throughout the development of this program. We're developing a drug in a serious, rare lifelong disease that affects kids and adults as well. They granted us early on in the development, Fast Track Designation post Phase II. They granted us breakthrough designation. And as I mentioned, they help support the Phase III study with their own nondilutive funding through the FDA orphan drug grant. So we were able to meet with the FDA as part of our pre-NDA meeting. We put out a press release noting that we are on track to submit the NDA in the second half of this year. We'll submit our Phase III data, our Phase II data, plus the FDA has made a recent movement around drug repurposing.

We're working with rapamycin, also known as Sirolimus, and we're repurposing that into a PI3K/mTOR-driven disease that is rare, that's chronic in nature. So we think what we're doing is consistent with that initiative as well, and we look forward to putting together a very robust NDA submission and submitting in the second half of this year.

Got it. And then looking ahead, potentially after that NDA submission and review, help us understand what the commercial path looks like and how you're preparing for that at the moment and any prelaunch activities and just your overall strategy for the launch.

I think on the commercial market, this is a key point of the time we're moving into a new rare disease. The disease has to be serious, rare, nothing approved where we can be first, but we also want to have a commercially attractive market. With microcystic lymphatic malformations, we've invested in claims analysis. So we've been able to go out and quantify the estimated number of diagnosed patients that are currently within clinical medicine. We estimate that there's more than 30,000 patients that are diagnosed in the United States within clinical medicine that have microcystic lymphatic malformations.

So it is an order of magnitude greater than what one would estimate in ultra-orphan disease. When you overlay orphan pricing of $100,000 to $200,000 per patient per year, you start to look at a total addressable market opportunity in the order of $3 billion to $6 billion, again, with nothing that's currently approved, and we believe based on our market research that we have the potential to be first line in standard of care in this disease. From a market research perspective, we have gone out and surveyed physicians. We asked them with a product profile if they would consider our drug first-line therapy, 98% said they would consider it first line and that they would prescribe the drug to an estimated 3/4 of their patients. So that's very encouraging.

On the commercial build, we have hired a Chief Commercial Officer. We did so about a year ago. Her name is Ashley Klein. Ashley is a proven commercial veteran in the orphan space. She previously launched a topical therapy called Oxervate for a disease called neurotrophic keratitis. Under Ashley's leadership, she built out a U.S. commercial organization, was able to grow the sales of that drug from 0 to north of $500 million, and it's continued to grow. That drug now does north of $1 billion.

Ashley has been tasked with recruiting an exceptional leadership team. And just earlier this year, we were able to add 2 key talents to the team. Number one is Jennifer McDonough. Jennifer previously led market access and reimbursement for Krystal Biotech, has had a very successful launch of a topical therapy for a serious rare genetic disease. We've also hired Kent Taylor to lead our sales organization. Kent previously led the sales organization at Arcutis.

So that team is out driving a disease state awareness campaign, which is called Beyond mLM. We also have a relatively concentrated market with about half the patients in 400 centers. We've identified those centers. We're out talking to those centers now about disease state awareness. So very active pre-commercial effort underway.

Great. And then maybe briefly, just what size sales force do you think is required to target these patients across those 400 centers? And then kind of can you go broader than those centers to -- over time to capture the remaining prevalent patients?

Sure. So there's multiple tiers to the market. There's that first tier, which is 400 centers, and we believe that, that constitutes about half the market. So of the 30,000, the 400 centers have about 15,000. That's going to be a key point of focus for our sales force. We expect to hire upwards of 40 sales reps. We had previously guided 20 to 40. We think the right approach is to hire 40 reps to promote, once approved, not only to that first tier, but also there's a second and a third tier. In that second and third tier, you have oftentimes dermatologists that are in the community that have patients with microcystic lymphatic malformations that can be outside of the academic centers.

So it's key that we build relationships with that Tier 2 and the Tier 3 as well. We'll do that not only through our sales force, but nonpersonal promotion as well, digital marketing. We can also build an inside sales effort. These are some of the tactics that Ashley used very effectively with her launch with Oxervate at Dompe. So we're going to use best practices from all the experience that she's accumulated from the Oxervate launch, Kent's experience in the atopic dermatitis space and the success Jennifer McDonough had with the Krystal launch.

Great. And then this might be an early question, but how do we think about pricing for this indication? And what are some analogs we can think about as reference points?

Sure. Definitely not too early to be thinking about pricing. I think a lot of the pricing is going to be governed by the seriousness of the disease. This disease is serious, functionally debilitating lifelong, what the current approaches are to treating. There's nothing approved, which predominantly used today. Our interventional techniques that are nonspecific in nature, don't have high efficacy rates, but do have high recurrence rates and then evaluating our safety and efficacy profile. So we've done a lot of payer testing directly with insurance companies through our third-party market research partners.

We've guided on a pricing corridor of $100,000 to $200,000 per patient per year, and we think we would have favorable coverage policies within that pricing corridor. Some of the analogs you had asked about, I was fortunate enough to work on a drug that's now approved in the U.S., Europe and Japan called ARIKAYCE from Insmed. I think that's a good analog, although our efficacy rates are significantly higher than what ARIKAYCE showed in their Phase III study. We have Ashley's experience with Oxervate, topical therapy for progressive eye disease. We also look at TEPEZZA, treating thyroid eye disease, chronically debilitating disease as a good analog for where we may price.

Great. And I think we should move on to some of your other pipeline assets covering -- just covered mLM. So moving to angiokeratomas and DSAP. You will present Phase II data, I believe, in the second half of next year on angiokeratomas. So just discuss the structure of the trial, the endpoints and kind of what you're looking to see out of this data.

Sure. So angiokeratomas are a great Palvella disease. What do I mean by that? Clinically significant angiokeratomas are serious. They're chronically debilitating. There's nothing approved, and we have the opportunity to be first with a therapy. And there's very little, if any, development underway from other companies. They are a type of superficial lymphatic malformation. So we think that there is some overlap in the biology between a microcystic LM and an angiokeratoma.

One of the layers of innovation that we have at Palvella, when we go into these diseases, we really try to understand epidemiology, and we try to understand diagnosed prevalence. That oftentimes has not been done because there's no companies in the space. When we did that with angiokeratomas, what we found is we estimate that there's more than 50,000 of these patients in the United States. So again, this is a large orphan market. We believe it to be currently uncontested, and we have the opportunity to be first.

These lymphatic malformations, as I mentioned, they present superficially. The major problem with these malformations is they oftentimes present in anatomical areas where it can be functionally debilitating to patients, including in the genitals area. Oftentimes, these patients have bleeding and the approaches that are available to them today include things like surgical excision, electrocautery, cryotherapy. These are invasive. They are rarely durable. And so we have the opportunity to come in with a targeted topical therapy that offsets what we believe to be the key driver here, which is the mTOR and VEGF pathways.

We're going to run a Phase II study. That study started early, credit to our clinical operations team. We thought it would start in the second half of this year. It started in the first half of this year. We're going to evaluate somewhere between 10 and 20 patients. We're utilizing endpoints similar to what we used in our microcystic lymphatic malformation study and our cutaneous venous malformation study. And what we'd like to see there is we'd like to see 30% or more of patients improve on drug. That's a benchmark that we put out for our cutaneous venous malformations Phase II study. And we think in a serious rare disease where there's nothing approved, if you can impact 30% of these patients positively, again, going back to ARIKAYCE as a nice analog, you can have a commercially viable drug.

So our clinical operations team is ahead of plan in terms of starting the study. We're being very judicious about enrollment and very selective about what patients get into the study, and we're on track to read that study out in the second half of next year. Really importantly, from a regulatory perspective, we're using the same IND and the same drug product. So eventually, if we're approved in microcystic lymphatic malformations, adding this indication to the label would be through a supplemental NDA, not a new NDA.

Great. And then what would you like to see in that Phase II data? And would you need to run a Phase III post that?

Sure. So in that Phase II data, we're looking at dynamic change instruments. So what that is, is it's the physician and the patient rating how they're doing at the end of the study compared to the beginning of the study. So you'd like to see 30% of those patients at a minimum improve while they're on drug. That's one key aspect of the study. The second is you want to use the -- looking at a lot of different endpoints in a rare disease where there hasn't been work done, you want to understand which of those endpoints is sensitive to detecting a treatment effect.

So you're using that Phase II study to inform a Phase III design. In terms of your question on would we need a Phase III study. Ultimately, the Phase II data is going to govern what the development path is. Our base case is, yes, we would likely need a Phase III study. I think we're encouraged by the repurposing initiative that the FDA announced, and we will always try to find expedited pathways to bring our therapies to patients.

Great. And similarly, as you just outlined for that indication, can you speak to the DSAP indication and when we could see data there and the development path there as well.

Sure. So let's start commercially, disseminated superficial actinic porokeratosis. Again, we've done our own epi work to determine whether this is a commercially attractive market. We estimate that there's more than 50,000 patients that have DSAP in the United States. This is a -- that are diagnosed in clinical medicine. This is a genetic disease. These patients have pruritic lesions that are proliferative in nature. And one of the major issues with these lesions beyond being pruritic is there is a higher risk for malignant transformation into squamous cell carcinoma.

Today, these patients are treated with more interventional approaches or they're treated with off-label therapies that are not FDA approved, and we think are nonspecific to the disease. So we have the opportunity to bring forward that first FDA-approved therapy, and that was the genesis of QTORIN pitavastatin. So work by Keith Choate, who's the Chair of Dermatology at Yale. He's done a lot of work on the genetics and the biology to show that you can take a pathogenesis-directed approach by intervening upstream of the causal pathway here, which is the mevalonate pathway. He's done some early work looking at off-label use of statins applied topically to try to validate the mechanism to try to validate the biology.

What we've done is we've looked at 7 different APIs, 7 different molecules in that class, and then we've looked at those in QTORIN in our platform. What we emerged with was QTORIN pitavastatin. Pitavastatin has a low IC50. It's a potent drug. It was the most recently FDA-approved statin. And we're really excited about this program. Our intention is to run, again, a 10 to 20 patient Phase II study, initiate that study later this year. But we think this is a very significant commercial opportunity. We have the impact of -- we have the opportunity to really impact patients who have what we consider to be a serious disease. And so we think this will be a key value driver for Palvella on a going-forward basis.

Great. Thank you. I'm just going to open it up to the audience and see if there are any questions. Anyone in the room? Okay. What do you feel like is most kind of misunderstood or not appreciated from investors about your story?

Sure. Misunderstood or underappreciated. I think any time you're in rare diseases that don't have an approved therapy, there's a low investor awareness. In fact, when we come across these diseases, we have to work really diligently with our scientific team, R&D team, commercial team, finance team to really understand these diseases. And so I think for us, the size of these markets is underappreciated. Microcystic lymphatic malformations, this is a multibillion-dollar total addressable market based on 30,000 or more patients. Cutaneous venous malformations most common vascular malformation, more than 75,000 estimated patients in the United States.

At orphan pricing, that's an $8 billion-plus opportunity. So I think that is perhaps underappreciated by investors. We've seen this before, though, with programs in disease states like hereditary angioedema, which at one point was thought to affect only 1,000 or 2,000 patients in the United States. Non-CF bronchiectasis was thought to be a smaller indication at one point. And I think Insmed is doing an amazing job just showing what a large commercial opportunity that is. So it's a phenomenon that exists within orphan, and that's why we're excited to go out and launch this drug, assuming FDA approval and prove out just how attractive this market is.

Great. And then we discussed the clinical programs, but is there anything in your pipeline or that you're working on preclinically that you'd like to highlight?

Sure. Our Chief Scientific Officer is here today, Jeff Martini. Jeff and I have been working together for many years. We've known each other about 15 years. Jeff is doing phenomenal work with the preclinical pipeline. We're going to announce 2 additional programs later this year. So we'll exit 2026 being in 6 rare diseases where nothing is approved, where we have the opportunity to have that first approved therapy. The next announcement -- the next 2 announcements that we'll make, one will be announcing a new API with QTORIN that will be studied in a serious rare disease where nothing is approved where we have the opportunity to have the first approved drug.

We also will announce the fourth indication for QTORIN rapamycin. So really important. Over the last couple of decades, it's been shown that there could be as many as 10 or 20 mTOR-driven skin diseases. So what we want to do with QTORIN rapamycin is continually grow the pool of patients that could be addressed with that product candidate. So we'll announce that fourth indication later this year. Jeff and his team have just done a fantastic job with that, and we're eager to share some of the things he's been working on for years with the market.

Awesome. And just moving to the financials. Just remind us of your cash runway and your cash position. And then as you think about kind of building out the sales force and the commercial considerations, how you're thinking about kind of spend over the next 12 months.

Sure. So we were fortunate enough on the heels of positive Phase III data. We went out to raise $150 million in capital. That turned out to be an oversubscribed upsized financing. We closed on $230 million, and we're grateful for the investors who participated in that financing, including many of our existing investors who have been with us for many years. So that capital base on top of our cash on hand, as I mentioned, we had $260 million as of the end of last quarter. That's enough capital to bring us through FDA approval well into the launch, commence our Phase III study in cutaneous venous malformations, read out our Phase II study in angiokeratomas, read out our Phase II study in disseminated superficial actinic porokeratosis as well as continue the great work that Jeff and our Chief Innovation Officer, David Osborne, are doing.

So we are well capitalized. We've been very capital efficient. We try to keep the team small and have the senior people on the field doing the work. For us, it's about flushing out as much risk on the least amount of capital. We think that, that will drive value at the share price level.

Great. And in the last few minutes we have, I guess, just speak to kind of the leverage of your pipeline and how that could translate to commercial leverage as in these rare disorders, I think it's so important that you can kind of take advantage of that. Just kind of speak to that, if you will?

Sure. So the leverage in the pipeline is QTORIN. We've developed a platform that we can apply to many different molecules. And so our goal is when we find an existing molecule that has been used systemically to validate the mechanism and the biology in a rare skin disease or a vascular malformation, we can bring that into the platform. And our goal is to go from concept to Phase II data on less than $10 million, very capital efficient. So that's the R&D synergies as a function of what we can do with QTORIN.

On the commercial side, in our first indication, microcystic lymphatic malformations, as we talked about, we're going to have a commercial footprint in vascular anomaly centers. Assuming we're FDA approved in cutaneous venous malformations, that is the same call point as microcystic lymphatic malformations. So a lot of commercial synergies with adding that second indication. We also will add -- the goal is to add angiokeratomas, which are lymphatic malformations. Many of those are treated by pediatric dermatologists and dermatologists. So we think that provides synergy as well. disseminated superficial actinic porokeratosis is also a dermatology call point. So we want to continue to stay on strategy, both with the diseases we select, but also ensuring that we have that commercial synergy as we add additional diseases where we have FDA-approved QTORIN molecules.

Wonderful. Thank you for that. I'm just going to open it up again to see if there's any questions from the audience. And in our last 2 minutes here, Wes, anything that you'd also like to highlight or that we should kind of think about the Palvella story?

Sure. From founding, I founded the company, we've always wanted to build an enduring biopharmaceutical company that both develops and successfully commercializes these therapies. I'm honored to work with the team that we've assembled at Palvella. They're very motivated to deliver for these patients and serve these patients. That's how we deliver on our mission. And we're going to repeatably unlock these orphan diseases that were previously thought to be untreatable. And by doing so, we're going to serve patients, and we're also going to open up multibillion-dollar total addressable market opportunities. So we're in a position of momentum with the team, the pipeline going from 4 diseases to 6 diseases by year-end as well as the balance sheet we've assembled.

Great. Well, thank you so much for joining us today. We really appreciate it.

Great. Thanks, Elizabeth.

Thank you for standing by. My name is Roselle, and I will be your operator today. At this time, I would like to welcome everyone to the Palvella Therapeutics First Quarter 2026 Financial Results Conference Call. [Operator Instructions]

I will now turn the conference call over to Bohan Wei. Please go ahead.

Thank you, operator. Good morning, and thank you for joining the Palvella Therapeutics Q1 2026 Financial Results and Corporate Update Call. As a reminder, our press release detailing today's announcements can be found in the Investors section of our website at www.palvellatx.com.

On today's call, you will first hear from Wes Kaupinen, our Founder and Chief Executive Officer; followed by Dr. David Osborne, our Chief Innovation Officer; Dr. Jeff Martini, our Chief Scientific Officer; and Matt 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.

And now I will turn the call over to Wes.

Thanks, Bohan. Good morning, everyone, and thank you for joining us on today's call. I am speaking to you today alongside our passionate management team, whose dedication and execution have helped bring our company to what we believe is a major inflection point.

Palvella is now positioned for our first potential FDA approval and U.S. commercial launch. The first quarter of 2026 was a defining period for Palvella, not because of any single milestone, but because multiple core elements of our strategy advanced together, decisively positive Phase III results for QTORIN rapamycin and microcystic lymphatic malformations, a strengthened balance sheet and shareholder base, the addition of key commercial and operational talent and an acceleration of our U.S. launch readiness.

Most importantly, our positive Phase III SELVA study for QTORIN rapamycin in microcystic lymphatic malformations achieved its primary endpoint and all prespecified key secondary and secondary endpoints, with a safety and tolerability profile that we believe supports first-line standard of care positioning in this serious chronically debilitating rare disease.

The SELVA results, along with our Phase II results in microcystic lymphatic malformations, which supported FDA granting QTORIN rapamycin breakthrough therapy designation, provide us with a robust evidence package as we move toward NDA submission later this year.

On the NDA, I am pleased to share that our NDA submission remains on track for the second half of 2026. Since our last earnings call and corporate update just a few weeks ago, the FDA has granted Palvella an in-person pre-NDA meeting to be held later this quarter.

In parallel to advancing towards our NDA submission, we continue to make strong progress preparing for and investing in a potential U.S. launch. I'm pleased to share that we have added commercial and medical leadership with deep experience launching highly relevant therapies in rare diseases and skin diseases, including successful products such as VYJUVEK, ZORYVE, OPZELURA, TEPEZZA and OXERVATE.

At the same time, our pipeline progress extends well beyond microcystic lymphatic malformations. In cutaneous venous malformations, we are on track to initiate a pivotal Phase III study in the second half of this year. In clinically significant angiokeratomas, a superficial lymphatic malformation, earlier this week, we announced that the first patients dosed in our Phase II LOTU trial. Thanks to our clinical development and clinical operations teams, this study initiated ahead of our original schedule.

And in disseminated superficial actinic porokeratosis, or DSAP, we continue to see strong patient and physician interest in our planned Phase II study, including having now received over 40 patient inbound inquiries expressing interest in the study.

I wanted to take a moment to share a message I received on LinkedIn over the weekend from an individual living with DSAP. "Hi, Wes, I'm so excited to hear about your trials. As a DSAP sufferer, I have tried everything and nothing has worked. Really need this as I have been suffering for over 25 years."

Testimonials like these reinforce the magnitude of the unmet need and strengthen my motivation and our team's motivation to advance our programs with urgency.

Importantly, we are pursuing this next phase of execution from a position of financial strength, supported by the upsized $230 million financing we completed in the first quarter with participation from high-quality existing and new investors.

We continue to see significant opportunity across a large subset of serious rare skin diseases where patients and families have historically been overlooked therapeutic innovation has been limited, and Palvella has the opportunity to step up for patients and families with targeted therapies designed to address meaningful unmet need.

We were pleased to recently announce Dr. John Doux appointment to our Board of Directors. John is a dermatologist and one of the leading voices advocating for drug development in rare chronically debilitating skin diseases. In John's 2015 manuscript in the Journal of Investigative Dermatology, he described how the orphan drug development model had expanded across many therapeutic areas, but had not yet meaningfully reached dermatology, a field with many serious debilitating diseases and few, if any, approved treatment options.

As John anticipated, and as represented by the quote on this slide, the first wave of innovation in rare skin diseases has largely been concentrated in epidermolysis bullosa, where multiple FDA-approved therapies now exist to address this serious rare disease.

At Palvella, we believe we are driving the next wave of innovation beyond epidermolysis bullosa across several serious rare skin diseases and vascular malformations, indications where historically, patients and families have been overlooked, treatment options are limited or nonexistent, and advances in understanding of the genetics and causal biology now create the opportunity to advance first-in-disease targeted therapies that can move patients from 0 FDA-approved options for that first FDA-approved therapy.

Palvella's strategy is unique and intentionally designed to stand apart. We are not seeking crowded indications. We are not building around incremental differentiation. And today, we are advancing 4 programs that fit the Palvella strategy. Notably, each has an estimated diagnosed U.S. prevalence that is meaningfully larger than the ultra-orphan threshold. We believe these clinical indications, therefore, not only high unmet need, but also underappreciated in terms of the size of the market opportunities they represent.

Across the market research we've conducted, physicians have consistently noted first-line potential for a therapy with a profile similar to QTORIN rapamycin. Our research shows that upon potential approval, more than 80% of physicians would consider QTORIN rapamycin as first-line therapy for microcystic lymphatic malformations, cutaneous venous malformations, angiokeratomas and disseminated superficial actinic porokeratosis.

Specifically in microcystic lymphatic malformations, which we believe will be the first approved indication for QTORIN rapamycin, 98% of physicians would consider a therapy with a profile similar to QTORIN rapamycin to be first-line. Furthermore, 96% of physicians surveyed noted advantages to targeted localized topical therapy for pediatric patients compared to oral mTOR inhibitors or oral PI3K inhibitors.

Moving to our U.S. launch planning. The positive Phase III SELVA results in microcystic lymphatic malformation and positive Phase II TOIVA results in cutaneous venous malformations were important contributors to our ability to complete an upsized $230 million financing in February.

I am personally grateful to all the existing and new investors who participated in the financing and have entrusted our management team with their capital. Our management team and I remain committed to working tirelessly to realize the full potential of QTORIN rapamycin, the broader QTORIN platform and the rare disease opportunities we believe Palvella is uniquely positioned to advance.

The upsized financing does not change our commitment to disciplined capital allocation. It does ensure, however, that if approved, the QTORIN rapamycin launch will not be under resourced. We intend to direct a substantial portion of the incremental proceeds raised beyond our original $150 million target toward launch success, including accelerating investments in our commercial and medical affairs build-out.

Proactively identifying and recruiting exceptional leadership to Palvella has been a key strategy for us since our founding. And I'm thrilled that Palvella has added 2 proven high-integrity commercial leaders to our team in Jennifer McDonough and Kent Taylor.

Prior to joining Palvella, Jen was instrumental to the prelaunch planning and successful launch of VYJUVEK, a repeat dose topical therapy for epidermolysis bullosa, a serious rare genetic skin disease. Ken, most recently was the Senior Vice President of Sales at Arcutis, where he led the sales organization and was a key driver behind the launch success of ZORYVE.

I'm excited to work alongside Jen, Kent and our Chief Commercial Officer, Ashley Kline, while leveraging their learnings from past launch successes with our shared goal of making QTORIN rapamycin the most successful launch yet for all of us.

With a strong capital base now in place, we are targeting a field sales force between 30 to 40 reps, revised from our original plan of 20 to 40 reps with plans to have that field team in place prior to the PDUFA date, this consistent with industry best practices for rare disease launches. We've hired medical science liaisons, or MSLs, with a clear objective of enhancing disease state awareness around the underlying genetic basis of microcystic lymphatic malformations, the chronically debilitating nature of the disease and the lifelong disease course. We are continuing to expand this MSL team on a national basis with plans to have several more MSLs start in the coming weeks and months.

We are also systematically engaging physicians at high-volume treatment centers, including vascular anomaly centers to support disease education, better understand patient flow and prepared for a focused launch model anchored in the centers that are already caring for these patients. This in contrast to many rare disease launches whose success is predicated on new patient identification and diagnosis.

Turning to the peak sales potential for QTORIN rapamycin and microcystic lymphatic malformations. We estimate peak U.S. sales potential of greater than $1 billion in microcystic lymphatic malformations for QTORIN rapamycin. That estimate is grounded in several factors.

First, recent field checks with high-volume centers as well as further analysis of the annual incidence data from our claims work continue to support an estimated diagnosed prevalence of greater than 30,000 patients, many of whom are concentrated in vascular anomaly centers.

Regarding pricing, in addition to the payer testing and analog work previously performed, we believe based on the efficacy results from the Phase III SELVA study, QTORIN rapamycin has the potential to support orphan pricing within our previously guided range of $100,000 to $200,000 per patient per year.

We also believe our current estimates do not fully capture the ways in which first-in-disease therapies can potentially expand the market over time. When a first approved therapy becomes available in a rare disease, it often can do more than enter a market.

Diagnosis can improve, referral patterns can change, specialists can become more engaged, advocacy can increase, patients who were previously misclassified or untreated may be identified and treatment can move upstream over time, particularly when a therapy has a favorable safety and tolerability profile is convenient to use and addresses a chronic disease that significantly impacts quality of life.

That is why we believe QTORIN rapamycin has the potential to represent more than the first approved therapy for microcystic LMs. If approved, QTORIN rapamycin could establish the foundation for a new standard of care for individuals living with this serious rare disease.

And now I will turn it over to David Osborne, our Chief Innovation Officer, to speak on our QTORIN platform. David?

Thank you, Wes. I'll now turn to the QTORIN platform and the role it can play in Palvella's broader strategy. My background, I'm a chemist, and most recently, I was Co-Founder and Chief Technical Officer at Arcutis. I have now been with Palvella for more than 6 months, and I want to share a few observations on what I believe makes QTORIN distinct.

QTORIN is a technological foundation that allows us to pursue Palvella's mission efficiently. Topical formulation is technically difficult. Even small changes in formulation can have large effects on drug loading, stability, release, skin delivery, tolerability and systemic exposure. QTORIN is designed to sit at a precise balance point, delivering therapeutic levels of drug into disease skin, including the dermis, while maintaining tolerability and minimizing systemic absorption.

We think about the QTORIN platform across 4 core attributes: high drug loading; demonstrated safety and tolerability; dermal engagement; and durable intellectual property potential. QTORIN rapamycin is an important example. At 914 Daltons, rapamycin is a large molecule that historically would not have been expected to deliver efficiently through skin based on conventional assumptions such as the 500 Dalton rule.

Yet QTORIN has demonstrated the ability to deliver rapamycin into the dermis, shattering my perception of the 500 Dalton rule, while also maintaining low systemic exposure and favorable tolerability. With 6 issued patents, additional applications pending proprietary formulation and manufacturing know-how and the potential for orphan drug exclusivity, we believe QTORIN rapamycin is supported by a multilayered exclusivity position that could enable a long and durable commercial life.

Importantly, this exclusivity strategy may also create meaningful barriers to competition and potential generic entry by protecting not only the composition and use of QTORIN rapamycin, but also the specialized formulation and manufacturing capabilities required to reliably deliver rapamycin into affected skin.

Since joining Palvella, I have also had the opportunity to evaluate multiple molecules within the platform. My view is that QTORIN has broad capability across a diverse range of molecules. Importantly, each new molecule can create a new opportunity for intellectual property, including formulation, composition, method of use claimed and disease-specific applications.

With 2 positive clinical readouts now behind us, we believe this is the right time to scale additional product candidates from the platform while remaining true to Palvella's operating principles, capital efficiency for investors and time efficiency for patients who are waiting.

I will now turn it over to Jeff to discuss our rare disease pipeline programs.

Thank you, David. I want to spend a minute on the qualitative data generated from our patient interviews in SELVA because this is something that's really important to Palvella and to regulators, particularly in rare diseases where there are no approved therapies and no regulatory precedent.

We previously shared the quantitative results from SELVA, where 95% of patients improved on the clinician-rated mLM-IGA. But what this qualitative work does is help us understand just how meaningful these changes are for the patient. I have spent a lot of time going through the interviews and the full analytical report. And what stood out to me was just how significant the disease burden is at baseline and how meaningful the changes are as patients progress through the trial.

At baseline, patients described dealing with constant bleeding and leaking and the impact that has on normal day-to-day functioning. They talked about needing advantages and changing clothes throughout the day.

When asked what animal best represents their disease, one child described their disease in own words as fire ants biting on the skin. A second child described their micro LM as a hippopotamus and stated because they're so big all the time, the spots keep getting inflamed and big like that. I was pleased that in reviewing these patient profiles, both of those patients were among the 95% who experienced improvement while on therapy.

And at week 24, which patients describe lines up very closely with what we measured in the trial. Across the interviews, you hear consistent themes around bleeding stopping, reduced leakage and lesion looking more like normal skin. You can see a couple of the quotes here, including the patient here who said her lesion doesn't bleed anymore, and now it just looks like normal skin.

Ultimately, we see clear alignment between patients and the trial endpoints. And that gives us confidence that these effects are both statistically significant and clinically meaningful. And that's been our goal with this program to deliver what we consider transformational efficacy and a well-tolerated therapy for these patients. These findings also strengthen the overall risk-benefit narrative, and this qualitative work will be included as part of our planned NDA.

As we advance towards NDA submission, we believe QTORIN rapamycin is supported by a regulatory profile that is meaningfully different from a traditional new chemical entity NDA or a BLA for cell or gene therapies.

First, we are pursuing the 505(b)(2) regulatory pathway given oral rapamycin is an already FDA-approved drug with substantial scientific and clinical knowledge. This pathway allows Palvella to leverage existing data on rapamycin, including the established systemic safety profile.

Second, the program is supported by a growing body of real-world evidence and clinical experience with rapamycin in lymphatic malformations, which helps validate the therapeutic rationale for mTOR inhibition in the underlying disease biology.

Third, our development program is designed to support a traditional approval, not an accelerated approval based on surrogate biomarkers. The SELVA Phase III study evaluated clinical endpoints, including physician-assessed disease improvement and patient-reported outcomes rather than relying on biomarker-based evidence of activities.

Finally, QTORIN rapamycin is supported by 2 prospective clinical studies demonstrating consistent large magnitude clinically meaningful results with a favorable tolerability profile.

As I highlighted on the previous slide, the qualitative patient interview data further reinforced how meaningful these treatment benefits are from both the patient and caregiver perspective. And importantly, when I shared the SELVA data with the FDA's Office of Orphan Products Development, which is providing nondilutive funding for the program, they were pleased to hear that we reached a pivotal milestone. They indicated they are interested in participating in our pre-NDA FDA meeting, which will occur this quarter.

We believe QTORIN rapamycin has a compelling regulatory profile, the ability to leverage a well-understood molecule through the 505(b)(2) pathway, combined with the innovation of Palvella's dermal targeted formulation and a disease-specific clinical program designed to support traditional approval.

Turning to medical affairs. We've strengthened our leadership and are building a strong presence as we move through 2026. As shown, a key focus will be ISSVA, where we're the platinum sponsor. That includes a late-breaker presentation by Dr. Jim Treat from the Children's Hospital of Philadelphia of our SELVA and TOIVA data as well as a scientific symposium with study investigators.

We're also sponsoring other important meetings, including the Epidermal Differentiation Disorders Symposium in Chicago. And as we look ahead, these engagements are an important opportunity for our medical affairs team to educate clinicians on our diseases and the SELVA and TOIVA data as we prepare for NDA submission in the second half of this year and move towards commercialization.

Overall, this reflects our focus on engaging the clinical community, increasing disease state awareness and laying the groundwork for a potential launch.

Cutaneous venous malformation is our second program for QTORIN rapamycin and one where we have a strong conviction as we advance towards Phase III, especially given how closely aligned with what we've already demonstrated in microcystic lymphatic malformations. Like the rest of our portfolio, this is a serious rare disease with no FDA-approved therapies.

Biology here is well understood with mutations that ultimately lead to upregulated mTOR signaling, which is directly aligned with QTORIN rapamycin's mechanism of action and consistent with what we see in mLM.

Clinically, these patients experience malformed veins in the skin, which can lead to bleeding, ulceration and functional impairment. Today, treatment is largely procedural, things like laser therapy or sometimes use of -- off-label use of systemic therapies, including oral rapamycin. So there's a clear need for a targeted well-tolerated topical approach.

What's particularly compelling to me is the strength of the Phase II data. As we announced last December, 73% of patients showed improvement, well exceeding our target of 30%. We are planning to present additional findings at ISSVA later this month.

We're also seeing strong signals of physician adoption with market research showing that 86% of physicians would consider QTORIN rapamycin as a first-line therapy. Our clinical and regulatory team is advancing Phase III planning with trial initiation expected in the second half of 2026.

Our third indication, clinically significant angiokeratomas, is one we announced last year and is progressing ahead of plan. One of the key reasons we selected clinically significant angiokeratomas is how closely they align with microcystic lymphatic malformations.

As shown, angiokeratomas are a superficial lymphatic malformation. So from a disease biology standpoint, there's a strong connection between the 2. They share a number of key features, including superficial dermal involvement, a lymphatic basis and clinical manifestations such as bleeding and functional impairment.

In addition to the mechanistic rationale, there is also real-world evidence supporting targeted therapy with rapamycin in these lesions. We believe this represents a very logical indication for our QTORIN rapamycin pipeline in a product strategy, leveraging what we've demonstrated in microcystic lymphatic malformations into a closely related disease with a similar underlying biology and no approved therapies.

The QTORIN rapamycin program for the treatment of clinically significant angiokeratomas has strong momentum. And as I just mentioned, a clear scientific rationale given its close mechanistic and clinical adjacency to microcystic lymphatic malformations.

Since we announced last year, we have achieved a significant and regulatory and clinical milestones. On the regulatory side, we were awarded Fast Track designation, which is an important milestone for this program.

On the clinical side, thanks to our best-in-class clinical team, we've initiated the Phase II LOTU study and are already dosing multiple patients. This is a single-arm baseline controlled study evaluating once-daily QTORIN rapamycin in patients with moderate to severe clinically significant angiokeratomas. We expect data from LOTU in the second half of 2022.

I also want to highlight some market research we conducted to better understand how QTORIN rapamycin may fit into clinical practice. In a survey of 50 physicians who treat clinically significant angiokeratomas, 96% indicated they would incorporate QTORIN rapamycin into their practice for this patient population.

Our fourth program in development is QTORIN pitavastatin for DSAP or disseminated superficial actinic porokeratosis, a program that I am particularly energized about. DSAP is well-characterized genetic disease driven by mutations in the mevalonate pathway with a clear and validated pathophysiology. DSAP fits squarely within our disciplined disease selection framework. It's a serious, rare, proliferative and progressive disease, commercially attractive with more than 50,000 diagnosed patients and has no FDA-approved therapies.

Clinically, patients develop multiple persistent lesions on sun exposed areas like the arms and legs. These lesions are visible, burdensome and increase over time with a risk of progression to squamous cell carcinoma.

What has been particularly striking is the level of interest we're seeing from both patients and investigators. We've received over 40 inbound unsolicited patient messages for the planned Phase II study, which really underscores both the disease burden and the urgency for new treatment options.

And one potential patient share with our clinical team, she describes the lifelong nature of the disease and the frustration of repeatedly having these precancerous lesions treated with procedures like freezing. And as reflected in the quotes on this slide, patients are actively seeking new effective treatment options and are highly motivated to participate in clinical trials. The patients describe as being desperate for any treatment.

We're also seeing strong engagement from clinicians who recognize the lack of effective therapies and the need for a targeted approach, and we're building on this momentum with the study initiation on track for the second half of 2026.

To bring it all together, QTORIN pitavastatin fits very cleanly within our overall pipeline strategy and shares key characteristics with QTORIN rapamycin, addressing a serious rare disease with no FDA-approved therapies and doing so on the basis of a strong scientific rationale supported by real-world evidence.

Upon potential FDA approval, QTORIN pitavastatin stands to potentially be the first FDA-approved therapy while entering a commercially attractive multibillion-dollar market with more than 50,000 patients in the United States. So overall, we see DSAP as a highly aligned and compelling next program and a strong example of how we're continuing to expand the QTORIN platform and unlock new opportunities across rare diseases.

And with David's leadership, we're well positioned to continue advancing this platform and realizing its full potential. We believe there's significant runway ahead, and we're just getting started.

And with that, I'll turn it over to Matt.

Thanks, Jeff. Starting with the financials. Palvella ended Q1 with $261.9 million in cash and cash equivalents, including our short-term investments in U.S. treasuries. Following our positive Phase III SELVA data and oversubscribed $230 million equity offering in February, we believe we now have sufficient cash to last well into a potential commercial launch. With current assumptions for a first half 2027 approval and launch and using current consensus analyst estimates for revenue, we would expect our cash to last through cash flow breakeven.

Our approach to value creation is enabled in part by our capital-efficient operating model. Palvella's core strategy of focusing on first-in-disease therapies targeting serious rare diseases with no FDA-approved products and leveraging our QTORIN platform paired with existing molecules, which we believe allows Palvella to go from concept to Phase II human data on less than $10 million of capital. This strategy allows robust build-out of the pipeline while remaining capital efficient.

Also factored into our cash runway is a robust fully funded spend on our commercial efforts. Having personally been involved in every conversation with investors during the financing, I'd like to thank everyone for providing Palvella the necessary capital to fully support our Chief Commercial Officer, Ashley Kline, and her team in our launch readiness efforts. Our successful financing now allows us the flexibility to pull forward commercial spending and invest in the opportunities we see to maximize launch success.

In addition to the longer-term funding support for commercialization and building a robust pipeline of new programs, we have a catalyst-rich period over the remainder of 2026 and early 2027. The first group of catalysts on the list around our lead program for microcystic lymphatic malformations, including data presentations and regulatory progress.

Following Phase III SELVA trial, which exceeded our internal upside expectations and exhibited patient results like the before and after pictures included here on the slide, we are on track for an NDA submission in the second half of 2026 with the potential FDA approval targeted for the first half of 2027.

One important step on this path is our recently granted pre-NDA meeting that will occur later this quarter. The meeting will be in-person with the FDA, and our management team and KOLs are eager to align with the FDA on an efficient path forward to filing the NDA for our breakthrough therapy designated program.

Turning to the remainder of our disease programs. We have a robust roster of catalyst events in 2026 across the portfolio, all fueled by our QTORIN platform. In cutaneous venous malformations, we announced our positive Phase II data in December 2025. After unveiling the data that clearly exceeded our threshold for moving forward to Phase III, we plan to initiate our Phase III study in the second half of the year. I'll also note that we submitted our breakthrough therapy designation application, and we expect a decision in the middle of the year.

For clinically significant angiokeratomas, we have received Fast Track -- FDA's Fast Track designation. And just this week, we announced that we had dosed our first patients in our Phase II LOTU trial, well ahead of our original schedule. The trial includes a 12-week safety and efficacy period similar to our Phase II TOIVA trial in cVM and our previous Phase II trial in mLM. We expect results for LOTU in the second half of 2027.

In DSAP, we've developed our QTORIN pitavastatin formulation, filed our IP, and expect to initiate a Phase II study in the second half of 2026.

We also plan to expand the pipeline with 2 additional diseases in 2026. First, in the second half of 2026, we'll announce a new QTORIN product candidate, our third product candidate from our QTORIN platform. Similar to a QTORIN rapamycin, we envision our new QTORIN product as a pipeline in a product with many potential indications.

Second, we'll add a fourth indication for QTORIN rapamycin, which we expect to announce in the second half of this year. Both of these new diseases will be in markets with commercially attractive dynamics consistent with Palvella's core strategy focused on serious rare skin diseases and vascular malformations with no FDA-approved therapies.

Our robust pipeline, including our lead program in microcystic lymphatic malformations, positions Palvella for a catalyst-rich 2026, followed by the potential for our first FDA approval in the first half of 2027.

I'll turn the call back over to Wes now for some additional comments prior to opening the line for questions.

Thanks, Matt. What makes Palvella stand apart is the combination of what we believe is a repeatable rare disease development model and a team capable of executing it from concept through commercialization. We are focused on serious underserved diseases that have historically been viewed as difficult or even untreatable, diseases with no FDA-approved therapies, meaningful patient burden and what we believe can become large, underappreciated commercial opportunities with limited competitive intensity.

We identify diseases where we can be first in disease, where the biology is well defined and where existing human experience or proof-of-concept data can potentially help derisk development and support the potential path to approval. We then apply the QTORIN platform to engineer product candidates designed for the affected tissue and pursue efficient clinical and regulatory pathways intended to reduce both the time and the capital required to reach potential FDA approval and commercialization.

But the model only matters if you have the right team to execute, we believe Palvella now has the team in place across all key disciplines from the discovery of new product opportunities through U.S. commercial and every critical discipline in between. In our view, that combination of our rare disease development model, our QTORIN platform and our execution capability is what truly sets Palvella apart.

With positive Phase III data now in hand, development underway across 4 serious rare disease indications and plans to expand our pipeline to 6 indications by year-end, a strengthened balance sheet and a passionate team united by a shared commitment of serving patients, we have never been more motivated to deliver on Palvella's mission.

Our goal remains clear to serve patients with serious rare skin diseases and vascular malformations for which there are no FDA-approved therapies while building Palvella into the leading rare disease biopharmaceutical company in this field. We believe the first quarter moved us significantly closer to the realization of this vision.

Thank you for your continued support. And with that, operator, we will now open the call for questions.

[Operator Instructions] Your first question comes from the line of Josh Schimmer with Cantor.

I have 3 quick ones, if I may. First, how do you think about which programs or indications will require a placebo arm versus which may be single arm for pivotal trials?

Number two, you've been quite active in introducing new indications and new programs this year. What do you expect your cadence for those going forward? And as you consider that, are there any limitations to the QTORIN platform in terms of the types of compounds that it will work with to what extent does that narrow down the prospects relative to all the compounded drugs that are currently being used in dermatology?

Josh, thanks for the questions. Your first question on which programs require a placebo arm. That's going to be disease specific. As we've seen in microcystic lymphatic malformations, that's a disease where there is no spontaneous regression. So our view and one that we believe we're aligned with the FDA on is that allows or enables a single-arm study to be a reliable way to determine efficacy. And we think we demonstrated that not only with the Phase III SELVA results, but also the Phase II results in microcystic lymphatic malformations.

I appreciate you asking the question because one of the differences between some of the diseases that we're pursuing is that they are genetically based, they are proliferative and progressive. Several of them are vascular malformations and not traditional skin diseases. Traditional skin diseases oftentimes do have spontaneous improvement and therefore, placebo-controlled trials are required.

So answer to your question is it's very disease-specific for several of our diseases. There's well-known pathophysiology. They're genetically based, they're progressive, they're proliferative. And therefore, we think single-arm trials can be a reliable way to evaluate efficacy.

In terms of new indications on a going-forward basis, there really are a few limitations to how many indications that we view longer-term that we'd like to have on label for QTORIN rapamycin. Our internal analysis as well as third-party researchers have identified many different mTOR-driven skin diseases. We're in 3 of those today. I'll just note in microcystic LM, cutaneous VM and angiokeratomas, we are -- we have active clinical programs underway. Each of those are Fast Track designations.

As we look out to 2027, you can expect that the Palvella team will continue to expand upon the pipeline, particularly new product candidates from the QTORIN platform, having David on our team really enables the capability that we did not have prior to David's joining the company.

In terms of the limitations of the QTORIN platform, at this point in time, we've tested over 15 molecules in the QTORIN platform. We've seen very few limitations. That's been a diverse range of molecules in terms of molecular weight, molecular structure, but I'll pass it over to David to comment on that question as well, Josh.

Josh, good to hear your voice. As Wes said, so far, the 15 compounds that I've personally put into QTORIN, they've all dissolved to high degrees. They've given us the flexibility of maximizing thermodynamic driving force. And for those 9 or so compounds that we've taken into in vitro skin permeation testing, QTORIN has delivered each of the molecules.

I think it would be foolhardy to say that QTORIN will work for every molecule that's ever been synthesized in the pharmaceutical industry, but I haven't found the ones yet that it doesn't work for. So we'll keep you posted.

Your next question comes from the line of Ritu Baral with TD Cowen.

This is Josh Fleishman on the call for Ritu. Congrats on initiating the Phase II LOTU trial in angiokeratomas. Curious, how are the global assessment endpoints and disease severity scales, both similar to and potentially different from those used in SELVA and TOIVA? What are preliminary time lines to enrollment completion? Do these sites have considerable overlap with those in SELVA and TOIVA?

And then as a quick follow-up, please, you mentioned the in-person pre-NDA meeting in mLM is on track for later this quarter. What are your goals going into this meeting? What would be a good outcome? What would be a great outcome?

Great, Josh. Thank you for being on. We'll take each of those questions. In terms of the endpoint construction for the Phase II study, we have endpoints that are very similar to the microcystic lymphatic malformation clinical program in that we have global assessment scales from both a physician and a patient perspective that are dynamic change instruments, measuring any change between end of treatment and baseline. We also have static severity scales.

One of the areas we probably don't emphasize enough is that when you're in these rare diseases where nothing is approved, there is a lot of innovation that is done around endpoints. It's not just innovating on formulation and executing your clinical trials, but you really have to design endpoints that measure that clinically meaningful burdens of disease to the patients. So similar endpoints between microcystic LM and what you see with angiokeratomas.

Jeff, did you want to fill in any color there for Josh?

Yes, just to add, the purpose of the Phase II study is really to inform future clinical trial design. So we have no statistical hierarchy in the endpoints. This is very similar to what we did with the Phase II mLM study and our Phase II TOIVA study.

And so what we'll ultimately do is determine what endpoints are sensitive to change, what are meaningful to patients, and that will inform future clinical trial designs.

Josh, in terms of your question around time line to top line readout, top line readout, we anticipate for the LOTU trial to be in the second half of next year, second half 2027. That implies that we'll complete enrollment in the first half of next year. Very important for all Palvella trials as we emphasize selecting the right patients for the study. So we'll continue to do that with our clinical operations team. We believe they're very skilled at that as evidenced by the results we've shown in the SELVA and TOIVA studies.

On the overlap, you're right, yes, there is some overlap between the investigators that have been involved in the mLM, cVM programs with the investigators who are involved or will be involved in the LOTU trial. We also do have some new sites that are higher-volume dermatology centers. This is an indication where some patients are in vascular anomaly centers, but there's also, from what we've seen, very significant patient loads in high-volume dermatology centers.

In terms of the goal of the pre-NDA meeting, what is good, what is great. Our objective is to align with the FDA on an expedited submission plan. We have breakthrough and Fast Track designation. We'll step the FDA through our Phase III results and what will be an in-person meeting. We were very pleased that the FDA granted us an in-person meeting. Presenting those results will not only be the team that's on this call, including Jeff, but we also plan to have some of our key opinion leaders present there to talk about the absence of therapies that they have today for these patients and how QTORIN rapamycin in our 2 clinical studies consistently demonstrated safety and efficacy.

So we want to stay on track, Josh, for a second half NDA submission that would keep us in line with our objective of a first half 2027 approval. And so that is our goal. We'll also be exploring in that meeting things features from Fast Track and Breakthrough like rolling submission. So hopefully, we'll emerge post receipt of FDA minutes from that meeting with some clarity around whether a rolling submission is the best path forward.

Your next question comes from the line of Annabel Samimy with Stifel.

Thanks for the good detail around the programs. I'm understanding that you have some decent enrollment of patients from SELVA into an extension trial. I think it was relatively high. I guess I'm wondering to what extent will that be needed for the filing? Or will you be able to supplement the filing with the data? And should we be expecting any data coming from that extension on an ongoing basis?

And then separately, congrats on dosing the first patient in angiokeratomas. Bigger picture here, there's clearly a lot more indications that you can add to rapamycin. So do you have analogs at this point regarding how many indications you might need to study before you could potentially get a broader label for mTOR-mediated diseases?

Annabel, thanks for being on. In terms of your question around our open-label extension study and whether there's any data from that study that will be required for filing. There are no rate-limiting items in terms of the data from that open-label extension study that would preclude or slow down our NDA filing.

That open-label extension study is primarily a safety study. So we're able to collect additional safety data beyond the 24 weeks, which is already a study with a long duration of dosing. We're pleased not only with the rollover rate that we saw and previously reported, which was of the 44 patients who completed the study, 43 of those rolled over. We're also pleased with the retention rate of the patients as they're moving through that open-label extension.

In terms of the data from that study, as I mentioned, that is primarily a safety study, and so we look forward to making that data available at the appropriate point in time at future medical congresses.

As we think about analogs and how we might be able to one day have a label that is specific to mTOR-mediated diseases, we're not the first company clearly to pursue this pipeline in a product strategy. Certainly, companies like Regeneron with Dupixent, AbbVie with Humira, these are aspirational type comps that we have, whereas we identify diseases that are clearly driven by the mTOR pathway, we see it within our best interest, the patient's best interest to run those clinical studies and add those clinical indications to the label.

What that allows us to do from a commercial perspective is to sort of perpetually grow the size of the total addressable market for that first drug product from the QTORIN platform.

Your next question comes from the line of Gaurav Maini with LifeSci Capital.

Congrats on the continued progress here. Just a couple for me. So number one, from the Phase II TOIVA cVM trial, there's a nice curve in the deck where you see the percent of participants with at least a 2-point improvement on overall cVM-IGA. And this curve looks like it still has room to improve kind of similar dynamic that we saw with the mLM data as well. So still need to finalize the Phase III cVM trial, of course, but fair to kind of assume that a longer duration than the week 12 Phase II is being considered for the Phase III?

And then a follow-up to a prior question asked, will there also be a photograph assessment as well as patient interviews included as tested measures in the angiokeratomas Phase II?

Great. Thanks for those questions, Gaurav. In terms of your question around longer duration of dosing on TOIVA, as you're aware, patients are being evaluated beyond the 12-week endpoint that we reported top line on in December of 2025, where we saw 73% of patients improve in a disease where there's no FDA-approved therapies. So those patients are being followed for an additional 12 weeks. We do expect to have that data finalized soon, and we look forward to reporting on that data.

I think our analysis of that data, Gaurav, is going to dictate whether a Phase III study is going to be 12 weeks or something longer than 12 weeks. As you recall from the microcystic LM program in our Phase II study, we showed a high magnitude treatment effect and all 12 patients were much or very much improved at 12 weeks. But an analysis of the data suggested that we follow patients longer. So we ultimately ran that out to 24 weeks. So the data will govern the endpoint for Phase III, whether that's 12 weeks or something longer than 12 weeks.

And I'll pass it over to Jeff to respond to the second part of your question as to whether a photograph-based analysis will be included in a future study.

Yes. So Gaurav, thanks for the question. So photos and interviews are critical to some of these programs that we develop. Clearly, in the microcystic lymphatic malformations and the venous malformation program, we saw clear photographic evidence of treatment benefit, which aligned very well with the patient interviews. So we will be including both of those as part of the angiokeratoma and potentially future studies. And I think that the qualitative data that I went through today is really meaningful to read through those quotes. And certainly, FDA is really likes to have that data as well.

Your next question comes from the line of Graig Suvannavejh with Mizuho.

This is Ryan on today for Graig. Congrats on launching the new program in angiokeratomas. We already know about the overlap in etiology between mLMs and cVMs. The literature on angiokeratomas not quite as robust, but there's a growing consensus that it has similar drivers. So just wondering to what extent do you see read-through from the other QTORIN rapamycin programs, particularly mLMs? And what are the key similarities or differences when compared with angiokeratomas?

And as a follow-up, can you give us a sense of how you're determining whether or not angiokeratomas are clinically significant. Is it primarily based on the location or severity of the lesions? Are there -- what are the primary qualitative, quantitative criteria for inclusion? And how are you setting up the patient screening criteria to maximize?

Great. Ryan, thanks for being on. I'll take the first part of your question and then pass it over to Jeff for your remaining question. So from our perspective, there is shared biology here, aberrant lymphatic biology. Clearly, VEGF and the mTOR pathway, we believe, based on all the scientific evidence are dysregulated in angiokeratomas. So as Jeff highlighted in the slide deck, we really view this as a scientific adjacency to microcystic lymphatic malformations in the ISSVA classification, both mLM and angiokeratomas are classified as isolated lymphatic malformations.

We think it's really important to run the study and then let the data answer the question in terms of what our effect sizes may be in this indication. But certainly, we're encouraged by not only the scientific underpinnings of the disease, which is similar to micro LM, but some of that real-world evidence that's growing in nature suggesting that rapamycin may have a very important role in treating this disease.

And I'll pass it over to Jeff to answer the back half of your questions.

Yes. So for the clinically significant component, this is really important is that we find patients who are at least moderate or worse of disease severity at the end of the trial, and that's what we consider clinically significant, those that would require a topical therapy intervention. And so that is important for 2 reasons. I think, number one, it's important to have patients who are severe and need this therapy. But also from a statistical or mathematical perspective, we want patients who are severe enough that they would move on the scales that we've entered the trial. So we have similar criteria for having the patients enter the study that we use as in SELVA because that worked really well for the SELVA trial. So we have a global assessment where the patients need to be assessed by the clinicians as at least moderate or worse severity.

And then what we've also done is we've identified 4 key individual signs that interviewing patients and clinicians are relevant to the disease. And they need to be moderate or worse on at least 2 of those 4 individual signs. And that gives us patients who are -- what we believe will respond on therapy and show on these scales that they're having a treatment benefit.

Your next question comes from the line of Whitney Ijem with Canaccord Genuity.

So just going back to the commercial prep for mLM. Just talking about the concentration of the patients at the top 50% of the centers. Can you -- in the engagement, I guess, you're having there, can you help us understand kind of or give us a sense of what you're learning so far as -- understanding that you're kind of early in the process. But just as we think about, I think, kind of the 50% of the prevalent pool, sorry, that are concentrated in those centers. Are you -- that was an estimate. Are you able -- are you kind of confirming that estimate as you're engaging with these centers? What are you learning about the patients as far as the percent currently on some kind of treatment, percent accessible to you guys as far as the topical route? Just any color there on learnings so far.

Yes. Thanks for the questions, Whitney. First thing I'll say it's just great to have a commercial and medical team on board that is spending 100% of their time engaging with physicians, with centers extracting these key learnings that you referred to here.

Just a quick review of the numbers and what we've learned from the claims analysis. At the top end of the funnel, we estimate more than 30,000 diagnosed patients. And that estimate comes from published real-world analysis studies as well as claims and also now with the field checks that we very consistently have been doing over the last several weeks and months.

The concentration you referenced of 50% is we estimate that about half the patients or 15,000 patients are in about 400 centers, and many of those centers are already established vascular anomaly centers most oftentimes associated with pediatric academic centers. So we're spending a lot of time engaging that top 400, but also there's efforts underway to engage with the second and third tiers of the market so that we're preparing for a launch to address not just the 15,000 in the top 50%, but also the rest of the market as well.

From a learnings perspective, our team does a great job of writing up their key learnings after each and every physician engagement, so that we're learning together. We have a very collaborative culture here at Palvella. I would say the #1 learning is there is a recognition in all these interactions that this is a serious, chronically debilitating disease and that current treatment approaches are not getting the job done for patients. So that recognition is one that we'll continue to reinforce with our scientific team, Jeff and our medical team through publications, through the presence of MSLs. And I'd say that's the major learning that we have on that front.

The second key learning, I mentioned the field checks is that there are what we would consider for a rare disease, very significant patient volumes at these centers. So one of the consistent write-ups that we do when we engage these centers is we try to understand how many patients are currently within that center being managed by physicians and being offered some sort of non-approved therapy or procedural intervention. And I referenced earlier, this is not an ultra-orphan disease. Those field checks have strengthened our confidence that there's more than 30,000 diagnosed patients in the U.S.

So those are, I'd say, the 2 key learnings. There'll be many more as we continue to get out there. Really, what we're doing is consistent with best practices in rare disease launch, which is having those touch points ahead of time and really driving that disease state awareness.

Got it. Super helpful. And then just second question for me. As we think about platform expansion and the new candidate you'll be announcing later this year, I guess, should we just -- should we be thinking about 505(b)(2) as a key part of the strategy or kind of novel proprietary molecules also being explored?

Yes. Thanks for the question. The answer is we can do both with QTORIN, both novel molecules and 505(b)(2) molecules. Matt has nicely outlined in the past that the 505(b)(2) model can provide some time and cost efficiencies.

And for the patient, at the end of the day, we think what they're interested in is a therapy that gives them a high magnitude treatment benefit and significantly improves their quality of life. So to the extent we can do that with systemic molecules that are not indicated for a specific rare genetic skin disease where we can leverage QTORIN to develop a molecule that is on target and in the tissue, while creating a lot of new and durable IP, we think that's a repeatable model while also selectively considering novel molecules for the platform.

Your next question comes from the line of Ryan Deschner with Raymond James.

Congrats on a very productive 2026 so far. Can you talk a little bit more about your strategy to identify underdiagnosed or misdiagnosed patient populations within the mLM space? And can you also give us just a little more color on the types of data you might be presenting at ISSVA, particularly for the SELVA study in terms of patient interviews, imaging, anything like that?

Great. So on the underdiagnosed or misdiagnosed patients, I'll point you to our BEYOND mLM disease state awareness campaign. While oftentimes microcystic lymphatic malformations present with a distinct clinical presentation, specifically these fluid-filled or blood-filled vesicles because they're rare in nature and some physicians have not seen high patient loads, they can be misdiagnosed or underdiagnosed.

So I appreciate the question, Ryan. I mean that is the basis for launching a disease state awareness campaign, which we did in conjunction with 5 advocacy groups. That's also the basis for having your medical science liaison team out in the field driving that disease state awareness.

In terms of the underdiagnosis and the misdiagnosis, I just want to comment that commercially, our success is not reliant upon finding large pools of underdiagnosed or misdiagnosed patients. What we're finding from those field checks as well as our claims analysis is that there's more than 30,000 diagnosed patients that are already within these centers.

So certainly, part of our strategy is to try to help the underdiagnosed or misdiagnosed that's core and consistent to our mission. But our commercial success is really focused on those patients who are diagnosed within these treatment centers who eventually upon a potential FDA approval, we're able to get on QTORIN rapamycin therapy as soon as possible.

Thanks, Ryan. I'll take the ISSVA question. So really excited about the ISSVA presentation. This is the first time that the ISSVA data or the SELVA data will be presented at a medical conference. It will be led by Jim Treat from Children's Hospital of Philadelphia. ISSVA is a great conference. I would invite everyone who's in the Philadelphia area to attend. It's really an incredible medical conference to learn more about these vascular malformations. So Jim is finalizing the presentation now. He's going to be presenting the top-line results as well as some new data, including some individual patient level data that hasn't been disclosed. But really, the audience here is the medical community as this is the first time it's presented to them.

Your next question comes from the line of Catherine Novack with Jones.

And just, I guess, a quick one on thinking -- how you're thinking about the prescriber base. The value proposition from the derm perspective seems fairly straightforward, just given the safety profile. But what are you hearing and you'll probably learn much more at ISSVA, but from prescribers who are seeing patients at these vascular malformation centers, patients who might have mixed disease or more severe disease? And how are these types of prescribers thinking about getting on board with a topical product versus something systemic?

Yes. Catherine, thanks for the question. We've done market research on that exact question where we've looked at what percentage of physicians would consider QTORIN rapamycin as first-line therapy or a product with a profile similar to QTORIN rapamycin. That number was 98%. We then asked as a follow-up in that market research, what percentage of your patients would you prescribe the drug to? In our market research, they indicated 75%.

And then we broke it out to your question in terms of VAC and non-VAC to try to tease out whether there would be any difference in prescribing behavior based on the institution affiliation of that particular physician.

We didn't see in that data any difference. I think one was 73% and the other was 77%. So we think independent of institutional affiliation, there's high enthusiasm to not only potentially prescribe this first-line upon FDA approval, but prescribe it to a large percent of patients within VAC, but also outside of VAC. We also had additional data where we tested specifically for pediatric patients. One thing we haven't talked about on this call is that to Whitney's question, as we've gone out and gathered key learnings, now that targeted therapies will hopefully be available upon the first FDA approval of QTORIN rapamycin, there is a movement towards earlier intervention.

The genetics behind this disease was discovered about 10 years ago. And because microcystic LMs are recognized as a proliferative and progressive disease, the KOLs who we work closely with, who have been involved in the trial, I talked about early intervention to try to alter the natural history of the disease. So we were able to test in our market research in pediatric patients specifically, whether there were advantages to a local targeted topical therapy versus a systemic approach and 96% of physicians noted the advantages to a localized topical approach versus a systemic approach.

The systemic approaches, they're available today. They're sometimes used. Usually, they're used for internal disease. There are challenges not only to the toxicity profile of those systemic approaches, but also whether those drugs are able to biodistribute into the skin to levels that would be therapeutic for the patient.

So put that all together, we believe upon a potential FDA approval, we have a very strong compelling scientific and medical case for QTORIN rapamycin to be first line and standard of care for patients with microcystic LMs.

Your next question comes from the line of Kaveri Pohlman with Clear Street.

This is [ Wayne ] on for Kaveri. And Congrats on all the progress. So 2 for us. First is rapamycin is supported by a substantial body of literature demonstrating efficacy yet, but its clinical use has been constrained by the absence of well-defined treatment guidelines. So to what extent can QTORIN rapamycin address these limitations and how effectively can these historical challenges be leveraged to position QTORIN rapamycin within the treatment paradigm?

And then with advances in molecular genetic increasingly elucidating the pathways driving this disease, is there an opportunity to pursue a pivotal basket trial across the PI3K-driven rare dermatologic conditions to support a broader label rather than conducting the indication-specific studies? We believe that Novartis have employed a similar strategy with alpelisib in the PIK3CA-related overgrowth spectrum.

Wayne, thanks for those questions. I agree with you. There is a substantial body of evidence that's real-world in nature. It's large and it's growing. There's also a recent paper by Dr. Bryan Sisk, one of our collaborators that notes the tremendous variability between institution and the use of systemic rapamycin for malformation.

So we would view the potential FDA approved QTORIN rapamycin as a unifying moment because we have tested the same drug product in rapamycin with a specific dosing schedule over specific duration with a consistent 3.9% concentration formulated QTORIN. And we believe that, that could be the basis for treatment guidelines that highlight QTORIN rapamycin as that frontline and standard of care treatment. So a lot of opportunity there based on what we know about all the limitations of systemic approaches.

In terms of a basket trial comment and then I'll open it up to Jeff. Certainly, that's something that we always want to be open-minded to. One of the limitations of basket trials, of course, is inviting in additional heterogeneity across multiple different diseases. Sometimes there's slight nuances in the endpoints that you want to deploy for one indication versus another indication.

I think what we've shown in microcystic LM is a very efficient clinical and regulatory strategy, a 12-patient Phase II study, a 51-patient Phase III study, and now we're on the cusp of an NDA submission. So we'll always consider all different types of trials, be open-minded with our collaborators like yourself as well as key opinion leaders and our Medical Scientific and Advisory Board in terms of how we think about the quickest way to get our drugs to patients. Jeff?

Yes. Thank you. So I'll just add that in general, we are open to many different trial designs, but what's worked really well for us is to be very specific and targeted and efficient in our clinical trial design and execution. We have a world-class clinical operations team who finds the right patients, and this allows us to see large magnitude treatment effects and allows us to efficiently develop these therapies. So that's something that will probably stay true. We have very clear genetics in these diseases. And ultimately, our goal is to do these smaller studies that inform the design of future clinical trials.

Your next question comes from the line of Danielle Brill with Truist Securities.

This is [ Trini ] on for Danielle. So I just have a question on Quoin recently announced planning to initiate several trials for their QRX009 topical rapamycin. And they previously also suggested that FDA indicated a single Phase III trial might be sufficient for the other asset 003. And just curious about if you have any thoughts on that.

Yes. Thanks for the question. Don't have any thoughts on the single Phase III trial for the other asset that you referenced. I believe that's in another rare skin disease. The other program you referenced in terms of their exploratory work with rapamycin, we understand that they're looking at microneedle technologies and other topical approaches and that, that program is in preclinical development. So it's something we'll monitor.

For us, efforts, resources, mind share and passion is focused on advancing our drug, QTORIN rapamycin for patients with microcystic LM, CVMs, angiokeratomas, charging towards the clinic in the DSAP program with QTORIN pitavastatin. So that's where our efforts will continue to focus.

Your final question comes from the line of Jeet Mukherjee with BTIG.

So you spoke to the high level of patient interest for your DSAP study, but can you speak to patient enthusiasm for the LOTU trial? And subsequently, what change on the AK, IGA or PGIC scales would you deem differentiated or meaningful here in this view as we look ahead to that data in 2027?

Yes. Jeet, thanks a lot for being on. And I'll comment and then ask Jeff to comment on the LOTU trial, including some of the modifications that we've made on the endpoints.

We've consistently heard leading into the trial from KOLs that there is a need for a targeted topical therapy for patients with angiokeratomas. Many of these angiokeratomas present, for example, with patients that have angiokeratomas of Fordyce in the genitals. And so we've seen some of the patients who have either enrolled in the study or have been screened to enroll in the study and these patients that are not amenable to things like electrocautery, surgery, other invasive procedural approaches.

In terms of the patient numbers that we're seeing in terms of our site feasibility work, this is a disease where there are also a lot of patients for a rare disease. So we believe KOL enthusiasm is high, patient enthusiasm is high. And I think the ability to move that trial forward and dose multiple patients ahead of schedule is a nice marker for the enthusiasm from both the physician community and the patients.

And so one of the things I talked a lot about is the mechanism and scientific rationale for selecting this program. But when we were doing our diligence on selecting clinically significant angiokeratomas. The other piece was really the tremendous clinician demand for a targeted topical therapy here. So that was part of the equation that we used to select clinically significant angiokeratomas.

Since that time, I've had the opportunity to train all of the clinicians that enter the study. It's really important to have a very hands-on approach like we do with our clinical team here. And when I'm training the clinicians, I'll say anecdotally that the enthusiasm that I heard when doing the diligence for the program is as high, if not higher, from the clinicians who are part of our clinical trial. So it's really encouraging. I think that's one of the reasons our trial is ahead of plan. There's just a lot of demand for it.

As far as endpoints go, what we do with these trials is because no one has ever run a clinically significant angiokeratoma trial before. That's the precedence and the innovation that we have here that Wes talked about earlier. So we conducted patient and clinician interviews prior to starting the program. We selected endpoints that we think are relevant for the disease. And ultimately, what we want to test in this clinical trial is how these endpoints move on the scale with QTORIN rapamycin. And if that's something we can move forward to Phase III.

So we'll be looking for across all the endpoints. We'll be doing the qualitative interviews. We'll be doing the analysis of photographs. And ultimately, the decision to move forward will be based on the data that we generate in Phase II.

Your final question comes from the line of Dev Prasad with Lucid Capital Markets.

Congrats on the question. I have -- sorry for the progress. I have a couple of quick ones. One is following the European patent on QTORIN rapamycin, how are you thinking about the approach for ex-U.S. market to expand QTORIN rapamycin?

And the second one is for DSAP program. You mentioned Phase II to initiate for second half. Can you narrow that down to early versus late? And are there any remaining gating items?

Yes. Thanks for the question. Dev, we see significant market opportunities outside the United States for QTORIN rapamycin, post the Phase III data, we've been pleased by some of the inbound interest that we've received from potential licensing partners in territories such as Japan as well as Europe.

We'll do what every biotech company, we believe, should do, which is explore launching alone outside the United States or doing a licensing deal. At this point in time, our preference is likely to maintain our key focus on our core competency, which is the U.S. market and eventually post FDA approval, intensify partnering discussions in those territories. For now, our global rights are intact, and we think that, that's a very attractive profile for the company.

In terms of DSAP, we will, at some point, narrow the guidance. What we're doing now is we're doing all of the key IND-enabling work such as toxicology work where we have the results of a short-term toxicology study, which were favorable. And so we're completing those required elements to open the IND and dose that first patient in DSAP. Thanks for the question.

This ends our Q&A session. I will now turn the call back over to Wes Kaupinen for closing remarks. Please go ahead.

Great. Thank you, operator, and thank you to everyone who continues to believe in Palvella's mission to serve rare disease patients. Our vision to become the leading rare disease biopharmaceutical company in this field and our strategy of pursuing first-in-disease therapies where there are no FDA-approved options. We remain relentlessly focused on execution and deeply committed to delivering for patients, physicians and for our shareholders. With that, I'll conclude today's call. Thanks, everyone.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Palvella Therapeutics Full Year 2025 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I'd now like to hand the conference over to Bohan Wei, Vice President of Corporate Development. Please go ahead.

Thank you, operator. Good morning, and thank you for joining the Palvella Therapeutics Full Year 2025 Financial Results and Corporate Update Call. As a reminder, our press release detailing today's announcement can be found in the Investors section of our website at www.palvellatx.com.

On today's call, you will first hear from Wes Kaupinen, our Founder and Chief Executive Officer; followed by Dr. Jeff Martini, our Chief Scientific Officer; and Matt Korenberg, our Chief Financial Officer. Wes will return for closing remarks before we open the lines for Q&A.

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.

And now I will turn the call over to Wes.

Thanks, Bohan. 2025 was a landmark year for Palvella Therapeutics, one that brings us closer to recognizing our vision of building the leading rare disease biopharmaceutical company focused on developing and commercializing first-in-disease therapies for serious rare skin diseases and vascular malformations.

Thanks to the efforts of the Palvella team, our scientific and clinical collaborators, our patient advocacy partners and the rare disease patients we serve, we achieved several value-creating milestones, including: number one, announcing positive Phase II data in cutaneous venous malformations, data which support the advancement of that program toward a near-term breakthrough therapy designation submission to FDA and a pivotal Phase III study. Number two, surpassing our target enrollment in our Phase III SELVA study in microcystic lymphatic malformations. This based on physician and patient demand as well as strong execution from our clinical operations team. Number three, expanding our rare disease pipeline with the addition of 2 new programs, QTORIN rapamycin for clinically significant angiokeratomas and QTORIN pitavastatin for porokeratosis.

Number four, adding top talent to our senior leadership team, including Dr. David Osborne as our Chief Innovation Officer; and Ashley Kline as our Chief Commercial Officer. Number five, extending our collaboration with the FDA and specifically FDA's Office of Orphan Products Development who in 2025 supported our SELVA Phase III study with additional non-dilutive funding. Number six, expanding our IP portfolio with 2 U.S. patents for QTORIN rapamycin, strengthening our multilayered exclusivity strategy. And number seven, capping 2025 by securing FDA's Fast Track designation in clinically significant angiokeratomas, the third Palvella program, which has been granted Fast Track designation.

This momentum, the result of focus and disciplined execution by the Palvella team has carried into 2026 where earlier this year, we announced positive Phase III data from our SELVA study in microcystic lymphatic malformations, results which we believe position QTORIN rapamycin, if approved, to be a first-line standard of care therapy for individuals with microcystic lymphatic malformations. With a significantly strengthened balance sheet as a result of a $230 million financing announced earlier this quarter, Palvella is now well positioned to pursue a near-term FDA approval of QTORIN rapamycin in microcystic lymphatic malformations, drive a successful stand-alone U.S. launch and concurrently advance the rest of our rare disease pipeline.

What makes Palvella stand apart from other companies begins with our corporate strategy of pursuing development and commercialization in serious rare diseases with no FDA-approved therapies. We believe that these diseases are unambiguously high unmet medical need. We intentionally focus on diseases where we are the pioneers in advancing therapies targeted to be first in disease for patients and families suffering from these rare diseases. Our goal is to apply our proprietary QTORIN platform, our internal product development engine for reproducibly developing novel topical product candidates in a focused subset of rare skin diseases and vascular malformations, which have clear biology and also the existence of human proof-of-concept data, which serves to validate a specific molecular approach. Evidence of this development strategy is microcystic lymphatic malformations, a well-defined disease caused by a PI3K mutation where mTOR hyperactivation is driving the disease progression and in which rapamycin has a large growing foundation of real-world human clinical evidence upon which Palvella can build.

We are taking a similar approach in cutaneous venous malformations, angiokeratomas and disseminated superficial actinic porokeratosis, and we anticipate by year-end the addition of 2 new diseases to our pipeline, bringing the number of diseases we aim to treat to 6. Overall, by taking the approach outlined on this slide, our aim is to reduce the time and capital required to achieve FDA approvals while entering uncontested markets that have more favorable commercial dynamics when compared to more traditional and more competitive markets. With approximately 600 rare skin diseases, 98% of which do not have a single approved therapy, we see ample opportunity to grow our pipeline and repeat our focused rare disease development model.

I want to take you through our recent -- how our recent execution translates into multiple anticipated high-impact milestones over the next 12-plus months. We entered 2026 exceptionally well positioned across both our lead program and our expanding pipeline. Starting with microcystic lymphatic malformations, we have positive Phase III data in hand and are on track for NDA submission in the second half of 2026 with a potential FDA approval targeted for the first half of 2027.

In cutaneous venous malformations following positive Phase II data, we expect a breakthrough therapy designation decision in the second quarter of this year and plan to initiate a Phase III study in the second half of this year. For clinically significant angiokeratomas, we have received FDA's Fast Track designation and are advancing towards initiation of our Phase II study ahead of schedule with the Phase II initiation now expected in the second quarter of this year versus our previous guidance of second half 2026.

In DSAP, we have developed our QTORIN pitavastatin formulation, filed IP, and we expect to initiate a Phase II study in the second half of 2026. And more broadly, we continue to expand the QTORIN pipeline with a fourth indication for QTORIN rapamycin expected to be announced in the second half of this year and a new QTORIN product candidate, our third, also expected to be announced in the second half of this year. This positions Palvella for a catalyst-rich period, including the potential for our first FDA approval, which we believe could create a streamlined and efficient pathway for indication expansion into other mTOR-driven skin diseases through planned supplemental NDA submissions.

Let me now turn to our lead program, QTORIN rapamycin for microcystic lymphatic malformations. We believe microcystic lymphatic malformations represent a significant multibillion-dollar commercial opportunity based on an estimated population of more than 30,000 diagnosed patients in the U.S. according to claims analysis and published literature. Based on the Phase III SELVA results, the results from our Phase II study and the market research we've conducted, we believe QTORIN rapamycin upon achieving potential FDA approval is positioned to be first-line and standard of care therapy for microcystic lymphatic malformations, directly targeting the underlying disease biology through inhibition of the causative mTOR pathway and doing so in the pathogenic skin tissue of interest.

Clinically, we have demonstrated a robust treatment effect across 2 prospective trials, along with a favorable safety and tolerability profile supporting efficacy and potential for long-term use in this patient population. With positive Phase III data now in hand, we are on track for an NDA submission in the second half of '26 and if approved, potential FDA approval in the first half of 2027.

I'd like to highlight our Phase III SELVA data, which we announced last month. Our team established base and upside cases grounded in what clinical study results could translate to meaningful improvement in patients' lives while supporting an attractive commercial opportunity. SELVA exceeded our predefined upside case across every dimension. On the primary endpoint, the Microcystic Lymphatic Malformation investigator Global Assessment, we observed a highly statistically significant outcome well above our upside case. Importantly, 95% of patients completing the efficacy evaluation period improved and 86% were much improved or very much improved. The blinded key secondary endpoint, the mLM-MCSS was also highly statistically significant. From a safety perspective, QTORIN rapamycin was well tolerated in both children and adults, supporting potential for chronic dosing across all ages.

Importantly, retention in the study was exceptionally strong with 98% of week 24 completed electing to roll into the extension period, supporting durability and continued treatment benefit. SELVA exceeded what we at Palvella had hoped to see, not just on efficacy, but on durability and safety. And ultimately, these results, we believe translate into meaningful impact for patients of all ages diagnosed with microcystic lymphatic malformations.

Turning to our regulatory progress. Our planned NDA submission is on track. We recently submitted our pre-NDA meeting request to FDA's Division of Dermatology and Dentistry with the pre-NDA meeting anticipated in the second quarter of 2026. Notably, we are pursuing a traditional full FDA approval based on clinical endpoints, which differs from an accelerated approval, which relies upon surrogate biomarkers that are likely to reasonably predict clinical outcomes. Providing a strong foundation for our NDA submission is both our Phase III SELVA data, which were highly statistically significant and clinically meaningful as well as the results from our Phase II study. Our interactions with physician key opinion leaders in this disease and our understanding of the progressive nature of the disease suggests that early therapeutic intervention could alter the natural history of the disease.

Therefore, it is our intent to pursue a label, which includes patients aged 3 and above. We have previously been granted breakthrough therapy, Fast Track and Orphan Drug Designations, and we plan to pursue a [ 505(b)(2) ] pathway, which may enable us to leverage existing FDA findings and the established body of evidence for rapamycin as part of a more streamlined development and regulatory strategy. We continue to collaborate closely with the FDA's Office of Orphan Products Development, which in addition to providing nondilutive funding, intend to participate in our anticipated pre-NDA meeting with the review division in the second quarter of this year. These elements support a path towards NDA submission in the second half of 2026 and potential for FDA approval in first half of 2027.

Turning to the commercial opportunity. We believe or QTORIN rapamycin is well positioned for a highly attractive orphan launch. Microcystic lymphatic malformations represent a serious rare disease with high unmet medical need and currently no FDA-approved therapies available to physicians and patients. There is already a large diagnosed patient population with a meaningful percentage of patients concentrated in specialized vascular anomaly centers. We have also consistently experienced strong enthusiasm from key opinion leaders about the potential for QTORIN rapamycin, many of whom participated in our Phase III and Phase II studies, and we believe this enthusiasm could contribute to a strong uptake curve following potential FDA approval.

From a pricing and reimbursement perspective, we anticipate orphan pricing consistent with our previous guidance of $100,000 to $200,000 per patient per year. All of this is supported by positive Phase III data, which indicate a favorable risk-benefit profile, particularly compared to the scarcity of therapeutic options available to these patients today, reinforcing the potential for QTORIN rapamycin to become a first-line standard of care therapy for individuals with microcystic lymphatic malformations.

We have made significant progress in building the foundation for a potential first half 2027 commercial launch. Starting with leadership, we have assembled a highly experienced commercial team. Last year, Ashley Kline joined Palvella as Chief Commercial Officer, and we recently added Jennifer McDonough to lead market access and patient services. Ashley is a commercial veteran in the rare disease space, having previously led the launch of oxybate, a novel topical therapy for neurotrophic keratitis and a therapy which now generates greater than $1 billion in U.S. sales a few short years after launch.

Last week, we welcomed Jennifer McDonough to the Palvella team. Jennifer is widely regarded as a leading executive in rare disease market access and patient services. Her contributions were critical to the success of the launch of VYJUVEK from Krystal Biotech, a first-in-disease topical therapy for dystrophic epidermolysis bullosa, a serious rare genetic skin disease. In parallel, we are building out our medical affairs capabilities with the hiring of medical science liaisons already underway and active participation across the key medical meetings you see listed on the slide here. Importantly, we are also taking a robust approach to patient identification and market development. We estimate more than 30,000 diagnosed patients in the U.S. and importantly, approximately 1,500 new patients diagnosed each year. We are concentrating our initial efforts on the highest value centers and treating physicians with a specific focus on approximately 400 high-volume centers that we estimate represent approximately 50% of the diagnosed population in the U.S.

Overall, we recruited top talent and are making significant investments to ensure we are well positioned for a successful U.S. launch of QTORIN rapamycin in microcystic lymphatic malformations.

Moving now to our QTORIN rapamycin for cutaneous venous malformations program. Let me begin with some comments on the commercial opportunity in this disease. Venous malformations are the most common type of vascular malformation and cutaneous venous malformations represent a large and underappreciated market opportunity with an estimated more than 75,000 diagnosed patients in the U.S. and currently no FDA-approved therapies. We reported positive Phase II data in December of 2025 with statistically significant results across several clinician and patient-reported outcomes. Specifically, 73% of patients demonstrated improvement on the cVM Investigators Global Assessment with 67% rated as much improved or very much improved at week 12. It suggests both a high responder rate and a large magnitude treatment benefit in this initial Phase II study.

We are now swiftly advancing towards a Phase III study with study design alignment expected mid-2026 and trial initiation planned for the second half of the year. In parallel, we are finalizing a breakthrough therapy designation application. This following a constructive preliminary advice meeting with the FDA earlier this quarter in which our collaborator, Dr. [ Denise Adams ], a prominent pediatric hematologist oncologist from Children's Hospital of Philadelphia, described the unmet need in cutaneous venous malformations as well as her experience in the Phase II study. In addition to the Phase II data, our breakthrough application will include both patient qualitative interviews capturing the meaningfulness of the therapy to their daily lives and a letter of support from the investigators who participated in the Phase II study.

We also, importantly, continue to generate additional data through the ongoing Phase II treatment extension period with plans to present that data set at a medical meeting later this year. Overall, our QTORIN rapamycin program in cutaneous venous malformations represents a compelling opportunity to expand into a larger second clinical indication for QTORIN rapamycin and assuming initial approval in microcystic lymphatic malformations, potentially advance through a streamlined supplemental NDA pathway.

I will now hand the call over to Jeff, who will talk about our additional pipeline programs. Jeff?

Thank you, Wes. Our clinically significant angiokeratomas program represents our third clinical indication for the QTORIN rapamycin program. Our Phase II trial is ahead of schedule with initiation anticipated in the second quarter. Angiokeratomas are a superficial lymphatic malformation and share overlapping clinical and pathological features with microcystic lymphatic malformations, including similar lesion morphology, superficial vascular involvement and aberrant lymphatic biology. These lesions are associated with increased mTOR signaling and do not spontaneously regress. This provides a strong mechanistic and clinical rationale for targeting this indication with QTORIN rapamycin.

As Wes mentioned earlier in the presentation and consistent with our strategy of leveraging existing human data, we are able to build on published proof-of-concept data, including multiple case reports demonstrating preliminary clinical benefit from off-label rapamycin use. Clinically significant angiokeratomas represents a large underserved indication with more than 50,000 diagnosed patients in the U.S., no FDA-approved therapies and the potential to expand QTORIN rapamycin into this indication through a supplemental NDA.

QTORIN rapamycin is a pipeline in a product with our lead program in microcystic lymphatic malformations preparing for NDA submission and launch, our cutaneous venous malformation program advancing towards Phase III and our clinically significant angiokeratomas program with a Phase II study planned and ahead of schedule. Across these initial 3 indications, we are already addressing a meaningful patient population in the United States, but there is a significant opportunity for expansion. We are actively evaluating additional mTOR-driven diseases that meet our highly selective criteria and expect to continue to expand our addressable patient population over time. This strategy enables efficient development by leveraging the same molecule and platform and targeting shared disease driving biology across multiple indications.

We are expanding our pipeline beyond rapamycin with QTORIN pitavastatin in disseminated superficial actinic porokeratosis, or DSAP, which represents our second QTORIN program. DSAP is a chronic, progressive and precancerous skin disease that presents with numerous expanding lesions on sun exposed areas, causing significant symptoms, including burning, itching and discomfort and carrying a risk of malignant transformation. Despite this, there are no FDA-approved therapies and existing treatment approaches are invasive, temporary and do not address the underlying disease biology.

QTORIN pitavastatin is a pathogenesis-directed therapy targeting the [ mvylNA ] pathway with the potential to become first-line and standard of care for patients with DSAP. Our approach is supported by emerging scientific evidence, including our recent publication in experimental dermatology, highlighting real-world statin use and treatment gaps and our presentation at the American Academy of Dermatology, demonstrating the burden of disease. Following our public announcement of the program, we are seeing strong inbound patient interest as we prepare for our Phase II study, which remains on track for initiation in the second half of 2026. QTORIN pitavastatin for DSAP highlights our disciplined approach to selecting diseases that meet our highly selective criteria combined with the QTORIN platform's ability to efficiently develop pathogenesis-directed therapies.

Before turning the call over to Matt, I'd like to briefly highlight the strength of the QTORIN platform as a new product development engine. We follow a disease-first R&D strategy, spending significant time identifying diseases that meet our highly selective criteria and are well suited for targeted topical therapies. We have now validated the platform with 2 positive clinical readouts, including our Phase III SELVA trial and the Phase II TOIVA results. We are leveraging QTORIN to scale our pipeline, rapidly advancing and testing multiple molecules in a time and capital-efficient manner. We also plan to pursue FDA platform technology designation following the anticipated approval of QTORIN rapamycin.

And as we look ahead, we expect to announce one new QTORIN program and one additional QTORIN rapamycin indication later this year. QTORIN represents a validated and scalable engine to deliver first-to-disease therapies that we believe can make a meaningful difference for patients and create long-term value for shareholders.

With that, I'll turn the call over to Matt to review our financial results.

Thanks, Jeff. Turning to the financials. Palvella ended Q4 with $58 million in cash and cash equivalents as of December 31, 2025. Following our positive Phase III SELVA data, we completed an oversubscribed $230 million public offering in February of 2026, bringing in $215.8 million in net proceeds.

I want to emphasize what this financing means for the company. With pro forma cash of $274 million, this financing fundamentally strengthens our balance sheet and eliminates financing overhang as we enter the most important execution period in Palvella's history. With this cash and even before considering any potential revenue, we are now fully funded to advance our microcystic lymphatic malformations program through an NDA filing, and FDA approval, and if approved, a U.S. commercial launch. For QTORIN rapamycin cutaneous venous malformations, our runway allows us to execute a Phase III program and subsequently complete an NDA filing. And for our QTORIN pipeline, we have the runway to support multiple Phase II data readouts from our existing and future pipeline programs.

The quality of investor participation in this financing was exceptional, and we believe it reflects the growing institutional conviction in both the SELVA data and our broader pipeline strategy. With this capital base and our innovative operating model that prioritizes capital efficiency, the Palvella team can now focus entirely on execution without the distraction of the near-term financing needs.

I'll now turn the call back over to Wes for closing remarks and to open the line for questions. Wes?

Thanks, Matt. 2025 was an exceptional year for Palvella. Now our focus is squarely on execution across our deep pipeline of rare disease programs. We are closer to our first FDA approval than we have ever been, and the entire Palvella team is committed to making that a reality for the patients and families who have been waiting.

With that, operator, we will open the line for questions.

[Operator Instructions] Our first question comes from Josh Schimmer with Cantor.

For the QTORIN rapamycin platform, what are the gating steps for each new indication that you choose to pursue? And given the broad number of settings where there is actual data for topical rapamycin, how many different indications do you ultimately expect you might have on the label?

Great, Josh, thank you for being on, and thanks for the question. For the platform, which was your first question, we really start with the disease. We profile diseases that, one, have no FDA-approved therapies. Number two, we look for diseases where there's low competitive intensity in the development pipeline. That allows us to be first. That's the goal, to be on a trajectory to having that first approved therapy. We also carefully evaluate from a scientific perspective, whether there is clear biology in that particular disease, well-defined biology. And we do prefer to go in diseases, I think as Jeff nicely highlighted earlier, where there is existing human proof-of-concept data, sometimes that can be from off-label use like we've seen with the use of rapamycin and lymphatic malformations. We think that having some of that data in hand, human proof-of-concept data helped to validate a particular molecular approach. We then apply the QTORIN platform, of course, the goal being to be on target and in tissue for these localized skin diseases.

On your second question in terms of how many indications we can eventually have for QTORIN rapamycin, there's a long list. There's 3 publications that I think nicely summarize all the different diseases, skin diseases where the mTOR pathway is implicated. Jeff can speak to some of those diseases, but there's well over a dozen diseases where scientists, clinicians, researchers, geneticists have implicated a strong role for the mTOR pathway. Jeff?

Yes, Josh, thanks for the question. Just to kind of reiterate what Wes said, we take a really disease-first approach, rely heavily on our Medical and Scientific Advisory Board, both for understanding the disease unmet need as well as the biological rationale and then find experts in the diseases because these are rare diseases, we have a lot of good collaboration with experts in these fields, which typically haven't seen much scientific or medical research. So we collaborate very closely with the KOLs and then ultimately pick the diseases that have the highest probability of success, biggest unmet need. And also, we do have a commercial evaluation as well.

And maybe just to round that out, Josh, the 3 papers that I referenced, the authors are [ Swarbrick, Fogal and Tatiana Lapa ], which look at the involvement of the mTOR pathway in skin diseases to maybe quantify your question in terms of size of the population, we think the addressable size of the patient population to be treated with QTORIN rapamycin once you add microLM, cVM, angiokeratomas and several of the other diseases that we've identified is in the hundreds of thousands.

Our next question comes from Ritu Baral with TD Cowen.

Wes, will the Phase II extension data or at least some of the Phase II extension data from the cVM study be part of your breakthrough application for that indication to FDA? And can you give us any more detail as to when that extension data will be presented and sort of like the parameters of that extension data? And then I've got a follow-up on commercial.

Great. Ritu, thanks for the questions. The Phase II extension data is not yet finalized, and we are proceeding with our breakthrough therapy designation application. Our breakthrough therapy designation application will include the Phase II data where we saw 67% of patients either achieve the ratings of much improved or very much improved. We are also going to include interviews, patient qualitative interviews where the patients in their own words as part of a qualitative interview sub-study that we incorporated describe their experience in the trial. We think that, that's really important to augment the statistically significant data with data that supports clinical meaningfulness.

And finally, our investigators have really rallied here to put together a letter of support for the breakthrough therapy designation application. This is something that our Chief Operating Officer, [ Kathy Goone ], has spearheaded with [ Denise Adams ] and several others. So that's going to be a key part of the breakthrough application. That letter will cover not only their view about the preliminary clinical evidence package, but also their view around future study designs, which is going to be part of our discussion with the FDA after the breakthrough decision.

Understood. And then on the commercial side for mLM, Wes, you mentioned -- and this is an Ashley question too, I guess, you mentioned there's the diagnosed pool for mLM. What are your up-to-the-minute estimates for that? And then you mentioned that those patients were under care in a concentrated way at vascular anomaly clinics. Do you have the number of those clinics and what percentage of the diagnosed pool they cover? And then right now, maybe more high level, what are your plans as far as patient support services, coverage support services for adjunct to the price range that you mentioned?

Yes. Thanks, Ritu. So our latest estimates, and this is based on convergence of evidence from a real-world occurrence study that was published by [ Jack Gallagher ] that's available in [ Orphanet ], which projects that there's approximately 80,000 patients in the United States with a cutaneous manifestation of their microcystic lymphatic malformations. We've also done claims work, which suggests a range of around 45,000 to 95,000 diagnosed patients that are within clinical medicine in the U.S.

So our -- we look at all that evidence. This is a dynamic process at Palvella. You're always evaluating claims data. We estimate perhaps conservatively that there's greater than 30,000 diagnosed patients in the United States with microcystic lymphatic malformations that could be addressable if approved with QTORIN rapamycin.

When you break down the claims data, we break it down into high-volume centers, many of which, Ritu, are these vascular anomaly centers. If you take the 400 highest volume centers, that constitutes about 15,000 patients in the United States. So that really is our primary focus. We fortunately have great relationships with many of these vascular anomaly centers as a result of work by our clinical operations teams and the Phase II and Phase III studies that we've run.

In terms of patient services for our U.S. launch, Ashley has a lot of experience in this area, having launched oxybate, one of the most successful orphan drug launches of the past decade. We're also thrilled to have recruited Jennifer McDonough. We've closely followed and rooted on VYJUVEK's success from Krystal Biotech in a really rare and devastating disease there. So what we want to do is work with specialty pharmacy and a patient services hub that have a proven track record in the rare disease space, particularly when you think about microcystic LMs, where you're very likely to see chronic dosing with QTORIN rapamycin so that we're not only treating the existing clinical signs, but that we're also preventing that disease recurrence, which is a major issue with the disease today.

Our next question comes from Annabel Samimy with Stifel.

Great progress. I just -- we've been getting questions from investors about FDA unpredictability. This is not an accelerated approval, clearly, and you've noted very specifically that it's not surrogate endpoints, but clinical endpoints. But there is still some concern about a one-arm study. How have these interactions been with FDA? Are you still comfortable with that design? And I guess, looking at cVM, what are you planning as far as Phase III design? And how might that change with breakthrough designation? And should we have any read-through to the MLM receptivity to one-arm trials? So it's, I guess, a multilayered question, but really, it's about FDA unpredictability these days.

Sure. Thanks, Annabel, for the questions. Prior to the commencement of the Phase III study, we believe we were aligned and continue to be aligned with the FDA on that single-arm Phase III baseline controlled study where the patient serves as their own control. I think it's important to note here a couple of things.

Number one, this is a disease where there is documented no spontaneous regression of the disease. Therefore, that can enable a single-arm design to serve as a reliable design for the purposes of an efficacy assessment, particularly when you employ clinical outcomes like we have, which we think are objective in nature, where the physician is scoring the patient's lesion at the end of treatment and comparing that to a baseline photo. We shared several photos in our Phase III SELVA release, and we think they clearly indicate clinical improvement in lesions that would otherwise progress to a worsened state.

So our interactions, we've had interactions with both the review division, the derm division as well as the Office of Orphan Products Development. Since the Phase III SELVA study concluded, we presented them with the data. I would describe those interactions as constructive, and we are proceeding towards a pre-NDA meeting. That's been requested at this point in time, and we expect that to occur in Phase II. I think there are certain elements of the FDA at a macro level that we're really encouraged by. I think we've all been following Dr. [ McCary ] advocating for a common sense approach, describing that the new default approach to generating substantial evidence of effectiveness is one trial, not 2, and he's consistently been advocating for expediting therapies to patients with rare diseases. FDA came out in Q4 of last year talking about accommodating real-world evidence to help inform regulatory decision-making. And from Palvella's perspective, we believe the FDA much prefers approved drugs to off-label or compounded drugs. So we think all of those sort of macro trends certainly work in our favor.

From a cVM perspective, it's going to be a 2-step process to land on a study design. Step one is going to be determining whether or not we are breakthrough designated. That application is going to go in imminently with the various elements that I mentioned earlier. Whether or not we're granted breakthrough, we're going to meet with the FDA on the other side of that decision. And I think our KOLs will be strongly advocating for flexibility for the Phase III study design. There's a range of potential outcomes here. In our interactions with folks like [ Denise Adams ] at [ CHOP ], I think they would much prefer all patients having the opportunity to go on drug, given that it's well accepted that [indiscernible] does have activity in vascular malformations and specifically venous malformation. So there could be issues around clinical epipoids or ethics as well that we have to work through collaboratively with the FDA.

That said, there is also the potential for a placebo-controlled design. Our strategy is to first determine whether or not we're breakthrough designated. And then on the other side of that, align with the FDA on a study design that works for patients, physicians, FDA and for Palvella as well.

Our next question comes from Ryan Ries with Mizuho.

This is [indiscernible] on for today. I was just wondering if you guys could talk a little bit about the plans for the commercial launch on some of the key new hires like any organizational changes, upgrades or time lines on sales force plans for upcoming kind of...

Yes. Thanks, Ryan, for those questions. I'm a firm believer in trying to recruit the best talent in the world to Palvella. Ultimately, I think that's going to help dictate our success for patients and shareholders. And I think we've really assembled incredible talent between Ashley Kline as Chief Commercial Officer, Jennifer McDonough, and our build-out of our medical affairs team.

Ryan, in terms of your questions of changes or upgrades, I would characterize where we are as additions and investments that we're making. So we are building out a medical science liaison team. We expect that to be somewhere between 5 and 10 MSLs. They will be very active with these top 400 targets that I mentioned earlier. They will also have a major presence at medical meetings. We expect to hire, and it was noted in our corporate deck ahead of sales in the near term. We're going to bring that hire on a bit early to start to really think through how to shape an attractive uptake curve for QTORIN rapamycin, similar to what we saw with companies like the ones I've been involved with, such as [ Insmed ], Ashley with Oxybate and GenMcDonough with Krystal Biotech. So that's going to be really key. We put forward a provisional range of 20 to 40 sales reps. I think with the capital raise having been completed, and we're very grateful to the investors who participated for their support, we're more likely to go to the upper end of that 20 to 40 range versus the lower end of that range.

Key in all this will be quality, Ryan. So one of the hiring processes that we've implemented here is that the senior executive team is very involved in the hiring at all levels. We want to make sure we bring in the right people that are high performers. We're a performance-driven culture here, but also ones who are authentically patient-oriented and really feel a strong desire to serve patients with rare diseases.

Our next question comes from Sam Slutsky with LifeSci Capital.

So obviously, great to see the angiokeratomas Phase II initiation moved up to Q2. But could you just remind us on the key endpoints that you'll be looking at here and the magnitude of effect that would be deemed clinically relevant? And then just as you prepare for commercial launch and pipeline expansion, any additional granularity that you're able to give on cash burn expectations over this next year?

Sam, thanks a lot for both questions. I'll pass it over to Jeff to discuss the endpoints that we're looking at in the Phase II angiokeratomas study. That's going to be similar to what we did in mLM and cVM and that there's going to be no prespecified statistical hierarchy, no primary endpoint. We think that's a thoughtful approach to take in rare diseases where there's no FDA-approved therapies and really where you're trying to determine which endpoints are sensitive to detecting a treatment effect before putting together that statistical hierarchy in Phase III.

So Jeff will comment on that, and then we'll pass it over to Matt Korenberg to address the second part of your question. Jeff?

Thanks for the question, Sam. So we're going to follow what we are calling the Palvella playbook, and it's really repeating the overall strategy that we've used for these other rare diseases that have never had a clinical trial done with them before.

So as Wes mentioned, there is no statistical hierarchy. The purpose of the study is to understand what are the endpoints that are sensitive to change. We started out by talking with patients as well as clinicians to identify what are the key signs. So we'll look at individual signs as well as global endpoints to look at global changes. We'll look at both dynamic and static scales. We'll also look at both clinician and patients' perspective.

And then importantly, like all of our trials, it's really important to capture the voice of the patients. So we'll be conducting qualitative interviews, both at baseline and end of treatment. And ultimately, we'll package all that data, and that will inform future plans.

Yes. Sam, on the cash -- on the cash burn, I appreciate the question. It's -- as I said in my prepared comments, it's -- the cash that we have today is sufficient to get us through basically advancing all of our programs over the next several years. What that translates to for 2026 is somewhere around $80 million of cash burn. So that's the number for 2026, just around $80 million.

Our next question comes from Whitney Ijem with Canaccord.

Just kind of to the FDA regulatory -- sorry, the FDA flexibility and macro tailwinds, I think you said there. Just curious if you've had a chance to speak with the agency on this plausible mechanism pathway. I know that was something you talked about back in December. Yes, just curious if you've had those conversations and just as we think about kind of all of the indications where there is sort of clinical validation for topical rapamycin, just if that might be a potential path forward to shorten the time line to some of those.

Thanks, Whitney, for those questions. On the plausible mechanism pathway, at this juncture, we have not had formal interactions with FDA as to whether one or more of our programs qualify for the plausible mechanism pathway. Looking across our pipeline, we do have several molecules and several diseases that we believe represent closer to a validated mechanism than one that is plausible in nature. So we're carefully monitoring how the FDA is implementing the new plausible mechanism pathway program, and it is our intention to better understand whether one or more of our programs other than microLMs could qualify for the plausible mechanism pathway. On microLMs, we don't think that's a pathway at this point in time that we need to march towards an NDA submission and FDA approval, but a plausible mechanism could apply to cVM, potentially angiokeratomas as well as porokeratosis.

Our next question comes from Ryan Deschner with Raymond James.

Thanks for the question. Were there specific drivers in the written feedback from FDA that drove the acceleration in the angiokeratomas clinical initiation time line? And also, what are your expectations for how far along the clinical -- in the clinical development of your new programs you can get with the current cash runway at this point?

Great. Thanks, Ryan, for both questions. I'll take the first question, and then Matt can speak to the key milestones that we intend to achieve with the cash on hand.

FDA granted us, Ryan, Fast Track designation in angiokeratomas at the conclusion of last year. We look at that as a major milestone for the company. It's our third Fast Track designated program. We placed in front of the FDA a Phase II design in angiokeratomas of about 10 or 20 patients. That design is intended to really be a signal finding study. The FDA understands that we're evaluating a number of different endpoints in this disease, which currently has no FDA-approved therapies.

So I think what enables us to move quickly there, and it's core to the business model that we articulated earlier is we do have an open IND at the FDA around QTORIN 3.9% rapamycin and hydrogel. They're very familiar with the tox package, all the safety data that we've presented over the years. We're leveraging our existing manufacturing process. So our ability to jump-start new indications on QTORIN rapamycin while preserving that same formulation IND manufacturing process is, we think, one of the advantages and what will allow us to do serial and sNDA submissions over time once we have that first approved indication, which we expect to be microcystic lymphatic malformation.

Matt, do you want to tackle the second part of the question?

Yes. Thanks, Wes. Ryan, the existing cash, as I said, even without considering any revenue, fuels a whole number of catalysts for us over the 2026 and 2027 and into 2028 period. On the lead program, mLM, we can get all the way through a potential approval and launch. On cVMs, we think we can get through a filing. For DSAP and angiokeratomas, the 2 programs launching Phase II trials this year, we can easily get through data on those 2 trials. And then for the 2 new indications that we've talked about announcing this year, we believe we have sufficient cash to get through data readouts in those indications as well.

Importantly, my prepared comments were caveated by a lack of any revenue adjustment for that cash runway. I think if we consider potential cash generation through revenue and launch, there's a potential that we can get to cash flow breakeven depending on how aggressively revenue ramps and depending on how aggressively we build out the pipeline. So we feel like we have all the cash we need for the foreseeable future to really just focus on execution and generating data and eventually commercial products across the pipeline.

Our next question comes from Danielle Brill with Truist Securities.

This is [indiscernible] on for Danielle. So I have a question about the microcystic dosing. You previously mentioned that some patients with larger lesions may require more than 1 pump per daily dose. Based on your recent medical affair outreach, we're just wondering how should we think about modeling the average daily dose and the annual revenue per patients across different lesion size?

Yes. Thanks for the question. We think the average patient will be 1 pump per day, and we expect this to be dosed in a manner that will be chronic therapy. I think that's something that we've gathered from our KOLs, including folks like Dr. Mike Kelly from the Cleveland Clinic. The way we're modeling that, and Matt can comment further is looking at that in the pricing range of $100,000 to $200,000 per patient per year. And so averaging that out across patients, some of whom will consume more than 1 pump per day, some patients who probably will consume less than 1 pump per day.

And so Matt can comment on any further specificity that he'd like to add.

Yes. Thanks, Wes. I think it's important when we have recently started talking about a peak sales opportunity of multibillion-dollar TAM and $1 billion or more as peak sales in mLM, doing is taking pretty conservative assumptions across the board, including for patient numbers, penetration and then to your specific question on any patient compliance assumptions as you move out in years for patients on drug. So we see any kind of compliance variations from a standard 1 pump per day as being more than offset by the new incident population of more than 1,500 new patients coming in per year. But we've been very conservative about that as we get to that $1 billion peak sales number. So I think that's probably the most level of specificity that we've given so far.

That's very helpful. We have another question on the doctor feedback from the recent AAD conference. So specifically for the dermatologists who have historically relied on or were hesitant to move away from compounded QTORIN rapamycin, did the data generate more buy-in from those doctors?

Yes. Thanks for that question. We've had extensive conversations with our physician collaborators around that question. Many of our Phase II and Phase III investigators have utilized compounded off-label therapies. I think you heard that Jenny likely from Dr. Mike Kelly on the SELVA Phase III data release. Very consistently, what we hear is that physicians much prefer an FDA-approved therapy that has proven safety, quality and efficacy and done so in prospective studies under an FDA IND to any therapy which has not gone through that rigorous and stringent FDA-approved process. That's very consistent feedback. And I think as we look at FDA activity around compounders, certainly, the FDA is ramping up their enforcement of compounded medications in the presence of drugs that are FDA approved, most notably from the GLP-1.

So that's been consistent feedback that we have received from folks like Mike Kelly, [ Jim Tree, Ed Shop ] and others. And most importantly, just to reiterate, our SELVA Phase III data, we saw 95% of patients who completed the efficacy evaluation period improved while on drug and 86% of those were much or very much improved. We think that, that -- if we're FDA approved, we think that, that will result in strong uptake from patients and physicians, and we're looking forward to that day of having QTORIN rapamycin be made available to those folks.

Our next question comes from Kaveri Pohlman with Clear Street.

I would like to follow up on maybe if you can provide more details on treatment compliance, what it would look like typically? And were there any patients in the Phase III or prior Phase II trial who needed to pass the treatment due to adverse events or any other factors? And overall, also for mLM out of 30,000 patients, can you share like what proportion you know consider truly like moderate to severe and therefore, more appropriate for the treatment? And I have a follow-up.

Yes. Thanks for those questions, Kaveri. I'll start with the last one. We think that any patient who is within clinical medicine and our data indicates that there's greater than 30,000 patients that are currently within clinical medicine that are diagnosed with microcystic LMs. We think any patient with that profile is a good candidate for QTORIN rapamycin. I think part of that goes to the underlying biology of the disease. This is a proliferative and progressive disease. So if the disease is left untreated, the patient will worsen. What we know clinically is that's likely to result in leaking or lymphorea bleeding, other impact on quality of life and, of course, risk of infection, cellulitis and other infections, some of which can even be life-threatening.

So we think the best approach even for those patients who may be more moderate in nature is to treat the lesion and treat it in a manner that hopefully alleviates the clinical signs, but also prevents the progression of the disease. From a treatment compliant perspective, our goal will be to work with, and Ritu asked the question earlier, our specialty pharmacy and our patient services hub to encourage patients to be compliant. We think that compliance with QTORIN rapamycin is set up in a manner for patients to be highly compliant with the drug.

What do I mean by that? It is once-daily dosing. We've also selected excipients in the formulation that are designed to be non-irritating. We do not have any traditional penetration enhancers. And for that reason, we would expect to see high compliance relative to other therapies, which may require more frequent daily dosing and which may have more significant safety or tolerability effects. Jeff?

Yes. Kaveri, thanks for the question on adverse events. So we've completed 2 clinical trials. The first was the Phase II trial, which was 12 weeks. In that study, no patients withdrew due to adverse events. In the Phase III trial, which was 24 weeks in duration, we had 50 patients enrolled. We did have 6 patients who discontinued treatment. 5 of those 6 were deemed unrelated to study drug. One of the patient was related as possibly related to study drug. This is a patient who had a history of lymphorea and withdrew for lymphorea.

Yes. Sorry, I just wanted to know if any patient had to pause the treatment in between and they restarted the treatment during that period?

No, we did not have that situation.

Got it. That's helpful. And maybe there was a recent publication suggesting that rapamycin's 2 years of continuous use followed by more like customized intermittent use can provide long-term benefit to majority of patients. Is that your expectation for QTORIN rapamycin as well? Or do you think having an official label and approval with increased awareness and clear guidance could change these estimates around duration of treatment?

Yes. Thanks for the question. It's a really nice scientific publication that came out just showing that long-term use of rapamycin can have a really nice clinical benefit. What we've observed in our clinical trial is that over 24 weeks with continued treatment is that you continue to have clinical benefit. And we observed patients 98% rolled over to the treatment extension. So they were, at least in our perspective, we're perceiving a positive risk-benefit profile. We don't have additional data beyond that point, but we'll continue to monitor those patients in the treatment extension period.

Our next question comes from Catherine Novack with JonesTrading.

Just curious of what's still up for discussion at the pre-NDA meeting? Do you think you'll get clarity on the 3-plus age range at this time? Or would this be something that would take place down the line during labeling discussions? And then just remind us of the enrollment dynamics that led to exclusion of the 3 to 5 age patients from the ITT in Phase III.

Great. Thanks, Catherine. On the pre-NDA meeting, essentially, what you're doing is you're putting forth what you anticipate being your package to support substantial evidence of effectiveness as well as what will constitute your safety package as well. So I'm not sure those are up for discussion. I think the FDA has known for a long time about our drug development program, the fact that we ran a Phase II study. Recall that they granted breakthrough therapy designation on that Phase II study. So that's demonstration of preliminary clinical evidence.

And then with a very similar design in Phase III, albeit with a much larger sample size, we demonstrated highly statistically significant results on our primary key secondary and all secondary endpoints. So it's a matter of presenting that data to the FDA.

To your question regarding age range, that typically does occur later on in the NDA discussions. We felt like it was important on this call to share that based on our feedback from investigators that there is a desire for Palvella to advocate that younger patients might have this therapy available to them, of course, pending FDA review and approval.

Jeff, do you want to speak to why the 3- to 5-year-old cohort was not a part of the primary endpoint?

Yes. Thanks. So Catherine, for the -- what we did in Phase II is we had patients 6 and up in that trial where we had 100% of patients respond. And so for Phase III, our intention was to repeat that successful study, and we originally enrolled patients aged 6 and up. We had a lot of interest from investigators to increase the age to 3 to 5. We ran that by the FDA. They agreed and they allowed us to expand while that trial was ongoing. Essentially, because we haven't studied the efficacy in the 3- to 5-year-old population, we kept the primary analysis of the primary endpoint the same, age 6 and up and then just did a post-hoc analysis on the patient in the 3- to 5-year-old category.

Our next question comes from Albert Lowe with Craig-Hallum.

I was wondering what are the steps for platform technology designation after the initial approval? And when can you potentially receive designation? And how would this change the Palvella playbook?

Yes. Thanks for that question, Albert. The goal is to secure approval of QTORIN rapamycin first. That's going to be the first product from the platform, we believe, to achieve that FDA approval. As noted on this call, we've had a constructive and collaborative relationship with multiple parts of the FDA, including the review division and the Office of Orphan Products. So our strategy for achieving the platform technology designation would be to indicate our interest in that designation to the review division of the FDA, but also involving other parts of the FDA, if relevant, before submitting a more formal application around that.

How does that change the Palvella playbook? I think that's an important question. The platform technology designation, while relatively new, in many ways, function similar to other expedited programs in the sense that it's designed as a result of the FDA's review of a CMC package and an understanding of the technology platform to then create more expedited and streamlined pathways for future platform products. So we see a lot of value in this, particularly given some of the similarities between QTORIN pitavastatin and QTORIN rapamycin. Dr. Osborne, David Osborne and Jeff will be announcing a third QTORIN platform product later this year. And so again, further to one of my initial slides that was presented today, we are consistently pursuing and advocating for ways to get drugs to patients sooner and do so on reduced time and reduce capital, and we think the platform technology designation would help us achieve that.

Our next question comes from Dev Prasad with Lucid Capital Markets.

On the update. I have a couple of questions. One is, can you talk about identification and recruitment 10 to 20 angiokeratoma patients for Phase II? Are you leveraging the same clinical site network as SELVA and TOIVA? Or does this require a distinct peripheral approach? And the second is the QTORIN pitavastatin. It's the first directed therapy for DSAP for this pathway. Just can you remind the most significant translational data or preclinical evidence that support this mechanism? And what gives you confidence in topical drug penetration for these later?

Great. Thanks, Dev. I'll take your first question on the angiokeratoma Phase II study. And then Jeff will take your second question around evidence of methylonate pathway inhibitors in porokeratosis. Actually, it's a great paper that Jeff was involved with that we recently published on that. So he'll be able to go through the highlights of that paper.

In terms of the sites for angiokeratomas, you're exactly right. We are going to leverage some of the same sites that we've worked with closely in microcystic lymphatic malformations and cutaneous venous malformations. We're also -- and we have great relationships with these groups. We're also going to leverage commercial sites. that often have large volumes of patients with angiokeratomas. I'd say we've been pleasantly surprised. One of our feasibility efforts that we make on all of our clinical trials is understanding just how many patients a particular academic site or a commercial site have with this condition. And I'd say consistently, what we've heard from our clinical operations team that there are more angiokeratomas patients than there are microcystic LM and maybe even as much as cutaneous venous malformation.

So a nice blend of both academic sites and commercial sites as well as a nice blend of sites who have been involved in mLM/cVM, but also some new sites that we will leverage for angiokeratomas as well as additional studies from our QTORIN platform. Jeff?

Thanks for the question, Dev. So with DSAP, the genetics here are very well characterized and a lot of this work comes out of the lab of Dr. [ Keith Choat ] at Yale University, who is a close collaborator and also a member of our MSAP. Genetically, they're monogenic loss of function mutations in any of the 5 genes involved in the metylonate pathway. So genetically, we know that this is the right pathway to involve a therapy. And the idea mechanistically is if you can inhibit this pathway from being activated, you can have a clinical response because these intermediate metabolites can cause toxicity within the cells. This was first studied out of [ Keith Cho's ] lab. It is a really nice clinical study with topical lovastatin who showed clinical response.

And since that time, there's been a number of studies, about 24 studies that we recently published on during review showing the potential proof-of-concept data with inhibiting this pathway for keratosis. Importantly, what we've uncovered in our formulation work really led by David Osborne was that many of these statins are chemically lab vials. They break down very, very quickly, which really translates to the inconsistent yield, which we've heard during our market research. What we've done with QTORIN pitavastatin is optimize that for delivery. So we get a stable formulation and consistent delivery at therapeutic concentrations with low systemic absorption.

Our next question comes from Jeet Mukherjee with BTIG.

So you shared some details about the Phase II study for angiokeratomas in terms of number of patients and efficacy measures. I was hoping you could shed some light on the Phase II study for DSAP as well. And when can we expect data from both these Phase II programs?

Great, Jeet. Thanks for being on. Thanks for the questions. Jeff can speak to the Phase II study design in DSAP. At this point in time, we have not given specific guidance on trial readout time lines. We are really enthusiastic about the fact that the angiokeratoma study, one is moving ahead of schedule with the first patient expected to be dosed this quarter and also just the level of demand that we're seeing for the study. So we look forward to providing guidance on those trial time line readouts here in the near term for both angiokeratomas and porokeratosis as we get a little bit further along towards initiation and start to move up the enrollment curve. Jeff?

Thanks for the question. So the trial design for DSAP is not finalized yet. So we're still working through that. But at a very high level, our approach is very similar. There's no spontaneous progression in this disease, and we know that inhibiting the methylinase pathway is on target. So what we've developed with QTORIN pitavastatin is an on-target in tissue approach. We're looking at both individual signs of the disease and global changes in disease. We're working with both patients and KOLs to identify what are the right signs to measure and what we think we can have a clinical benefit on. We'll also, like all of our programs, incorporate baseline and exit interviews to help capture the voice of the patient.

That concludes today's question-and-answer session. I'd like to turn the call back to Wes Kaupinen for closing remarks.

Thank you, operator. In closing, thank you to everyone. who firmly believes in Palvella's mission to serve, our vision to lead and our strategy of being first in disease. We remain relentlessly focused on execution and have an unwavering commitment to delivering on this mission, vision and strategy. We deeply appreciate your continued support.

And with that, I'd like to conclude today's call. Thank you, everyone.

Thank you for participating. You may now disconnect.