Good afternoon, everybody. Catherine Novack, biotech analyst here at Jones. With me, we have Wes Kaupinen, CEO of Palvella Therapeutics. Thanks so much for joining us. I guess to start off with, you know, maybe give an introduction to Palvella. It's a story that not as many people are familiar with. You know, tell us, you know, what is your technology? What is your approach? You know, and what are your clinical candidates? Great. Thanks, Catherine, for having me here today at your conference. Really excited to share the Palvella story with everyone here today. Palvella, we'll start with our mission, and Finnish means to serve. The mission of the company is to relentlessly serve those patients that have serious, rare genetic diseases for which there are no approved therapies. The vision for Palvella is we want to build the leader. We want to build the leader in the area of rare genetic skin diseases. It's been estimated that there's about 600 rare skin diseases, and only 2%, unfortunately, have an approved therapy. This is a high unmet need corridor of the orphan disease universe. It's also low competitive intensity. We believe that we have the opportunity to build the enduring leader and the really the leading rare disease biotech company focused on these genetic skin diseases. Our technology, which is internally developed, is called QTORIN. QTORIN is a platform for reproducibly generating novel topical product candidates that can be linked to these serious rare genetic skin diseases without approved therapies. Our lead product from the QTORIN platform is called QTORIN rapamycin. QTORIN rapamycin is moving through a phase three pivotal study. We have QTORIN rapamycin right now under evaluation for two different indications. We think once approved, it could be north of a billion dollar a year drug in the United States. Yeah. So, you know, mentioned—you mentioned QTORIN rapamycin. Lead indication is something called microcystic lymphatic malformations. Maybe for people who aren't familiar, can you help define the market size? What is the opportunity? You know, and what is the rationale for rapamycin in this indication? Yeah, great. Microcystic lymphatic malformations, like all Palvella diseases, is serious. It's rare. It's genetic. There are currently no FDA-approved therapies. The disease is caused by a mutation in the PI3K pathway that causes upregulation of the mTOR pathway. Right now, what these patients experience clinically is they have these genetically malformed lymphatic vessels that protrude through the skin. Not only do they protrude through the skin, but they discharge internal lymph onto the skin. That clinical phenomenon is called lymphorrhea. That puts them at risk of persistent infections of the skin, of the soft tissues. Today, there's nothing approved. There's some highly invasive approaches which are being deployed to try to treat these lesions. What we want to do is we want to bring forward a targeted topical therapy that's FDA-approved and can really be first in disease for these patients. Yeah. Can you just remind us the expected U.S. market opportunity? You know, how many patients are there out there? Yeah. So we estimate, based on the epi work that we've done, that there's more than 30,000 diagnosed patients that are in the United States today. We believe the total addressable market opportunity, assuming orphan price points, approximately $100,000 per patient per year, that you're looking at a $3 billion-plus total addressable market opportunity. Like a lot of orphan diseases, because of the pricing power that you have in these diseases, they can be multi-billion dollar markets. Right now, nothing approved. We're in phase three, very little competition in the way of the development pipeline. We think these are very attractive commercial dynamics for Palvella. You know, there's been research with oral rapamycin in these population. What's the benefit of topical formulation? And then are you able to deliver drug to the dermis, which I believe where, you know, these lymphatic malformations are actually present? Yeah. Oral rapamycin is a potent immunosuppressant. It's approved in kidney transplant for rejection of the new graft. It's approved for a rare lung disease called lymphangioleiomyomatosis. Unfortunately, oral rapamycin has immunosuppressive effects. It also comes with a whole host of toxicities for patients. For a localized skin disease, it's really not an optimal construct for patients. That's why there's not a lot of use of oral rapamycin today in these localized skin diseases. Oral rapamycin also has the challenges of limited biodistribution into the skin. The drug doesn't distribute well into the skin. With oral rapamycin for these skin diseases, a lot of times you're inflicting immunosuppression and side effects, but you're not getting the full benefits of rapamycin because of the lack of deposition into the dermis. With QTORIN, QTORIN rapamycin, which is our lead product candidate that we took more than two years to develop, having worked through more than 80 prototypes with a very talented team of U.S. and European formulators we are able to get drug into the dermis. To your point, that is the pathogenic skin tissue for microcystic lymphatic malformations, for cutaneous venous malformations, and many of these other rare genetic skin diseases. That was a key innovation that we were able to make. It's a large molecule, 914 daltons rapamycin. We had to go through various prototypes to be able to chaperone that drug to the dermis, which is the site of pathophysiology. Mm-hmm. You know, I believe there are compounded topical formulations available. You know, where—what's the value proposition for QTORIN versus, you know, a compounded? Yeah. There is limited availability of compounded formulations. I think first and foremost, those are unapproved and they're unproven. Our market checks would suggest that there's limited efficacy from those that may have to do with their concentrations, which is sort of 0.1%. What we've been able to achieve with QTORIN is a 3.9% formulation. They're also not regulated, similar to an FDA-approved medicine. They don't go through the process of proving out safety, efficacy, and also quality manufacturing. It's been published that there's a number of these formulations that are irritating to patients' skin. Today, in the absence of an approved therapy, you do see some limited compounding of rapamycin. Really where the physician market wants to unify is around an FDA-approved drug, one that's novel, has a 3.9% concentration, can engage the dermis, and also has proven safety and quality. You're expecting pivotal data in the first quarter of 2026. You know, remind us how similar this trial is to the phase two that you ran. You know, you had a successful phase two readout. You know, what are some of the key differences in the trial design, if any? You know, how can we translate the results of phase two into phase three? Yeah, great. I'll start with the phase two study. That was a single-arm baseline controlled study, where all patients received QTORIN rapamycin, and they were compared at end of treatment to prior to before going on study medication. This type of disease, where there's no spontaneous improvement of the disease, no spontaneous regression, we believe really lends itself to that single-arm design. You referenced our phase two data. In phase two, on the clinician global impression of change, that's a single-item instrument where the physicians rate the patient's lesion severity at end of treatment compared to prior to treatment. We had all 12 patients that were rated by the physician as either much improved or very much improved. We saw that as a high-magnitude treatment effect and one that was consistent across the study population. Ultimately, that data suggested to us, given how compelling it was, to submit to FDA for breakthrough therapy designation. That designation was granted. We've subsequently interacted with our KOLs and the FDA to design our phase three, which looks very similar to the phase two. It's also a single-arm study. It's baseline controlled. It's going to be a QD once-daily dose, which is exactly what we had in the phase two study. A couple of the changes that we've made in phase three, number one, we are extending treatment duration from 12 weeks to 24 weeks. We've done some modeling work that suggests that there may be more treatment effect to capture for some patients by having them on study drug longer. We think that that's a key change. We've also taken sample size from 12 in phase two to 40 patients in phase three. Overall, given the great phase two result that we had, we did want to mimic that study design with phase three. We think we've accomplished that with what we call our SELVA study, our phase three pivotal SELVA study. Mm-hmm. You know, single-arm pivotal studies, they're, you know, they're not common, but they're certainly used. Tell us, you know, what are some of the criteria you think FDA would be looking for in the study and in the disease population that would make them comfortable approving a therapy on a single-arm pivotal study? Yeah, I think a lot of it has to do with the disease characteristics. For microcystic lymphatic malformations, it's a disease where there's no spontaneous regression. We believe that you can have all patients on drug, have the patient as their own control, and that allows for a reliable efficacy assessment. There's another drug called alpelisib, which is an oral PI3K inhibitor, that was approved in another vascular malformation called PIK3CA-related overgrowth syndrome. That drug was approved on a single-arm, open-label study. It was a compassionate use study where there was a retrospective chart review. There are precedents for this. You do oftentimes in rare diseases see some flexibility from the FDA to make these trial designs allowable. Mm-hmm. And what feedback have you gotten from KOLs, specifically about QTORIN rapamycin? Yeah. We've been able to do market research. We went out to over 50 physicians. We tested the product profile of QTORIN rapamycin, which is this high-concentration, 3.9% rapamycin anhydrous gel. We asked them the question as to whether this drug would be first-line therapy. Of the physicians that we surveyed, 98% noted that this would be first-line therapy for microcystic lymphatic malformation patients. We think that's a really strong market signal. We're also looking at our phase three study. We've also been fortunate enough to attract the likes of some of the real key opinion leaders in microcystic lymphatic malformations. Our principal investigator is Dr. Joyce Teng. Dr. Joyce Teng is a real pioneer in the area of advancing therapies for rare genetic skin diseases. She's at Stanford University, James Treat from Children's Hospital, Philadelphia, Michael Kelly at the Cleveland Clinic, Megha Tollefson at the Mayo Clinic. are all participants in our phase three study. It is excellent for us to have this unified front of the physicians working closely with the company, the company working closely with the patient advocacy groups to advance this drug to these patients who are in need. Mm-hmm. You're planning to submit through the 505(b)(2) regulatory pathway. You know, how, why did you choose to leverage that pathway? How can that, you know, expedite the regulatory process for you? Yeah, the 505(b)(2) pathway was designed to streamline the drug approval process for molecules that have already achieved an approval in another indication. For Palvella, we're going to be able to leverage existing data on rapamycin, like the toxicology data from the reference-listed drug, which is oral rapamycin. We'll be able to reference pharmacology data. We really think there's advantages to the 505(b)(2) pathway, particularly as it relates to orphan drugs. It is so important in these rare diseases where nothing's approved, that you have a tremendous sense of urgency in bringing drugs forward for patients in need. Mm-hmm. What FDA designations do you have and what's the expected exclusivity if approved? Yeah. In terms of FDA designations, I'll link it to the second part of your question. We have FDA's orphan drug designation. With orphan drug designation, we do expect at approval that benefit of a seven-year marketing exclusivity, which means the FDA will not approve the active moiety rapamycin in microcystic lymphatic malformations for that seven-year period. We also, early on in the development of this drug, were able to have FDA fast-track designation granted. The benefits of fast-track designation is we're able to have more frequent communications with the FDA. The FDA also will allow us to be eligible for a rolling submission of our NDA, so submitting our NDA in modules as they're available. We'll also be eligible for a priority six-month review at the time of NDA. Further, to fast-track designation after our positive phase two data, as already referenced, we were granted breakthrough therapy designation. That was based on the preliminary clinical evidence from phase two. Catherine, more recently, it was announced in Q4 of last year that Palvella's phase three SELVA trial is the recipient of an FDA orphan drug grant. The FDA does have a pool of capital that's administered by the Office of Orphan Products Development, where they make non-dilutive grants, typically in serious rare diseases with either no therapies or inadequate therapies where a certain pharmacological intervention has shown preliminary scientific and technical credibility. Last year, there were 51 applicants for this grant program. There were seven grants that were announced as awardees. Palvella was really pleased to be one of those grants. In fact, we were the only phase three study that will be supported by the FDA orphan drug grant program. All these designations together, we think will be very beneficial, assuming positive phase three data, meeting with the FDA, and again, really trying to link arms to move this drug forward for patients who currently have nothing. Mm-hmm. Just thinking about the timeline, you have phase three data in less than 12 months. You know, then what's, what's the next steps, review process timeline? You know, what do you think the best case scenario for bringing this to market is? Yeah. So we'll submit our NDA in the second half of next year. That may be on a rolling basis, assuming rolling NDA submission is granted by the FDA. We expect that that would put us on a path to achieving FDA approval sometime in that Q2 2027 timeframe. That's a date that everyone at Palvella has ingrained in their mind because we really want to get this drug to patients as soon as we possibly can. We are also excited to go from a late-stage development company to being a commercial company. That date, we'll have more clarity on that through our readouts, through our NDA submissions. Right now, we're really anchoring on the second quarter of 2027. Mm-hmm. Great. You know, before the pivotal data, you actually have phase two data in another indication, cutaneous venous malformations. You know, walk me through the rationale for rapamycin in this second indication. Yeah. Cutaneous venous malformations, there are some similarities to microcystic lymphatic malformations. Similar to microcystic lymphatic malformations, this is a type of a vascular malformation. It is more prevalent. To your earlier question, there's 30,000 microcystic lymphatic malformation patients diagnosed in the United States. We estimate there's more than 75,000 patients that have venous malformations in the United States. Larger indication, commercially for us. This disease, in terms of the similarities, also a central driver of this disease is that hyperactivation of the mTOR pathway. There's two different genetic mutations that can occur. One can be a PI3K mutation, similar to microcystic LM. There can also be a TEK mutation. Both of those mutations hyperactivate that mTOR pathway. The pharmacologic rationale is very similar in the sense that we want to use QTORIN rapamycin to selectively inhibit that mTOR pathway. With these patients, they have deformities. They have malformed veins that protrude through the skin. Bleeding is a major problem in this patient population. Also a proliferative disease where there's no spontaneous regression. The genetics are well elucidated. The biology is well characterized. There is also quite a bit of off-label use of rapamycin in Europe to treat internal venous malformations. There is a large growing base of clinical evidence that suggests that rapamycin is on target and can really help these patients have clinical benefit. Mm-hmm. We, I think we talked about this on your earnings call recently, but, you know, trying to understand whether there's a difference in efficacy based on the underlying genetic mutation, you know, is that going to be folded into the phase two as well? Yeah. There are some published studies that I think help answer that question, from some of our European collaborators, who have looked at that exact question where they've parsed out, TEK mutations versus PI3K mutations. In that published paper from Dr. Miikka Vikkula, Dr. Emmanuel Seront, both mutation types reported greater than 80% efficacy, which we think makes sense since we know TEK activates the mTOR pathway. We will certainly, as we advance the program, look more carefully at genetic testing. Today in clinic, most of the time these patients are receiving a clinical diagnosis in the absence of genetic tests. Okay. What should we expect from the top-line data then the fourth quarter of this year? Yeah. This is going to be a phase two proof of concept study. There's approximately 15 patients that we'll read out on in Q4 of this year. This is a baseline controlled study where all patients receive drug. We're going to look at safety and tolerability first and foremost. The safety and tolerability of QTORIN rapamycin in this patient population. Then, like a lot of rare diseases, we're going to be evaluating a number of different endpoints, both clinician and patient-reported outcomes. The goal of this study as a proof of concept study is to try to understand which of these endpoints most effectively detect a treatment effect from QTORIN rapamycin. Once we gather that information, Catherine, we'll then be in a position to go to the FDA, assuming that we see strong efficacy from the study. We would advocate for breakthrough therapy designation and then want to move the drug into a pivotal phase three study. Just remind me the, you know, the expected U.S. market size and, you know, what percent of the patients are TEK versus PI3K driven? Yeah. We estimate there's more than 75,000 diagnosed cutaneous venous malformation patients in the United States. About 70% of those patients, based on the literature, are TEK mutations, and about 30% of those patients are PI3K mutations. Okay. Great. And then, you know, thinking about future applications of QTORIN rapamycin, you know, what is the next, what's the thought for the next indications? Yeah. We really fundamentally believe, based on all the scientific research that we've done, as well as it leveraging work of some of our academic partners, that QTORIN rapamycin is a pipeline in a product. We think there's more indications to pursue beyond microcystic LMs and beyond cutaneous venous malformations. We've communicated that in the second half of this year, we will announce our next indication for QTORIN rapamycin. When I quoted earlier that we believe QTORIN rapamycin could be north of $1 billion in sales at peak, that's just based on two indications: microcystic lymphatic malformations and cutaneous venous malformations. Should we be able to add a third and a fourth indication, we think there's more commercial upside from those indications. We have great dialogue ongoing right now with our key opinion leaders. We want to be very disciplined about making sure that that next indication is one of high unmet need and that Palvella can fulfill that unmet need. We look forward to sharing that with the market in the second half of the year. Great. Then I guess if you could just do, you know, summarize the catalysts for the next year and let us know what to, you know, what should we should be focusing on. Great. It is a very exciting next year at Palvella. Four major catalysts. One will be announcing our next QTORIN platform program. That is going to be our next molecule that we synergize with the QTORIN platform. We will announce that program in the second half of this year. We will also announce the target disease that we intend to pursue. We expect that disease to be serious, rare, genetic, no approved therapies, as we like to say at Palvella disease. That is number one. Number two, we will announce that third indication for QTORIN rapamycin. Followed by that, we will have the Q4 readout in cutaneous venous malformations, phase two proof of concept study, 15 patients. In Q1 of next year, we will have our pivotal phase three data from our SELVA study in microcystic lymphatic malformations. Great. Thanks so much for joining us. I think we actually have a bit of a break now. I think, you know, stick around because after that, we have Dave Angulo coming right up. Thanks so much for joining me, Wes. Great. Thanks, Catherine.