Good afternoon, everyone. Thank you so much for joining us. My name is Whitney Ijem. I am one of the biotech analysts here at Canaccord, and it is my pleasure for the last slot of the day to be chatting with Palvella. As I said, ending on a high note. Thank you for being here. On behalf of Palvella, we have CEO Wes Kaupinen. Thank you for having me, Whitney. Starting high level, we are going to dive right in. For anybody newer to the story, can you just frame what Palvella is today? What do you do? What is the platform designed to address, and what are you trying to build over the next five years? Sure. Well, thanks so much for having me. This is our second year in a row having the opportunity to present at the Canaccord Conference. Appreciate your coverage. You were one of the first analysts to initiate coverage on Palvella after we went public and appreciate all your support since we have been a public company. I am going to start with the name Palvella, which in Finnish means "to serve." The mission of our company is to serve patients that have serious rare diseases, and we specifically focus on those diseases where there are no approved therapies. The strategy of the company can be summed up in a word, which is first. We want to deliver drugs that are first-approved therapies for these serious rare diseases. The vision of the company, Whitney, is to build the enduring and leading biopharmaceutical company, addressing rare skin diseases and rare vascular malformations for which there are no FDA-approved therapies. That's obviously rare skin disease is a corridor of the orphan universe that you know well. I would describe rare skin diseases as high unmet need. There's approximately 600 rare skin diseases. Fewer than 2% have approved therapies, but also very low competitive intensity. Those dynamics really lend itself to building a company in the space. You've referenced our pipeline and our platform. We have both a late-stage pipeline and a platform. Our late-stage pipeline, the flagship product is called QTORIN rapamycin. That is our 3.9% anhydrous formulation of the mTOR inhibitor rapamycin. Earlier this year, we read out a positive phase III study in a disease called microcystic lymphatic malformations. That's a serious, rare genetic and lifelong disease for which there are no approved therapies. There's more than 30,000 of these patients in the United States. We recently had a pre-NDA meeting with the FDA and have initiated, thanks to Jeff Martini and his team, a rolling NDA submission at the agency. Beyond that, we're going to expand the uses of QTORIN rapamycin to other mTOR-driven skin diseases. Since we went public, we read out a positive phase II study in a disease called cutaneous venous malformations, also a type of vascular malformations, no approved therapies. These patients have this condition at birth. It is a lifelong disease. We also believe this to be driven by the mTOR pathway as well. Our third indication for QTORIN rapamycin listed on the slide here is called angiokeratomas. Thanks to our clinical operations team, we initiated a phase II study here earlier this year. That study will read out in the second half of this year. That is a type of a superficial lymphatic malformation. More recently thought to be driven by the mTOR pathway. FDA has granted us Fast Track designation in both angiokeratomas, cutaneous venous malformations, and microcystic lymphatic malformations. We have Breakthrough designation, Fast Track designation, as well as Orphan designation. You mentioned the platform as well. We have a second molecule that we've paired with the platform, and that's called pitavastatin. Our second product candidate is called QTORIN pitavastatin. That will be studied in a serious rare genetic disease called disseminated superficial actinic porokeratosis. We're completing our pre-IND work there, our IND-enabling studies, and we expect to initiate a study there later this year. So four diseases that we're currently in today. Really excitingly, we are going to announce two more diseases by the end of the year, such that we are going to exit this year developing programs, QTORIN and derived programs, in six rare diseases, each of which we have the opportunity to deliver that first approved therapy. Mm-hmm. Okay, awesome. That is a very helpful overview. Going back to mLM, can you briefly characterize the disease? We have this picture up here. Talk about that and kind of through the lens of it is not just an aesthetic thing. We are looking at a picture, but kind of talk about the burden of the disease and some of the data that you have shown. Sure. Genetics were elucidated about a decade ago. We know that we estimate close to 100% of these are driven by PIK3CA mutations. mTOR is directly downstream of PIK3CA. mTOR is hyperactivated. What does that cause? You can see in the picture here, that causes genetically malformed vessels to protrude out through the skin. The major clinical issues to these patients is that they have discharge of lymphatic fluid onto the skin. That phenomenon is called lymphorrhea. That results in the skin barrier being compromised. Because the skin barrier is compromised, these patients are prone to super infections and oftentimes have infections like acute cellulitis, and they can be hospitalized. They also, as you can see from the picture here, can bleed. So those are two of the major clinical burdens to these patients, oftentimes being in these cycle of infections. It is proliferative and progressive, so if left untreated, clinically it should predictably get worse. There is an urgency to intervene, and the FDA considers it a serious disease, which is a prerequisite for both Fast Track and Breakthrough designations. Mm-hmm. Okay, perfect. To the data you have shown, just again, high level, briefly, talk about what you showed in the phase III and maybe any physician-patient feedback you got on the meaningfulness of those results. Great. What preceded the phase III was a phase II study. 12 patients we studied in phase II. All 12 patients improved on a clinician change scale, where all 12 patients were rated as much improved or very much improved. That was the basis upon which we designed the phase III study. It was also the basis upon which we applied for Breakthrough designation, which was granted. The phase III study was a 51-patient study. This was our pivotal study that read out in Q1 of this year. Our primary endpoint was called the Microcystic Lymphatic Malformation Investigator Global Assessment. It is a seven-point scale where physicians are rating the patient's lesion severity at the end of treatment compared to day zero. What we found at the end of the study was that 95% of patients improved, having been on our drug according to that clinician scale, and 86% were rated much improved or very much improved. We met, from a statistical significance perspective, our primary, key secondary, and all pre-specified secondary endpoints. Got it. Okay. On the back of that data, you mentioned you had a pre-NDA meeting with the FDA, and you have started the rolling submission. You have let Jeff out of the office today, so I assume things are going well. Can you talk about, are there any outstanding rate-limiting items, or is it just execution to get to the completion of the filing? Sure. It is execution to get to the filing. We are very focused on putting forward a very high-quality, persuasive submission. We are in the final QC stages. At this point, we are not waiting for any additional data. We are just packaging the remaining modules. What we have said is we would like to have this submitted before the end of the year. That puts us on track for a first-half 2027 submission, and Jeff and the rest of the leadership team is doing a great job. We were really pleased to have a pre-NDA meeting, and even more pleased that the FDA, given some of the resource constraints there, granted us rolling review, which is really designed to expedite therapies through the NDA process. Mm-hmm. Got it. Okay. Completion by the end of the year, as you said. What does launch readiness look like at this point? You are planning to launch yourself in the U.S., right? What are you building? What are the different pieces of that, and what is happening now versus what will be happening maybe next year and then post-approval? Sure. I believe the most important thing that we can do as a company that is going to go from a clinical stage company to a commercial company is to proactively identify and recruit exceptional leadership in the orphan space. I want to spend a minute talking about the management team that we've recently recruited to Palvella. Ashley Kline is our Chief Commercial Officer. She previously led the launch of a drug called Oxervate, which is a topical therapy for a rare eye disease. She led that launch in the United States for an Italian pharmaceutical company called Dompé. Under her leadership, that drug went from zero to north of $500 million in annual sales in about a four to five-year period. The launch was profitable in the first year of the launch. She is an experienced launch leader in the orphan space, launching a first-in-disease drug. She has hired Jen McDonough, who worked at Krystal Biotech, your former company. Jen led all market access at Krystal Biotech, as well as patient services. She is now in that role for Palvella. Krystal launched very successfully, a repeat dose topical therapy, similar to what we envision for QTORIN rapamycin. Jen has started to build out her team on the market access, pricing, and reimbursement side. We have also hired Kent Taylor as our SVP of Sales. Kent was at Arcutis, where he led the sales organization for the ZORYVE launch. I think that is really a key decision that we will make. The other thing is to ensure that you appropriately resource the launch. We closed $230 million in capital, and we are grateful to the investors who participated in that financing in Q1 of this year. Strong leadership team in place, strong balance sheet. What are we doing now? A lot of what we are doing now is deploying our medical affairs team in the field, meeting with physicians, meeting with sites. We have been able to, through a claims analysis, identify a total of about 400 centers in the United States. that manage about 15,000 patients, we estimate, with microcystic lymphatic malformations. We are prioritizing at medical meetings through on-site visits, meeting with these sites, developing relationships, and really driving disease state awareness of this disease. We have launched the disease state awareness campaign called BEYOND mLM. As we move into launch, what we will start to do is we will start to recruit more of the sales leadership team and sales reps. Previously, we guided that we were going to hire somewhere between 20 and 40 sales reps on our earnings call last week. We have said that the goal is to bring 40 sales reps on board. We expect to have those sales reps in place prior to launch. We do not anticipate those being contingent offers where we are waiting for the FDA approval. We actually want to have them recruited as Palvella employees, train them on QTORIN, train them on our clinical data, such that once we have that FDA approval in place, they have the ability to go out and be in a position to drive sales. Mm-hmm. Okay, got it. How are you thinking about pricing? Just remind people there, and is the payer engagement, I guess, something that is going on as well now? Yes. That is ongoing. We have been able to do payer testing, thanks to Ashley and her team. Following the phase III data, I can confirm that through that payer testing, we anticipate a price point somewhere between $100,000 and $200,000 per patient per year. That is in line with other orphan therapies that are first in disease. As we looked at launch analogs, which we will talk about, there are some topical orphan launches like the Krystal launch, like the launch from ARIKAYCE, that are much higher price points than that. But we think the $100,000- $200,000 price point is a reasonable price point for QTORIN rapamycin at launch. Mm-hmm. Okay, got it. Launch analogs. Where would you point people to get a sense of how things could go? Sure. We have dug deep to really understand the most successful orphan launches, particularly those ones that are non-oncology orphan launches. We look at a drug like VYJUVEK, which was launched for a rare genetic skin disease, and the great work that Krystal Biotech has done bringing that therapy to a patient population that was in the need of the first approved drug. We have learned a lot from that launch. Obviously, we have Jen on our team now, and she was previously at Krystal. One of the things that they did particularly well, in our opinion, was they hired patient access liaisons. Instead of outsourcing their patient services hub, they had a team of FTEs who, on a very compliant basis, worked really closely directly with the patients. That is a strategic decision that we have made. Other launch analogs are drugs like Oxervate. Ashley led that launch, a topical therapy for a rare eye disease. A number of different tactics that she used there that were successful. One of those is hiring an inside sales team to augment the efforts of the outside sales team to really promote to the tier 2 and tier 3 of the markets. We have, of course, looked at the Tepezza launch, which was a first-in-disease therapy for thyroid eye disease. Serious, rare, highly visible disease as well, and some key learnings that we have extracted from that launch. We have also been able to hire some folks who were involved in that launch as well from the Horizon Therapeutics team. Mm-hmm. Okay, got it. I could keep asking you mLM questions, but I will switch to CVM. Just, I guess, going straight to the disease itself and how it maybe compares to mLM, can you kind of compare and contrast what is similar, what is different, and briefly touch on the data you have generated there as well? Sure. Similarities is it is a genetically driven disease, typically TIE2 or PIK3. There is a lot of evidence of oral rapamycin treating internal venous malformations. We think that there is a lot of data to suggest there is clinical benefit from taking the approach of intervening with an mTOR inhibitor. We want to treat patients who have cutaneous venous malformations. The cutaneous manifestations of venous malformations are going to be less responsive to oral rapamycin because oral rapamycin does not distribute well through the skin. These patients, in terms of the disease burden, they have a number of issues with their venous malformation. The veins are dysregulated and engorged in the skin. This can cause issues such as thrombosis, swelling. A subset of these patients have major issues with bleeding. In the words of our key collaborators, like Mike Kelly at the Cleveland Clinic, this is as debilitating or can be as debilitating as microcystic lymphatic malformations. Another similarity, nothing is approved for these patients, so we have that opportunity to have the first approved therapy. Really importantly, these patients are treated with very similar physician treaters to microcystic lymphatic malformations. There is quite a bit of call point overlap between microcystic LM and cutaneous venous malformations. Got it. Okay, perfect. There's been a lot of discussion on the phase III design. That's something you're working through and getting ready for. Can you maybe bookend it for us? What is best case scenario, and I don't want to say worst case scenario, but maybe less ideal outcome in terms of design? Sure. I think it's incumbent upon any management team, including the Palvella management team, when you see a large effect size in phase II, which is what we saw with 73% of patients responding. We've had the opportunity as a team to go through the patient qualitative interviews and how they're reporting the drug had a major impact on their quality of life. I think it's incumbent to shape an efficient and expedited development program. We think that's something we'll have the opportunity to do because we have Fast Track designation in this disease. We'll explore a number of scenarios with the FDA. Typically, the FDA likes to default to placebo-controlled studies. That's something that we look forward to having the conversation with them around whether that's going to be a requirement or whether there's a path to a more efficient development program. Mm-hmm. Okay. At some point, a placebo-controlled study was on plan for mLM, and you successfully made the case to the FDA and ended up running the study that you ran. I guess, can you remind us of the playbook you followed there, and are you planning to kind of do the same thing here? Sure. One similarity between mLM and CVM to answer that question is neither disease has spontaneous regression. The disease does not get better. mLM is proliferative, progressive. CVM is also a progressive disease. In certain diseases where there is well-known pathophysiology and a well-defined disease course and the disease is rare, sometimes the FDA can be amenable to trial designs that use the patient as their own control. I think that's one of the similarities. That was something that we worked really closely with the agency on. I think that's one key piece. I think the second key piece is that there is a lot of off-label use systemically of rapamycin in microcystic lymphatic malformations, where you can see off-label use for those patients that have internal disease. That can also be the case with cutaneous venous malformations. That can present clinical equipoise issues. That's something that we need to work through as part of our regulatory interactions as well. I think those are two key points. Then I think given the amount of real-world evidence, Whitney, that's out there that suggests that mTOR inhibition is on target in this disease, particularly off-label oral use for venous malformations, I think there's a question of how much incremental evidence is needed to prove safety and efficacy beyond what's already out there from a real-world evidence perspective and beyond what we've shown in our phase II study. Mm-hmm. Okay, got it. Remind us what you said on timelines or when you expect to have an update on the conversations there. Absolutely. We want to start that study this year. Right. We look forward to post our FDA interactions into phase II interactions, then receipt of minutes announcing that phase III study by the end of the year. Okay, perfect. We look forward to that. Moving over to angiokeratomas. Phase II study ongoing, as you said, with data expected in the second half of next year, right? Just to double-check. That is right. Okay. What would constitute a meaningful efficacy signal here, and how would this opportunity fit commercially with what you are already building for mLM? Sure. It fits really nicely commercially because angiokeratomas were recently reclassified as a type of superficial lymphatic malformation. There is a lot of biological similarities between angiokeratomas and microcystic lymphatic malformations. There are more than 50,000 of these patients in the United States with this disease. This disease can present on the extremities, it can present in the buttocks, it can present in the vulva, the genitals as well. It is a very debilitating disease. It fits really well with the Palvella ethos of really treating patients that have serious disease where there's no FDA-approved therapies. There's absolutely some treater overlap in terms of the physicians who are treating microcystic LM and CVM. From a rollout perspective, we expect approval next year in micro LM. In 2029 for CVM, we would expect approval here, assuming successful phase II and phase III, in that 2031 timeframe. So we would be continually expanding the total addressable pool of patients with QTORIN rapamycin. Mm-hmm. Okay. So yeah, nice little commercial cadence there, for sure. All right. So maybe switching over to pitavastatin for DSAP, as you mentioned. How should we be thinking about the potential phase II design there, similar to what we've seen from the other programs, and what are the endpoints that matter most here? Sure. So the phase II should be very similar to the playbook you referenced earlier, which is typically in these rare diseases, we like to run 10 to 20 patient studies to develop an initial evidence base. We like to include a lot of different endpoints both clinician-reported and patient-reported, understand which of those endpoints is sensitive to the drug effect, and then understand what the effect sizes are on those endpoints. That ultimately informs phase III design. Similar to our three QTORIN rapamycin indications, there is a lot of real-world evidence suggesting that this approach of inhibiting the mevalonate pathway, which is what we're going to be doing with QTORIN pitavastatin, does generate clinical benefit for patients. That's why even a 10 to 20 patient study, we think is enough evidence if we see the right effect size to move to a phase III. I'll harken back to my experience at Insmed, with ARIKAYCE, which was a drug I worked on while part of the management team there. That's a drug that had about a 30% efficacy rate, in its phase III pivotal study. It's gone on to be about a half-billion dollar a year drug. Our threshold for success in these rare diseases is if you can really impact about a third of the patient population positively with an intervention, a patient population that currently has nothing and may be undergoing destructive approaches with laser surgery, electrocautery, different sorts of procedural interventions. Having a targeted pharmacotherapy that can be delivered locally and topically could be really meaningful for that patient population. Mm-hmm. Got it. Okay. You have talked about pipeline expansion, and announcing two new programs later this year. Any hints, any previews you can give us? What are the kind of key lenses through which you look to pick new indications? Sure. We will announce the fourth indication for QTORIN rapamycin. There are three publications out there from Fogel, Swarbrick, and Tatiana Lapa that really profile more than 20 mTOR-driven skin diseases. Where we like to focus, Whitney, is diseases that are serious, rare, and nothing approved, and they are commercially attractive. We do have an internal threshold for what the diagnosed prevalence needs to be for us to study that indication. I am really excited by what Jeff and his team have uncovered here in terms of commercial opportunities and clinical indications for the fourth QTORIN rapamycin indication. We will announce that fourth indication later this year, and then we are already starting to work on what could be the fifth indication to be announced sometime after this year. Okay. Got it. All right. Rapamycin, pitavastatin, is there potential to expand QTORIN to other molecules as well? Is that a focus, or are you kind of good with the two you have gotten? That is a focus. Okay. We have a reproducible method for generating these novel topical product candidates. It is an internal product development engine. It really describes what QTORIN is, reproducibly generating topical product candidates to study in serious rare diseases. We will announce later this year our next QTORIN program, which will be a third molecule. We will exit this year with QTORIN rapamycin, QTORIN pitavastatin, and a third QTORIN candidate. I think this is part of the Palvella story that may be underappreciated, which is mLM gets a lot of focus as a post phase III asset going into launch in an uncontested disease with 30,000+ patients. There is a lot of internal excitement at Palvella about just how many diseases there are out there, and the reproducibility and scalability of QTORIN to keep generating these exciting programs that can be first to disease for these patient populations. Mm-hmm. Got it. Okay. Last minute here. With $251 million in cash at the quarter end, how do you think about runway? What's contemplated through all of the things you've got going on? What's funded with current cash, and how do you think about that going forward? Sure. Capital efficiency has been a hallmark of this company since founding. Our goal is to flush out as much risk on the least amount of capital. I think we've done a very good job of that. We agree. Thank you. And continue to do so with Matt Korenberg doing a great job as our CFO. With the $250 million in cash, assuming even modest revenue numbers, there is a path forward to getting to cash flow breakeven without additional capital raises. Something we will revisit, like a lot of biotech companies do at approval, is whether we want to augment the balance sheet, potentially with non-dilutive capital. We think there could be a lot of capital out there, assuming FDA approval. But right now, with the balance sheet we have in place, we are well funded to fund these six programs and also potentially get to a cash flow breakeven moment for the company. Mm-hmm. Okay. Awesome. And then last five seconds. Everything we have been talking about so far, clinical trials, et cetera, U.S. and commercial launch in the U.S. How are you thinking about international at all, if at all? Sure. We think it's a great expansion opportunity for Palvella. We've had a lot of interest from Japan, both physician interest and potential partnering interest. We'll do what every great company does. We'll look at both launching alone there as well as partnering and see what the best approach is as we think about the patients we serve, but also making sure any sort of geographic expansion is done in an NPV positive way. Mm-hmm. Excellent. Okay, perfect. We covered a lot of ground. Thank you so much for taking the time, and thank you all for listening. My pleasure.