Palvella Therapeutics, Inc. Common Stock 2026 Q2 Earnings Call

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 investor 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 E. Korenberg, our Chief Financial Officer. Before we begin, please note that today's remarks may include forward-looking statements regarding our development programs, regulatory strategy, commercial planning, and financial outlook. These statements are based on current assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings for a full discussion of these risk factors. 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 two 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 three 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 Designation 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.

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, number one, we remain on track to complete our NDA submission in the second half of this year, and number two, 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 pre-launch 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 four 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 multibillion-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 four 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 and 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 two 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 and 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 for 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 pre-launch 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 one, 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 three 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 four pre-specified 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 lymphatic malformations, and if approved, to establish a new first-line standard of care for pediatric and adult patients living with this serious lifelong disease. Additional pre-launch 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.