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DATE

Tuesday, Aug. 4, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Founder and Chief Executive Officer - Wesley Kaupinen
• Chief Scientific Officer - Jeffrey Martini
• Chief Financial Officer - Matthew Korenberg
• Vice President of Investor Relations and Corporate Affairs - Marcy Nanus

TAKEAWAYS

• Cash and Short-Term Investments -- $250.6 million as of June 30, 2026, providing liquidity to support operations through potential FDA approval and a standalone commercial launch.
• Net Loss -- $21.9 million for the second quarter, or $1.52 per basic and diluted share, compared to a net loss of $9.5 million in the prior year period.
• 2026 Cash Spend Guidance -- $85 million to $95 million, reflecting a modest increase in planned expenditures to support commercial and medical affairs readiness.
• February 2026 Capital Raise -- $230 million, which exceeded the original $150 million target to enable investments in high-return launch initiatives.
• QTORIN Rapamycin (mLM) FDA Timeline -- NDA submission completion is scheduled for the second half of 2026, with a potential approval expected in the first half of 2027.
• Phase III SELVA Efficacy -- 95% of patients demonstrated improvement on the primary mLM-IGA endpoint at week 24, including a 100% improvement rate in children aged six to 11.
• mLM Addressable Market -- 30,000 or more diagnosed U.S. patients, representing a multi-billion-dollar total addressable market based on estimated orphan pricing.
• Estimated Orphan Pricing -- $100,000 to $200,000 per patient per year for the mLM indication, supported by recent payer research and historical orphan drug analogs.
• Sales Force Expansion -- 40 sales representatives planned for the U.S. launch, reaching the upper end of prior guidance to maximize physician education and patient identification.
• Commercial Target Clinics -- 400 centers identified in the first tier of the market, which currently manage approximately 15,000 patients with microcystic lymphatic malformations.
• QTORIN Rapamycin (cVM) Phase III -- Initiation is planned for the fourth quarter of 2026, following Phase II results where 73% of patients showed clinical improvement.
• cVM Addressable Market -- 75,000 or more diagnosed U.S. patients, with the indication representing the most common type of vascular malformation.
• Angiokeratoma Phase II LOTU -- Dosing for the 15-patient study commenced in April 2026, with topline results anticipated in the second half of 2027.
• DSAP Phase II Initiation -- Initiation of the Phase II trial for QTORIN pitavastatin is scheduled for the fourth quarter of 2026.
• Product Pipeline Expansion -- Addressable U.S. patient population expected to grow tenfold from 30,000 in mLM to 300,000 across multiple mTOR-driven indications.
• mTOR Pathway Indication Timeline -- Potential FDA approvals for cutaneous venous malformations in 2029 and clinically significant angiokeratomas in 2031.
• R&D Expense -- $12.5 million for the quarter, up from $5.1 million last year due to manufacturing activities and costs associated with the rolling NDA submission.
• G&A Expense -- $8.9 million for the quarter, compared to $4.1 million last year, reflecting increased headcount and professional services for public company operations.

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RISKS

• Martini stated, "FDA did not grant the [Breakthrough Therapy] designation based on our initial package" for cutaneous venous malformations, though the company plans a resubmission using more mature 24-week data.

SUMMARY

Management reported significant progress toward transitioning into a commercial-stage biopharmaceutical company following the commencement of a rolling NDA submission for QTORIN rapamycin in mLM. The company is utilizing its QTORIN platform to target four rare dermatological conditions that currently lack FDA-approved treatments, estimating multi-billion-dollar addressable markets for each indication. Financial discussions highlighted a cash position of $250.6 million and a strategic increase in 2026 cash spend to $85 million to $95 million to support a larger sales force and internalized patient services. Research and development efforts are focused on advancing Phase III trials for cVM and initiating studies for DSAP and angiokeratomas while preparing for a potential 2027 launch.

• CEO Kaupinen stated that 80% of surveyed physicians would consider QTORIN rapamycin as a "first-line therapy" if approved, which supports management's expectations for a favorable uptake curve.
• The company made the strategic decision to internalize patient support services, with Kaupinen noting this provides "greater ownership of the patient experience and tighter coordination across patient access."
• CSO Martini indicated that angiokeratomas can "develop and proliferate during childhood and adolescence," causing significant disease burden through persistent bleeding and pain.
• CFO Korenberg reported that the company is building a "larger medical affairs team than initially envisioned" to improve initial launch performance and physician engagement.
• Management is utilizing the 505(b)(2) regulatory pathway for QTORIN rapamycin, which Kaupinen noted allows Palvella to "leverage FDA's prior findings for rapamycin" to expedite the approval process.
• The company expects to announce a fourth target clinical indication for QTORIN rapamycin and a third product candidate from the QTORIN platform during the second half of 2026.
• Payer research conducted by the company suggests that "orphan drug pricing ranges are likely to be well supported" for the lead mLM indication without the requirement for step-throughs of unapproved therapies.

INDUSTRY GLOSSARY

• 505(b)(2): A regulatory pathway that allows an applicant to rely on existing clinical data from a previously approved drug to support a new drug application.
• cVM: Cutaneous venous malformations, a type of vascular malformation characterized by abnormal, dilated venous channels in the skin.
• DSAP: Disseminated superficial actinic porokeratosis, a chronic and progressive precancerous skin condition.
• mLM: Microcystic lymphatic malformations, a serious, rare, and chronically debilitating genetic skin disease.
• mLM-IGA: Microcystic Lymphatic Malformation Investigator Global Assessment, a clinical scale used to measure the severity of mLM lesions.
• mTOR: Mechanistic target of rapamycin, a signaling pathway that drives the pathogenesis of several rare dermatological conditions when hyperactivated.
• QTORIN: Palvella's proprietary delivery platform designed for the targeted, localized treatment of mTOR-driven skin diseases.

Full Conference Call Transcript

Operator: 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.

Marcy Nanus: 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.

Wesley Kaupinen: 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.

Jeffrey Martini: 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.

Matthew Korenberg: 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.

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

Alexa Deemer: 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?

Wesley Kaupinen: 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.

Operator: Our next question comes from Whitney Ijem at Canaccord Genuity.

Whitney Ijem: 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?

Wesley Kaupinen: 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.

Whitney Ijem: 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?

Wesley Kaupinen: 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 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.

Operator: Our next question comes from Ritu Baral at TD Cowen.

Ritu Baral: 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.

Wesley Kaupinen: 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.

Ritu Baral: 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?

Wesley Kaupinen: 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 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 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.

Ritu Baral: Would prior auths really just be diagnosis?

Wesley Kaupinen: 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.

Operator: Our next question comes from Annabel Samimy at Stifel.

Annabel Samimy: 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?

Wesley Kaupinen: 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.

Jeffrey Martini: 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.

Annabel Samimy: 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?

Wesley Kaupinen: 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.

Operator: Our next question comes from Graig Suvannavejh at Mizuho.

Ryan Ries: 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?

Jeffrey Martini: 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.

Wesley Kaupinen: 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.

Ryan Ries: 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?

Wesley Kaupinen: 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.

Operator: Our next question comes from Ryan Deschner at Raymond James.

Ryan Deschner: 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?

Wesley Kaupinen: 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.

Operator: Our next question comes from Sam Slutsky at LifeSci Capital.

Samuel Slutsky: 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?

Wesley Kaupinen: 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.

Jeffrey Martini: 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.

Operator: Our next question comes from Danielle Brill at Truist.

Unknown Analyst: 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.

Wesley Kaupinen: 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.

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

Wesley Kaupinen: 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.

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