Palvella (PVLA) Q3 2026 Earnings Call Transcript

DATE

Thursday, Nov. 5, 2026

CALL PARTICIPANTS

• Vice President of Corporate Development and New Product Planning - Bohan Wei
• Founder and Executive Officer - Wesley H. Kaupinen
• Chief Commercial Officer - Ashley Kline
• Chief Scientific Officer - Jeff Martini
• Chief Financial Officer - Matthew E. Korenberg

TAKEAWAYS

• NDA Acceptance -- The FDA accepted the New Drug Application for QTORIN rapamycin for the treatment of microcystic lymphatic malformations on Oct. 28, 2026.
• PDUFA Date -- The FDA granted priority review for the application and established a target action date of Feb. 28, 2027.
• Estimated Peak Sales -- Management projected that peak annual U.S. sales for QTORIN rapamycin in microcystic lymphatic malformations could exceed $1 billion.
• Cash and Equivalents -- The company reported $236.7 million in cash, cash equivalents, and short-term investments as of Sept. 30, 2026.
• MLM Patient Population -- Management estimated that there are more than 30,000 diagnosed U.S. patients for microcystic lymphatic malformations.
• Pricing Range -- The company estimated an annual therapy cost of $100,000 to $200,000 per patient per year for its lead candidate.
• Net Loss -- Net loss for the third quarter was $24.6 million, or $1.70 per share, compared to $11.3 million, or $1.03 per share, in the third quarter of 2025.
• R&D Expenses -- Research and development spending was $10.8 million, up from $6.5 million in the prior year period, driven by manufacturing and clinical activities.
• G&A Expenses -- General and administrative expenses rose to $11.9 million from $3.6 million year over year, reflecting increased headcount and public company costs.
• Sales Force Capacity -- Management plans to deploy approximately 70 personnel in the field for launch, including 40 frontline sales representatives.
• CVM Patient Population -- The company identified more than 75,000 diagnosed U.S. patients for cutaneous venous malformations.
• Angiokeratoma Market -- Management estimated the diagnosed U.S. population for clinically significant angiokeratomas at more than 50,000 patients.
• DSAP Market Size -- A new claims analysis presented in October identified approximately 155,000 diagnosed U.S. patients with disseminated superficial actinic porokeratosis.
• Phase 3 CVM Initiation -- The company remains on track to initiate a Phase 3 study for cutaneous venous malformations in the fourth quarter of 2026.
• DSAP Phase 2 Initiation -- Management expects to initiate a Phase 2 trial for QTORIN-pitavastatin in the fourth quarter of 2026.
• Angiokeratoma Data Timeline -- Top-line results from the Phase 2 LOTU-2 study for clinically significant angiokeratomas are expected in the second half of 2027.
• Physician Prescribing Intent -- Market research with more than 150 physicians indicated that over 70% expect to prescribe QTORIN rapamycin if it is approved.
• Quarterly Cash Expenditures -- Cash expenditures during the third quarter were over $16 million, offset by $2.6 million in interest income.
• Noncash Charges -- The quarterly net loss included $4.5 million in noncash charges related to the Ligand royalty agreement.
• Shares Outstanding -- As of Nov. 2, 2026, there were 15,844,715 shares outstanding, which includes 1,226,258 common share equivalents from pre-funded warrants.

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RISKS

• Korenberg stated, "The first few quarters in any first in disease launch are about wiring the system, with revenue and underlying demand frequently decoupled," noting that establishing Medicaid access and prior authorization pathways takes time during the initial launch phase.

SUMMARY

Palvella Therapeutics, Inc. (NASDAQ:PVLA) is preparing for the potential commercial launch of QTORIN rapamycin in the first half of 2027 following FDA acceptance of its New Drug Application. Management reported that the company has secured a priority review designation, which shortens the FDA review goal to six months from the standard 10 months. The company stated that its current cash balance of $236.7 million is sufficient to fund operations deep into the commercial launch phase, covering multiple clinical programs and expansion of the QTORIN platform. Strategic focus remains on establishing QTORIN rapamycin as a first-line treatment for various rare skin diseases and vascular anomalies where no FDA-approved therapies currently exist.

• CEO Kaupinen stated that the company aims to establish QTORIN rapamycin as the first-line treatment and standard of care for microcystic lymphatic malformations.
• Management reported using a large language model to analyze anonymized chart notes, which identified novel treaters and coding patterns not found in traditional claims analysis.
• The company is building an in-house patient services organization to manage the end-to-end experience from diagnosis through ongoing support.
• Chief Commercial Officer Klein stated, "We have the opportunity to be the first FDA-approved therapy for an estimated more than 30,000 microcystic LM patients in The US."
• Dr. Martini stated, "Treating early gives us a chance to change the course of this disease," noting that microcystic lymphatic malformations are progressive with no spontaneous regression.
• Management reported that payers identified microcystic lymphatic malformations as a serious genetic vascular anomaly with unmet need and indicated that step-through therapy requirements are unlikely.
• The company plans to announce two additional QTORIN indications and a third product candidate by the end of 2026.

INDUSTRY GLOSSARY

• Angiokeratomas: Rare, chronic isolated lymphatic malformations involving dilated vessels at the top layer of the skin that frequently bleed.
• Cutaneous Venous Malformations (CVM): A rare vascular condition involving abnormal veins in the skin, often causing pain and bleeding.
• DSAP: Disseminated superficial actinic porokeratosis, a chronic, progressive, and precancerous skin disease.
• Microcystic Lymphatic Malformations (MLM): A serious, rare genetic disease characterized by leaking, bleeding lesions and progressive disfigurement.
• mTOR: A signaling pathway that serves as a key driver of various rare skin diseases and vascular malformations.
• NDA: New Drug Application, the formal proposal to the FDA to approve a new pharmaceutical for sale in the United States.
• PDUFA: The Prescription Drug User Fee Act, which sets the goal date for the FDA to complete its review of a drug application.
• QTORIN: A proprietary topical delivery platform designed to localize drug targeting to the skin while limiting systemic exposure.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the Palvella Therapeutics Third Quarter 26 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Bohan Wei, Vice President of Corporate Development and New Product Planning. Please go ahead.

Bohan Wei: Thank you, operator. Good morning, and thank you for joining the Palvella Therapeutics' Third Quarter 26 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.pavelatx.com. On today's call, you will first hear from Wesley H. Kaupinen, our founder and executive officer, followed by Ashley Kline, our chief commercial officer, Dr. Jeff Martini, our chief scientific officer, and Matthew 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. And now, I will turn the call over to Wesley.

Wesley H. Kaupinen: Thanks, Bohan. Good morning, everyone, and thank you all for joining us on the Palvella Therapeutics' Third Quarter earnings call and corporate update. For children and adults, living with microcystic lymphatic malformations, every day counts. Microcystic lymphatic malformations are a serious, rare, and chronically debilitating genetic disease. Starting at a young age, daily life can be impacted by persistent leaking and bleeding from their lymphatic lesions, functional impairment, infections, disfigurement, and a physical and psychological burden of living with a lifelong infiltrative disease that progressively worsens over time. Despite this profound burden of disease, there are currently no FDA approved therapies for microcystic lymphatic malformations.

Last Wednesday, October 28, a major milestone was achieved that could soon change the treatment paradigm for individuals living with microcystic lymphatic malformations. Our team at Palvella Therapeutics announced that the FDA has accepted our new drug application for Qtorin Rapamycin for the treatment of microcystic LMs and furthermore that the program has been granted FDA's priority review. A designation for medicines that, if approved, would offer significant improvements in the safety, or effectiveness of treating serious conditions. And which sets a 6-month FDA review goal rather than the standard 10-month review.

In light of this milestone, I want to take a moment to recognize the patients and families who have participated in our clinical studies our clinical investigators, our patient advocacy collaborators, our highly dedicated employees, and everyone who helped us reach this important point. Thank you. Furthermore, 116 days from today, on February 28, 2027, the Palvella team working in conjunction with our physician and patient advocacy collaborators will have the potential opportunity to begin transforming the lives of these patients through the commercialization of QTORIN rapamycin if approved. Our goal is not simply to bring another medicine to market. Our goal is to establish QTORIN rapamycin as the first line treatment and standard of care for microcystic lymphatic malformations.

Recently, I was in Fort Lauderdale, Florida with newly recruited members of our commercial and medical affairs teams. We have recruited an exceptional group of leaders who have helped build and launch some of the most successful products. In both rare diseases and dermatology. Including individuals like Phil Hazel, Marcy Telkamp, Nick Kerr, Matthew Giordano, Erica Luccheri Johnson, and many others. What struck me was the depth of their experience in launching novel products, their boundless positive energy, and most of all, the shared commitment to delivering on the potential for a highly successful launch for the microcystic lymphatic malformation community.

Longer term, an FDA approval in microcystic lymphatic malformations may open the door to many other potential clinical indications where Qtor and rapamycin can make a meaningful impact to patients. The vision for QTORIN rapamycin is a pipeline and a product. 1 drug that can eventually address many rare skin diseases and vast anomalies in which the mTOR pathway has been identified to be a key driver of those diseases. At Palvella, we are striving to realize the full patient impact that Qtorin Rapamycin can have And as you will hear today, we are actively advancing QTORIN rapamycin for multiple additional indications.

2 of which are in advanced clinical stages in cutaneous venous malformations and clinically significant angiokeratomas with the goal of delivering multiple first in disease therapy to these deserving rare disease patient populations. While we believe QTORIN rapamycin for cystic lymphatic malformations will represent our first FDA approval and an attractive peak annual US sales opportunity exceeding $1 billion we believe what truly sets Paul Bell apart is our ability to repeatedly unlock multibillion dollar markets in orphan diseases previously thought to be untreatable. The repeatability of our approach is enabled by 2 elements that are core to Palvella. Number 1, our disciplined first-in-disease strategy.

We aim to go from zero to 1 in serious rare diseases that currently have no FDA approved therapies. Rather than pursue incremental differentiation in crowded markets, our focus is on pioneering the first approved therapy in diseases where patients have oftentimes been left behind. Number 2, our proprietary QTORIN which enables us to reproducibly generate novel IP protected topical product candidates to address these serious rare skin diseases and vascular malformation. Importantly, at Palvella, we often focus on selecting diseases where there is already human proof of concept data supporting the therapeutic approach. Frequently from real world clinical evidence.

This provides early but important mechanistic and clinical value validation that modulating a specific pathway has the potential to deliver meaningful benefit to patients. We then apply our Qtoron platform to optimize localized drug targeting, tissue exposure, and tolerability. With the goal of translating that early evidence into compelling clinical outcomes demonstrated in rigorous, well conducted clinical trials while using endpoints specifically designed to support FDA approvals. Our overarching goal is to bring first-in-disease therapies to FDA approval as quickly and efficiently as possible, recognizing that time matters to rare disease patients while capital efficiency and the probability of achieving FDA approvals matter to our shareholders.

Who have entrusted us to translate their investment into high clinical impact commercially available FDA approved therapies. With our NDA now accepted and our PDUFA date set for next quarter, I would like to introduce you to our Chief Commercial Officer, Ashley Klein, who will be leading the launch of QTORIN rapamycin in microcystic lymphatic malformations. Ashley began working with Palvella more than 2 years ago and we formally announced her appointment as Chief Commercial Officer in May of last year. What makes Ashley particularly valuable to Paul Vella is that she's not preparing for her first successful rare disease launch she's preparing for her next 1.

Bringing lessons learned from her previous successful launches directly into our preparations for QTORIN rapamycin. While General Manager of Dompe U.S. business, Ashley led the highly successful launch of Oxervate, a first-in-disease topical therapy for a rare disease with no previously FDA approved treatments. Under her leadership, Oxervate grew to more than $500 million in annual US sales while achieving profitability in its first year. What impresses me most about Ashley is her combination of strategic thinking, relentless execution, and a genuine commitment to patients.

With our potential first approval approaching, I could not be more excited about the team that Ashley has recruited the progress of our launch preparations, thanks to Ashley and her entire team, and our shared determination to deliver for the microcystic LM community. Ashley, over to you.

Ashley Kline: Thanks, Wesley. As Wes mentioned, I have been working with Paul Vella for a couple of years. Prior to that, I led the launch of Oxervate. A topical eye drop for the rare eye disease neurotrophic keratitis. 7 years after launch, Oxervate has grown to more than $1 billion in US sales. I bring that up because the NK market in 38 looked a lot like what we see today in microcystic lymphatic malformation. Some of the parallels with the launch of Qtorin rapamycin include the lack of an FDA approved therapy and potential upside from patients who were undiagnosed. I want to spend a few minutes on how we expect this launch to unfold assuming approval.

While I am proud of what I have achieved previously, what is very exciting about the opportunity at Palvella is the large number of existing diagnosed patients and the organic maturation of vascular anomaly clinics with large numbers of patients receiving specialist care. Some keys for a successful orphan launch are strong prescribing intent a pathway to coverage with nonclinical barriers addressed and removed, and a patient finding effort that allows resources and capital to be deployed efficiently. Here's the headline. We expect strong physician demand for QTORIN rapamycin to be there from day 1. In our market research with more than 150 physicians, more than 70% said that they would expect to prescribe if approved.

On the payer side, we know that payers see value in the product. 've had initial conversations with some plans, and those conversations have been constructive. I will share more on that in a minute. Next, a word on the market opportunity and patient identification. We had a lot of confidence in our claims analysis and traditional market research. But at Palvella, we have a culture of refusing to be satisfied. And we continue to invest in refining our view of this market. 1 recent investment was using a large language model to analyze anonymized chart notes, which unearthed novel treaters and ICD-10 coding patterns.

A group that was invisible in traditional claims analysis indicating potential upside on our internal estimates. We are deploying this novel algorithm now in the largest US database of dermatology encounters. And we look forward to those results. The underlying opportunity is clear. With more than 30 thousand diagnosed U.S. patients at $100 thousand to $200 thousand per patient per year, reaching $1 billion at peak requires modest penetration. Our team is laser focused on bringing these patients the first FDA-approved therapy for their disease if we receive approval next year. When we received the SELVA data in February, the results of the clinical study exceeded all of our tested scenarios.

So we went out to both physicians and payers to do additional market research. The data that I am sharing with you here has not been shared before. This research bolsters our confidence in early uptake. More than 70% of physicians surveyed expect to begin prescribing within 3 months of approval. And most plan to start several patients at once. Our market access testing confirmed that payers agree LM is a serious genetic vascular anomaly with unmet need. And they found the SELVA data to provide a compelling clinical evidence package. Payers agree that clinical diagnosis is appropriate in MLM, and noted that there will not be step through therapy given the lack of FDA approved treatment options.

We also anticipate favorable coverage in the orphan pricing corridor. We also have a team of MSLs field marketers, and patient assistance liaisons in the field. And what they are reporting back is consistent with what we heard in market research. I would like to take a minute to discuss the how behind our execution. I am fortunate to work with an exceptional leadership team here at Palvella. And we continue to add outperformers every week. Each of us bring different perspectives from prior roles, including deep expertise in both dermatology and rare disease. That breadth makes us a very powerful group.

In the prelaunch setting, we are reinforcing the urgency to treat that we have heard from our KOLs and investigators. By launch, we will have about 70 people in the field, all custom built to serve the MLM community. Importantly, we are building our own patient services organization in house at Palvella. Because we believe that owning the patient experience directly from diagnosis through access and ongoing support is critical in a rare disease like MLM. That decision is informed by the experience of many of our team who join us for rare disease launches, including Crystal Biotech, InSight, Horizon, Ascendis, and others.

We are very deep into recruiting, and we expect most of the team to be on board and trained prior to our PDUFA date in late February. I also wanna touch on a precision digital marketing effort. Led by our VP of Marketing, Peter Finlayson. Just as we deploy innovative trial designs and formulation science, there is a great deal of innovation on the marketing side. Paul Bella is using cutting edge physician targeting technology to efficiently deploy dollars against top treaters of MLM in The US. Expanding our reach far beyond what could be accomplished alone via a field organization. This is already in place for our Beyond MLM disease education campaign.

I want to sum up with how we expect this launch to unfold assuming approval. We have the opportunity to be the first FDA-approved therapy for an estimated more than 30 thousand microcystic LM patients in The US. We have confirmed that there is strong physician demand and we will position Qtorin rapamycin as first-line and establish it as the new standard of care for appropriate patients if approved. There is no approved therapy for these patients today and we have a sense of urgency to deliver this drug to patients.

We expect a broad label, that covers both pediatric and adult use for patients with all severities, including those that are treatment naive, and those who have tried off label drugs and procedures. And we anticipate long term administration to keep the disease in check. Now I will hand it over to Dr. Jeffrey Martini, who will provide an update on our pipeline

Jeffrey Martini: Thank you, Ashley. Before I provide details on our programs, I want to spend a minute highlighting the FDA's new rare disease framework initiative. Palvella recently attended the FDA's public meeting on the initiative held on October 28 in partnership with the Reagan Udall Foundation. 1 of the key themes was that the framework starts from the position that rare disease drug development should no longer be measured against precedents set by drugs for more common conditions. Diseases are fundamentally different, and they should be treated differently. This quote captures why that matters in our space. I spoke with Dr.

Zarwust this week about the opportunity in rare diseases and this is the comment he provided to FDA at the public meeting. He said that dermatology has more rare diseases than any other specialty and that he is taking care of more rare disease patients than he could ever count. it is another third-party view that rare skin disease is a quarter of high unmet need. We will continue to be the leader in this space. Turning to our pipeline. We set out to build the leading pipeline in serious rare skin diseases and vascular anomalies and we are doing exactly that. Every program on this slide targets a serious, rare and commercially attractive disease with no FDA approved therapy.

What makes this possible is Qtorin. Our platform and the engine behind the programs you see here. QTORIN delivers drugs directly into the skin where the disease manifests. While limiting systemic exposure. It is a repeatable engine. We pair it with molecules that have strong biological rationale, and we can move from 1 rare disease to the next. With speed and capital efficiency. Today, that engine has produced a lead program approaching its PDUFA date in February. Several more programs advancing behind it, and new Qtorin programs on the way. Later this year, we expect to announce a new QTORIN rapamycin indication and a third QTORIN program. We are just getting started.

And we look forward to sharing more as this pipeline grows. 1 of the questions I get asked most often by investors is, when should patients be treated? My answer starts with 3 things, genetics, biology, and the course of the disease. All 3 point the same way. And they are why clinicians who treat lymphatic malformations recommend treating early before the malformation infiltrates multiple tissue planes. Starting with genetics, researchers at Boston Children's discovered that lymphatic malformations are driven by somatic, PIK3CA mutations that keep the mTOR pathway switched on. That drives the biology. Because if the growth pathway is always on, a microcystic lymphatic malformation is proliferative and progressive. With no spontaneous regression. MTOR signaling drives the disease.

And that is the scientific basis for QTORIN rapamycin for this disease. So the longer a patient waits, the deeper and wider the disease can spread. The harder it becomes to treat. As the Boston Children's authors put it, early intervention should be considered because of their tendency to progress. Treating early gives us a chance to change the course of this disease. Moving to our programs and development. Cutaneous venous malformations is our next pivotal program. It is the most common vascular malformation with more than 75 thousand estimated diagnosed patients in The US and no FDA approved therapies. And QTORIN rapamycin has the potential to be the first approved therapy.

We remain on track to initiate our phase 3 study this quarter. We are currently in the midst of our regulatory interactions, and we plan to announce study initiation and the final study design once the study starts. The FDA has been a collaborative partner throughout our work in rare disease, and we value its engagement as we advance QTORIN rapamycin for patients who have no approved therapies. The program has fast track designation, and there is significant overlap with the physicians who treat microcystic lymphatic malformations. We plan to pursue a supplemental NDA building on our planned launch in microcystic LMs.

As a reminder, in our positive Phase II TOIVA study, 73% of patients improved on the cVM-IGA at week 12. The 24 week data presented at PEDRA in October showed additional improvement between week 12 and week 24 on multiple endpoints and a reduction in disease severity and bleeding in pediatric. Patients after treatment. Our next program is clinically significant angiokeratomas, which we see as an under recognized market opportunity. I spoke earlier this week with Dr. Jim Treat, senior pediatric dermatologist at Children's Hospital Philadelphia and our incoming chief medical officer who commented on how these patients highly symptomatic and how this is an under recognized disease.

The lesions bleed with minor friction and become--because the dilated vessels sit at the top layer of the skin, the bleeding can be startling and lead to firm, painful clots. On the genitalia, lesions can bleed during sexual activity which carries real stigma. That sensitive location also limits today's destructive treatment. Angiokeratomas are a type of superficial lymphatic malformation and these patients are often seen in the same vascular anomaly clinics that treat microcystic lymphatic malformations and venous malformations. There are no FDA approved therapies for the more than 50 thousand estimated diagnosed US patients. And the FDA granted fast track designation in December 2025.

We expect top line results from our Phase II LOTU-2 study in the second half of 27. LOAD-2 is a 12-week baseline control study of once daily QTORIN rapamycin in about 15 patients. And we are seeing strong enrollment momentum and site engagement. Thank you to our incredible clinical and clinical operations team for leading this. Validating our view of this opportunity, market research with 50 physicians found that if approved, 96% would incorporate QTORIN rapamycin into their practice. Turning to our second QTORIN product candidate, QTORIN-pitavastatin for disseminated superficial actinic porokeratosis, or DSAP. DSAP is a chronic, progressive, and precancerous skin disease with no FDA approved therapies.

QTORIN-pitavastatin directly targets the mevalonate pathway that causes DSAP making it the first potential pathogenesis directed therapy for this disease. We continue to make strong progress. Working with Dr. Kent Choate, who will serve as the study PI, and Dr. Lihie Admon at Yale, we established pharmacodynamic proof of principle showing that pitavastatin reversed hyperproliferation a human porokeratosis cell model. And we plan to publish these findings in a future manuscript. We have completed formulation development and multiple IND enabling toxicology studies And we have licensed a US patent from Yale and filed additional IP. We remain on track to initiate the phase 3 study this quarter, and interest is already strong.

With more than 90 unsolicited patient requests about this trial. The market is also larger than we expected. A new claims analysis presented at fall clinical dermatology in October identified approximately 155 thousand diagnosed US DSAP patients. QTORIN-pitavastatin has the potential to become the first FDA-approved therapy and standard of care for these patients. Matthew will now provide an update on the finances. Matthew?

Matthew E. Korenberg: Thanks, Jeffrey, and good morning, everyone. The third quarter marked a transition point for Palvella. We completed our NDA submission at the end of August and last week, the FDA accepted the application granted priority review, and set a PDUFA target action date of February 28, 2027. The team's focus in my remarks this morning center on 1 thing, making sure we are ready financially and operationally to launch QTORIN rapamycin in the first half of 27 if approved. As of the end of Q3, Palvella had $237 million in cash equivalents and short term investments compared with $250 million at the end of Q2 26.

The lower cash balance reflects over $16 million of cash expenditures offset by $2.6 million of interest income and the proceeds received from our FDA orphan products grant. Research and development expenses for the third quarter were $10.8 million compared to $500 thousand in the third quarter of 25. The increase was primarily a result of CMC activities completion of our NDA submission, our Phase II LOTU-2 trial in Angiokeratomas, and increased head count. G&A expenses were $11.9 million compared to $3.6 million a year ago, reflecting increased headcount overall with commercial and medical affairs hiring being by far the largest portion of that spend. And an increase in other prelaunch activities and general expenses associated with public company activities.

Net loss was $24.6 million or $1.70 per share compared to a net loss of $11.3 million or $1.03 per share in the third quarter of 25. The Q3 26 net loss includes $4.5 million of noncash charges related to our Ligand royalty agreement. Our cash expenses for 2026 have been below our previous expectations and it is likely that the full year will come in below our previous guidance. That said, we do expect the fourth quarter to be our largest investment to date as we ramp up hiring in precommercial activities.

Within the 70 overall commercial and medical affairs team members that Ashley mentioned, we continue to plan for approximately 40 frontline sales reps and we expect to have the team in place about 2 months ahead of the PDUFA date. We are also spending to build launch inventory. As we get our commercial infrastructure built across the organization, and we begin trials in CVM and DSAP this quarter, any spend savings in late 26 versus previous guidance will generally be pushed into early 27. Our view of cash runway is unchanged.

Based on our current operating plan, our assumption of an approval and launch in the first half of 27 and current consensus revenue estimates, we expect our existing cash to fund Palvella deep into the commercial launch. That includes a fully funded standalone US launch the phase 3 CVM program, our angiokeratoma and DSAP programs, and continued expansion of the QTORIN platform this year and beyond. If Qtorin rapamycin is approved, our cash balance provides our team the ideal environment to focus exclusively on a successful launch. Lastly, I wanted to offer a few points that may help with modeling as we approach a potential commercialization.

First, closer to commercialization will provide specific cost of goods guidance, but I wanted to mention 2 related points to consider now. Product costs incurred before approval will be expense in R&D, translating the cost of goods sold levels running below our long term rate. An initial period after launch. In addition, please note that royalties owed to Ligand will not run through the cost of goods line. Expenses associated with the Ligand royalty payments will appear below the operating line. Second, the first few quarters in any first in disease launch are about wiring the system, with revenue and underlying demand frequently decoupled.

Each step takes time including payers writing coverage policies, prior authorization pathways settling in, treatment centers building QTORIN rapamycin into their workflows, and our patient services team moving patients from prescription to first fill. Commercial plans vary in how quickly they move, and Medicaid access can take at least a quarter, if not multiple quarters, to get in place. We expect early demand to be strong, with revenue realization in line with other first in disease launches reflecting the wiring period before revenue uptake accelerates. Third, we will share key launch metrics that we think are most informative and helpful once we are closer to being commercial.

We do not intend to provide specific 2027 revenue guidance, but we hope to provide the building blocks and metrics that will allow investors to model and track our progress. To sum up, we enter the final months before our PDUFA date, with $236 million on the balance sheet, a launch plan that is fully funded, and a commercial and medical team that will be in place well ahead of our PDUFA date. With that, I will turn the call back to Wesley for additional comments prior to our Q and A.

Wesley H. Kaupinen: Thank you, Matthew. I want to take a moment to summarize the potential market opportunities anticipated market position, and potential for uptake in Palvella's 4 target clinical indications. The punch line summary is that each may represent a multibillion dollar total addressable market in The U.S. This is based on estimated diagnosed US prevalence in each disease and the expectation for orphan pricing upon approval. Importantly, our data driven epidemiologic work indicates an estimated more than 30 thousand diagnosed US patients, with microcystic LMs, more than 75 thousand diagnosed patients with cutaneous venous malformations, more than 50 thousand diagnosed US patients with clinically significant angiokeratomas, and greater than 50 thousand diagnosed US patients with disseminated superficial actinic porokeratosis.

Furthermore, for each of the diseases you see listed here, we believe assuming continued clinical and regulatory execution by our team, that we are on a trajectory to potentially introduce the first FDA-approved therapy for each of these diseases. A first and only market position we believe has favorable uptake implications when compared to a more conventional biotech company strategy of pursuing incremental differentiation in competitive markets with well resourced entrenched incumbents. Specifically across all 4 indications, our market research supports that 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.

As Jeff highlighted earlier on this call, this slide will soon expand. from 4 diseases to 6. We believe both new programs will reflect the hallmark characteristics of Palvella's approach. The potential to pioneer the first FDA-approved therapy in a serious rare disease, combined with patient prevalence and orphan pricing potential, that make each opportunity unambiguously commercially attractive. In closing, at Palvella, our mission to serve patients our vision to build the leading company addressing rare skin diseases and vascular anomalies, and our strategy of pioneering first in disease therapies have never been stronger. They are the foundation of what we believe will become multiple first in disease FDA approved therapies for patients who today have no approved treatment options.

We stand today on the cusp of our first potential FDA approval next quarter with a compelling late stage rare disease pipeline extending well beyond MLM. And an internal product development engine powered by Qtorin that we believe can generate novel therapies for many years to come. We believe this upcoming potential FDA approval will be a defining achievement for Palvella. And demonstrate the potential of our Qtorin many more first in disease therapies in the years ahead. Thank you. Operator, you may now open the call for questions.

Operator: To ask a question during the session. And wait for your name to be announced. To withdraw your question, please press *11 again. Our first question comes from Josh Schimmer at Cantor Fitzgerald.

Josh Schimmer: Great. Thanks so much for taking the questions. I have 3 quick ones. First, you noted the importance of initiating therapy early for MLM how are you going to be able to educate the field about the importance of doing so? Number 2, the CVM trial for Qtorin Rapamycin should be starting soon, but I think we are still waiting to hear on a final design. Where are you in terms of aligning on that with the FDA? And then the last question is around the capital efficiency that you have shown.

And just wondering how much of that is a function of the unique space that you are in, the ability to leverage 505(b)(2) applications and fundamentally lower costs of dermatologic clinical development compared to perhaps the frugality of the company in light of what is still a somewhat higher cost of capital since that will ultimately determine how the expense structure evolves over time. Thank you.

Wesley H. Kaupinen: Hey, Josh. Thanks for being on this morning, and thanks for your 3 questions. We will go through each of those now. On number 1, how are we going to educate the field in terms of early intervention? that is gonna be a medical and scientific led initiative from Palvella. We have hired Vimal Patel as our head of medical affairs. We now have a medical affairs team under Vimal, and that team day in and day out is already in the field working with those 400 centers that rep about half the market, as well as working with the additional Tier 2 and Tier 3 parts of the market We have also recruited, Jeffrey highlighted, Dr. Jim Treat. Dr.

Treat has been the senior pediatric dermatologist at Children's Hospital of Philadelphia and really has led their efforts on the dermatology side of their vascular anomalies clinic. So we are making sure that we bring in this top talent. We have a scientific and medical discussion that is being led with all segments of the market and then at approval, of course, that is gonna be augmented by the incredible commercial team that Ashley has recruited. Jeffrey will speak out here momentarily, but also we have a steady flow of publications and science that we put out even recently to demonstrate large effect sizes in our youngest populations in the Selva study.

Those posters are publicly available on our website and credit to our ClinOps, ClinDev, and MedAffairs team for the great work they have done there. On cutaneous venous malformations, we are in the midst of those regulatory interactions now and we plan to announce the study initiation, the final study design once the study starts. We expect that to be this quarter. When we announce, we expect to share things like the study design, the sample size, the trial endpoints, and the duration of that clinical study. Again, we are appreciative as Jeffrey mentioned, of the collaborative dialogue that we have had with the FDA including the Fast Track designation that they have granted for this program.

On capital efficiency, I think that is starts with a management philosophy above all. which is our goal is to flush out and mitigate as much risk as we can on the smallest amounts of capital that is always been the goal. We view that the capital we have should be deployed towards our r and d and commercial engine. We run lean. Our facilities are lean here in Wayne. Feel free to come visit us. We have got 2 to 3 people piled into. In each office here. it is a start up entrepreneurial culture, and it is 1 that is being replicated by the commercial and medical teams that we have hired.

There are also, and I appreciate you calling them out, advantages, we believe, to the 505(b)(2) program. that is a program I am very familiar with from my time at Insmed and, clearly, our first program here with QTORIN rapamycin. Is leveraging that program as well. Jeffrey? I wanna open it up to you and Ashley to comment on the first part of Josh's question around early intervention.

Jeffrey Martini: Yeah. So for early intervention, it is really about disease education. And we are going to take a strong medical affairs approach. We find that clinicians really respond well to data. So showing them the publications, explaining the genetics, explaining the pharmaco of QTORIN rapamycin, how we are able to deliver high concentrations at the site of pathophysiology. And then if you can turn off this overact activated pathway, can really change the clinical disease course. That will be a key initiative of both medical affairs and attending medical conferences. Next year on throughout the launch.

Ashley Kline: Thanks, Jeffrey. I will just add that in speaking with clinicians who treat a lot of microcystic lymphatic malformation, especially patients who are older, including adults, they see the effects of the lifelong impact of the disease and the way that it can ravage a patient's tissue. So there is a lot of alignment already from the physician community on the importance of treating early.

Wesley H. Kaupinen: Josh, I just want to add 1 point to your third question on capital efficiency about what we do. And I really think that this the 5 zero 5 b 2 pathway has some efficiencies. When we take the molecules we do not have the same pharmacology risk of a new chemical entity. So in our early stage clinical trials, because no 1's ever run these studies before, really what we are looking at is what is clinically meaningful differences, what are the right endpoints, what are these endpoints that change due to interaction with the QTORIN product? We do not need to derisk to see if the molecule is working or not.

So that really saves us a lot of time in our early stage clinical development.

Matthew E. Korenberg: And then it is Matthew here. Last point on capital efficiency. Really, the only thing I would add is our Qtorium platform really allows us to, operate in a much more capital efficient manner. We can leverage all the historic knowledge and expertise and know-how we have from our Qtorin platform as we develop each new program. So developing the next program is far more capital efficient than others. Typical development.

Josh Schimmer: K. Thanks for those comprehensive answers.

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

Ritu Baral: Good morning, guys. Thanks for taking the question. I have a couple. They are all commercial because there is a lot to ask about. 1, the field force Ashley, you mentioned that you had 70 people ready at launch, and then I think later Matthew, you mentioned there were 40 frontline reps. Can you break out sort of that delta of 30? Are those MSLs? Are they reimbursement support? How many of them are in house hub and going to be devoted to reimbursement support.

And then my second question was about the shape of the launch and what your learnings in the field force are telling you, do they support the slides I am sorry, the numbers on slide 20 because our calls with doctors suggest the MLM numbers could go up with education. Are you expecting, like, a bolus or at least a bolus of interest And do you have ideas on the cadence that patients come in to see their doctors and if that could change with the new therapy.

Wesley H. Kaupinen: Sure. Great. Thanks for those questions, Ritu. On the field force, the slide notes the more than 70 that we expect. To be in place at the time of launch. Matthew mentioned it, 40 of those will be frontline field sales reps. The remaining 30 are gonna be our sales leaders, which are now in place, and we are at the meeting in Fort Lauderdale that I mentioned that includes area vice presidents as well as rare disease directors that are across the country. We also, as part of that 30, have a medical affairs team, of medical, as well as Vimal who is leading that group. Patient access liaisons, field marketers, as well as inside sales.

So I appreciate you asking the question because, hopefully, you get a sense of the resources that we are putting against the launch, and all of that is in the spirit of building a world class service organization to pair with what we think is a product that demonstrated 95% efficacy on the primary endpoint in our phase 3 study. I will let Ashley speak to the cadence of the launch. We do not anticipate a bolus. We think this will be a steady growth quarter over quarter. it is a large market.

Different than some of the recent orphan launches, which have more, of an ultra orphan profile, but I will pass it over to Ashley to add any color.

Ashley Kline: Thanks, Jason. Thanks, Ritu. Good morning. I have spent a lot of time in the field at medical meetings and meeting with hem oncs and dermatologists over the last month I was in Vienna at the EADV meeting. Was in Las Vegas at fall clinical dermatology. And I was in Florida at the LEARN lymphatic Education and Research Network meeting. Last month. So I have had a lot of face-to-face time with clinicians over the last few weeks. My takeaway from that is that clinicians are they find our clinical profile to be very compelling. They have confirmed that there is an unmet need, they do not plan to watch and wait once our product is available.

So there is that urgency to treat that we represented on the slide earlier. The other point that has really come through in those meetings is how much they find the Qtorin technology to be a major differentiator So there is a lot of excitement about how the Qtorin technology has created a profile that has efficacy but also seems to have a great safety profile, and they are excited about how we could use the Qtorin platform in other diseases and with other APIs. So there is a lot of clinician excitement there. I do not know if that answers your question about supporting the numbers.

Ritu Baral: It does. And I think you also had a question Yeah. Mhmm. Go ahead. Oh, I was gonna say if I could sneak in 1 last question about what you are learning as far as the reimbursement split of the MLM market, publicprivate Yeah.

Wesley H. Kaupinen: Yeah. Thanks for that question. We will have some more of that data available over to you as we get closer to launch. This is a payer mix that we expect to be heavily weighted towards, commercial. And also Medicaid as well.

Operator: Our next question comes from Greg Suvannavej Mizuho.

Ryan Rich: Good morning, everyone. This is Ryan Rich on today for Greg. Just wanted to ask a little bit about driving awareness among physicians and patients in your early outreach effort. Especially your digital awareness campaign Can you tell us about the channels that you will be using to reach out to both of those groups and what can you tell me about those efforts so far? And how do you see those efforts steering patients and physicians towards Palvella and QTORIN. Thank you.

Wesley H. Kaupinen: Great. Hey, Ryan. Thanks for being on, and appreciate the questions. So those channels are gonna be field based They are gonna be digital, which Ashley will speak to. We have also had a significant presence at recent medical congresses. only going to intensify as we move closer to launch. And through the launch, I was fortunate enough to be able to attend the Pediatric Dermatology Research Alliance meeting in my hometown of Alexandria, Virginia last month. Saw firsthand our team educating physicians with our Beyond MLM Disease State Awareness Campaign Really proud of what we have accomplished here in terms of partnering with several patient advocacy groups to launch that campaign.

We have been pleased with the opt in rates that we are seeing thus far to that, which have exceeded our, internal forecast. And Ashley will provide additional color around our efforts to drive awareness in advance of launch.

Ashley Kline: Thanks, Wesley, and thanks for the question. I will just add that in terms of interacting with patients, we have had the great opportunity to attend Arkansas Children's, had a Vascular Anomalies Family Day recently, The Vascular Birth Marks Foundation had an event in New York that they invited us to partner with them on, and there are many other vascular anomaly family days that we are planning to participate in, and that is a nice way for us to support the community.

And then in terms of digital outreach, we have a robust digital plan focused on educating patients about the disease and encouraging them to seek care from a clinician and we are advertising on all of the places you would expect, including Meta, Reddit, Google, and others. We have a very experienced team in marketing that is leading that effort.

Ryan Rich: Great. Thank you.

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

Annabel Samimy: Hi, all. Thanks for taking my questions and congrats on the progress. So just going back to the launch you had talked about, thanks for the color on the reception from physicians and the identifying. Identification of new prescribers through your LLM model. I guess from that perspective, this LM model that identified these new prescribers how does that change the breadth of physicians that you could be potentially targeting over time? I know you have talked about 400-and-change physicians. Could this potentially expand the breadth of your of your of your infrastructure and in terms of identifying also not only just physicians, but more patients.

And are there any new orphan disease analogs that you would point to that you feel comfortable using as a good benchmark? And then separately on CVM, I know that you are still talking to the FDA about the study design. Maybe you can provide some color around how FDA views CVM differently from MLM that it continues to be an ongoing discussion on how this trial proceeds. Thanks.

Wesley H. Kaupinen: Yeah. Good morning, Annabel, and thanks for your questions. Before I pass it over to Ashley, I just wanna answer the first part of your question, which is we believe that infrastructure we highlighted on the call earlier today of more than 70 is the existing infrastructure that we will need. We will not need to expand in the early part of the launch even with some of the new patients and new treaters, we think we are identifying outside of those claims that can be handled by this infrastructure that is largely in place and will be fully in place, as Matthew mentioned. About 2 months before the launch.

We are gonna promote approval to all 3 segments of the market. there is about 400 centers that we believe manage about 15 thousand patients. So this is an unusual level of patient concentration. For a rare disease. That exists because of this inorganic this organic market development that is occurred at the vascular anomaly centers here over the last 2 decades. Before I pass it over to Ashley to give more color, we have talked about Launch Analogs in the past. Certainly, ARIKAYCE from Insmed, a drug I had experience with on a premarket basis, Ashley's experience with Oxervate.

These drugs that are first in disease launching in new markets, we think are very good analogs And in terms of your question as it relates to CVM, You know, there are some similarities between microcystic lymphatic malformations and cutaneous venous malformations. We think both of those diseases are serious and rare. there is no spontaneous regression, and the diseases are, and really importantly, there is a nice base of real world clinical evidence supporting the use of mTOR inhibition and rapamycin In terms of where we are from a regulatory perspective, we are currently in the midst of those regulatory interactions.

We expect those to conclude very soon here, at which point our goal is to urgently start this clinical study. We want to bring this drug to patients with the same urgency that we are with microcystic lymphatic malformations And we expect to soon have that study design and be able to announce that to the market at the time of initiation.

Ashley Kline: Ashley? Thanks, Wesley. I will just reiterate that the team size that we described was frontline salespeople and about 70 people in total in the field is sufficient to cover the opportunity. That we believe we have identified, and that includes the group that we have worked on using the, the LLM model and some of the analog work.

Annabel Samimy: Okay. Great. Thank you.

Operator: Our next question comes from Alethia Young at William Blair.

Alethia Young: Hi, thanks for taking my question, guys, and congrats on getting to the milestone of PDUFA date. In a very fast time, which also reiterates your pipeline and the progress there. So a couple of questions. Someone has asked a version of this, but I kind of wanted to just understand, like, when you think about there is numbers for MLM, they are, like, 45 thousand to 90 thousand and then, you know, you are talking over 30 thousand. Like, know, can we get a little bit more granular on reconciling, like, kind of what is the differential? Like, are these people, you know, just that they are just not found and they are in the community or something?

My first question My next question is when we think about like, your pipeline and some of the bigger programs beyond MLM, like, we think about, like, in Phase 1, like, derisking those programs? Do you think it requires bigger studies in a way to kind of get to, you know, potentially even faster answers in late phase development. And then I am always intrigued by the topical statin in DSAP. So I just wanted to kind of get a little bit more on you know, there seems to be, like, chatter out there about kind of development strategies. Is that is that how we should frame it and think about it? Thank you.

Wesley H. Kaupinen: Great. Hey, Alethia. Good morning. Thank you for being on. Jeffrey will address the question around the topical statins In terms of your question on microcystic lymphatic malformations, I have been working for many years in rare disease epidemiology. And you know, it is not a precise science. You really have to triangulate in these diseases where there is no approved therapies to estimate what the diagnosed prevalence is. So we invest in those methods. We have published on the results of those. The first thing we did in microcystic lymphatic malformations is we ran a real world occurrence study that is published in Orphanet, which projected 79 thousand diagnosed patients with microcystic manifestations of their lymphatic malformations.

That was The US diagnosed prevalence number. You mentioned the claims work that Ashley has done. Of 45 thousand to slightly north of 90 thousand. Our 30 thousand number, reflects, a management philosophy similar to what Josh was asking earlier, which is we think we should anchor on the lower end of our ranges embed conservatism in those numbers, We may find when we go to launch, and you know this from all of your orphan experience, that when you have the first company step into a disease, oftentimes, it can really elevate disease state awareness. It improve diagnosis rates and those numbers can grow over time.

But we are gonna stick with our greater than 30 thousand number knowing that there could be patients beyond that as Ashley has highlighted. In terms of how we derisk, Qtorin programs, thanks for that question. I will point to the evidence of the phase 2 cystic LM study as well as the Phase II TOIVA study in cutaneous venous malformations. We are oftentimes going into our phase 2 studies with some early real world evidence that the molecule or class of molecule in the case of the statin do have clinical activities and they have shown that in early proof of concept studies.

So we are building on a human clinical base of evidence many times before we apply Qtorin and run our phase 2 studies. What we showed in our MLM phase 2 study sample size of n=12, we had 100% of patients on the Clinician Global Impression of Change that were much or very much improved. In our Toiva Phase II study, we had 73% of patients, again, in a disease where there are no FDA approved therapies, respond on our cutaneous venous malformations investigator global assessment. We have a similar strategy on the Angiokeratomas where we think we can really get that early answer on an efficacy signal and call it 10 to 15 patient clinical strategies.

So Jeff likes to refer to this as the Palvella playbook. We think that is a reasonable sample size in a rare disease to make that go/no-go decision. For making that phase 3 investment moving into the later stages of development. On the topical statins, I will pass it over to Jeffrey to address your questions there.

Jeffrey Martini: We are really excited about the QTORIN-pitavastatin program for DSAP. The team here at Palvella is excited to get this study started later this quarter. We are hearing a lot from study investigators who are reiterating the unmet need. And as I mentioned earlier in the call, the patients are reaching out to us. They are unsolicited. We have had greater than 90 patients reach out to us inquiring about the trial and reiterating that unmet need. 1 of the things that we do with our development programs is start by talking to the patients.

We have already conducted qualitative interviews to understand the burden of patients, what are the key signs that are critical to them And in working with our clinicians, we design endpoints that we believe can move with the QTORIN-pitavastatin program. Our phase 2 strategy will be testing a lot of different endpoints and we will see which ones are most sensitive to treatment change for QTORIN-pitavastatin. And then ultimately, that design of that phase 2 will inform the design of a larger phase 3 trial which in our Palvella playbook that Wesley mentioned is our pivotal Phase III trial.

Alethia Young: Great. Thank you, guys. I like that Palvella playbook. that is a good 1.

Operator: This concludes the question-and-answer session.

Wesley H. Kaupinen: I would now like to turn it back to Wesley Kaupinen for closing remarks. Great. Thank you, operator, and thank you for your thoughtful questions and your strong interest in what we are building at Palvella Therapeutics. We are all eyes forward here to February 28, 2027. That happens to serendipitously be rare disease day. And we are all striving for that to be the day that we achieve our first of what we really want to be the first of many FDA approvals for these deserving patients that today are living with serious rare skin diseases and vascular anomalies. We look forward to updating all of you on our continued progress with both our launch planning.

Thank you, Ashley, for being on today. And the advancement of our deep rare disease pipeline. Operator, you may now conclude the call. Have a great day, everyone.

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

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