Palvella Therapeutics, Inc.

Good day, and thank you for standing by. Welcome to Palvela's first quarter 2025 financial results and corporate update conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised, today's conference is being recorded. I would now like to turn the conference over to your speaker today. Bo Hanwei, please go ahead.

Thank you, operator. Good morning and thank you for joining the Palvela Therapeutics Q1 2025 financial results and corporate update call. As a reminder, our press release summarizing today's updates is available under the investor section of our website at www.palvelatx.com. On today's call, we are joined by Wes Coffinan, our chief executive officer, 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 plans, commercial outlook, and financial performance. These statements are based on current assumptions and subject to risks and uncertainties that may cause actual results to differ. Please refer to our filings with the SEC for more information. And now I'll turn the call over to Wes.

Thank you, Bohan. Good morning, everyone. Thank you all for joining us today. This past Monday morning, the Paul Vela team, including our scientific and clinical collaborators, investors, senior advisors, board members, and family members converged on New York City for the ringing of NASDAQ's opening bell. Paul Vela becoming a publicly traded company approximately five months ago is an important milestone for the company. And it is a testament to Paul Vela's vision of building the leading rare disease biotech company focused on serious genetic skin diseases with no FDA-approved therapies. It is also a testament to our mission, which is to relentlessly serve those rare disease patient populations who have historically been neglected, and to our strategy, which is to focus our therapeutic development efforts and eventually our commercial efforts exclusively on those diseases with no FDA approved therapies. We want to be first for patients. Becoming public is furthermore a testament to the Pulvella management team who have turned mere concepts into breakthrough designated medicines while turning the challenges of drug development and rare complex diseases into triumphs. The collective sentiment at NASDAQ that day was that our substantial progress to date including both developing a late-stage pipeline with cuturin rapamycin and a compelling platform with cuturin, is truly only the beginning for Pulvella. Our hope is to return to NASDAQ one day in the near future to celebrate the first regulatory approval of cuturin 3.9% rapamycin anhydrous gel, a milestone we believe we're even closer to achieving based on today's exciting update that we have exceeded our enrollment target of 40 patients in the landmark SELVA phase three study of ketoran rapamycin to the treatment of microcystic lymphatic malformations. Four quarters, four anticipated high impact milestones. Moving left to right, microcystic lymphatic malformations are a serious, rare, chronically debilitating and lifelong monogenic disease. The genetics, disease biology, target skin tissue, and natural history of microcystic lymphatic malformations have all been well characterized. Genetically, they're caused by PI3K mutations. Biologically, the PI3K mutation results in the hyperactivation of the mTOR pathway, which ultimately produces malformed vessels that protrude through the skin, as you can see from the picture here on the slide. The target skin tissue is the dermis, which is the site of disease origin cystic lymphatic malformations. From a natural history perspective, the disease is present at birth, has no spontaneous regression, and is proliferative and progressive. The major clinical burden to these patients is referred to as lymphorrhea, which is the leaking or discharge of internal lymphatic fluid onto the skin or into the soft tissues. The result of this is that these patients are at persistent risk of serious infections, including acute cellulitis, which can cause repeated hospitalizations. There are, unfortunately, no FDA-approved therapies for these patients. We'll provide an update today on our Phase III cell, the study of ketorin rapamycin, which has received FDA's breakthrough therapy, fast-track, and orphan drug designations, We anticipate top-line results from the study in Q1, 2026. Moving to cutaneous venous malformations, the disease pathology of cutaneous venous malformations is similarly driven by the mTOR pathway, caused by mutations in either PI3K or Ti2, which leads to over-activated mTOR signaling. Cutaneous venous malformations are a serious disease, and they're characterized by dysregulated growth of malformed veins in the skin, which can cause functional impairment and bleed. Because of the genetic driver of the disease, cutaneous venous malformations continue to grow over time and do not spontaneously regress. There are unfortunately no FDA-approved therapies for patients afflicted with cutaneous venous malformations. We'll update today on our phase two TOIVA study of ketoran rapamycin, which has received FDA's fast-track designation and we anticipate the study will report top-line results in Q4 of 2025. Importantly, if approved, we believe, based on market research, that cuturin rapamycin has the potential to be first-line therapy and standard of care for patients with both microcystic lymphatic malformations and cutaneous venous malformations. Our pipeline beyond our two lead programs and microcystic LMs and cutaneous venous malformations continues to make tangible progress under the strong leadership of our chief scientific officer, Dr. Jeff Martini. In the third panel on this slide, we truly believe ketorin rapamycin can represent a pipeline and a product with clinical and commercial potential that extends well beyond microcystic lymphatic malformations and cutaneous venous malformations. We anticipate unveiling our third target clinical indication for Cuturin Rapamycin in the second half of this year. Moving to the fourth panel, we also anticipate unveiling our next Cuturin program in the second half of this year, which would be our second product candidate from the Cuturin platform after Cuturin Rapamycin. We see both our next Cuturin Rapamycin indication and our next tutoring platform program as key near-term value drivers for Paul Vela. Dr. Martini will provide updates on our progress on both programs on this call. Our strong momentum at Paul Vela is highlighted first by what's presented at the top of the slides. We have now exceeded our enrollment goal of 40 patients in our landmark phase three study evaluating cuturin rapamycin for the treatment of microcystic LMs. On our phase two TOIVA study of cuturin rapamycin for the treatment of cutaneous VMs, we now have six sites open and enrolling, and top-line readout is anticipated in Q4 2025. We recently participated in the Society of Investigative Dermatology and the International Society for the Study of Vascular Anomalies meetings where we gather new insights and deepen our relationships with scientific and clinical leaders in the field. From an organizational standpoint, we've added Jason Burdette to our executive team as SVP of CMC and Technical Operations. Jason brings 30 years of experience in global pharmaceutical development, technical operations, and supply chain to Palvella. and we're thrilled to have him on our senior team as we approach planned NDA submission next year and, if approved, standalone U.S. commercialization in 2027. We also continue to make progress on our search for an exceptional chief commercial officer with that higher plan for the second half of this year. For this position, we're seeking a proven leader with experience launching novel therapies that were first to market in serious rare diseases. In addition to the proven experience commercializing in rare diseases consistent with Palvela's historical and current model of operating with capital efficiency, we are seeking to recruit a leader who can lead a launch in a thoughtful and capital efficient manner. We look forward to keeping everyone updated on our progress. And we've also expanded our intellectual property portfolio with the issuance of our fifth US patent with anticipated claims from that patent into 2038. Moving to our lead program, Cuturin Rapamycin for the treatment of microcystic lymphatic malformations. I'm pleased to share, thanks to the dedicated efforts of our phase three investigators and the research coordinators at clinical trial sites, our patient advocacy collaborators, the highly committed Pauldella Clinical Operations Team, and most of all, the patients living with microcystic lymphatic malformations that we have exceeded enrollment of 40 patients in our pivotal phase three trial, evaluating cuturin rapamycin in patients with microcystic LMs. The study has generated strong interest with all 13 sites, including institutions such as Stanford University, the Cleveland Clinic, Children's Hospital of Philadelphia, the Mayo Clinic, to name a few, all enrolling patients into the study. In terms of concluding enrollment, We're anticipating closing study enrollment in June after all pending enrolled patients have completed screening. As a result of the diligent efforts and commitment from investigators and sites beyond these pending enrolled patients, there is additional potential for more patients to enter the study. We believe that it is in Palvela's best interest to honor the site's work and their relationships with patients and accommodate additional patients into the study in a timely manner. At the same time, now that we've exceeded our enrollment target of 40 patients, our goal is to bring the Phase III trial to an orderly close while communicating closely and clearly with our study investigators and sites on defined study closure timelines. As you can see from the graphic at the bottom of the slide, if patients meet study eligibility criteria, they are then enrolled into the study. Patients first move through an eight-week baseline period before moving to the efficacy evaluation period of 24 weeks, followed by the treatment extension period of 24 weeks. We look forward to providing more detail on final patient enrollment numbers at the time of achieving full enrollment in the near future. Overall, we are pleased. that we've been able to accomplish our phase three study enrollment goals while remaining on track to report top line data in the first quarter of 2026. In addition, as you'll hear from our CFO, Matt Kornberg, later in this call, we are also staying on track for our 2025 cash expense and long-term cash runway forecast. Moving to our regulatory overview, we've all been carefully monitoring the recent and ongoing changes at FDA, and the Paul Vela management team will continue to remain vigilant in doing so along with our regulatory advisors. For Paul Vela's cuturin rapamycin, we wanted to provide additional clarity that our program is regulated by the Division of Dermatology and Dentistry which is within the Center for Drug Evaluation Research, or CDER, which you can see listed at the top of this slide. Importantly, the Division of Dermatology and Dentistry continues to be led by Dr. Jill Lindstrom, a dermatologist and the division director who began as director of the division in late 2023 and continues in that role today. Due to our Plan 505 pathway for our NDA submission, we anticipate division-level leadership, in this case, Dr. Lindstrom, would be responsible for the NDA review and approval decision. So while there have been many changes across the FDA that we've all read about and that we continue to track, there has, by contrast, been consistency for Paul Vela in terms of, number one, the division regulating Paul Vela's program, dermatology and dentistry, and number two, the leadership of that division, in this case, Dr. Lindstrom. As a reminder, assuming positive phase three data, we anticipate that our program could potentially be expedited as a result of some of the designations we've achieved over the years. In Q4 of 2023, we were awarded FDA's breakthrough therapy designation based on the results from our phase two baseline controlled single arm study of 12 patients. Breakthrough therapy designation was added to our previously granted fast-track and orphan drug designations. Additionally, out of 51 applications received by FDA's Orphan Products Grants Program in fiscal year 2024, Paul Vela's Phase III Selva trial was one of just seven clinical programs and the only Phase III study to be named an awardee of a non-dilutive FDA grant. In our case, we anticipate up to 2.6 million from the FDA over multiple years in non-dilutive funding to support the phase three study. Moving to the bottom of the slide, in terms of the regulatory environment for our other planned pipeline programs, the Paul Vela team is closely monitoring emerging regulatory frameworks, including a newly proposed plausible mechanism accelerated approval pathway for certain rare diseases that has been publicly highlighted at a conceptual level by Commissioner Dr. Marty Makary. We were encouraged by the comments about the need to expedite therapies to patients living with rare, ultra-rare, and oftentimes serious diseases, and we will continue to follow updates from FDA on these new pathways and their potential relevance to our earlier stage programs. I'd like to now turn to the commercial opportunity we see ahead for ketoran rapamycin. As a reminder, at a high level, Palvella firmly believes that the opportunity to develop and commercialize in serious rare diseases where Palvella can introduce the first FDA approved therapy can represent very attractive commercial opportunities, especially considering the lower competitive intensity dynamics in these markets compared to more conventional and competitive rare disease markets, which are already well served as a function of having existing approved therapies in most cases. As this slide shows, for microcystic lymphatic malformations, a recent epidemiology study conducted by a multidisciplinary team that leveraged an extensive medical claims database resulted in the following estimates. In terms of estimated diagnosed U.S. prevalence of microcystic LMs, the study indicated that there could be greater than 44,000 diagnosed U.S. patients, figures that are largely in line with Paul Della's previous estimates. In terms of estimated annual incidence of microcystic LMs, the study indicated that there could be 1,500 or more new microcystic LM cases per year. When taking these prevalence and incidence estimates and overlaying them with anticipated orphan pricing levels, the data supports that microcystic lymphatic malformations could be a multi-billion dollar total addressable market in the United States. Importantly, the poster also indicated that about one-third of diagnosed patients are currently managed at vascular anomaly centers, which are already established centers of excellence for diagnosing and treating microcystic lymphatic malformations and other vascular malformations. We look forward to providing more information related to the commercial opportunity and Palvela's commercial planning as we onboard a chief commercial officer in the coming months. With that, I'll turn it over to our chief scientific officer, Dr. Jeff Martini.