Palvella Therapeutics Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 14, 2025

Key Takeaways

  • Positive Sentiment: Phase III CELVA trial fully enrolled 51 patients for microcystic lymphatic malformations, exceeding the 40‐patient target and on track for Q1 2026 top‐line results.
  • Positive Sentiment: Phase II TOYVA study for cutaneous venous malformations is actively enrolling at leading vascular anomaly centers with top‐line data expected in Q4 2025.
  • Positive Sentiment: Palvella will announce a third mTOR‐driven indication for Qtorin Rapamycin and a second Qtorin platform candidate by year‐end 2025, aiming for lower‐cost, faster pipeline expansion.
  • Positive Sentiment: Secured $70.4 million in cash as of June 30, providing a runway into 2027; expects $55 million cash at year‐end and recently joined the Russell 2000/3000 indexes.
  • Positive Sentiment: Hired industry veteran Ashley Klein as Chief Commercial Officer, leveraging her success launching Oxervate to build a high‐impact commercial team.
AI Generated. May Contain Errors.
Earnings Conference Call
Palvella Therapeutics Q2 2025
00:00 / 00:00

There are 12 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to the Pavela Second Quarter twenty twenty five Financial Results and Corporate Update 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. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to your speaker today, Bohan Wei, Vice President of Corporate Development. Please go ahead.

Speaker 1

Thank you, operator. Good morning, and thank you for joining the Palvella Therapeutics Q2 twenty twenty five 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, are joined by Wes Coppinen, 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 strategy, commercial planning, and financial outlook.

Speaker 1

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.

Speaker 2

Thank you, Bohan. Good morning, everyone, and thank you all for joining today's call. Palvella is now nine months into our journey as a publicly traded company. And I want to state at the outset of this call that the Palvella management team and I are as energized as we've ever been about executing on our vision of building an enduring rare disease biopharmaceutical company that is the leader in developing and commercializing therapies for serious genetic skin diseases with no FDA approved therapies. Our substantial progress in the second quarter of this year on our late stage rare disease pipeline and our Qtorin platform pipeline development positions us for what I believe will be a transformative period over the next several months.

Speaker 2

Between now and the 2026, we have four anticipated high impact milestones, each of which we're making significant progress against. Number one, microcystic lymphatic malformations. Microcystic lymphatic malformations are a serious, rare, chronically debilitating and lifelong monogenic disease. There are unfortunately no FDA approved therapies for these patients. The genetics, disease biology, pathogenic tissue of interest and natural history of microcystic lymphatic malformations have all been well characterized, making the disease an ideal disease target for Paul Vella to pursue.

Speaker 2

The PI3K genetic mutation biologically results in the hyperactivation of the mammalian target of rapamycin or mTOR pathway, which ultimately produces malformed vessels that protrude through the skin as pictured here. We'll provide an update today on our phase three CELVA study of qTOR and rapamycin. Paul Vella's breakthrough innovation designed to selectively inhibit the causative mTOR pathway in the pathogenic skin tissue in microcystic LMs. This program has received FDA's breakthrough therapy, fast track and orphan drug designations for the treatment of microcystic LMs. In Q2, we announced that we exceeded our original target of 40 by enrolling 51 subjects, and we now remain on track to announce top line results in 2026.

Speaker 2

Moving to number two, cutaneous venous malformations. The disease pathology of cutaneous venous malformations is similarly driven by the mTOR pathway, typically caused from mutations in either a type two or PIK3CA, which leads to the disfiguring presentation of malformed veins in the skin. Veins which can bleed, thrombosed, ulcerate, and due to the disease's proliferative nature, become increasingly problematic over the disease course. There are unfortunately no FDA approved therapies for these patients. Our phase two proof of concept study of Qtorin Rapamycin called Toiva continues enrollment at leading vascular anomaly centers across The US and we anticipate top line results in Q4 of this year.

Speaker 2

Importantly, if approved, we believe based on market research that ketorin rapamycin has the potential to be first line therapy and standard of care for patients with both microcystic lymphatic malformations and cutaneous venous malformations. Moving to number three, our objective to expand Qtorin Rapamycin into a third rare disease clinical indication. The scientific evidence continues to clearly point to Qtorin Rapamycin's potential to be a pipeline and a product with clinical and commercial potential that extends beyond its potential in microcystic lymphatic malformations and cutaneous venous malformations, and to additional vascular anomalies, genodermatoses, nonvascular neoplasms and other clinical indications. In the second quarter, we made substantial progress on this objective. Thanks in large part to thoughtful input from our medical and scientific advisors, many of whom we've had relationships with for nearly a decade.

Speaker 2

We remain on track to announce the third clinical indication before the end of this calendar year. Notably, an indication expansion strategy on our established lead product, CutoranRapamycin, could enable entry into a new rare disease clinical indication and an attractive new orphan commercial market, and do so at a lower cost and a shorter time period when compared to the more traditional approach of starting a de novo pipeline program from concept. As a management team, we continue to proactively identify avenues for recognizing time to market and cost to market efficiencies, which could result in FDA approved therapies for rare disease patients sooner and for shareholders, a reduced capital intensity business model when compared to strategies employed by other biotech companies. Moving to number four, our next Qtorin platform program. Our Qtorin platform originated from many years of our internal R and D efforts.

Speaker 2

And we believe Qtorin represents an exciting internal product development engine, which can reproducibly generate novel patented topical product candidates. The second product candidate from the Qtoron platform will be for a serious, rare skin disease with no FDA approved therapies. In the second quarter of this year, we achieved important key preclinical development milestones and announcement of this program is planned for the 2025. Similar to our indication expansion strategy on Qtorin Rapamycin, we believe that by leveraging our established in house Qtorin platform, this could enable entry into a new rare disease clinical indication and an attractive new orphan commercial market at a lower cost and a shorter time period when compared to the aforementioned traditional approach of starting a de novo preclinical pipeline program from concept. Taken together, these four near term high impact milestones establish a steady cadence of clinical and pipeline milestones between now and the end of Q1 twenty twenty six, setting the stage for a transformative period for paldella.

Speaker 2

Momentum remains strong for Qtor and rapamycin for microcystic lymphatic malformations with key milestones achieved in the second quarter of this year. We successfully completed enrollment in the phase three CELVA trial in June with 51 subjects, exceeding our original goal of 40 subjects by more than twenty five percent. This milestone was made possible thanks to the dedicated efforts of our phase three investigators and their research coordinators, our patient advocacy collaborators, the Paul Vella clinical operations team led by my colleagues, Kathy Gowan and Emily Cook, and most importantly, the patients living with microcystic lymphatic malformations. With enrollment complete, the focus of our clinical operations team is to ensure participant compliance while maintaining the highest data quality standards ahead of the anticipated first quarter twenty twenty six top line readout. In parallel, we advanced multiple value building initiatives for the ketorin rapamycin for microcystic LMs program in the second quarter.

Speaker 2

On the regulatory front, we received the first proceeds from our FDA orphan products grant to support the phase three CELVA trial. As background, Paul Della's phase three baseline controlled single arm study underwent a rigorous grant review process at FDA, and we were pleased to be one of seven awardees in last year's grant cycle, which over the life of the grant could contribute up to $2,600,000 in non dilutive FDA funding. We've also started accelerating NDA activities in anticipation of the phase three data in Q1 twenty twenty six and our strong desire to expedite our program to NDA submission and potential FDA approval assuming a positive phase three study. Importantly, from a regulatory oversight perspective, the division of dermatology and dentistry continues to be led by Doctor. Jill Lindstrom, a dermatologist and the division director.

Speaker 2

While there continues to be changes across FDA, there's been consistency for Palvella in terms of number one, the dermatology and dentistry divisions regulation of our program. And number two, the leadership of that division in this case, Doctor. Lindstrom. We have had a significant presence and visibility at major scientific meetings in the second quarter of this year. We were honored to have our longtime collaborator, Doctor.

Speaker 2

Amy Peller, Chair of Dermatology at Northwestern present the phase three SELVA study design, as well as the phase two results at the fifteenth World Congress of Pediatric Dermatology. We also had a poster featured at the eighty second annual meeting of the Society of Investigative Dermatology, which summarized a rigorous claims based method for estimating the diagnosed prevalence and annual incidence of microcystic lymphatic malformations in The US. The results of this analysis confirm Paul Vella's prior diagnosed US prevalence estimates, which indicate a multi billion dollar total addressable market opportunity in The United States. Finally, in our last earnings call, we outlined our search for a Chief Commercial Officer, while noting the desire to recruit a proven leader with experience launching novel therapies that were first to market in serious rare diseases. I was thrilled and our entire team was thrilled to recruit Ashley Klein as our Chief Commercial Officer.

Speaker 2

Ashley is a proven commercial executive in the rare disease space. She is best known for leading The US launch of Oxervate, a first in disease topical therapy for neurotrophic keratitis, a rare eye disease which previously had no FDA approved therapies. Under Ashley's leadership, Oxirate surpassed 500,000,000 in annual US sales by year five of launch and achieved early profitability through an innovative, capital efficient and high touch launch strategy that emphasized high impact physician outreach and education, and ultimately establishing that launch as one of the top performing non oncology orphan drugs of the past decade. Ashley brings a dynamic results driven and importantly, oriented approach, making her an excellent fit for Palvella. We look forward to many significant continued contributions from Ashley on Qtorin Rapamycin and our other rare disease programs.

Speaker 2

Momentum also continues to build for our Qtorin Rapamycin for cutaneous venous malformations program. Beginning with our phase two TOYVA study, we're pleased to have excellent study leadership in place with Doctor. Mega Tolleson, a pediatric dermatologist from the Mayo Clinic, who is serving as our principal investigator. Jeff Martini and I spoke earlier this week with Doctor. Tolleson and she reiterated the debilitating nature of cutaneous venous malformations, including the bleeding, disfigurement and proliferative nature of the disease that can significantly impact patient quality of life.

Speaker 2

Our ongoing phase two study is a proof of concept study with no statistical hierarchy of endpoints. The study is designed to enroll approximately 15 patients. All sites are now active and recruiting patients, including our most recently activated site, Johns Hopkins University, a leading vascular anomaly center who I spoke with earlier this week. Assuming, completion of enrollment later this quarter, we remain on track to deliver top line data in the 2025. From a regulatory standpoint, this program benefits from the previously granted FDA Fast Track designation, reflecting both the seriousness of the disease and the urgent need for effective therapies.

Speaker 2

For all of our rare disease programs in parallel to our clinical development efforts, we also conduct rigorous prospective epidemiologic studies to understand the number of patients afflicted with these rare diseases we hope to treat. In collaboration with key opinion leaders in venous malformations, we completed a nationally representative blinded real world observational study estimating The US annual prevalence of cutaneous VMs. With findings submitted to a peer reviewed journal, we continue to estimate that greater than seventy five thousand patients in The US have venous malformations, either cutaneous only or mixed cutaneous and internal disease. With that, I will now hand it over to our Chief Scientific Officer, Doctor. Jeff Martini.

Speaker 2

Jeff? Thank you, Wes.

Speaker 3

Clinicians are increasingly moving towards targeted medical therapy for venous malformations, reflecting a broader shift toward precision medicine in vascular anomalies and away from invasive, destructive approaches such as surgery and sclerotherapy. There are now more than 20 published papers supporting the use of rapamycin in venous malformations, with compelling evidence that mTOR inhibition can be effective in treating internal disease. There remains, however, a significant unmet need in addressing cutaneous venous malformations. The evolving treatment paradigm for venous malformations is increasingly moving toward targeted medical therapies. On the left, the schematic shows that venous malformations can be internal or in the skin.

Speaker 3

Internal lesions have been shown to respond to systemic mTOR inhibition where the drug can access the molecular target. On the other hand, cutaneous venous malformations within the dermis and epidermis remain largely unaddressed by oral therapy due to poor biodistribution of rapamycin to the stent. In our TOYBA study, we are selecting patients with significant cutaneous disease, which is the portion that will be evaluated for both safety and efficacy. On the right we show representative clinical images of cutaneous venous malformations, a proliferative disease with a significant negative impact on quality of life. Cutaneous VMs are characterized by bleeding, thrombosis, ulceration, visible disfiguration, and proliferations.

Speaker 3

These manifestations contribute substantially to patient morbidity, which is often lifelong in nature. Next I'd like to spend a few minutes talking about the future of R and D at Palvella. I speak with key opinion leaders on a weekly, often daily basis about potential new applications of duteronirapamycin. And the excitement in the field is clear. Over the years there have been numerous publications demonstrating the potential of rapamycin to treat serious skin diseases.

Speaker 3

And the science is converging on the idea that there are many clinical applications beyond microcystic lymphatic malformations and cutaneous venous malformations. There have been more than 25 potential mTOR driven skin diseases identified, including other vascular malformations, genodermatoses, and certain nonvascular neoplasms, the far majority of which currently do not have an FDA approved therapy. I'm genuinely encouraged about the future and the potential we have to positively impact patients' lives by expanding the applications of ketorin rapamycin. For those who are interested in the science, I'd encourage you to read the published papers in this space. It's a fascinating and rapidly advancing area of rare disease and dermatologic medicine.

Speaker 3

Looking ahead to the 2025, we expect to announce two meaningful pipeline catalysts. The first is the next mTOR driven indication for ketoramirapamycin, a serious rare skin disease with no FDA approved therapy. This reflects our strategy of ketoramirapamycin's potential as a pipeline and a product targeting diseases that meet the palvella criteria of being serious, rare, and lacking FDA approved options. The second is a new ketoram program outside the rabamycin mTOR inhibition pathway. Working with leading experts in the rare skin diseases, we've identified a target disease and a molecule that fit our rigorous selection process, strong biology, compelling commercial potential, and the potential to advance to a Phase II proof of concept in under two point five years with less than 10,000,000 in R and D investment.

Speaker 3

Both programs are expected to be announced later this year and have potential eligibility for Fast Track and orphan designations, as well as new intellectual property. Together, they underscore the scalability of the Qtorium platform and add meaningful value creating R and D milestones. I'll now turn the call over to Matt Korenberg, our Chief Financial Officer, to walk through our second quarter financial results.

Speaker 4

Thanks, Jeff. Turning to the numbers. Pelletella finished the quarter with $70,400,000 in cash and equivalents as of 06/30/2025, providing us an approximately two year runway that carries us into the 2027. Total operating expense for the quarter, including R and D and G and A, was $9,300,000 which is fully aligned with our plan to drive the Selva and Toivo studies, expand the Qtorium platform and build commercial readiness. We expect to exit 2025 with approximately $55,000,000 in cash, maintaining the balance sheet strength needed to reach multiple data and regulatory milestones.

Speaker 4

Finally, in June 2025, Palvella was added to both the Russell two thousand and Russell three thousand indexes, broadening our institutional shareholder base and increasing visibility as we advance toward late stage readouts. Now I'll turn the call back to Wes for his closing remarks and to open the line for questions.

Speaker 2

Thank you, Matt. PAUVELLA enters the second half of twenty twenty five with the CELVA Phase III study fully enrolled. The TOYVA Phase II study advancing, a strengthened leadership team and a solid cash position funding us into the 2027. We're executing against a clear strategic plan to deliver first in disease therapies and create meaningful value for the patients we serve and for shareholders. Let me reiterate the key takeaways and priorities we're executing next.

Speaker 2

In second half twenty twenty five, we plan to announce the third mTOR driven clinical indication for Qtoron Rapamycin, our lead product candidate. In second half twenty twenty five, we also plan to announce the second product candidate from our Qtoron platform. In Q4 twenty twenty five, Toiva Phase II top line results in cutaneous venous malformations are anticipated. And in Q1 twenty twenty six, our CELVA Phase three top line results in microcystic lymphatic malformations are anticipated. In closing, our team remains highly committed and aligned when executing on our vision to be the leader in addressing rare serious skin diseases, our strategy of delivering novel therapies for diseases which currently have no FDA approved treatments, and our mission, which is to relentlessly serve these patient populations afflicted with serious rare diseases.

Speaker 2

Operator, we're ready to open the line for questions. Thank you.

Operator

Certainly. As a reminder, to ask a question, please press 11 on your touchtone telephone and wait for your name to be announced. Our first question will be coming from Ritu Baral of TD Cowen. Your line is open.

Speaker 5

Good morning, guys. Thanks for taking the question. Wes, I wanted to dig in a little bit on the implications of the 25% over enrollment in the Phase III SELVA study. Can you tell us what that does to your powering assumptions and also also I guess the heterogeneity of the patient pool that you have ended up with and how that might impact any sort of variance on the endpoints that you see if they if this has any impact on how you view the market. Oftentimes, over enrollment can, you know, be a tell on on on patient numbers, etcetera.

Speaker 5

Then finally, what you plan to release with top line in early imaging? Thanks.

Speaker 2

Hey, Ritu, good morning. Thanks so much for your questions. We were excited to be able to over enroll this study. We had a lot of interest from our clinical sites. As you know, with these rare disease clinical studies, your clinical operations team is working hand in hand with investigators, encouraging them to recruit patients.

Speaker 2

And so it was really at the desire of the clinical sites and our physician collaborators to accommodate more patients coming into the study. We view this as a positive, it will allow us to have a larger data set to ultimately submit to the FDA as part of our NDA process. And then I'll pass it over to Jeff to address your questions on what the over enrollment does for powering, as well as what we've done from a protocol and patient selection perspective to attempt to smooth out any sort of heterogeneity that you mentioned.

Speaker 3

Jeff? Thank you, Wes. Thank you for the question, Ritu. So from the powering assumptions, going into the study with 40 patients, based on our assumptions and design of the study, we were 99% powered. So increasing the number of subjects just increases the power beyond 99%.

Speaker 3

To address your question on heterogeneity, there's really no impact to the overall program because all the patients, regardless if it's the first patient in or the fifty first patient, are evaluated and screened through the inclusionexclusion criteria by both the clinicians and then an independent medical assessment. Great.

Speaker 2

And Ritu, I'll pick up your last question there, which is on any sort of market implications. Our guidance on the market opportunity is we estimate there's more than thirty thousand diagnosed patients in The US with microcystic lymphatic malformations. We've done some preliminary market research with Ashley on board. We'll continue that between now and leading into approval. In our market research testing on a large sample size, ninety eight percent of physicians surveyed indicated, that ketorin rapamycin would be first line therapy for microcystic lymphatic malformations.

Speaker 2

As part of that market research study, we of course presented our product profile, which included our phase two data, as well as some of the pictures, from the phase two results.

Speaker 5

Oh, and the last thing, guys, just what you plan to release with the top line?

Speaker 2

Yeah, so top line will be in 2026. The plan there is clearly to report on the primary endpoint as well as report on potential other endpoints. We will also report top line on safety and tolerability RITU.

Speaker 5

Can you specify what secondaries would be released at the same time at this point?

Speaker 2

Yeah, that's something that we'll be providing guidance on RITU at a later date.

Speaker 5

Understood. Thanks for taking all the questions.

Speaker 2

Yes, thank you.

Speaker 6

Thank you. And our next question will be coming from Whitney Ijem of Canaccord Genuity. Your line is open, Whitney.

Operator

Hey, good morning, guys. Thanks for taking the questions. First one is just on dosing for CVM in particular as it relates to the size of the lesions. I guess first, can you talk about the relative size of the lesions in CVM versus MLM? Then how does that translate into a dosing difference as we think about read through of MLM data to CDM?

Speaker 2

Yeah, hey Whitney, thank you for the questions. Thanks for being on today's call. We'll pass it over to Jeff to talk about dosing as well as size of lesions. Jeff?

Speaker 3

Yeah, thanks, Wes, and thanks for the question, Whitney. So the dosing, we'll start first with the pump that we use. One actuation of the pump is a two fingertip unit of Qtorin rapamycin three point nine percent anhydrous gel that allows coverage of about 200 centimeters squared. For both of our clinical trials we allow up to 400 centimeters squared for each of the indications.

Operator

Got it, okay, that's helpful. And then ahead of the announcement of the new programs later this year, I guess can you talk a little bit more about the criteria that you apply as it relates to ketorinreprimycin? I know you said of MTOR driven and no other approved therapies. Are there any other kind of key criteria or boxes to check? And in particular, if epidemiology or U.

Operator

Patient numbers, if there's any kind of set cutoff on that.

Speaker 2

Yeah, thanks, Whitney. You summarized it well. We really strongly prefer these diseases where there's no FDA approved therapies. We believe that translates to a high unmet need for these patients. Those are the type of patient populations that we wanna serve.

Speaker 2

We like diseases that are considered serious, which means they have a significant impact on daily quality of life. If we're able to prove that out with the FDA, of course, we're eligible for designations like Fast Track and Breakthrough, which allow us to advance these programs to patients in a more expeditious manner. From an epi perspective, historically, we've given a lot of weight to that in our disease selection. We typically prefer epi that is, orphan, not ultra orphan. So we're usually not in these disease states where there might only be 1,000 or 2,000 patients, but rather disease states that are more analogous to the type of prevalence you see in diseases like microcystic lymphatic malformations.

Operator

Perfect, that's helpful. Thanks so much. And our next question will be coming from Annabel Samimy of Stifel. Your line is open.

Speaker 7

Hi there, thanks for taking my questions. Had a few. Just you mentioned your focus right now for the CELVA trial is just ensuring compliance. How are you ensuring compliance for those patients? And just wanna understand if there's something that's being the twenty four week trial, is that gonna be more difficult for them or is the efficacy large enough for it to be self insuring, let's just say?

Speaker 2

Yeah, hey Annabel, great questions. You know, to answer the second question first, I'll bring you and everyone else back to the formulation development we did all the way back and call it the 2017, 2018 time period. We really worked deliberately to make this formulation patient friendly. Everything from the excipients that were selected with rapamycin, and the tolerability profile of those excipients to the packaging of Qtorin rapamycin in our measured dose pump, which we also think is a preferred packaging relative to tubes. So with QD dosing administered once daily at nighttime, we don't anticipate this being more difficult for patients, particularly relative to some other topical therapies that are a bit more cumbersome, if you will, for the patients to administer.

Speaker 2

From a compliance point of view, one of the strengths of Palvella, for many years has been our clinical operations team. And I think that's borne out and just what a fabulous job they've done, on the SELVA trial. There is continued education of the clinical sites. We're in touch with those sites daily, reinforcing that those investigators really ensure patient compliance. We're often meeting every week with our clinical operations team every Monday, to discuss the trial.

Speaker 2

And so I think, supporting the sites with compliance and retention messaging is what has historically allowed us to see very good patient compliance in our trials.

Speaker 7

Okay, got it. And I know a lot of people think about MLM being an indicator for CVM, but how do you think about it the other way around? You will come into the CVM data first. So is that going to be a reverse strong indicator just further support that the Qtorium platform is really delivering drug deep into the dermis where it is? Like, I guess, we see CVM proof of concept as a good indicator for how MLM or consistency of data in MLM?

Speaker 7

So just thinking about it the other way.

Speaker 2

Yeah, great, thanks for that question. We view these as very different diseases. Certainly there's that shared causative biology with the mTOR pathway involved in both. But fundamentally, you have different architecture of the malformed lymphatic vessels versus the malformed veins. I think that that's one key difference.

Speaker 2

And as Jeff did a nice job highlighting, in his presentation, there's different clinical signs that are measured, between the two indications. So, it's important to sort of draw out the differences in the two. I think one other, consistency, if you will, between the two is there has been significant, use of off label systemic rapamycin to treat internal lymphatic malformation and internal venous malformations. But fundamentally, what we've learned from our scientific collaborators and clinical collaborators is that there are, significant differences between these two diseases.

Speaker 7

Okay, got it. And one last question, if you can indulge me. I know that you've done various population analyses for MLM. You're still talking about greater than 30,000, but I guess recently you've been talking maybe the range is higher, maybe the low end of the range is possibly $44,000 Can you talk about that and what are some of the other additional analyses that you're doing to truly identify what the size of this population is?

Speaker 2

Yeah, absolutely. So we've done actually three epi studies. My personal view is that when you're an innovator in the rare disease area, you can't be reliant upon the literature or one study from the literature to guide your epi. When I was at Insmed, we did real world observation studies, which we've done here at Pallvala. So across our three epi studies that we've done, the low end range is the range we quote that reflects conservatism by our management team.

Speaker 2

We'll continue to get at that number to answer your question, Annabel. Having Ashley on board is going to allow us continue to refine our market sizing leading in The US launch of Qtorin Rapamycin. Ashley has a very strong background in analytics. She trained at Bain Consulting, spent many years at Genentech. So you're hitting on one of her key objectives, which is continue to refine the sizing of the market from an Epi perspective, as well as other key market dynamics.

Speaker 7

Great, thank you.

Operator

And our next question will be coming from Danielle Brill of Truist. Your line is open.

Speaker 8

Good morning. Thanks so much for the questions and congrats on all the progress. So I have a couple on TOYVA. Wes, you mentioned the trial is still recruiting. Can you just speak to the pace of enrollment there versus your internal expectations?

Speaker 8

And I guess specifically, what is the rate limiting step to getting these patients enrolled? And then can you help contextualize for us how the CVM data might compare to the MLM data in Phase II, given the genetic heterogeneity here? What magnitude of efficacy should we be looking for? Thanks so much.

Speaker 2

Yeah, great. So on your first question on pace of enrollment, our goal has been to read this study out top line in Q4. We now have all clinical sites active and recruiting. That's, obviously a big lift by our clinical operations team. I think we've targeted the right, leaders here from a clinical perspective to work with us in recruiting these studies.

Speaker 2

You know, to address your second question on what is rate limiting, we're going to great lengths Danielle to select the right patients for the CVM study. As Jeff outlined earlier in his presentation, there's really sort of three types to simplify it a bit of venous malformations patients, patients that have, disease exclusively on the skin, patients that have both disease on the skin and internally, and also patients that have exclusively internal disease. We are really, focused with our investigators, as well as our third party, eligibility consult team on selecting those patients that have disease manifesting in the skin, in the epidermis, the dermis, and oftentimes with the patients coming into the trial, the disease is on the stratum corneum and it's presenting superficially. So sometimes there's differences with where a company wants to go with their drug commercially, which can eventually maybe be a much broader population. But for the purposes of the phase two study, given its sample size of around 15 patients, we're really focused on getting the right patients, into the study.

Speaker 2

To address your last question, in terms of how we think about success, in the cutaneous venous malformations phase two study, sort of go back to, my experience at Insmed. Insmed has an approved drug, two approved drugs now, but their first approved drug, ARIKAYCE, which showed about a twenty nine percent efficacy rate in phase three, that drug has been very successful commercially. And so I think, in these rare diseases where there's nothing, if you can show an effect in about thirty percent of patients, typically you have a drug, for the purposes of overlaying it on paldella, that you would be at the FDA, you'd be advocating for breakthrough designation, and you'd be advocating to move it forward to a phase three study, particularly if there's a clean safety profile compared to approaches like surgery and sclerotherapy, which are the destructive approaches used today by physician treaters.

Speaker 8

Perfect. Makes sense. Thanks again for the question.

Operator

And our next question will be coming from Ryan Deschner of Raymond James. Ryan, your line is

Speaker 6

Thanks for the question and good morning. Can you remind us what age range you're targeting for an MLM label at this point? And can you tell us anything about what age range patients already enrolled in the ZELVA trial are skewing toward? And then I have a follow-up. Thanks.

Speaker 2

Great. Ryan, thanks for being on. The age range for the phase three CELVA study, is three and above. Initially, we started with six and above. We requested to the FDA that, we'd be allowed to dose patients who are younger than six in the phase three study.

Speaker 2

That was something that our physician collaborators had suggested to us, the ability to, treat these lesions, early, they viewed as potentially beneficial, to these patients. On your second question, Ryan, we haven't given any, data at this point, around kind of the range of ages or the mean or median ages. But we expect to do so later in the development of the program. From labeling perspective, the way we think about this is that the primary endpoints in the SELVA study, the primary analysis of the primary endpoint will be patients six and above, we're not going to include any subjects that were three to five in that analysis. Reason is that this is the first time we've tested our drug in that three to five population.

Speaker 2

So as we think about a label, of base case is label would be patient six and above, if we're able to see data in that three to five year old patient population, suggesting safety and efficacy, you can expect that our management team will be at the FDA advocating for those three to five year olds, and advocating that we have a label that reflects, three and above. But it's important that we develop the data, for that three to five year old cohort, which we're doing now.

Speaker 6

Got it. And then also regarding the phase three CELVA study in MLM, would the over enrollment here more a reflection of the high demand for good treatment for MLMs, or is it looking more like patient identification might be a little easier than expected based on actual prevalence?

Speaker 2

Yeah, great question. I think the answer is both high demand and patient identification. I think as you're aware, Ryan, these patients are typically diagnosed by the age of two or three. In particular, these fluid filled vesicles or lymphatic cysts typically enable physicians to make a clear diagnosis of this disease. So I think it's both demand from the sites as well as improvements in patient identification.

Speaker 2

I'll just add a third here, which is having worked now at multiple rare disease companies, it's very challenging to enroll these rare disease studies. And I think over time, we've developed a core competency with Kathy, who I mentioned earlier, and Emily Cook, and being able to execute these studies. And one of the ways in which we do that is we're not ultra reliant upon large CROs. We built an internal team here, and we are the ones who are really maintaining those relationships at the site. So both the points you raised, but also the great execution by our clinical operations team.

Speaker 6

Got it. Thanks, Wes.

Speaker 2

Thanks, Ryan.

Operator

And our next question will come from Katherine Novak of Jones Trading. Your line is open.

Speaker 9

Hi, morning. Thanks for taking my question. A couple on Selva. So for the last after last patient, last visit, is there any follow-up or can you go straight into data cleaning analysis? And then how approximately long would that cleaning and analysis take given that this is a single arm study?

Speaker 2

Yeah, hey Catherine, good morning. In terms of the timelines from last patient, last visit, you're absolutely right, you can go straight into data cleaning and analysis. In our studies historically, we've been able to do the data and cleaning analysis in a matter of weeks. And so in this case, we want to make sure we're prioritizing quality and in particular QC. We've looked at those timelines on a very detailed basis with our clin ops team, and this allows us to be in a position to read this study out in 2026.

Speaker 9

Okay, great. And then for the CVM Phase II, know you've said that there's no statistical hierarchy of endpoints, but, you know, which endpoint are you thinking about when you think about taking forward into the Phase III? I know that FDA has in the past expressed a preference for static measures over change scales, and I'm wondering how you're thinking about that when it comes to analyzing phase two.

Speaker 2

Yeah, great. So, on the second, comment you made, it's very typical, to do both dynamic change scales, which are often preferred by physician collaborators who are true experts in these rare disease, and static scales. And so in both of our studies, we have dynamic change scales and we have static severity scales. For the purposes of what our phase three primary endpoint would be, we're gonna analyze all the data post phase two, we're gonna meet with our physician collaborators looking at that data, and then ultimately we'll prioritize a primary and we'll prioritize a hierarchy of secondary endpoints. Just to give a little bit of background on why you wouldn't select a primary endpoint in phase two is we are really pioneering new ground in these rare diseases.

Speaker 2

There's been no other companies that are there constructing novel endpoints, really understanding disease burden and then testing a novel therapeutic intervention. So we think it's best these proof of concept studies to look at a host of different endpoints, understand which of those endpoints may be sensitive to a treatment effect, and then very carefully review all of that data with physician experts. And then the next step, of course, is to collaboratively be with the FDA. We have Fast Track designation, so we think they're motivated to see this program move forward, phase two success. And then it's through that iterative process that we would select a singular primary endpoint for phase three, but also a host of secondary endpoints that'll contribute to the overall efficacy assessment.

Speaker 9

Okay, got it. Thanks for the clarification and the color.

Speaker 2

Sure. Thank you.

Operator

And our next our next question will come from Dev Prasad of Lucid Capital Markets. Your line is open.

Speaker 10

Hi, everyone. Thank you for taking our question. I have a question on new quetioren program. For the two new program that you plan to announce in second half, what is the anticipated timeline for moving each into the clinic? Should we expect both to reach within the next twelve to eighteen months, or they'll be sequential?

Speaker 2

Yeah. Hey, Deb, great. I'll start it off here, and then I'll ask Jeff to comment as well. What we try to do once we announce a program is we try to charge towards the clinic for these rare disease patient populations who currently have nothing. So we'll give more definition around timelines for dosing first patient.

Speaker 2

After these programs have announced, there's some preliminary FDA interactions that we'd like to have as well. But certainly, at, call it the second half of next year, we'd like to be in a position to initiate studies and start to develop that clinical evidence set on both of these programs. Jeff?

Speaker 3

Yeah, thanks, Deb. Really excited about these two new announcements later this year. For the new Qtorin rapamycin program, that would be one that will require an FDA conversation. But ultimately, that's one that would be closer to the clinic. For the new Qtorin program with the new molecule, we haven't guided on timing there, but we know it'll be less than two years and less than $10,000,000 for phase two data.

Speaker 10

Great. I have another one on manufacturing. Given the small but this market, how are you approaching the commercial manufacturing? Will it be in house versus CMO? And any capacity planning assumption you are making right now?

Speaker 2

Yeah, thanks for that question, Dev. So we have multiple commercial manufacturers that we've scaled up with. Those are US based manufacturers. Importantly, they are third party CDMOs, we're not doing that in house. And importantly, we're sourcing active pharmaceutical ingredient rapamycin from multiple sources there as well.

Speaker 2

From a capacity perspective, importantly, we brought on Jason Burdett as our head of CMC and technical operations. Jason has scaled up and commercialized on many, many programs, particularly given his role as VP of technical operations at Shire and other companies. So, we don't at this point anticipate any capacity issues based on Jason's projections and the fact that we have a plan for multiple commercial manufacturing

Speaker 3

partners.

Speaker 10

Great, thank you for taking my questions.

Operator

And our next question will be coming from Sam Slutsky of LifeSci Capital. Your line is open.

Speaker 11

Hey, good morning, everyone. Thanks for taking the questions. I guess just as a quick refresher, could you remind us on the potential commercial strategy in MLMs as it relates to initial target centers? What proportion of MLM patients are trying to treat at those centers, think about build out, sales reps needed, etcetera?

Speaker 2

Yes. Hey, Sam. Good morning and thanks for being on the call. So we're excited at a top level to commercialize on a standalone basis in The United States. That was part of the motivation to bring on Ashley, which is to build a team.

Speaker 2

The claims analysis elucidated that about a third of our target market in microcystic lymphatic malformations are in 150 vascular anomaly centers. So that represents a meaningful concentration in the market in a very few set of centers in The United States. There's approximately another 20% of the market from the claims data that's in approximately 200 additional academic centers. So putting those two together, high concentration of patients in less than, call it, 500 centers in The US. We'll build out sales, marketing, field marketing and medical presence to make sure that we're really building a commercial engine that is high performing and really serving the needs of physicians and patients.

Speaker 2

Ashley's got pen to paper, Sam, so we're doing some of that work now and we'll give more guidance on sizing of the commercial infrastructure at some point here soon.

Speaker 11

Awesome, thank you.

Operator

And this concludes today's conference call. Thank you for participating. You may now disconnect.

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