Good morning, everyone. I'm Research Associate at HC Wingright. It's a great pleasure to welcome you all to the HC Wingright 27th Annual Global Investment Conference. Thank you for taking the time to join us today. We hope you'll find the sessions insightful and engaging. Now, I'm delighted to introduce our next speaker, Mr. Wes Kaupinen, CEO of Palvella Therapeutics, a clinical-stage biopharmaceutical company focused on developing and commercializing novel therapies to treat patients suffering from serious rare genetic skin diseases.
Thanks for that introduction. Good morning, everyone. My name is Wes Kaupinen. I'm the Founder and CEO of Palvella Therapeutics. Thank you for the invitation to present at the HC Wingright Conference. I had the opportunity to work with Andrew Fine during the early days of INSMED, where he brought a lot of attention to their rare disease pipeline build-out, and we're really fortunate to have Andrew and the HC Wingright team involved here at Palvella. I'll be making some forward-looking statements today. I encourage everyone to refer to our SEC documents for the risks associated with those statements. I'll begin with the name Palvella, which in Finnish means "to serve." The mission of our company is to serve patients that have serious rare genetic skin diseases.
The strategy at Palvella can be summed up in one word, which is "first." We want to be first in disease for patients who previously had nothing. We think that that strategy allows us to deliver transformational efficacy potentially for these patient populations, and also we think it's a sound strategy for our shareholder base as well. Our vision, as you can see listed on the slide here, is to build the leader in building an enduring rare disease biopharma company. Over the last several years, we believe we've assembled the team, a late-stage pipeline and platform, and the capital base to execute on this vision and excitingly do this in a public company context. Researchers have estimated that there's approximately 600 rare skin diseases. Unfortunately, for those patients, over 98% of these do not have a single approved therapy. We want to change that treatment paradigm at Palvella.
This is a high unmet need, low competitive intensity corridor of the orphan universe. The way we're going to do that is by delivering first and only approved therapies that previously did not have an approved treatment. There are many exciting new updates at Palvella. Just last week, we announced the addition of David Osborne as our Chief Innovation Officer. David has a long successful history in the area of dermatology drug development. He was most recently the Co-Founder and Chief Technical Officer at Arcutis Biotherapeutics. We're really excited to work with someone of David's stature in the dermatology industry. He'll be focused for Palvella on our next QTORIN™ product candidate, as well as leading future QTORIN™ product candidates. The commercial opportunity also continues to take shape for QTORIN™ rapamycin 3.9% anhydrous gel, our lead product candidate.
Researchers have identified over 25 mTOR-driven skin diseases, so we are now viewing QTORIN™ rapamycin 3.9% anhydrous gel as having a clear and compelling pipeline and a product potential. Our initial indication is microcystic lymphatic malformations. There, we estimate there's approximately 30,000 or more diagnosed U.S. patients. Over time, we want to expand into additional indications and grow the addressable pool of patients by more than tenfold. Our U.S. launch planning is in full swing with QTORIN™ rapamycin 3.9% anhydrous gel. We've hired Ashley Klein as our Chief Commercial Officer. She's best known for having launched a topical drug called Oxervate for a disease called neurotrophic keratitis. That disease, neurotrophic keratitis, previously had no FDA-approved therapy, so she is a rare disease commercial veteran having launched the disease where she was first.
There's a number of new insights which we'll go through in today's slide deck from Ashley's initial work here at Palvella Therapeutics. Our team has been building for many years for the four milestones that we're going to announce over the next seven months. Moving left to right, later this month, we will announce a third indication for QTORIN™ rapamycin 3.9% anhydrous gel. We anticipate that being in a serious rare disease where there's no FDA-approved therapies. We will also, in the second panel, announce our next QTORIN™ program that will be a new API with QTORIN™. We will link that to a serious rare disease where nothing is FDA approved, where we believe there's clear biology in a commercially attractive market.
Our goal there, consistent with our capital-efficient approach, is to generate phase two data on less than $10 million and do so in less than two and a half years. In our first clinical indication to read out later this year, December of 2025, we will read out top-line data in cutaneous venous malformations, which you can see pictured here, serious rare chronically debilitating disease, nothing approved. We're very close to announcing completion of enrollment of a 15-patient proof of concept study. I'm excited to announce that data in December of this year. On the far right of the slide, you can see our phase three ongoing study of QTORIN™ rapamycin 3.9% anhydrous gel in microcystic lymphatic malformations, serious rare chronically debilitating disease, nothing approved for these patients. Based on our successful phase two trial that had statistically significant and clinically significant results, we were granted breakthrough therapy designation.
We launched a phase three study of 40 patients, and we were fortunate to exceed enrollment, announcing full enrollment of 51 patients in June of this year. If approved in either cutaneous venous malformations or in microcystic lymphatic malformations, we anticipate, based on market research, being first line in standard of care for those patients. I'll now move to a discussion of QTORIN™. QTORIN™ refers to our platform for reproducibly generating novel topical product candidates, doing so in a capital-efficient manner. QTORIN™ enables high active payloads into a vehicle gel. We believe that's important for onset of therapeutic activity as well as achieving higher peak therapeutic impact. We've shown with several products with QTORIN™ that we're able to chaperone drugs into the dermis, which is the lower layer of the skin, oftentimes where these rare genetic skin diseases manifest.
From a safety and tolerability perspective, the goal is to deliver the drug into the deep layers of the skin and then keep the drug there while minimizing systemic absorption, a key feature of our QTORIN™ platform. In the bottom right, with each QTORIN™ product candidate, we're able to file new intellectual property. We'll go through the progress we've made with QTORIN™ rapamycin there, but that will allow us ultimately to protect these innovations for many years. While rapamycin has broad potential in dermatology, its use today is limited because of what's listed on the slide here. Oral rapamycin is known to be a strong immunosuppressant and inflicts a number of unwanted systemic toxicities on patients. Probably most importantly, it has poor biodistribution into the skin, which really limits its efficacy.
On the far right side of the slide are the many limitations that have precluded a commercially viable topical formulation from being developed. Our QTORIN™ technology, we believe, overcomes these limitations. Here is our breakthrough innovation, QTORIN™ rapamycin 3.9% anhydrous gel. We refer to it as a breakthrough because this has been granted FDA breakthrough therapy designation for microcystic lymphatic malformations. On the left side of the slide are a number of the key innovations with QTORIN™ rapamycin. We're able to get a high concentration into the vehicle gel. We deliver quantities that we've shown preclinically are greater than the IC90 for mTOR inhibition, and we've limited systemic absorption across all of our studies with QTORIN™ rapamycin. We're really excited to now have this lead product candidate in a fully enrolled phase three study. QTORIN™ rapamycin, we believe to be a pipeline in a product.
Our objective on the left of the slide, and the team is very focused on this, is driving towards successful phase three result and ultimately FDA approval in microcystic lymphatic malformations. There, we see an addressable pool of patients of about 30,000 in the United States. Over time, we want to grow the pool of addressable patients by a factor of more than 10x. We would then, assuming we show safety and efficacy in cutaneous venous malformations, our goal would be to add that to the label, add a third indication, which we'll announce later this month, but then keep growing the label and ultimately be able to help more patients that have these mTOR-driven skin diseases. Moving to our lead indication, microcystic lymphatic malformations. Microcystic lymphatic malformations are a serious rare chronically debilitating genetic disease.
At the top right of the slide, you can see we estimate that there's more than 30,000 patients in the United States diagnosed with this disease. The disease is well characterized from a genetics and biology point of view. It's driven by monogenic PI3K mutations. This causes hyperactivated mTOR signaling. The result of that is pictured here on the far right, which is genetically malformed vessels protruding into and through the skin. The major clinical burden to these patients is called lymphorrhea. That's the leaking or the discharge of internal lymphatic fluid onto the skin or into the soft tissue. The result of this is serious infections such as cellulitis. Unfortunately, nothing approved for these patients today. The historical mainstay of therapy has been surgery, sclerotherapy, laser therapy, and more recently, off-label use of oral and topical mTOR inhibitors, which have a number of limitations.
Our solution for these patients, we want to be on target and in tissue. With QTORIN™ rapamycin, we're leveraging the well-known therapeutic properties of rapamycin to inhibit the causal pathway in microcystic lymphatic malformations. That's the mTOR pathway. We want to do it on the right side of the slide where the disease manifests, which is in the dermis, the lower layer of the skin. We were really pleased to run a phase two study with the key opinion leaders you see listed here. This was a single-arm, baseline-controlled study of 12 patients over the course of 12 weeks. I'll share today some of the clinically and statistically significant results we were able to generate on pre-specified global and individual endpoints.
Beginning on the left side of the slide, which is the clinician global impression of change, this is a single-item instrument that physicians rate the lesion severity here at week 12 compared to the patient's condition at baseline. On the clinician global impression of change by week 12, we showed an average effect size on the negative 3 to plus 3 scale of 2.42. 100% of patients in this study were either a plus 2 or plus 3, much improved or very much improved. We were subsequently granted FDA breakthrough therapy designation on this data, and we wanted to share a couple of pictures today. Looking on the left side of the slide here, this was one of our patients at baseline that had significant volume to their microcystic lymphatic malformation. You can see the presence of bleeding of vesicles on the right side of the slide.
Fortunately, in this phase two study, we saw a reduction with this patient in the volume of the lesion, the presence of the bleeding hyperkeratosis, and a reduction in the number of cysts or vesicles that are present. Similar result here for this patient, where you can see on the right side of the slide, after treatment with QTORIN™ rapamycin, very little in the way of active disease, some hyperpigmentation, but this patient was very much improved after 12 weeks of therapy. We also evaluated safety in a phase two study. In the middle of the slide, you can see that systemic levels of absorption of rapamycin with QTORIN™ rapamycin were below 1 ng/mL. In kidney transplant where the drug was dosed orally, rapamycin, the patients typically dosed to 10 to 24 ng/mL.
Our design goal was to be below 5 ng/mL, which is typically the lower boundary that triggers immunosuppressive effects that were seen in the phase two study. There was also a reduction or an absence of the toxicities typically associated with systemic mTOR inhibitors, so while preliminary and while phase two and encouraging safety profile. We were pleased to recruit Joyce Teng to be our principal investigator for our phase three pivotal study in microcystic lymphatic malformations. She's the longtime head of Pediatric Dermatology at Stanford and one of our longtime collaborators. Here, we set out to run a 40-patient study, single-arm, baseline-controlled, 24 weeks with a QD dose. As mentioned earlier, this study was over-enrolled with 51 patients being recruited into the study, and we are on track to have data in Q1 of 2026.
Here, we've highlighted the similarities between the phase three design and the phase two design. Both the phase three and the phase two are baseline-controlled studies that have enriched for a moderate to severe patient population with QD dosing. We have a similar construct in that we have a clinician endpoint as our primary endpoint in phase three. That's a single-item question that is administered by the clinician at week 24. It behaves very similar to the CGIC, and we've made some key enhancements to that endpoint, which we've listed on the right side of the slide. Assuming success in the phase three study, we would expect an expedited regulatory pathway just based on breakthrough therapy, fast track, and orphan drug designations that have been granted. We would submit through a 505(b)(2) pathway with potential for a six-month priority review and also rolling NDA submission.
On the top right of the slide, we're very grateful to the FDA for the funding support that they have provided for this phase three study. We applied for an FDA orphan drug grant. This is a program administered by the agency. We were one of 51 applicants last year. There were seven awardees. Palvella phase three baseline-controlled study was the only phase three program that was announced as an awardee, so we're very grateful to the FDA for the support. Much to update now that Ashley's been in the seat since May, here is an executive summary of the key outputs from her first few months on the job. Number one, we see a large orphan market that's currently uncontested with more than 30,000 patients in the U.S.
We believe, number two, we're positioned to be the first and only FDA-approved therapy with a strong intent to prescribe based on market research, including in the pediatric patient population. We'll touch also today on the expected pricing corridor as well as the concentration of the prescriber base. This highlights here our market research. We surveyed 52 physicians who are high-volume treaters of microcystic lymphatic malformations. 98% of those indicated that a profile of 3.9% rapamycin gel would be first line, and they indicated in this survey a patient load of approximately 75% of their patients being candidates for that drug. We also see at the top right of the slide encouraging preliminary market research on the receptivity of this drug in the pediatric patient population. Our claims data, and we've done multiple rounds of claims analysis, suggests that 400 centers in the U.S.
currently manage about 50% of the diagnosed patients. We believe this to be a relatively high concentrated prescriber base. Our plan is to build an orphan sales force of 20 to 40 reps. The primary focus will be on the far left, that tier one that we've listed, but we will make sure that we have active personal promotion through orphan sales reps as well as non-personal promotion such as digital marketing and other approaches that Ashley used at Oxervate for all tiers listed here. Additional new research that we'd like to share today is our research with payers. Here, we've tested our product profile. We anticipate a low budget impact to payers with the launch of QTORIN™ rapamycin 3.9% anhydrous gel.
There was a favorable receptivity to our efficacy and safety profile, and we would not anticipate any step edits with QTORIN™ rapamycin 3.9% anhydrous gel through unproven and unapproved other versions of rapamycin. Here is our suggested pricing corridor. There's been a number of topical products that have launched in the orphan space we've also included here. EraCase, a drug that I had the opportunity to work on prior to its launch at INSMED, as well as Oxervate, where Ashley very effectively led their launch. Our plan here is to generate phase three data and then ultimately do another round of payer testing prior to announcing a drug price launch closer to FDA approval. We will have a very strong presence at upcoming medical congresses, vascular malformations conferences such as ISFAR, which will be held in May in Philadelphia next year, dermatology conferences, as well as hematology and oncology conferences.
Our objective here is to build upon the strong KI relationships that we've been able to establish over many years, as well as driving disease state awareness, and we're actively building out our medical affairs team. Moving to cutaneous venous malformations, similar to microcystic LMs, the genetics and biology have been well characterized. This disease is driven by two mutation types, TI2 or PI3K. In both of those mutation types, mTOR is upregulated. Again, you can see the result of that on the right side of the slide with these dysregulated veins protruding through the skin. There's an estimate of more than 75,000 patients with this disease in the United States. As you can see from the slide here, the clinical burden of these patients ranges from bleeding, thrombosis, ulceration, disfigurement, and the proliferative process causes significant impact on quality of life.
The current unmet need here for patients is for a targeted localized therapy for this disease. Over the last several years, there's been a growing evidence base of oral systemic rapamycin for internal venous malformations. On the far right side of the slide, a publication from some of our European collaborators, which notes that rapamycin is establishing itself as the gold standard for these internal venous malformations, albeit with the need for topical agents which can address cutaneous disease, exactly what Palvella Therapeutics has been working on the last few years. As I mentioned, we're close to announcing full enrollment of our phase two study, which will be about 15 patients dosed over a 12-week period. We expect to have that data in December of this year, and we're thrilled to have Megatolleson from the Mayo Clinic as well as several other leading sites involved with this study.
Our market research suggests strong potential for QTORIN™ rapamycin 3.9% anhydrous gel as a first-line therapy, similar to our market research with microcystic lymphatic malformations. Here on a preliminary basis, 86% of physicians surveyed noted that they would consider a product profile of a topical 3.9% rapamycin gel as first-line therapy. Excited to have fast track designation. If we're successful in phase two, we'll be at the FDA advocating for a phase three study and also with the potential to move forward with breakthrough therapy designation submission. Finally, our two programs that we'll announce later this year, left side of the slide, our third indication for QTORIN™ rapamycin. That'll be strategically aligned, serious disease, no FDA approved therapies, commercially attractive. Right side of the slide, our next QTORIN™ program, also in a serious disease where nothing's approved, and our goal there is to move into a phase two study.
Very exciting time for our R&D team who have been hard at work for many years for these imminent announcements that we'll have. Balance sheet, thanks to an oversubscribed PIPE financing which closed in December of last year, we have $7 million in cash due to our capital-efficient operating model that provides us with about two years of cash runway. That financing is led by BVF and Frazier. We're grateful to their support. We have participation as well from our longtime partners, Ligand Pharmaceuticals and Petrichor. We protect all of our innovations through a three-part exclusivity strategy on QTORIN™ rapamycin 3.9% anhydrous gel. We have six issued patents that go through at least 2038. We also have a number of innovations that we've kept as formulation and manufacturing trade secrets, and we also anticipate having regulatory exclusivities on QTORIN™ rapamycin 3.9% anhydrous gel.
To wrap up, what sets Palvella Therapeutics apart? We are building a leader in the area of rare genetic skin diseases, and from a mission perspective, all of us are striving to be first for these patients who currently have nothing. We have both a late-stage rare disease pipeline and a platform that can reproducibly generate these novel topical product candidates. On our first program, QTORIN™ rapamycin 3.9% anhydrous gel, we have the potential to be first and standard of care in both microcystic lymphatic malformations and cutaneous venous malformations. We believe we've designed our phase three for success. Based on the phase two study, we have breakthrough therapy designation, a single-arm, baseline-controlled phase three study, and are thrilled to have the FDA support financially through the FDA orphan drug grant. We're looking forward to one day commercializing this drug, assuming FDA approval.
There, we expect initially in microcystic LMs, a multi-billion dollar total addressable market, and we want to extend the use of QTORIN™ rapamycin 3.9% anhydrous gel into these additional mTOR-driven skin diseases. Thanks to everyone for their time today, especially the HC Wingright team. Thanks to the Palvella Therapeutics team who helped. Very blessed. Incredible opportunity here at Palvella Therapeutics. We're really, really energized to be building what we think will be an enduring company in the rare disease space. Thanks.