ARS Pharmaceuticals, Inc. Q1 FY2025 earnings call

• Product Launch and Market Potential: neffy has blockbuster potential with a U.S. market potential of $3 billion. In Q1 2025, it generated $7.8M in revenue. It addresses a substantial unmet medical need with many patients struggling with needle anxiety and portability concerns.
• Product Milestones: neffy 1-milligram dose was approved by the FDA in early March 2025 for children weighing between 15 and 30 kilograms. The 1-milligram dose represents 23% of all epinephrine units dispensed in 2024 and more than half of all epinephrine prescriptions for children.
• Commercial Strategy: Three pillars - driving healthcare provider adoption (sales team engaged over 10,000 providers, >50% prescribed), securing market access (over 57% of U.S. commercial lives have access, secured coverage across over 30 formulary platforms), and increasing patient awareness (launching a DTC campaign).
• Partnerships: Strategic collaboration with ALK-Abelló to expand the promotional network for neffy to over 20,000 healthcare providers in the U.S., including targeted outreach to ~9,000 pediatricians.
• Regulatory Progress: Regulatory reviews are underway for neffy in multiple countries, with commercial launches expected mid-2025 to the first half of 2026.

In the first quarter of 2025, neffy, the first and only needle-free epinephrine treatment for type 1 allergic reactions, generated $7.8 million in U.S. net product revenue. This accounts for 97.5% of the total revenue of $8 million for the quarter. The revenue reflects the growing demand for an alternative to traditional auto-injectors.

• The company is launching a comprehensive DTC campaign with a planned investment of $40 million to $50 million for the remainder of 2025, expecting benefits to start in Q3 2025.
• Projected 2025 operating expenses are between $210 million and $220 million, excluding stock-based compensation and cost of goods sold, with the ALK co-promotion agreement adding approximately $8 million in operating expense.
• Anticipates an inflection in sales starting in Q3 2025, driven by the DTC campaign, the availability of the 1-milligram dose, and the peak epinephrine prescribing season.

• Dependence on the successful commercialization of neffy, including continued payer access and market adoption.
• Uncertainty regarding regulatory approvals and timelines in international markets.
• Potential impact of competition and market dynamics on neffy's market share.

Q: How much of the 1Q sales figure is attributed to inventory and how you're thinking about inventory over the next few quarters going into peak epinephrine season as well as following it?

A: Our first quarter numbers were very little influenced by inventory. We're seeing fairly steady inventories at this point, and it was prior to the 1-milligram being launched. As we wean zero cost inventory into our inventory over the next 18 months or so, we would expect that inventory COGS would increase slightly.

Q: What would the gross to net discount look like in the first quarter? How meaningful was that change from fourth quarter to first quarter?

A: As expected, the gross to net will slowly come down towards the 50% mark. We're seeing a good uptake of insurance coverage and fewer cash sales, and that will obviously bring down our gross to net when we get better insurance coverage. Q4 was definitely a higher gross to net than Q1.

Q: When you've worked through the inventory on hand, what do you expect cost of goods to settle out at? And for the 50% of commercial lives that have access, can you confirm that there are no prior auth requirements for access to neffy for them?

A: We don't have exact guidance on COGS other than they're in the ballpark of being pretty low. Currently, about 57% of people have coverage with no prior authorization. If you count with prior authorization, we're probably close to 90%, but 57% right now have coverage on neffy without any prior authorization or any other paperwork required.

Q: Could you talk about the strength of the neffy Experience Program and helping to convert possible later adopter physicians into broader prescribers of neffy? And what has the feedback been so far in terms of some details you've heard recently about use of neffy there? Any updates on single versus twice dosing of neffy, for example?

A: The neffy Experience Program has been very successful with more than 2,500 physicians enrolled. We're seeing very good results with surveys, with about 90% getting response with a single dose of neffy and about 10% needing a second dose. The experiences are coming back very positive.

Q: On the payer front and insurance coverage, how are you tracking against your goal of, I think, 80% commercial lives by 3Q? And could you remind us, are there any payers still in negotiations or in progress right now that you would need to secure to get there?

A: There's a number of payers we're still working with, like Caremark and Aetna. We do have the contract with Zinc, but we're still working with them. We're tracking towards our goals, and prior auths are coming down.

Q: Could you talk about the number of prescriptions that were actually written and filled in the quarter as we try to understand what the sort of capture rate of IQVIA and other providers are? And could you provide any color on -- you've talked about the PAs and the high success rate there. And can you talk about how many of the prescriptions in the past quarter have been covered versus required a prior auth?

A: When we look at the prescription data through IQVIA, it's not 100% capture. Roughly, it's about 13,000 prescriptions or units. The PA rate was about 70% at the beginning of the year and is down to about 45% now.

Q: How are you thinking about the rest of the year in terms of -- I know you're not providing guidance, but how the Q1 results are tracking for that inflection point in the second half of the year?

A: We're still tracking according to plan and expecting the inflection in the third quarter. The August, September timeframe tends to be peak sales for this product, especially with the children.

Q: Do you still think that prior auths are the biggest impediment at the moment? And so when you get to the broad access that you're guiding towards, that will be a real boost?

A: Prior authorizations are a headwind, but they become less and less as time goes by because the remaining patients that are not covered or those insurance companies that are delaying, the doctors are more willing to write the prior authorizations because there's just fewer of them.

Q: How we can think about the sales targets that ALK has to hit in order to get to the performance-based payments that you have discussed? And then the second thing is, what is your market share now? And where do you hope to be by the end of the year?

A: We have milestone targets in terms of market share that we think is very reasonable to hit. In the category of the basket of epinephrine across the board, brand and generic, we have about a 1.3% share. We hope to increase our market share as we move forward.

Q: I just wanted to confirm, Kathy, I think you said you're expecting most of the sort of DTC marketing to be in Q2 and Q3. So, I wanted to confirm, should we sort of expect a tail off in Q4? Or is it more that most of the sort of growth will be Q2 and Q3 and then it will be steady thereafter?

A: We do expect to spend some in Q4, but the majority in Q2 and Q3. And as Rich said, the inflection point for sales, we would expect to start really in Q3.