ARS Pharmaceuticals Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 13, 2025

Key Takeaways

  • Positive Sentiment: In Q2, ARS recorded a US net product revenue of $12.8 million, reflecting a 64% increase quarter-over-quarter driven by the launch of the 1 mg pediatric dose and improved payer traction.
  • Positive Sentiment: Weekly two-pack prescription volume for NEFI jumped by 180% from Q1 to Q2, signaling accelerating physician and patient demand ahead of peak allergy season.
  • Positive Sentiment: NEFI achieved 93% commercial insurance coverage, with streamlined prior authorization processes and a copay assistance program capping patient out-of-pocket costs at $25.
  • Positive Sentiment: The rollout of a national DTC campaign in June–July and a pediatric co-promotion with AOK are expected to further boost NEFI adoption in Q3 and Q4, particularly during back-to-school season.
  • Positive Sentiment: With $240 million in cash and short-term investments providing over three years of runway, ARS is well-positioned to fund ongoing commercialization, global launches, and its Phase IIb urticaria trial.
AI Generated. May Contain Errors.
Earnings Conference Call
ARS Pharmaceuticals Q2 2025
00:00 / 00:00

There are 9 speakers on the call.

Operator

Good morning and welcome to the ARS Pharmaceuticals Conference Call. At this time, all participants are in a listen only mode. After the company's prepared remarks, we'll open the line for questions. Please be advised that this conference is being recorded. I'll now turn the call over to Justin Chalka, Chief Business Officer.

Operator

Please go ahead.

Speaker 1

Good morning, and thank you for joining our second quarter twenty twenty five earnings conference call. This morning, we issued a press release detailing our financial results and commercial highlights, which is available in the Investors and Media section of our website at ars pharma dot com. With me on the call are Richard Lowenthal, our Co Founder, President and CEO, who will review recent corporate updates and achievements Eric Carraz, our Chief Commercial Officer, who will cover our commercial activities and progress and Kathy Scott, our CFO, who will provide a summary of our financial results and cash position. Before we begin, please note that today's remarks may contain forward looking statements. Actual results may differ materially.

Speaker 1

Please refer to our earnings release and SEC filings for further risk disclosures. With that, I'll turn the call

Speaker 2

over to Rich. Thank you, Justin. Good morning, everybody, and thank you for joining us to discuss our commercial momentum with Nephi in the second quarter of this year and early weeks of the third quarter. We have long believed that a needle free, portable, and reliable epinephrine treatment option could transform how patients and providers treat severe allergies. The commercial data we will share today confirm that this vision is becoming a reality.

Speaker 2

NEFI is gaining traction across prescribers, payers, and patients, which we will talk about during this presentation. Our momentum is reflected in the continued quarter over quarter growth in The U. S. Net products revenue for Nefi. In Q2, we achieved $12,800,000 in net product revenue, in part driven by the availability of our one milligram pediatric dose starting in May and steady traction we have made with payers.

Speaker 2

With 93% commercial coverage today, Nefi is accessible to the vast majority of patients with commercial insurance. Perhaps more importantly, this momentum has translated into strong and accelerating growth in Nefi prescriptions, a clear indicator of demand and commercial execution. From the end of the first quarter to the end of the 2025, we saw an increase of 180% in weekly two pack unit volume, which was in line with our internal expectations and consistent with analyst forecasts. This growth is particularly encouraging as it comes before we have realized the full effects of three key important drivers. First, the rollout of our national DTC campaign, which started with targeted advertising in early June and was followed by an expansion to linear TV in July.

Speaker 2

Second, our U. S. Pediatric co promotion with AOK, which was fully deployed in late June. And third, the peak prescribing season of late summer and early fall as parents and children head back to school. As such, we expect to see even greater growth in nephi prescriptions in the third and fourth quarters of this year.

Speaker 2

Beyond our US commercialization, our partners are executing well to establish NEFFI as a global brand. In June, ALK successfully launched Euronephi in Germany, the first country outside The United States to have commercial access to intranasal epinephrine. In July, your NEFI was approved in The United Kingdom, which is the largest market outside The U. S. For epinephrine auto injector sales.

Speaker 2

Looking ahead, we expect additional regulatory decisions on NEFI in Canada, Australia, and Japan by the 2025 and in China by the 2026, followed by commercial rollouts starting in the first half of next year. We also expect approval of the one milligram pediatric dose by the European Medical Agency in the 2026, which would trigger another $5,000,000 milestone payment from AOK. Beyond our first approved indication, we're expanding the reach of our intranasal epinephrine technology with the initiation of a randomized controlled Phase IIb clinical trial in chronic spontaneous urticaria, a life altering condition that affects millions of people. This study is underway at with sites in The US and Europe, and we anticipate top line data in the 2026. Let me now turn the call over to Eric to review our US commercial performance in more detail.

Speaker 1

Thank you, Rich. Starting first with physician engagement and demand, our 118 person sales organization at ARS has now reached approximately 15,000 healthcare providers. More than 9,000 seven 100 of them have a dispensed prescription for NEPE with over 70 coming from the highest three deciles of prescribers. These figures reinforce the strength of our physician targeting and engagement strategy. The Nepi experience program, which now includes the one milligram dose has successfully enrolled over 2,800 allergists and approximately 20,000 doses of both the one milligram and two milligram Nepi have been distributed for use in offices during oral food challenges.

Speaker 1

With hundreds of uses already recorded, the real world exposure is helping to build confidence in the effectiveness and safety of Nepi. We anticipate sharing more outcomes data from this program later in the year. Over 3,200 schools have joined our NEPE in schools program, establishing NEPE as a preferred epinephrine treatment and educational settings. With the one milligram pediatric dose availability, participating schools can narrow carry both one milligram and two milligram doses for emergency use. Since the end of the first quarter, 14 states have updated their legislation to allow designated school employees to administer our needle free epinephrine during emergencies.

Speaker 1

This change reflects the strong demand for NEPE. The advocacy for NEPE was also clearly expressed at the National Association of School Nurses Conference that attended in June. On the payer front, we have reached a critical inflection point with 93% commercial coverage, including in scenarios where prior authorization is submitted. Approximately 57% of commercial payers do not require for patients to fill. Those payers that do require a healthcare professionals can now manage the process more easily.

Speaker 1

The prior authorization approval rates for Nappy with payers under the major closely aligned with the access levels in the overall commercial epinephrine market. For example, payers under zinc health services, the group purchasing organization for CVS Caremark account for approximately 30% of nefi dispenses in line with the overall epinephrine market. This is despite more than three quarters of CVS Caremark members still requiring PAs. It's encouraging to know that these PAs are being approved more than 80% of the time. For patients with commercial insurance, our copay assistance program ensures that most individuals only pay $25, which is significantly less than the average $40 for generic injector.

Speaker 1

Additionally, copay support is now automatically applied at the point of sale in 95% of pharmacies, including all the major retail pharmacies and grocery store chains, such as CVS, Walgreens, Walmart, Rite Aid, Costco, Kroger and Publix. With increasing fill rates, this program ensures that patients can access NEPI when they need it the most. Together, these changes represent a meaningful shift from our early launch phase. Broader coverage and streamline prescribing are enabling a more confident and seamless experience for HCPs. And as NEPE volume increases in the coming months, we expect additional PDMs to remove PA requirements and adopt contracts that recognize the value of NEPE at terms that are consistent with our 50% long term gross to net retention guidance.

Speaker 1

This will further eliminate potential barriers to access for patients. Turning to consumer engagement, our direct to consumer campaign, Hello, Nappy, Goodbye Needles is gaining traction. The campaign launched in phases, connected TV and streaming platforms began in late May and early June, followed by broadcast and linear television in July. We've since expanded both the reach and frequency on linear TV to further increase branded awareness, encourage patients to ask for Nepi by name. Since the campaign began in late Q2 aided awareness has increased significantly in the July, Cantor, a market research firm conducted patient and caregiver surveys.

Speaker 1

The results show that nearly 50% of respondents recognize and recall our DTC advertisement for NEP, which is higher than the Cantor norms across approximately 150 other DTC campaigns. The branding for the NEPPY ad was also notably strong with half of the respondents stating that they could not help. But remember that it was for NEPPY. This also exceeded Cantor norms. As awareness grows, we expect to continue to increase in demand for NEFI over time.

Speaker 1

Historically DTC campaigns for pharmaceuticals start to show an impact about twelve to sixteen weeks after they begin. Additionally, we know that the average consumer needs to see an ad about seven to eight times before they take action. We are confident in the feedback we've received and the expected broader impact of our DTC campaign. Lastly, we are pleased with the positive growth trajectory in the volume of nephi prescriptions. Feedback from our sales organization indicates increased adoption across all patient segments.

Speaker 1

This includes patients switching from auto injectors, those with a lapsed RX and are returning to therapy and new patients being prescribed epinephrine for the first time. This broad based adoption highlights the appeal of Neve as a preferred treatment in the epinephrine market. The combination of our field execution, increased consumer awareness and demand and a smoother prescribing experience for healthcare professionals has established a strong foundation for continued commercial growth. I'm proud of what the team has accomplished so far and look forward to sharing more about our progress in the second half of the year. I'll now pass the call over to Kathy to walk through our financials.

Speaker 3

Thank you, Eric. We continue to maintain a strong cash position while investing significantly in the commercial growth of Nepi. Starting with our revenue for the 2025, we recorded total revenue of 15,700,000.0. As we go forward, it's important that we look at revenue in terms of product revenue from our core US commercial efforts, and then collaboration and supply revenue separately. That distinction is key as US net product revenue reflects underlying demand and market penetration with NEPI.

Speaker 3

The milestone and supply revenues are important for our overall financial performance represent one time or partnership related income streams. Our US net product revenue for NEPI in Q2 was 12,800,000.0, reflecting a 64% increase compared to net product revenue in the first quarter of the year. We expect to see continued growth in product revenue as we start to recognize the impact of our DTC campaign, as well as the prescription growth and improved payer access environment that Eric described. In terms of collaboration revenue, a 5,000,000 milestone payment from ALK was triggered related to the launch of YERNEFI in Germany in June, And we generated an additional 300,000.0 in supply revenue from our partners. Of the 5,000,000 milestone, we recognized 2,600,000.0 as revenue and the remaining 2,400,000.0 was recorded to the financing liability on the company's balance sheet in accordance with the GAAP accounting treatment of our original licensing agreement with ALK.

Speaker 3

With regard to the urine epi one milligram dose in The EU, we anticipate EMA approval in the 2026, which would trigger an additional 5,000,000 milestone payment from a okay. Similarly, approximately half of that 5,000,000 would be recognized as gap revenue in the 2026 and the other half would be added to the financing liability on our balance sheet. Turning to our operating expenses, R and D expenses for the second quarter were 4,000,000, primarily related to the initiation of our Phase 2b urticaria trial and continued clinical and development expenses for Nefi. SG and A expenses were 54,300,000.0, reflecting our investment in a strong national DTC campaign and continued sales and marketing efforts for Nepi. We remain committed to making substantial investments in the launch of Nepi to ensure both short and long term patient and physician awareness and market share capture.

Speaker 3

As a reminder, for modeling purposes, the bulk of our DTC campaign investment of approximately $50,000,000 will be recognized in our SG and A expenses in the second and third quarters of this year. Lastly, cost of goods sold increased from the first quarter due to higher product sales and also establishing a one time inventory reserve for older inventory. This is not expected to recur and COGS for NEFI remain highly favorable. Another favorable aspect to our financials this quarter is the update on our gross to net retention. As payer coverage has improved, the trend in our gross to net yield has progressed as we anticipated.

Speaker 3

Our GTN retention moved from about 70% in the 2024 to the mid 60% range in the 2025, and now to the low 50% range in Q2. This progression reflects the success of our payer access strategy with an increasing volume of prescriptions now covered without prior authorization and therefore eligible for rebate payments under our payer contracts. We had previously guided to a steady state gross to net retention of approximately 50%, which we reached in the second quarter. Looking ahead, we expect our gross to net retention to be maintained around this level, providing greater predictability in future revenue modeling. Lastly, on our cash position, maintaining a strong balance sheet with over three years of operating runway remains foundational to our corporate strategy, enabling us to advance our commercial efforts with focus and flexibility.

Speaker 3

We ended the 2025 with cash, cash equivalents and short term investments of 240,100,000.0. This balance sheet strength means we are well positioned to fully capitalize on The U. S. Commercial opportunity for NEPE, while maintaining financial discipline and resilience in a dynamic market environment. With that, I'll pass the call back over to Rich.

Speaker 2

Thank you, Kathy. As we move into the 2025, we remain focused on our top priorities. First, sustaining and accelerating market share growth through the peak back to school season, driven by our DTC investment in the coming weeks and months. Second, enabling NEFI's global expansion through the international launches across our partner network, including in The UK later this year. And finally, advancing our urticaria program towards a potential label expansion.

Speaker 2

We are fundamentally changing the treatment of type one allergies. The barriers that kept patients from carrying and using epinephrine before, including the fear of needles, device complexity, portability, and shelf life concerns are gone with Nefi, and its delivery is easy for both patients and caregivers. Backed by Nefi's growing awareness and adoption in The United States, expanding global reach, and our advancing pipeline, I believe we're well positioned to deliver both near and long term value for our stakeholders and improve outcomes for patients worldwide. Thank you for your continued support. Operator, please open the line for questions.

Operator

Our first question comes from Lashlin Henbury Brown with William Blair. Your line is open.

Speaker 4

Hey, guys. Thanks for the questions, and congrats on the progress. Think first question would be can you confirm sort of the the number of prescriptions written or or shipped during the quarter? And second, it sounds like you see encouraging progress on DTC in terms of awareness. Wondering if there's any early signs that you can see that this is translating into actual sort of prescribing behavior, either from doctors or patients asking for it or anything along those lines?

Speaker 5

Yeah, Lachlan. Hi, Rich Lowenthal. So yeah, I mean with regards to number of prescriptions you can calculate it. We have $12,800,000 in net sales and gross to net was roughly 52%. So it's about 35,000 prescriptions in the quarter, two packs I should say.

Speaker 5

Some prescriptions are for two or three two packs, but 35,002 packs. And then that compares to 19,000 in the first quarter. And with regards to the DTC campaign, so really the linear TV, which tends to give the greatest impact on sales, started July. Normally the norm in the industry is twelve to sixteen weeks to start seeing significant impact from that return on investment. But we are getting a lot of feedback.

Speaker 5

Certainly, a lot of people, even just people that are trying to find a case are mentioning the ads, the DTC campaign and seeing the Nefi Carry case in the ad, they want to know how to get it. So we get a lot of feedback like that, that people are definitely seeing the ad. They're definitely acting on it. And again, it takes a few months to get an appointment if you're a naive patient. Maybe you have an appointment scheduled, but we're hoping that that starts to translate to significant uptick in the near future.

Speaker 5

But we would expect it to take twelve to sixteen months to start seeing significant impact.

Speaker 4

Got it. Thanks. And, also, I think, Eric, you mentioned that you've seen some patients who previously lapsed prescriptions coming back in and filling prescriptions for NEFI. Can you give a sense of how much like, is that a sort of one off patient doing that? Or are you seeing a sort of consistent trend there?

Speaker 1

Yeah, I can take this one. And good morning. So it's still very early to kind of break all the data out. We do plan on doing a pretty extensive claims analysis in the fourth quarter end of the year. But the feedback that we're hearing, and I interact quite a bit with our field team and physicians is it really is a mix of patients that are switching.

Speaker 1

Those those patients that are also reengaged because now they have an option that is needle free, easy to carry and obviously less invasive. But we're also getting patients that, to your point that are lapsed, that really opted out because of the needle. So we see that kind of across the board and feedback from all physicians and kind of what we're seeing from our field feedback as well.

Speaker 4

Thanks. I'll I'll back in the queue.

Operator

One moment for our next question. Our next question comes from Rodney Reeves with Leerink. Your line is open.

Speaker 6

Hi. Thanks. This is Macy on for Luana. Just one from us. So, you know, congratulations on the remarkable progress in commercial coverage.

Speaker 6

Just one on that. So with CVS Care much still requiring the prior auth for some payers under the same, what's the realistic ceiling for coverage without prior authorization? And would you be able to quantify the revenue impact of moving that remaining same portion over to full coverage?

Speaker 5

Yeah. I'm I'm not sure. Sorry, Mazi. I'm not sure exactly what you're asking with regards to the ceiling.

Speaker 6

I guess ceiling in terms of commercial coverage, like, do you expect that 93% is the the peak, or do you think that there's still room to grow?

Speaker 5

Yeah. So so hope hopefully, I'm answering your question correctly. But So about 25% of the CVS companies under CVS, under Caremark, are covering NEFI without prior authorization, right? And then the rest are requiring a prior authorization, but there are no companies within the Zynq network that are blocking NEFI, so require any kind of medical exception. What's happening is as we're getting better and better coverage without prior authorizations, it frees up doctors to write those prior authorizations for those companies that are still remaining.

Speaker 5

So we haven't really seen any signs of a ceiling. The prior authorizations are staying fairly steady, but they're concentrating towards the companies that are not covering without prior authorization yet, that don't have it on open access. So that's where we're at at the moment, but I'm not sure if that answers your question exactly or not, but, hopefully.

Speaker 6

No. No. Actually, that's exactly what I was asking. Thank you for that.

Speaker 5

Okay. Great. Great. Thank you.

Operator

One moment for our next question. Our next question comes from Andres Zagridis with Oppenheimer. Your line is open.

Speaker 7

Alright. Good morning, and congrats on the quarter, guys. I'll try to keep it to one question here. So we're seeing strong growth in weekly scripts. Which of the many levers do you see driving the inflection point in the second half of the year?

Speaker 7

And then maybe one follow-up.

Speaker 5

Well, certainly the DTC campaign, Andreas, is going to be a major driver. We also, as we mentioned in our talk, expanded the sales force with the partnership with AOK, so they're focused on the pediatricians, you know, the ones that are prescribing. We think that will, help dramatically. I mean, it's adding 10% reach to our current market force, about 55% overall. So we think those are really the major drivers.

Speaker 5

I mean, seasonality we mentioned, but that's kind of routine and that's going to happen regardless. I mean, there's just an increase in the overall number of scripts over the summertime. But really what we think are the big drivers of the DTC campaign to start raising awareness, not only among patients and caregivers, but among physicians too. So even the physicians that we don't reach hopefully will see these ads and realize there's a new product and research it. And then obviously, that sales force expansion.

Speaker 5

And we'll continue to evaluate things as we go forward as to what else we can do. Given our cash position, we have a lot of flexibility, and we'll continue to evaluate things as we go forward.

Speaker 7

Alright. And then just can you along the lines of the DTC, can you remind us how long you plan to to have the campaign last? And then just one more on back to school. How how are you seeing the impact on on on scripts from the back to school season? And any thinking along the same lines, any thoughts around patients getting multiple packs in these type of back to school period for the year as they kind of given the ease of use and the multiple areas that, you know, the car, the house, etcetera.

Speaker 7

Any thoughts around that?

Speaker 5

Yeah. So so with the DTC campaign, first of all, we're we're budgeted. We're actually looking at possibly even adding more to the budget for this year, and then we're budgeted for next year. So we anticipate that continuing at a similar pace, with the exception of some seasonality around holidays and things, we may slow down, but certainly at a similar pace to what you're seeing now, and we would continue that through 'twenty six. And again, we're continually assessing that, and as we start seeing impact and we get data back on the effectiveness of our DTC campaign, we have some very good companies that we use to collect data on that, we'll obviously concentrate our efforts in those channels that are most effective and then also potentially increase the budget overall.

Speaker 5

We do want to do that assessment over time, and it's pretty typical at this stage. Sorry, what was your the multiple packs. We are seeing a lot of orders coming in for two or three packs of Nefi, two packs. And certainly with the case ordering as well, we're seeing a lot of people asking for two or three cases. And that, you know, we think is a good sign that people are looking to get multiple packs of Nefi.

Speaker 5

But I don't know, Eric, if we have any statistics on that or we're just still at the early stage of that. And also, one other thing, Andreas, as we've talked about in the past, a lot of people who are in a cash based situation would buy a PAC very easily. But then once they get insurance coverage or they meet their deductibles, they seem to be coming back to get more packs. But Eric, do you have anything to add to that?

Speaker 1

Yep. Andreas, we track these numbers, and I can tell you that, what we're seeing in terms of number of cartons, devices per patient for that initial prescription is slightly higher than what we've seen previously in the market. So these are things that we continue to drive our field teams the points you made, especially with kids. Parents want the kids to have one with them at all times. They wanna have one in the house just in case.

Speaker 1

So as Rich said, we are seeing multiple paths. It's messaging that we'll we'll continue to drive. And there's a lot of programs too that we're doing through NEPE Connect, but also even at the point of purchase, if a patient goes in and is covered, one thing that we updated a few months back was that we'll just charge one co pay, the $25 for multiple, cartons. So again, we see this as an opportunity to drive that even higher in the months to come, but, definitely, you know, really nice, increase that we're seeing over the last couple of weeks and months in terms of number of cartons per prescription.

Speaker 7

Congrats on all the progress, guys. I'll jump back.

Operator

One moment for our next question. Our next question comes from Ryan I'm sorry, Ryan Deschner with Raymond James. Your line is open.

Speaker 8

Thanks, and congratulations on the quarter and the script growth. I wanted to ask, how are you thinking about the timeline for feeling the full impact of the DTC campaign ramp, expanded reach from the AOK promotion and availability of the one Mignefi? Do you feel like these factors have come online quickly enough to fully take advantage of the August epinephrine peak? And will these factors still be in enough of an acceleration mode to potentially even sustain quarter on quarter growth in 4Q despite seasonality?

Speaker 5

Ryan, so I'll start out on that. So the typical norm is twelve to sixteen weeks, but we do know that because of the especially the AugustSeptember peak, And we would expect that awareness that we're seeing to have an impact during that period because people have already had their appointments scheduled. A lot of the delay in the impact of DTC is people have to see the ad multiple times, they have to think about it, they do their research, they act on it, and then when they do that, especially in the allergy market, there's around a three month waiting list to get an appointment. So once they've seen it multiple times and they they decide, you know, hey. I think I'm interested in that, schedule an appointment.

Speaker 5

But during the summer period, we do know that a lot of these, especially children, will already have their appointments prescheduled. So we're expecting to see a good impact, and we expect to see that this does propel us through a nice second half of the year. Sorry, what was your second question?

Speaker 8

Yeah. Will these factors be enough really to be in enough of an acceleration mode to sustain quarter on quarter growth in 4Q despite that seasonality? And then I also wanted to ask, what would you consider the biggest indicators going forward that NEFI is starting to make or starting to take meaningful bites out of the larger blue sky market that doesn't regularly carry or use epinephrine?

Speaker 5

Yeah. So right now, I think we are pretty confident about the quarter over quarter growth continuing. So that's not in question in my mind, to answer your question. And then right now, as Eric said, we haven't done really a thorough market analysis of where all the prescriptions are coming from. Anecdotally, we know that there are a lot of people that have never had an auto injector that have gone and purchased Nefi.

Speaker 5

You know, we even have some investors that were allergy patients that have never gotten an auto injector because they don't like them and have gone and got an Effie. So most of our input right now is anecdotal, but I think that there is a fairly healthy number coming from all segments. But the switchers are the, you know, kind of the easier, low hanging fruit patients that have those auto injectors. They already are conscious about having epinephrine. They've already accepted epinephrine in general, and then they just don't like either carrier or use the auto injector, so they're switching.

Speaker 5

But we do hear anecdotally that there's people coming from all segments.

Speaker 8

Got it. Thanks, Rich.

Speaker 5

And as Eric said, we'll do a more thorough market analysis later this year after we get we want to get to a certain point where we have a certain market share, and then it makes sense to do that kind of work and start really dissecting where these patients are coming from.

Operator

And I'm not showing any further questions at this time. And as such, this does conclude today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.

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