ARS Pharmaceuticals, Inc.

Good day and welcome to ARS Pharmaceuticals' fourth quarter and full year 2024 Financial Results Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. Instructions will be provided at that time. As a reminder, this call is being recorded. I would now like to turn the call over to Justin Chokmah, Chief Business Officer. Please go ahead. Good morning.

With me today are Richard Lowenthal, co-founder, president, and CEO of ARS Pharma, Eric Corraz, our Chief Commercial Officer, and Kathy Scott, our CFO. Earlier today, we issued a press release outlining our fourth quarter and full year 2024 results, along with recent business highlights. You can find this press release on our website at ars-pharma.com. Our call today will proceed as follows. Rich will provide an overview of our corporate progress and key development and insights into the NEPI launch. Eric will discuss NEPI's ongoing and planned commercialization efforts in the U.S. and our market strategy. Kathy will then provide a financial overview, after which we will open the call for questions. Before we begin, please note that today's discussion includes forward-looking statements based on our current expectations. These statements are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our earnings and reliefs issued today for further details and a discussion of risks. With that, I'll turn the call over to Rich.

Thank you, Justin, and thank you to everyone dialing in today. The past six months have been extremely productive for ARS. Since September, we have successfully launched NEFI 2 milligrams in the United States and secured FDA approval for the 1 milligram NEFI dose for patients weighing 15 kilograms to less than 30 kilograms. The population of children at this lower weight range that will use NEFI 1 milligram represents 23% of the current auto-injector market. ARS has also made significant strides in payer coverage. with over 51% commercially insured able to get NEFI without a prior authorization as of April 1st. And we anticipate over 80% without prior authorization by early this summer with the addition of NEFI to the Caremark formulary. Our commercial execution has established a strong foundation of healthcare provider awareness for NEFI as a compelling alternative to traditional epinephrine autoinjectors. providing patients with a needle-free, portable, and highly effective option for severe allergic reactions, including anaphylaxis. The U.S. epinephrine market represents a $3 billion in the annual net sales near-term addressable opportunity among 6.5 million patients prescribed epinephrine in the last three years, with an additional expansion opportunity among untreated patients of over $7 billion in annual net sales, covering It estimated 20 million patients that have been diagnosed with severe allergic reactions based on claims data. However, only 3.2 million patients consistently fill their autoinjector prescriptions, leaving a vast population without protection. NEFI directly addresses this gap by eliminating barriers such as the needle anxiety and portability challenges. Just a few weeks ago at the 2025 American Academy of Allergy, Asthma, and Immunology Annual Scientific Meeting, we showcased nine presentations on the continuously growing body of clinical evidence demonstrating the therapeutic value of NEFI to healthcare providers. Notably, among the presentations at the Quad AI meeting, a study in Japanese patients experiencing anaphylaxis symptoms after oral food challenge found that patients receiving NEFI experienced low symptom scores within 10 minutes compared to traditional intramuscular injection. A separate set of clinical studies in China reinforced the bracketed pharmacokinetics and pharmacodynamic profile of NEFI in persons with pure Chinese ethnicity, demonstrating its efficacy and safety under a variety of conditions, including self-administration, allergic rhinitis, infectious rhinitis, and allergy challenges and repeat dosing. An additional analysis confirmed that NEFI is safe and achieves effective exposures of epinephrine for patients four years of age and older and weighing 15 kilograms to less than 30 kilograms. I'm proud of these data we presented at the Quad AI meeting as it showcases NEFI's extensive and rigorous clinical development program. Nephe remains the only approved product to have generated anaphylaxis efficacy data in a clinical study, to have met the bracketing criteria established by FDA for approval of all key pharmacokinetic parameters to ensure safety and efficacy, and to have data demonstrating that it is well-tolerated in children down to 15 kilograms body weight, who account for almost half of the patients prescribed epinephrine. This and other extensive clinical data we have previously presented on NEFI's profile has now been supported by the growing real-world data of treating anaphylactic reactions from our NEFI experience program. The data from the NEFI experience program to date is numerically better than that historically reported with epinephrine injections. We plan to share additional details of this survey of our NEFI experience program once we have completed the survey and plan to repeat this several times during the program as it progresses with over 2,500 clinicians having NEFI for oral food challenges and immunotherapy treatments. At Quad AI, hundreds of physicians shared with us many of their positive success stories of treating patients with NEFI, including cases where patients had been rescued by NEFI from even having very severe anaphylactic reactions and being unconscious. Physicians are clearly and enthusiastically communicating to us that they believe that NEFI represents a new standard of care. We have established a strong initial commercial trajectory in the U.S. to ultimately deliver on this expectation and establish NEFI as the new standard of care. Since the initial launch in September of 2024, NEFI generated $7.3 million in net product revenue in the United States reflecting a strong early adoption since it became available in the fourth quarter, and strong breadth of early prescribing with thousands of healthcare providers prescribing NEFI reflecting the allergy community's confidence in NEFI as an alternative treatment. That said, as you can see in the IQVIA prescription data, we are still on the early part of the S curve of what we anticipate to go into a multi-billion dollar blockbuster peak sales trajectory. We anticipate a significant inflection in both the depth as well as the breadth of healthcare provider prescribing later this year as the headwinds from the need for prior authorization requests diminish. Healthcare providers consistently tell us that the current levels of NEFI prescribing represent only a fraction of their intended use of the product in the future. In fact, one leading allergist stated that he intends to switch all of his 4,000 patients. but our data shows that this doctor is only prescribed to about 1% of their patients to date, given the need for these prior authorizations to get approval. A key learning in the NEFI launch is the unique administrative barrier that prior authorizations pose for NEFI due to the large volume of epinephrine eligible patients, as well as the acute nature of this disease, This results in the need for a very large number of prior authorizations to get a significant revenue, given each prior authorization translates to an average of 1.3 prescriptions per patient to date. As a result, healthcare providers only have bandwidth to prescribe very selectively due to the cumulative time required to prepare prior authorizations, even with simplified forms and ARS facilitation through BlinkRx. Based on this feedback from hundreds of prescribers, including most recently at the Quad AI meeting, we expect to see a tipping point in the NEFI trajectory as we attain our payer coverage goals early this summer and make prescribing more seamless for physicians. Our payer engagement strategy has already yielded multiple favorable coverage decisions, including a cent. the group purchasing organization for Express Scripts, one of the three largest pharmacy benefit managers in the United States, who put NEFI on formulary within 10 weeks of launch. In the last month, we also have signed contracts and provided patients with unrestricted access to NEFI with two other group purchasing organizations, MSR and Zinc, at terms that preserve our greater than 50% gross to net yield. MSR signed an agreement in February adding NEFI to their formulary, which now gives patients who have OptumRx access without any restrictions. As of April 1st, UnitedHealthcare will also add NEFI to their formulary with unrestricted coverage under the MSR agreement. Just the past few days, we also obtained agreement and coverage with Zinc, which provides access to the largest payer in the United States, CVS Caremark, as well as Anthem, Aetna, and several other insurers. We anticipate being on formulary for CVS Caremark, Anthem, Aetna, and others by July 1st in time for the summer peak prescribing season for children. Therefore, we remain on track for 80% unrestricted commercial coverage by the summer of this year. We have also made progress on Medicaid with bellwether states such as Texas, Alabama, and Montana adding NEFI to their formularies without prior authorization. and other states are expected to follow suit in the coming months leading into the summer prescribing season for children. By the summer, we anticipate physicians to freely start writing NEFI for their patients without being deterred by the administrative workload of prior authorizations. This will be in time for the back-to-school season driven by the pediatric population, And we'll also be supported by the fact that we will have 1 milligram NEFI in the marketplace by May 2025, which represents 23% of all prescriptions as mentioned earlier. And having ended this year with over $314 million in cash or cash equivalents, we are in a strong financial position to accelerate adaptation and awareness during the back to school season, including an extensive direct to consumer campaign we anticipate launching in May of 2025. In parallel, we are also on track to have a global commercialization footprint with NEFI within one year from now. As a reminder, your NEFI, the equivalent of NEFI in Europe, is approved in the European Union. Our UK regulatory submission is under review, with a decision expected by May 2025, and our partner, ALK Abello, is preparing for commercial launches in Germany and UK by this summer. Regulatory submissions are also completed in Canada, China, Japan, and Australia, with decisions in Canada, China, and Japan anticipated by year-end 2025. As we look ahead, physicians and patients' demand is clear for NEFI. We are also getting favorable payer formulary coverage, which is now just a function of time with the three major GPOs signing agreements that are favorable and give us a 50% gross to net for better. We are also accelerating our marketing and investments in direct-to-consumer advertising prior to the back-to-school peak prescribing season. We expect to see significantly broader and deeper adaptation of NEFI across the board through conversion of the existing epinephrine users, reactivation of patients who previously avoided treatment due to their fear of injection, and bringing NEFI to those who didn't have a prescription or diagnosis in the past. Let me turn the call over to Eric to walk through our commercial highlights and plans for increasing adoption and use of NEFI in 2025.

Good morning, and thank you, Rich. As we've laid out previously, our NEFI commercial strategy is focused on three core areas, physician education and engagement to drive NEFI adoption and market share, payer coverage to ensure affordability and access to NEFI, and patient awareness and education to encourage adoption and prompt patients to ask their healthcare provider for NEFI. Our team is executing very well against all three of these. To date, our sales team has directly engaged with approximately 9,000 healthcare providers, Additionally, more than 4,000 healthcare providers have submitted NEFI prescriptions through BlinkRx by NEFI Connect. Importantly, approximately 81% of these prescriptions were submitted by physicians in the highest decile of allergists. These are physicians who represent the highest volume prescriptions in the U.S. At the recent Quad AI meeting, we met with over 1,000 physicians, and the feedback across the spectrum of stakeholders continues to reinforce the enthusiasm for a needle-free epinephrine treatment and the growing demand for Nephi. Among the physicians that the team engaged at the conference, the feedback regarding the product was overwhelmingly positive. Many HCPs who have used Nephi in a clinical setting as part of the experience program shared their experiences. One particular influential physician, who is a thought leader amongst his peers, had his first experience with Nepi just two weeks before the conference. He was so impressed with the response, which appeared within a minute, that he shared his experience with his colleagues and nursing team. Allergists have reported great real-world success with response rates similar to or even better than those historically reported with epinephrine injection products. As of today, approximately 2,500 allergists have enrolled in our NEFI experience program. And as shared, it allows for hands-on clinical use and real-world validation of the product. This participation represents over 80% of the healthcare professionals conducting allergy challenge studies, reflecting a strong interest in NEFI. Our commercial team is actively sharing this information with both NEFI experience participants and healthcare professionals more broadly. which reinforces their confidence in NEFI's clinical profile backed by real-world response data. We have observed strong adoption by payers with positive coverage decisions from major organizations such as Express Scripts, Cigna, Optum, Navitas Health, and TRICARE. The coverage enhances access to NEFI for millions of commercially-insured patients across the nation. Furthermore, starting April 1st, UnitedHealthcare will include NEFI as a covered treatment without a prior authorization. In addition, all three group purchasing organizations have signed contracts with us. Ascent in late Q4 of last year and Zinc and MSR in the last few weeks. And we expect downstream payers of these GPOs to adopt the negotiated terms and add NEFI to the formularies with unrestricted access. Payers recognize the added value that NEFI offers by lowering barriers to prompt epinephrine use. leading to better outcomes for patients and reduce healthcare costs. Our goal is for NEFI to achieve more than 60% commercial coverage by the end of the first quarter. Given our current position, we are confident in our ability to reach this target. We are actively engaging in discussions and contract negotiations with additional key payers and expect to achieve 80% commercial coverage by the early part of the third quarter. As commercial coverage increases, the product acquisition process is streamlined, allowing doctors to more easily send prescriptions directly to retail pharmacies, such as CVS and Walgreens. For patients with commercial insurance, our copay assistance program has made Nepi more affordable. Most commercial patients only pay $25 for each prescription, which is lower than the average copay of $40 for a generic auto-injector. Our copay support is automatically applied at the point of sale, ensuring that NEFI is accessible to more patients. Switching gears, we are also proud of our NEFI in Schools program, which provides K-12 schools with two cartons or four single-use doses of NEFI at no cost. This initiative aims to promote widespread adoption of the product in schools nationwide. To date, more than 5,000 nurses have participated in our educational sessions and are now advocates for NEFI. We greatly appreciate the collaboration with school nurses who play a crucial role in safeguarding children by administering this easy-to-use needle-free epinephrine device in emergencies. As we look ahead, we are planning a large-scale direct-to-consumer advertising campaign starting in May. This is time for the peak prescribing season during the summer. This campaign will include connected television platforms such as Hulu, Netflix, and Prime, as well as linear TV focused on news and sports channels. In addition, we'll utilize print and social media, incorporating influencer partnerships with a combination of broad and targeting advertising strategies. This initiative is crucial because our market research indicates that when a patient requests NEFI, physicians will prescribe it, provided there are no market access barriers. We also recognize that the epinephrine market has been highly responsive to promotional efforts in the past, and we have seen no meaningful promotion in the last decade. We are planning additional near-term commercial initiatives specifically aimed at the pediatric population, targeting both healthcare providers and caregivers. We plan to share more details about these initiatives in the coming weeks. The pediatric population significantly contributes to the summer peak in prescriptions observed in the market as schools prepare to reopen. We believe we are well-positioned to take advantage of this seasonal trend, especially since early adopters of NEFI are parents with children who are affected. The recent approval of the one milligram dose will allow us to access the entire school age population. We also plan to continue collaborating with our advocacy partners running PSA campaigns, as well as other institutional partners to create a total surround sound environment for NEPA. Finally, as the year progresses, we'll evaluate further expansion of our sales team by early 2026 to maximize healthcare provider engagement and drive market share. After spending several months on the front lines with our sales team and meeting with hundreds of prescribers, it has become clear that NEFI has a compelling clinical profile that resonates with both physicians and patients. This has been further validated by the successful treatment of patients with allergic reactions as demonstrated in our NEFI experience program. All indications show that physicians are eager to prescribe NEFI more frequently, and we understand the steps needed to remove the obstacles they face. We are excited to unlock the demand for NEFI in the coming months by ensuring a more seamless insurance experience and driving patient demand through our comprehensive DTC campaign and our sales and marketing efforts. Let me now pass the call over to Kathy to talk through our financials.

Thanks, Eric. We reported our Q4 and full year 2024 financial results in a press release this morning, and I'll walk through some of the highlights. In terms of sales, we're proud to have recorded $6.7 million in NEPI sales for the fourth quarter of 2024 and $7.3 million for the full year of 2024 since our launch in late September. Of note, these revenues are slightly higher than the preliminary numbers that we announced mid-January. Before turning to our revenues, I'll take a minute to explain how we're treating the cash proceeds from our ALK licensing agreement that was signed in November 2024. As a reminder, we received a nonrefundable upfront cash payment of $145 million from ALK. In Q4, only $73.5 million of that payment was included in our revenues. The remaining $71.5 million is treated as a liability on the balance sheet due to GAAP accounting treatment. Specifically, $69.4 million is treated as a financing liability and $2.1 million is treated as a contract liability for future performance obligations. This GAAP accounting treatment is because of a specific term of our licensing agreement that we built in to maintain strategic optionality for the future. The agreement ensures that ARS has the option to repurchase rights for certain regions partnered out to ALPAY, which results in our not being able to account for a portion of the cash proceeds as revenue. So while the business and economic intent is that of a licensing agreement, due to the open-ended flexibility of the reacquisition language, GAAP treats cash flows from these certain territories as a financing agreement that shows up on the balance sheet, impacting our reported revenue figures. To reiterate, there is no impact on the amount of the non-refundable cash proceeds received, and we have sole discretion in how they are used. Going forward, none of the financing liability from the ALK agreement that appears on the balance sheet as of December 31st, 2024, will be included in revenue until the expiration of the ALK agreement. We expect to receive $5 million in cash proceeds from milestones under the ALK agreement in each of Q2 and Q4, 2025. Approximately half of each $5 million payment will be recognized as GAAP revenue. The other half would not be recognized as GAAP revenue, but would be added to the financing liability on the balance sheet. Future royalty payments from ALK would be recognized as GAAP revenue if they are related to the territories that are not subject to the repurchase right. Royalty payments related to territories that are subject to the repurchase right would be capitalized and added to the financing liability on the balance sheet. To summarize our 2024 revenues, Total revenue for the fourth quarter of 2024 was $86.6 million, which included $6.7 million in net product revenue from NEPI sales in the United States, $73.5 million in collaboration revenue from ALK, $6 million in collaboration revenue from our licensing partner in Japan, and $0.4 million in revenue from supply agreements. Full year 2024 revenue totaled $89.1 million, reflecting $7.3 million in NEPI sales in the U.S., $81.5 million in collaboration revenue, and $0.4 million from supply agreements. The Q4 and full year 2024 revenues do not include the $71.5 million cash proceeds received from ALK that are required by GAAP to be recorded as a liability on the balance sheet. Turning to our expenses, R&D expenses for the fourth quarter and full year 2024 were $3 million and $19.6 million, respectively. These costs were primarily associated with the manufacturing of NEPI to support our U.S. commercial launch, along with certain other product development costs and personnel-related expenses. Our SG&A expenses for the fourth quarter and full year 2024 were $35.5 million and 71.7 million respectively. These primarily reflect marketing expenses and personnel related costs associated with the commercial launch of NEPI as well as general operating expenses. We had net income of 49.9 million or 51 cents per share basic and 48 cents per share diluted for the fourth quarter. Net income was 8 million or 8 cents per share basic and diluted for the full year 2024. In terms of our balance sheet and cash runway, we ended the year with $314 million in cash, cash equivalents, and short-term investments. At the time of FDA approval of NEFI 2mg in August 2024, we guided to an operating runway of at least three years, which budgeted an upfront fee of about $50 million for an ex-US partnership. The ALK licensing agreement provide us with a significantly greater cash infusion of $145 million upfront and an additional $10 million in near-term regulatory and launch milestones expected to be attained in mid to late 2025. As such, the combination of the capital brought in from our ALK deal, along with our earlier than anticipated success in obtaining favorable coverage decisions from U.S. payers, has given us a lot of flexibility to further invest in the commercialization of NEPI while maintaining a strong balance sheet. Looking ahead, as Eric noted, we plan to accelerate our DTC investment beginning in May in order to take advantage of the back to school seasonality. We are projecting a DTC campaign spend of between $40 and $50 million in 2025. In parallel, we are working to ensure availability of the one milligram NEPI dose for children four years or older starting in May. With this in mind, we anticipate operating expenses excluding both cost of goods sold and stock-based compensation will be approximately $200 to $210 million for the full year 2025. With this forecast, we still expect to maintain a runway of at least three years based on our current operating plan. I'll hand the call over to Rich now to finish up.

2024 has set up 2025 to be a pivotal year of commercial execution for NEFI. Our primary focus is accelerating adoption of NEFI and expanding global market access and advancing our intranasal epinephrine technology with the plan to start phase two in urticaria as well as our allergy challenge clinic registry study in the next few weeks. The early enthusiasm from physicians, payers, and patients reinforces our confidence in NEFI's potential to become a new standard of care in emergency allergy treatment. I'd like to thank the entire ARIS team for their dedication in making this launch a success. We look forward to continued momentum in 2025 and beyond. With that, let's open up the call for questions.

Thank you. We will now begin the question and answer session. Ladies and gentlemen, if you have a question or a comment at this time, please press star one one on your telephone. If your question has been answered, you wish to move yourself from the queue, please press star one one again. We'll pause for a moment while we compile our Q&A roster.

Our first question comes from Ryan Deshner with Raymond James. Your line is open.

Hi, good morning. Thanks for the question. And congrats on the progress. I think you mentioned that NEFI 1 milligram will be available starting in May. A lot of KOLs we've spoken to have said this is a big source of demand even currently. How are you looking at the ramp for this format relative to what we've seen with the 2MIG product?

And then I have a follow-up. Yeah, we believe it's additive. You know, it's about 23% of the market. However, it's probably more than that for the impact on the sales ramp of NEFI as we've discussed the The adoption we're seeing right now is heavily weighted towards children. So obviously adding the younger children, which obviously parents have more of an issue with injecting, is actually should be very beneficial. And as we said, we expect it to be weighted towards um and in 2024 it was 23 of the prescriptions uh for epinephrine injections so we think the 23 will have a significant impact on our sales ramp or sorry the one milligram excuse me the 23 would have a significant impact got it um and then um just one more uh wondering if you give us any more detail on on the progress toward the 80 access goal

which I think was more toward the end of the third quarter. It sounds like it's evolving. And what proportion of NEFI sales do you expect to come from public programs like Medicaid?

Thank you. Yeah, and I'll speak a little bit to that. And, Eric, if there's anything I missed, you can add in. So at this point, we're at about, as of April 1, so UnitedHealthcare came to agreement with us, and we'll put it on unrestricted access on April 1. So, as of April 1, we'll be at about 51% of commercial patients will have access without a prior authorization. Now, it's a little over 60% total. But we actually focus on the ones that don't need the prior authorization because that's what we're realizing is the major barrier to prescribing NEFI for a lot of physicians, even those that are very favorable They honestly tell us they only have so many hours in a day and weekends to write prior authorizations. So it is a big headwind. With that also said, we just signed an agreement really just within the last week with Zinc. Zinc represents Caremark, Aetna, Anthem, and a number of other insurers, which is more than 25% of the commercially insured market. Unfortunately, or for whatever reason, I can't tell you, but Caremark typically only puts things on formulary either January 1 and July 1. So, we do currently expect them to put NEFI on formulary by July 1. They do make exceptions. It could go sooner, but we don't know that yet. If Caremark goes on formulary July 1, we also expect Aetna and Anthem to be on formulary, and by formulary I mean unrestricted access, right? So no prior authorization required because they're already approving prior authorizations fairly readily. But we do expect them to have unrestricted access by July 1 or sooner. So that would bring us very close to that 80% mark. Certainly, if you count all coverage, but even just counting unrestricted access, I think we'd be close to the 80% mark by July 1. And we think that's very encouraging going into the summer season on top of our DTC campaign and other information we'll be putting out to make doctors more and more comfortable with the use of NEFI. We think we'll all come together for this summer period and really hopefully drive sales over the summer.

Thanks for the color. Appreciate it.

One moment for our next question. Our next question comes from Alexa Deamer with Care Difference Gerald. Your line is open.

Good morning, everyone. This is Alexa Deamer on for Josh Shimmer and congrats to the ARS Pharma team on another great year. I wanted to ask what percentage of the epinephrine market is direct to patients in comparison to the broader entities like airlines and schools?

Okay, well, currently very little is being sold outside of the retail market. So almost all of our sales are retail. We are working with the two largest kit manufacturers for airlines who do want to replace other epinephrine products in the kits. Obviously, airlines have to opt in, but there's a lot of advantages to NEFI between the ease of use, the lack of the needle, which reduces liability for the airlines, as well as the temperature excursion data, the high temperature data, which is important in an airplane. But very little, and Eric, you can chime in here. I don't think much, if any, of our revenue is coming from outside of retail. We expect that to grow over time. But initially, it takes time for that to happen. And for example, the kit manufacturers did not want to put an F in the kits until the one milligram was available. So they're waiting because they need both doses. So at that point, we expect that to start to pick up over time. And again, not immediately because they're not going to go throw away all their kits or replace all their epinephrine in the kits. They're going to do it over time as it expires. Eric, do you want to add anything into that?

Rich, I'll just add that when we look at our forecasting, you know, it's really focused on the retail market. As Rich mentioned, kind of this public interest market of airlines. You can think about hotels, restaurants. law enforcement, emergency rescue, that's not included, but as time goes on in terms of education and awareness and them getting funding, we do have an opportunity in that channel. And then just one point back to Ryan's question too, just people may be thinking this, the one milligram is also included in all of our payer contracts. So again, once that's available, there's no issues with the doctor writing the one milligram in addition to the two milligrams.

And I'll just add one more point to that because You know, one of the things you need in a retail market is to find a way to make or to make it easier for some of these organizations, such as restaurants, to purchase NEFI, right? So, you can imagine a very well-off restaurant can easily afford to buy a couple boxes of NEFI. You know, most restaurants run on fairly tight margins, so buying NEFI to have in the restaurant is perhaps a hurdle. One of our largest advocacy groups actually came up with a great idea and is working on this independently of us because they want to see NEFI in the restaurants and they believe that without the needle, the liability again becomes much better so that the good Samaritan using NEFI can't hurt themselves versus an auto injector. They're actually negotiating with several of the largest insurance companies, and I've mentioned this to a few analysts already, to give a discount on their insurance if they have nephi in the restaurant or epinephrine in general and we think that's a brilliant idea actually because that would potentially pay for the nephi or the restaurant by giving a discount on their insurance if they actually have the epinephrine in the restaurant so those kind of things are all happening But again, we'll take some time before we start to realize significant revenue from those type of opportunities.

Awesome. Thank you, and congrats again.

One moment for our next question. Our next question comes from Louise Chen with Scotiabank. Your line's open.

Hi. Congratulations on all the progress this quarter, and thank you for taking my questions. I had a few for you. So first question I wanted to ask you was, How long does prior authorization for those payers that require you to do it usually last for? Does it have to be renewed? The second question I had was, do you have any data that talks about that upside expansion opportunity for you and how many of those patients you're actually picking up from there? Those that are untreated were previously diagnosed. And then last question is, I saw some headlines on the potential for epinephrine to go over the counter. Don't know if you have any thoughts on if that were to ever happen, what that would mean for you. Thank you.

Okay, so could you just repeat the questions one at a time, first question? Sorry, just to make it clear.

Yeah, yeah, sure. Yeah, sure. Okay, so I wanted to ask you with respect to prior authorization for the payers that require you to do it, how long does this usually last for? Does it have to be renewed at some point?

Yeah, I think, and Eric, you can add into this, but I believe that they need a prior authorization I mean, again, the nature of this is a little unusual. You might only get one or two or three prescriptions a year, right? So they're going to get a prior authorization for that prescription. Some of them are for one, some two. We've seen three prescriptions go through or three boxes in one prescription, I should say, three units pretty readily. But I believe they would probably need that prior authorization each time. So that's a huge burden. And if you think about the revenue, if on average right now, we're seeing 1.3 units per prescription. Now we believe that will go up significantly because a lot of those are cash pays where they're just buying one now and they'll get more once it's an unrestricted coverage, once their insurance company is covering it. But the, you know, if you think about it, it's only a little more than $500 in revenue to us, net revenue. So each prior authorization accounts for a very small net revenue, and that's why we believe in this category it's a major hurdle for the doctors. Do you want to add anything to that, Eric?

Yeah, I would just say it's a mix. It depends on the insurer, as Rich mentioned. Some will require it every single time. Others, it may be a little bit longer. But I also think it's important, as we mentioned in our presentation, that we are on track to hit that 80% of coverage in commercial. And when we say that, that's coverage with no PA. All of our contracts that we're putting in place with the GPOs, with the PBMs, again, we're not paying any rebates if there's any type of step edit or prior authorization. So we're really confident that, again, we're lowering the barriers in time here for physicians to write this product without a PA.

Okay, and if you could just repeat your second question again.

Yeah, sure. Okay, so wanted to ask you for patients that were previously diagnosed, so untreated with traditional epinephrine, how many of them have chosen to take your product just trying to, you know, assess the expansion opportunity and how that's progressing for you.

Eric, do you have that information? You know, we haven't broken out and done any claims analysis. We have plans to do that in the middle part of the year here. But, you know, from an opportunity perspective, as we've shared, there's 3.2 million patients that have current treatment. And then you're looking at another 16.5 that are diagnosed without treatment. Within that group, we know over the last couple of years, there's 3.3 million patients that have been prescribed epinephrine. About a third of them have filled, but they haven't refilled. So there is a significant opportunity there to re-engage those patients. When we talk to physicians, when we talk to patients in that group, the major reasons why they didn't refill or fill initially is because of the needle size, portability, and affordability as well. So, you know, when you look at our programs in commercial, again, if they're covered, $25 for the prescription, even if they get more than one carton, we only charge one copay, but we're able to, again, get reimbursed on, you know, two cartons or three cartons. the average co-pay for a needle injector is about $40. So I think we're removing a lot of the challenges in terms of a needle-free, easy-to-use, portable option, and we do see a very significant opportunity to reengage this population, whether it's through the physician or our DTC efforts that we'll launch in May. Does that help?

Yes. Can I ask one more quick question?

Yes.

Very good. Thank you. With the opportunity for epinephrine to go over the counter, what would that mean for you?

Yeah, it's been brought up to us multiple times, including by big pharma companies. Of course, we know the inhaled epinephrine is over the counter, but it's not systemic, and it's for, you know, asthma. The two criteria for over the counter, obviously, are first, safety. We believe Nephi is very safe, especially with only two doses. You can overdose on epinephrine, so that is a big risk. And FDA has raised significant concerns about levels above that observed with two EpiPens. So that's been a big, significant discussion for years and years and years that they just don't know the safety in real-world patients. with levels above that. So people that might take more than two doses of NEFI would be a concerned FDA. The other criteria is self-diagnosis. You've got to be able to self-diagnose that you have the disease. And there's a lot of causes of symptoms similar to food allergies that may or may not be an actual food or venom allergy. So, FDA would also have to get over that barrier of the ability of people to self-diagnose. So, while it's a discussion and would be interesting, I think it's a difficult hurdle for this type of product, just the profile for FDA. So, I would not expect it to go TC. Certainly, in the near future, I would not expect that to happen.

Thank you.

One moment for our next question. Our next question comes from Rowana Ruiz with Lyric Partners. Your line is open.

Hey, morning, everyone. So I was curious, what are you hoping to learn from the challenge clinic registry study for NEFI that's starting in April and around how long will that run for? And as you gather this data, would you present it in sort of a rolling basis this year at medical meetings or publications?

Yeah. So, first of all, this is going to be the largest randomized controlled study ever done with epinephrine, period. There's never been a study like this done. But now that we're approved, you know, FDA believes it's feasible. We believe it's feasible. So, it will be 600 people treated. 400 on FE, 200 on IM injection. And again, it will be randomized and partially blinded. By partial, I mean it's blinded up to the time the physician decides to give a dose of epinephrine. They won't know what the treatment is up to that point. The second dose would not be blinded because, of course, they know what they gave the first time. It would have to be the same product the second time if they need a second dose. So this is going to be a very significant study. FDA's primary interest is safety. Again, as I mentioned, all of our clinical trials are in healthy people in a clinic not having a reaction. So FDA is very interested in seeing real-world data of all comers. Basically, this study will be anyone they're going to give oral food challenge to is eligible to enroll. that would, you know, normally get epinephrine if they have a reaction. And so, it's a really real-world study where you're going to get patients with asthma, with all sorts of other concomitant meds. Nothing is barred in this study. So, we'll get a really good sense of the safety of nephi and also of injection. So, even prior injection, I don't think we have you know, a super good sense of that in a clinical environment like this where you're really recording things that are not just spontaneously reported. So that's the nature of the study. It's going to be, really, it's going to be an amazing study. We will do an interim analysis. I don't think we'll do multiple rolling ones because that's just not normally done, but we probably will do an interim analysis so that at least preliminary data will be presented probably at the next Quad AI meeting. and then we'll present the full data. And we will be looking at clinical outcomes as well, but those are secondaries because FDA did really focus on safety, that they wanted to understand the safety of NEFI, have better data on the safety of NEFI. We understand it's, you know, side effects are very mild and, you know, very infrequent, but nonetheless, they want to see in patients that actually have a reaction and are on all their concomitant meds or of all their other concomitant conditions that you typically see in this population. So that's really the main focus of the study. And we will probably do an interim analysis for Rwanda. So that's helpful as well.

Yep. Got it. Interesting. And then I wanted to follow up. I thought your KOL feedback that you mentioned earlier was really interesting in terms of physicians that want to switch all of their patients to DESE or possibly majority Do you have a sense of the proportion of physicians out there that you're detailing that have this interest?

I think it's mixed. I think of some we talk to at Quad AI, which are really the top tier physicians, to be very honest, because they're the ones that are going to the meetings and educating themselves. And, you know, I've had a number of conversations myself with a lot of these. And, you know, one major one told me that he just doesn't have He can't spend all, you know, all evening and weekends writing PAs, so prior authorization, so he's kind of limited. He's picking and choosing, but he would switch almost everybody, and he thinks almost all of his patients would prefer NEFI. And he also noted that he, in his region, he's a major advisor to pediatricians and general practitioners. So he had thrown out that he advises about 100 pediatricians and a couple hundred general practitioners that have patients. that contact him with questions. And he said none of them will write PAs. They just won't do it. So allergists are more flexible to write these prior authorizations where pediatricians just probably have less time, I don't know, or they're not as equipped in their clinics to write prior authorizations and manage it. So he said they just won't do it until that barrier clears. But even their contacting him about NEFI and wanting to prescribe, especially again to the children, are a primary focus of a lot of these doctors right now. But we think it's pretty prevalent. There are still a few that are waiting to see some real-world data, and we're collecting real-world data from a NEFI experience that looks spectacular right now. And once we get to a large enough, and right now we could talk about it a little bit if you want, but we're at about 758 patients treated that have been reported from 478 doctors. And the data's coming in really like it's working at least as well as injection, possibly even better. But nonetheless, once we get to maybe a couple thousand, we might do a publication, basically a letter to the editor of one of the major publications to give some data. And I think that's what a lot of them are waiting for. They're waiting to see, especially the less, let's say, academic scientific doctors that understand the data well. The other ones are like, well, okay, let me see it. used in a bunch of patients, and it's working well, and then I'll prescribe. And then they all agree this is a much better profile, much better product than injection for their patients, but a lot of them still have that hesitation. So that's another, one of the other two or three things we're focused on is really that access, unrestricted access, making the doctors comfortable and getting real-world data for them that it's really working equal to injection. And then the third is raising awareness among the patients and caregivers that NEFI is available and they can go get it unrestricted without complications or high fees. That's going to be a big initiative as well. And that's why we're aligning our DTC campaign with that access occurring and, you know, Some people say north of 50% is already good enough to start driving patients into the doctors. We're actually going to start that process when we're hopefully closer to the 80% mark so that people will get it very easily and without high co-pays.

Makes sense. Thanks a lot.

One moment for our next question.

Our next question comes from Lassen Henberry Brown with William Blair. Your line is open.

Hey, guys. Thanks for taking the questions. I guess the first one is just can you talk about the system that you have to go back to doctors or patients who were written a script and it wasn't approved once you get coverage with their insurer and sort of the system you have and maybe what you've seen from that so far as you've won. Yes.

Two different things. I would separate, if it's through BlinkRx, our online pharmacy, then BlinkRx is obviously keeping record of all patients who were denied a prior authorization or who even filed a prior authorization. So we have all that data and their contact information because they went through BlinkRx. So as insurers are added to coverage, and we get unrestricted coverage with new insurers, they can go back and inform the patient as well as the doctor that that patient is now covered and can go back and get NEFI without a prior authorization. So that's one thing I think Eric's team is doing quite effectively. The other is a little harder to deal with if it was a script written through a pharmacy. And of course, Even if we have the cash pay in place or, you know, patient goes and they don't have that copay assistance, you could have a lot of people walk away from the script that we don't want. We want them to go to the pharmacy and have that $25 copay. So in that regard, we're doing a couple things. The sales force is really tasked with informing the doctors that their patients are now covered for, let's say, United as of April 1, right? So, another couple weeks. If you're a UnitedHealth patient, which is about 8% of the United States commercial insurance, you can now go back and get that script again, or if the script is still valid, just go back to the pharmacy and get NEFI and not have to have the prior authorization. On top of that, we also don't want patients to walk away from a copay. So, if they have a with United, if they have an $80 copay, just throwing out a number just as an example, but you have an $80 copay for NEFI with United and you don't want to pay $80, but you would easily pay $25, you have to have our coupon from our website from your smartphone to give to the pharmacist. We are now working very hard with both CVS and Relay Health to sign agreements to to preload that card so when patients and caregivers go to the pharmacy, it will be automatic, that they won't have to have the coupon, and if they forgot the coupon. And, you know, surprisingly, even somebody I know who's used NEFI multiple times already, she has a lot of different allergies, and she's a very smart person. She actually paid $200 for NEFI, and she had authorization. She had prior authorization approved. or insurance coverage. And I was shocked. And I said, well, you know, didn't you use the coupon? And she said, oh. And I'm like, so we don't want that because she obviously could afford it. She didn't think anything of $200. But to a lot of people, $200 is a barrier and will walk away from the script. So we're trying to get that done as well to make sure that it's seamless. meaning you get your script from the doctor, you go to the local pharmacy, you hand the script to the pharmacy, which is sent electronically, of course, these days, so you don't actually have a physical script, but you go into the pharmacy and they just say your copay is $25 and you walk away happy. And that's really what we're trying to get to, to make that as seamless as possible for the vast majority of the population as quickly as possible, and especially going into this summer.

Great. Thanks. I mean, can you comment on, for the coverage that you've won so far, have you seen many of those scripts, for example, the ones through BlinkRx go back and get filled, or are those patients maybe when the initial script is denied, do they just get a script for an auto-injector?

Yes, I'll refer to Eric on that one, Eric. Eric, do you have any information on that as to when BlinkRx goes back after coverage?

I don't know. Yeah. Lachlan, we are seeing a percentage of those patients convert. We have a protocol in place, as Rich mentioned. Once we get coverage, and we've been doing this over the last couple of weeks, we're reengaging those patients. A portion of those patients opted to go to the cash prescription. But the other ones, we're getting a nice amount of them kind of coming back and saying, OK, hey, great. Now that my insurance is covering this, it's affordable. They're moving from kind of a submitted prescription that's waiting to obviously, you know, a dispense prescription. So they have. So we're not only doing that, as Rick said, with Blink, but our field team is also trained to engage the doctors on all these updates, really working closely with the staff because it's they're carrying that workload, too, of working with the patients and going through that process. So the field team has data based on each position of what payers their patient base represents and their messaging accordingly. So we're pulling that through and driving that all those wins that we're seeing.

Hey, great. Thanks. I got off the follow up.

Go ahead.

No, no. I was just going to add that again, a lot of people are telling us that they're just getting, if they're not covered, they're getting one now, but they want more than one prescription. So they're getting one now at the cash pay price of 199. And then they're waiting for coverage to, you know, for their insurer to cover NEFI so they can go back and get more because that seems to be a common strategy, common theme we're hearing from patients and caregivers that they just want the one initially. And I know we just spoke to somebody, an advocacy person in Utah, a state advocacy person that's working on the legislation in Utah. And her kids both have this disease and she has nephi and she was, you know, just waiting for her cases, everything. She wants her kids to carry it, right? She just loves nephi because her kids can actually carry it. So she went out and got it. And I'm sure she'll get more prescriptions. She just wanted to get one for each of the kids initially so that they have the NEFI in their hands, walking around with it, and they're really thrilled about it. So that's the kind of feedback we get all the time and heard from a lot of people already in that kind of mode of I'll pay for the one at the $199, but then I'll wait for insurance for more.

Okay, great. That's great context. And as a follow-up, you've talked about how access and getting the payer coverage is really important to driving prescription because of that prior authorization burden. Can you talk about the maybe lag that you see there? I mean, how quickly, when you sign a new contract, so far when you've signed new contracts and gone on formulary, Are you able to see an uptick in prescribing over the following, you know, weeks or a couple of months? Or, like, how should we think about what that sort of delay looks like?

It's a great question because I just asked that question yesterday of my team. And I think they're still collecting the data. I don't know, Eric, if you have it. I haven't seen it yet. But the example is kind of like Express Scripts, which started now – you know, a couple months ago, it really kind of hit with Express Scripts. So how are the, you know, sales going now with patients under Express Scripts versus other insurance companies, which may have only recently added NEPI, so it's not the data won't be as impactful. But I don't know, Eric, do we have any sense of that yet?

Yeah, we are looking at individual cohorts of patients based on insurance. I can tell you that the last couple weeks, especially with like Express Scripts, we're seeing an incline there in terms of share relative to what we see in the overall average. So that's what we expect to see. And for each of those plans that we're winning, you know, we're driving that through messaging, whether it's non-personal promotion, through marketing, but most importantly, through our direct efforts with our field team, you know, interacting with doctors, interacting with staff. I would say also that, you know, it takes time when the patient comes in, right? Certain patients see their doctor every six months, others maybe every year. But when they come in, now the doctor knows that if that patient has Express Scripts starting April 1st, United, that this is going to be covered without a prior authorization. So we are encouraged by what we're seeing in terms of the increases here, and it does really create a nice opportunity for us over the next couple of weeks, and especially going into the May back-to-school season with a lot of patients coming in to really drive this.

Yeah, just to add one more thing to that, I know we're actually going a little over time a little bit, but we just are now working with advocacy and on our website, posting a scorecard. We wanted to wait until we crossed that 50% mark, so United gets us there. But we're putting a scorecard, and the advocacy groups are going to post this on their websites as well, under their NEFI description, where it's going to show who's covering without any restrictions, without any prior authorization, who's covering but is still requiring prior authorization, Again, I don't differentiate between the insurer that's covering with prior authorization and one that's not covering at all, and then who's not covering at all. And there's two purposes of this. One is that I want the patients to know they're covered and the caregivers, right, and the doctors. So the scorecard's also being shared by our sales force with the doctors. But I also want them to know who's not covering because if your insurer is not covering and and you see this whole list of insurers that are, and you go and call up your insurer and say, hey, why are you guys not covering this and all these other insurers are covering it? We think that puts a lot of pressure on insurance companies to cover more quickly. So that's another strategy we have to try to facilitate that by now starting to make it very publicly who is covering without this prior authorization requirement and who is not.

And we're hoping that that will also start to have some impact over time. Thanks. One moment for our next question.

Our next question comes from Julian Harrison with BTIG. Your line is open.

Hi, good morning. Thank you for taking my questions and congrats on all the recent progress. On the CSU Phase 2b trial you expect to initiate in the next few weeks, I'm wondering if you could remind us of the competitive positioning here and any early feedback you have on preference for episodic relief versus chronic therapies in CSU.

Yeah, well, first of all, they're very independent, okay, because these people are all on chronic therapy, right? So you could be on chronic antihistamine, high-dose antihistamine therapy, or high-dose Zolair, and you still have flares. So what... What there is no current therapy for is those flares, meaning you're on Zolair and you're stable, but every couple months you have a big episode where you've got a couple days to a few days of severe symptoms all of a sudden, and it's very, very upsetting to these people. And a lot of times they get not only itchy and painful, but they also sometimes get angioedema, facial angioedema. So their lip swells up, their cheek swells up. They don't want to go to work. They don't want to go out. while that's happening. So the difference is you're on your chronic therapy and then you have a flare and now you can have an immediate treatment to treat that flare and resolve it within minutes and then go back and just go back to your daily life, go to work, go wherever you want to go versus go to the hospital and get The other current ways they deal with this flare is you either just tolerate it and hope or wait for it to go away, because it will go away, or you go to the hospital and get IV antihistamines at very high doses. It tends to be effective in a lot of cases. And then the other is to take a steroid, which takes hours to take effect, okay? So NEFI would provide a unique advantage of treating that acute event while they're on chronic therapy. So it's synergistic with chronic therapy. I just want to make sure it's clear that we are not intending to replace chronic urticaria therapy at all. This is a supplemental treatment to treat that exacerbation that occurs. And if you go back to the Zoller Phase III studies that were published, People on Zolair even will have three to six of these events a year. Well, actually more than three to six events. I should take that back. They went to the emergency room three to six times a year to treat this type of an event. So it's a pretty significant issue even on chronic therapies like Zolair. Now, there are a portion of people that are just stable on Zolair or antihistamine even that never have these events. but there's a large proportion of people that have these events, so it is an unmet medical need. We're not proposing to replace chronic urticaria therapies. We're looking at supplementing them. Does that help? That's very helpful. Thank you, and congrats again. Okay, thank you. Great.

And I'm not showing any further questions at this time. I'd like to turn the call back over to Richard.

Okay, well, I really appreciate everybody joining the call, and... look forward to the next conference call when we get closer to that summer period. Obviously, we think at that point we're hoping to see a significant uptick in scripts and then going into the summer when our DTC campaign starts in May, we really start raising that awareness. And we think you'll really enjoy our DTC campaign. We've been working very hard and we think it will be very, very positive, shifting the thinking, shifting the paradigm towards NEFI is easy, easy to carry, easy to use, and not threatening, and treat the symptoms immediately and don't wait for severe anaphylactic disease. So we think that that will really shift the paradigm towards earlier and earlier use of epinephrine in order to stop the symptoms immediately when a reaction occurs. And that's really how doctors want to see epinephrine used. So with that, I'll close the call.

Thank you, ladies and gentlemen. This does conclude today's presentation. You may now disconnect and have a wonderful day.