ARS Pharmaceuticals, Inc.

Good morning and welcome to ARS Pharmaceuticals' fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the company's prepared remarks, we will open the line for questions. Please be advised that today's conference is being recorded. I will now turn the call over to Justin Chukma, Chief Business Officer. Please go ahead.

Good morning and thank you for joining our fourth quarter and full year 2025 earnings conference call. With me on the call are Richard Lowenthal, our co-founder, president, and CEO, Eric Karras, our chief commercial officer, and Kathy Scott, our chief financial officer. Earlier this morning, we issued a press release detailing our financial results and commercial highlights for the fourth quarter and full year 2025. That press release and the slide presentation that we will refer to during today's call are available in the Investors and Media section of our website. Before we begin, please note that today's remarks may contain forward-looking statements. Actual results may differ materially. Please refer to our press release and SEC filings for further risk disclosures. With that, I'll turn the call over to Rich.

Thank you, Justin. Good morning, everybody, and thank you for joining us. 2025 was our first full year for ARS as a commercial company. It was a year focused on building infrastructure, educating the market, and learning as we introduce a new treatment into a well-established therapeutic category. NEFI is the only FDA-approved needle-free treatment for type 1 allergic reactions, including anaphylaxis. Real-world data from our NEFI experience program published in the Annals of Allergy, Asthma, and Immunology, showed that approximately 90% of patients experiencing anaphylaxis are effectively treated with just a single dose, consistent with published results for injection-based epinephrine products. These data support NEFI's profile as a safe, effective, and reliable treatment, which reinforces confidence among healthcare providers and patients. For our first full year of commercial sales, we generated $72.2 million in net product revenue. That performance reflects meaningful physician engagement and patient uptake across multiple commercial drivers, which Eric will discuss in detail. At the same time, quarterly progression has been shaped by the structural dynamics of this category, particularly the refill dominance, electronic prescribing patterns, prior authorization requirements, and seasonal factors such as deductible resets and back-to-school demand. Growth has not yet followed a linear trajectory, consistent with products launched in a mature refill-driven market. We believe this reflects market structure rather than underlying demand for NEFI. Legacy auto-injectors benefit from decades of embedded renewal behavior within physician workflows. Approximately half of these prescriptions are refills, most written electronically without an office visit. As a new entrant, NEFI has relied on new prescriptions, and we have not yet reached the point where expired NEFI product contributes to volume through refills. New prescriptions require office visits, education, workflow adoption, and administrative time, all of which introduce friction early in the launch. These realities informed our commercial team, and we have refined our execution approach going into 2026. As part of the continued refinement of our strategy, beginning the second quarter, we will expand our sales force and realign territories to increase engagement with our priority accounts. Importantly, this is funded through reallocation of existing commercial resources and will not increase our plan SG&A expense in 2026. We also strengthened our virtual and digital strategy. Given the dominance of electronic refills, long-term success requires participation in renewal workflows, not just influence of the initial prescription. Our Get NEFI on Us program at getnefi.com offers commercially insured patients a free virtual visit with a prescriber, along with a zero copay for eligible patients. Getnefi.com is designed to reduce administrative barriers and streamline patient transition from autoinjectors to NEFI. In parallel, we refreshed our DTC campaign early this year to emphasize practical real-world use, including fear-free administration and portability of NEFI. We are still early in building up the getnefi.com awareness. However, engagement indicators have been encouraging so far. Collectively, these efforts are intended to improve consistency and scalability over time, As we move forward into 2026, our focus remains on disciplined execution. Our priorities fall into three categories, access, adoption, and advancement. On access, we are committed to expanding unrestricted coverage with the remaining major PBM, CVS Caremark, where discussions are ongoing. In a high-volume category like epinephrine, prior authorization requirements can create meaningful administrative friction. Reducing that burden remains an important objective. We ended 2025 with approximately 93% overall commercial coverage, inclusive of plans that may still require prior authorization at approximately 57% of covered lives have access without prior authorization. On adoption, we are focused on deepening engagement in high-volume practices, improving workflow integration, and building the installed patient base. As the installed base matures and product reaches expiration cycles, renewal contributions should become increasingly relevant beginning later in 2026 and into 2027. On advancement, our international partners continue to secure regulatory approvals across Europe, China, Japan, and Australia, reinforcing the broader global opportunity of NEFI. We expect continued regulatory progress and partner-led launches in these territories in 2026. We also continue to advance our pipeline in the treatment of chronic spontaneous urticaria flares with interim data expected in the second half of 2026 from our ongoing Phase 2b trial. This is an indication with peak sales potentially as large as nephi and anaphylaxis. We remain on track to finish this study by the end of 2026 with phase three beginning in mid-2027. In summary, NEFI is a differentiated product operating within a large established market. We have made important progress in our first full commercial year, and we are applying those learnings to sharpen execution and improve consistency going forward. With that, I'll turn the call over to Eric to share more details on our commercial execution.

Thank you, Rich. 2025 was NEFI's first full year on the market, and one in which we learned a great deal about operating within a mature, refill-driven category. My comments will focus on four areas, prescriber adoption and field execution, payer access, consumer demand and DTC performance, and market expansion and refill behavior. Starting with prescriber adoption and field execution, As of the year end 2025, more than 22,500 healthcare providers have prescribed methadone, representing significant growth from mid-year levels. 50% of these prescribers are repeat writers, indicating continued usage once they gain experience with the product. Prescriptions remain concentrated amongst our high-decile allergists and pediatricians, with approximately 80% generated by decile 7 to 10 prescribers. This concentration validates our targeting strategy and reinforces that NEPI is gaining traction in high-value practices. Our sales representatives are highly focused on leveraging market access wins and account management in these practices. During 2025, we also gained clarity around how prescribing behavior is influenced. Approximately half of epinephrine prescriptions are refills, and the majority are written electronically without an office visit. As a result, influencing workflows, not just clinical preference, is essential. Our market analysis shows that driving prescriber change in high volume accounts requires consistent engagement, at least three calls per month, with both physicians and administrative staff who manage electronic prescribing systems. That insight underpins our decision to expand our field organization from 106 to 150. and to realign territories to increase interaction frequency with priority accounts. This is about improving execution intensity, not simply expanding our footprint. Turning to market access, we ended 2025 with approximately 93% commercial coverage, inclusive of plans where prior authorizations may still be required. We are highly focused on CVS Caremark, Anthem, and the large regional payers to ensure commercial coverage without restrictions. We've also secured unrestricted coverage for Medicaid patients in eight states. In other states, Medicaid coverage requires prior authorization, and we are working diligently to reduce barriers for healthcare providers and ensure affordability for patients in these highest volume states. Across commercial and Medicaid, we are encouraged by the ongoing discussions with payers and state-level decision makers and look forward to sharing more information during the second quarter as those discussions progress. For plans that require prior authorization, approval rates are approximately 55%. While approvals are meaningful, the administrative burden itself can dampen prescribing momentum in a high-volume category, which is why reducing pay requirements remains a top commercial priority. Turning to consumer engagement, our DTC efforts have materially increased awareness. Aided awareness has risen from approximately 20% pre-campaign to 60% today. Recent brand tracking data shows that about 55% of caregivers and patients recall seeing a NEPI advertisement. This exceeds industry norms and shows strong brand attribution. As expected in the first 12 to 18 months of a DTC launch, awareness builds ahead of full prescription conversion. While we are seeing lift in prescriptions, conversion is influenced by multiple factors, including ad frequency, appointment timing, product access, and payer coverage. Importantly, we are building a durable patient base and expanding brand equity, positioning us to translate awareness into sustained prescription growth as HCP adoption deepens and coverage continues to expand. Our messaging has evolved alongside the campaign, focusing more directly on the challenges with needle injectors. Previously, we emphasized differentiation with our Hello Nepi Goodbye Needles campaign. Recently, we've begun to emphasize the emotional and lifestyle benefits. reduced anxiety for parents protecting their children when heading to school, portability for people with active lifestyles, and greater confidence in administering Nepi without hesitation when needed. We are also integrating DTC with our digital conversion platforms, including our Get Nepi on Us program. Currently, approximately 10% of Nepi prescriptions are facilitated through this program. which allows eligible patients to obtain NEFI without waiting for their current needle injector to expire or requiring an in-office visit. We expect this percentage will expand meaningfully over the next 12 months as awareness grows as we more tightly integrate BTC and digital conversion pathways. The long-term objective is clear, build a large base of NEFI patients to renew electronically. As this base matures and NEPI gains market share, the renewal dynamics will act as a tailwind instead of a friction point. In the broader epinephrine autoinjector market, IQVA research indicates that only 31% to 39% of refill prescriptions are renewed after 12 to 24 months from the initial prescription. This reflects a natural level of patient turnover over time and creates a meaningful opportunity with the majority of patients to cycle renewal periods. Healthcare providers have multiple touch points to recommend therapy and to introduce NEFI as a better treatment option. To fully capture this near-term opportunity, it is critical that we participate not only in in-office prescribing decisions, but also in electronic renewal workflows, where many of these refilled decisions are made. Embedding NEFI into those digital pathways expands our ability to intercept patients at the point of renewal. Encouragingly, early patient surveys indicate strong refill intent amongst NEPI users, with initial renewal activity expected to emerge in 2026, though it remains early in our launch. Additionally, we are seeing prescriptions come from all patient segments, those who are newly diagnosed, those who were previously diagnosed and untreated, and those who had lapsed, which suggests both capturing share in the market while also expanding it. Over the course of 2025, we strengthened prescriber depth and engagement. We expanded commercial coverage. We materially increased awareness. We built a scalable virtual conversion infrastructure, and we began laying the groundwork for renewal-driven sustainability and growth. 2026 is about operational precision and consistency. The adjustments we have made reflect a deeper understanding of the category dynamics and the drivers of durable growth. Our objective is on steady, sustained growth built on tighter workflow integration and disciplined commercial execution and continued alignment between awareness, access, and prescribing behavior. I'll now turn the call over to Kathy.

Thank you, Eric. We'll walk through our financial results and then spend a few minutes on capital allocation, operating discipline, and our path to cash flow breakeven. For full year 2025, total revenue was 84.3 million, comprised of 72.2 million in U.S. net product revenue, reflecting our first full year of commercial sales, 9.7 million in revenue from collaboration agreements, and 2.4 million in supply revenue from our international partners. As we've emphasized in prior quarters, we believe U.S. net product revenue is the clearest indicator of underlying demand and commercial traction. That revenue stream reflects real market penetration and recurring prescription behavior. R&D expenses were $13.2 million, primarily driven by our product development, clinical trials, and personnel-related costs. SG&A expenses were $230.1 million, reflecting our investment in commercialization, including DTC and our sales team. These investments were intentional and strategic, designed to build durable market share and long-term brand equity. As noted, we are preparing to expand our sales force from 106 to 150, beginning in the second quarter of 2026. This expansion will be funded through reallocation of existing commercial resources, including reductions in lower-yield spend categories, such as certainly market research and non-core initiatives. As a result, the expansion is expected to be neutral to our overall SG&A run rate in 2026. This is an important point of our operating disciplines. We are not increasing spend, but optimizing it. We are directing dollars toward high-return, field-based commercial execution based on our insights and learnings we have gathered during launch, which we expect will accelerate revenue growth without increasing structural costs. This approach reflects a more focused and execution-driven phase of the launch. Separately, at year-end 2025, gross to net was in the low to mid 50% range. We continue to target gross to net retention of around 50% at steady state. As coverage broadens and prior authorization requirements decline, we expect greater predictability in revenue modeling and continued operating leverage. Turning to our cash balance, we ended 2025 with 245 million in cash, cash equivalents, and short-term investments. This provides a strong and flexible balance sheet for a commercial-stage company. Our current cash position is expected to be sufficient to fund ongoing commercial expansion of NEPI in the U.S. with continued investment in BTC and field execution, to advance our chronic spontaneous urticaria program, and to carry the company through expected cash flow breakeven, a critical milestone for the company. In summary, we are focused on strong execution, disciplined investing in our commercialization efforts, growing revenue and market share, and a clear path to profitability. With that, I'll turn the call back to Rich for closing remarks.

Thank you, Kathy. As we move into 2026, our focus is on steady execution, quarter by quarter. It is still early in the commercial lifecycle of MEFI, a product that addresses a meaningful need among patients and caregivers with food allergies. We are encouraged by the progress made to date, given the structural dynamics of this large established market, which takes time to navigate. Our priorities in the months ahead are expanding access, deepening the prescriber base, and office staff engagement and continuing to build a loyal patient base. At the same time, we remain disciplined in how we allocate capital and manage expenses. We believe we have built the foundation to support durable growth and long-term value creation. Thank you for your continued support. Operator, please open the line for questions.

Thank you. Ladies and gentlemen, as a reminder, to ask a question at this time, you will need to press star 1-1 on your telephone and wait for your name to be announced. To retry your question, simply press star 1-1 again. Please stand by while we compile again your roster. Now, first question coming from the line of Ryan Deschner with Raymond James Hill and is now open.

Hi, good morning. This is Anthony on for Ryan. Just one question from us. You've previously mentioned inventory dynamics were very different from 3Q to 4Q last year. How are you thinking about inventory dynamics in 1Q so far and into the 2Q back to school ramp?

Eric, do you want to take that question?

Yes. Good morning. Thank you for the question. We watch that number closely. It's called days on hand. And right now what we're seeing in the first quarter is something you would typically see, you know, managing days on hand. So we're very comfortable with that. As we get into kind of the June, July, August, and September timeframe, we'll obviously watch that closely too and make sure that we manage that. The wholesalers are looking at kind of like an average of the last couple of weeks and they project out. But obviously, you know, we'll watch that closely as the buying picks up.

All right. Thank you. And actually, if you don't mind, can I ask one more question? Sure. How are you looking at direct-to-consumer spend in 2026? And, yeah, that's it.

Yeah, so we expect that the direct-to-consumer spend in 2026 will be very similar to what we spent in 2025. It's about roughly $100 million between direct-to-consumer and direct-to-healthcare provider advertising. So that's what we're projecting right now.

Thank you very much.

Thank you. Our next question, coming from the lineup, Andres, are you guys with us? I'm Maria-Lena Smallfin.

You're taking our question. Congrats on a successful year. Can you give us a little bit more color on what you're seeing on the contribution from the Get MEPI program? And then also, how are you thinking about timing on extending unrestricted access? Yeah, maybe a follow-up. We'll say thanks.

Yeah, so first on the GetNefi.com, so we're seeing a little bit over 10% of our prescriptions coming through GetNefi.com at this point. We believe the program is growing well, so we see the trend lines are going well and it's starting to catch on. A lot of it is just building awareness of the program, and again, the program provides benefits to both the physicians by making it a little bit easier for them to deal with prescribing, and especially if there is a prior authorization necessary, and also for patients who want to get NEFI and don't want to wait the long periods of time it sometimes takes to get an appointment with an allergist to get in to get a prescription. So we think it's going to grow over time, and we're very happy with the program right now. And the second question, just remind me, Andreas, sorry.

Just more on the timing of expanding the access.

Yeah, well, right. Okay, so we believe we'll have some confidence in our coverage very shortly in the next month. Certainly Caremark will wait until July 1st, and then Anthem and Aetna can actually move a little bit quicker, and so can Blue Cross companies. If they put it on formulary, they can move a little quicker. But Caremark has a very rigid system, so they put it on July 1st. So we believe heading into the summer we'll have a fairly substantial expansion of our coverage. And then we're also working very heavily, Andreas, on getting additional Medicaid coverage, and we're making a lot of progress in that arena as well.

Okay, great. I'll hop back on the queue and congrats again on a successful year.

All right, thank you.

Thank you. Our next question coming from the line of Lachlan Hanbury-Brown with William Blair. Your line is now open.

Hey, guys. Thanks for the question. I guess I'd be interested on the sales force. You said the sort of expansion there is funded by reallocation. You mentioned a couple of points, but would appreciate any more detail you can give on kind of where that funding is coming from and what is, I guess, being deprioritized to fund the sales force.

Well, I think and Eric or Kathy can go into more detail, but I think, you know, some of it is coming from advertising. A lot of it is coming from market research where we were doing quite extensive market research and felt we can cut back on that and, you know, shift that funding over to the sales force. Kathy, do you want to go into any more detail on that?

Kathy, you may be on mute. I'm sorry, my audio is very garbled. I didn't hear that question.

So, Lachlan, you want to repeat the question?

Yeah, sure. I mean, I was just interested in a bit more color on where the funding for the Salesforce expansion is coming from or what's being deprioritized. And he said, you know, market research and a few other things in the call that I'm wondering

There's more you can elaborate on there. Rich, I can comment.

Yeah, go ahead, Eric. Good morning, Lachlan. As Rich said, you know, we looked across the entire marketing kind of commercial budget, and the things that we're taking down, like we looked last year at some of the large conferences, some of the regional conferences that we did, and we really did an analysis of the greatest impact in terms of And as Rich also said, we look to optimize kind of our spend from a media perspective, so some money from there. And then also just monies that the representatives use in the offices to bring in, you know, lunch and things along those lines, a very small portion. But, again, we feel very confident that this does not have any impact on our ability to execute what we need to do, but more important, pull through and the frequency that we see that really links to higher market share adoption is what we're excited about.

Okay, thanks. And maybe the second question, can you talk more about what you're seeing from the direct-to-consumer campaign? I mean, I know you said you're seeing good awareness increases, but are there any other signs beyond awareness that that's sort of having an effect or maybe even driving behavior, appreciating it's probably a bit early still to be seeing a meaningful shift in behavior?

Yeah, I think we do. I mean, there's different, you know, we have a lot of analysis that goes into that, and we can track back a lot of the behavior of patients when they actually watch a commercial, especially through connected TV or pop-up ads, and we can actually trace them back to their activity to going on the website and then getting the prescription. So we definitely see an impact of the direct-to-consumer.

And, Rich, I would just add, too, like when we do some of the surveys, too, the recall of the advertisement is in the, you know, mid to upper 50s, which really is strong and exceeds what we see kind of across the board in industry norms. So that's obviously encouraging in addition to the awareness. The feedback we've also heard, too, in some of our research of patients and consumers, too, is that the messages are resonating. We're very excited about the new creative campaign, too, as in my comments, and Rich talked to this as well, where it really gets to the point of the challenges with the needle injector, talks about the emotional impact, more of the ease of use of carrying, lack of hesitation, and even points that, you know, NEFI works just as well as a needle injector, those points are resonating and we'll continue to drive those with consumers and physicians.

Thanks.

Thank you. And as a reminder, to ask a question, please press star 11. One moment for our next question. Our next question coming from the line of Kevin Holder with Broad Capital Partners. Your line is now open.

Good morning. Thank you, and congrats on the quarter. The first one, I wanted to touch on the refill rates. You know, how should we be thinking about the timing and cadence of those refills, you know, and how it converts to revenue through 2026? And, you know, what do you anticipate the proportion of new scripts versus refills being by year end?

The proportion? Okay. So I'll talk a little bit first about the dynamics of the refills. So we are seeing some refills. Mostly at this stage we would expect it to be coming from patients who just want to get more NEFI. They got perhaps one or two boxes earlier and then wanted to get more. or because they've actually used the product and wanted to replace it. But we don't expect to see refill dynamics start from expiration until the end of this year. There may be some starting over the summer because of the back-to-school period and the fact that typically schools require that their epinephrine – Patients epinephrine, parents bring epinephrine to the school that will last for the full year. So a lot of our initial launch slots are going to start expiring at the end of 26, beginning of 27. So we would expect to see some meaningful refill dynamics pick up at that point when things start to expire and also, as I said, over the summer because of the need to have a prescription that lasts for the full year. What were you saying again, the last part of that question? You can just repeat it.

Yeah, of course. Just in terms of, you know, new scripts to, you know, refills, I think, you know, kind of how much, you know, what's the dynamic there?

Yeah, I mean, right now, I think the vast majority of our prescriptions are new prescriptions, so they're new patients. Eric, do you want to speak to that any more?

Yeah, I think from a top-line perspective, I mean, when we look at kind of our trends, and as Rich said, in the second half of this year, I mean, definitely than that year, year and a half mark. We are seeing patients right now, too, if you look at kind of the audiences that we've previously shared, like our P1 audiences, the patients that currently have a needle injector, about 75% of our prescriptions are coming from there. And then the P2, P3 audience are people that were either prescribed or diagnosed, haven't been prescribed. About 25% of our prescriptions are coming from that area. So this is from survey data of physicians and patients But again, certainly in the second half of this year, we'll see more of the refill impact given just the timing of the product being on the market for a year and a half to two years at that point.

Okay. That's helpful. Thank you both. And then just one more for me. You know, with the new advertising campaign that you launched in January, how should we be thinking about SG&A spend like throughout the rest of the year and the cadence?

I think it will be – we basically gave a little bit of guidance on that already, so I think it will still be consistent. I don't think the new campaign is changing that. It's just changing the messaging and the creative part of it. But as far as the spend, I don't think we're anticipating any change in the spend.

Okay. That's helpful. Thank you, and congrats on the quarter again.

Yeah. Thank you.

Thank you. And I am showing there are no further questions in the queue at this time. Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation, and you may now disconnect.