Silverback Therapeutics Aktie

Good morning, and welcome to ARS Pharmaceuticals First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I will now turn the call over to Justin Chakma, Chief Business Officer. Please go ahead.

Good morning, and thank you for joining our first quarter 2026 earnings conference call. With me on the call are Richard Lowenthal, our Co-Founder, President and CEO; Eric Karas, 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 first quarter of 2026.

That press release and our slide presentation 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, and good morning, everybody, and thank you for joining us on the call. We are off to a strong start in 2026, following our first full year as a commercial company and building momentum across the business. During the quarter, we continued to focus on key drivers of growth, which are expanding access, making neffy more affordable to patients and caregivers, increasing prescriber adoption and strengthening consumer awareness.

We have made progress in further positioning neffy as a differentiated and increasingly scalable treatment within a large market of type 1 allergic reactions, including anaphylaxis. In the first quarter, we generated $22.7 million in total revenue. This includes $17.5 million in U.S. net product revenue for neffy, which represents 3x the volume of neffy prescriptions year-over-year and more than double the revenue.

Our sales growth in the first quarter is a positive achievement given that the first 2 months of the year are typically the lowest volume period for epinephrine. This is due to the reset of health insurance deductibles on January 1. As additional context, epinephrine is in a mature refill-driven market, where approximately half the prescriptions are renewals typically written electronically without an office visit. As a new entrant, neffy has largely relied on new in-office prescriptions to date. We are now beginning to see shifts in the underlying market dynamics with improved payer access, reduced prescribing friction and maturation in the refill cycles for our installed base.

These factors, alongside the growth we've seen in demand, prescriber engagement and patient uptake provide the foundation for more consistent and scalable long-term growth going forward. Our neffy priorities remain focused on 3 areas: access, affordability and adoption. Starting with access. The primary barriers influencing prescriber adoption in this category are the prior authorization process and perceived misperceptions of out-of-pocket cost. Even when prior authorization approval is obtained, the process creates friction that can delay or deter prescribing.

Addressing these barriers is critical focus for this year. We ended the first quarter with approximately 90% commercial coverage, of which 57% was without prior authorization. At the state level, Florida, a bellwether Medicaid state has added neffy to its unrestricted formulary effective July 1, with many additional states progressing towards adding neffy to their preferred drug list. This brings us to a total of 9 states covering neffy under Medicaid.

The most consequential recent development is at CVS Zinc, which covers Caremark, Aetna and Anthem. Based on feedback from CVS in late April, we submitted an updated proposal to add neffy to their commercial formularies, removing the PA requirement and targeting a July 1 effective date. This proposal is now in the final stages of the formulary approval process. Based on the anticipated time line to approval, we should be able to provide more definitive updates within the next few weeks.

This timing has been extended beyond the original expectations due to the focus of PBMs on new legislation and the ongoing FTC-related interactions. Given Caremark's coverage and the typical alignment of Aetna and other Zinc-related plans, a neffy formulary addition would meaningfully expand access for patients this summer and bring the proportion of covered lives without prior authorization in line with other epinephrine auto-injector products.

In addition to our work with Caremark, we recently launched a new initiative to help make neffy more affordable for patients. We anticipate this will further improve health care provider willingness to prescribe neffy by addressing the misperception of high out-of-pocket costs for patients. This new system gives patients the ability to get the neffy $199 cash price directly through retail pharmacies. Historically, the $199 cash price was available only through our specialty pharmacy and telehealth channels.

Patients whose prescriptions were not covered by commercial insurance and who filled neffy at retail pharmacies could be quoted the product's WACC price plus pharmacy markup fees, in some cases, resulting in out-of-pocket costs of over $1,000. These high retail prices created confusion and impacted prescribing decisions. Under the new program, our patients with rejected commercial claims who fill their prescriptions at retail pharmacies will pay no more than $199.

We expect this program will increase the number of neffy prescriptions that are purchased by the patient and will help align health care provider perception with the reality of neffy's maximum $199 cash price. This is completely in line with other epinephrine auto-injector products. With the introduction of the $199 retail pharmacy cash option and CVS progressing through the final stages of its approval process, we believe that the proportion of covered lives with access to neffy without prior authorization is positioned to expand meaningfully over the coming months.

As payer access continues to improve, prescribing patterns should strengthen, particularly as we approach the back-to-school season. Together, these initiatives are expected to support sustained broad-based adoption with the commercial impact building progressively through the second half of 2026 and 2027.

Turning to adoption. We intend to deepen our reach within the highest volume prescribing practices and to build a durable patient base. In May, we expanded our sales force to 148 people with a focus on prioritizing accounts that drive the greatest prescription volume. As the patient base matures and product reaches expiration cycles, we expect refill contributions to scale later this year and into 2027.

At the end of March, the minimum age restriction was removed from the neffy label by FDA, enabling pediatric patients who are greater than 33 pounds and under 4 years of age to get access to treatment. We believe pediatric adoption will accelerate further as the recently approved broadened FDA label takes hold and real-world evidence of effect continues to build.

Further, through our growing neffyinSchools program, there have been over 200 successful uses of neffy in treating anaphylactic episodes reported by school nurses with very positive feedback. These experiences are helpful in building greater comfort and familiarity with neffy among patients and caregivers who often consult their school nurses as well as with prescribers. Beyond the U.S., our partners continue to position neffy for market adoption in other geographies.

Most recently, in April, Health Canada approved neffy as the first and only needle-free emergency treatment for allergic reactions, including anaphylaxis with commercial launch by our partner, ALK, later in 2026. Just before that, in March, the European Commission granted marketing authorization for Euro neffy 1 milligram, further extending the neffy access for younger children at risk of anaphylaxis in the European region.

Overall, we are well positioned heading into the important summer months and second half of this year to take full advantage of expanded access and improved affordability for neffy. Let me now turn the call over to Eric to share more details of our commercial execution.

Thanks, Rich. In 2026, we continue to evolve our commercial execution in response to market dynamics. We are confident that these efforts will help us increase neffy market share. There are currently about 120,000 patients using neffy in the U.S., 29,500 of them were added in the first quarter. However, there are still many patients with suboptimal care and significant opportunity to grow the market as we implement our commercial strategy focused on access, HCP adoption and consumer engagement.

The biggest takeaway from our first full year in the market is that commercial success is driven as much by ease of prescribing as it is by product differentiation. We know that the biggest way to enhance the ease of prescribing is to address prior authorization requirements. This is crucial not only because many PAs are denied, but also because the process disrupts prescribing patterns in a high-volume category with millions of prescriptions written each year.

And since many of those prescriptions are written quickly and often electronically, even small amounts of friction can disproportionately impact prescribing behavior. We have implemented additional support programs to help doctors complete prior authorizations more efficiently without disrupting their existing office workflows. By doing so, we can ensure that patients do not arrive at the pharmacy only to find that their claim has been rejected and that a PA needs to be written after their visit.

The goal is to minimize prior authorizations and simplify prescribing. We are building our commercial plans around the current view and evolution of the access environment. As Rich noted, our CVS Caremark proposal is in the final stages of the approval process, and we expect to share more in the weeks to come. In addition, our new retail conversion program works at the point of sale to reduce abandonment when a commercial claim is rejected. This program converts a denied claim into a cash price of $199.

We believe this will reduce the burden on health care providers and their patients while increasing prescriptions due to the simplicity of directing patients to retail. We expect to see an important cyclical effect here as HCPs prescribe neffy more, there will be more claims covered by insurance, which will help establish a solid base of patients who benefit from becoming neffy users who then become a patient base for future refills.

All of this is well timed ahead of the back-to-school season, which is typically the busiest period for prescriptions. We stand well prepared for that season this year. On the Medicaid side, we have secured unrestricted coverage for patients in 9 states, most recently in Florida, which is among the top 5 states in the epinephrine market. In other states where Medicaid coverage still requires prior authorizations, we are collaborating with state-level decision-makers to gain agreement on preferred formulary coverage.

Updated proposals similar to the one approved by Florida Medicaid have been well received. We are in active discussions with multiple states and state pooling groups and expect to achieve unrestricted coverage in the majority of Medicaid programs by early 2027. Given Medicaid currently accounts for roughly 1/4 of the overall epinephrine market, this will be a meaningful expansion. As we gain preferred drug status in more states, we expect to increase our market share and grow this segment simultaneously.

This growth is driven by unmet needs and undertreatment in the Medicaid population with affordable co-pays ranging from $0 to $5. Our goal is to translate the improvement in access into increased prescribing amongst the highest decile HCPs. In high-volume practices, prescribing is driven by workflow as much as clinical preference. Over the quarter, we had strong engagement with prescribers. More than 28,000 HCPs have prescribed neffy and approximately half demonstrate repeat use.

Our metrics show that prescribing continues to be concentrated amongst the highest decile accounts, reinforcing that adoption is occurring where it matters most. To ensure that neffy is consistently at the forefront of decision-makers and awareness is high across targeted practices, we have expanded our sales organization to 148 representatives and area sales managers, enabling more frequent engagement and deeper interactions with office staff.

This support includes assistance with prior authorizations and the conversion of electronic refill requests, resulting in tighter alignment between access wins and field activities. Our representatives have also established stronger relationships with HCPs and their staff to address back-to-school questions. And we're providing more information about neffy in waiting rooms and exam rooms to help health care providers educate their patients and encourage inquiries about neffy.

We are implementing significant awareness strategies targeting parents, particularly mothers through our direct-to-consumer efforts and social media campaigns. Our media efforts have been aimed at the best targets across various media, and we understand they are effectively reaching our target audience. To maximize patient adoption and request for neffy, this will continue to be an important area of strategic investment. Our virtual Get neffy program is also helping to grow our market share by reducing obstacles for patients. It allows them to take action without needing a traditional office visit and provides us with valuable data about our customer base.

We've learned that these patients tend to be older than our overall demographic. So we are implementing targeted direct-to-consumer marketing to effectively reach this audience and simplify their access to neffy. Over time, another primary driver of scale will be the participation in refill behavior. Starting this summer, families will begin renewing their neffy prescriptions to make sure they do not have a product that expires midway through the school year.

This annual market aspect will continue to expand and is a key driver of neffy's volume and market share as well as establishing a self-sustained model to grow the patient base. We are better positioned this year to take advantage of the increased summer volume as this is our second back-to-school season and our execution continues to sharpen.

In summary, for prescribers, our sales force is in the field, working to drive market growth, improve patient access and capitalize on market access wins. We're introducing more solutions to simplify the process for health care professionals and their staff, ensuring patients can obtain neffy at retail pharmacies. For patients and families, we have increased targeted direct-to-consumer media for the back-to-school season, including linear and connected TV, digital platforms, social media and testimonials designed to drive greater awareness and direct requests for neffy.

For payers, we believe the CVS Caremark process is nearing completion, and we've continued to expand access through Medicaid initiatives and favorable decisions. I'll now turn the call over to Kathy to cover the financials.

Thank you, Eric. I'll focus my comments on how our financial performance in Q1 reflects the continued evolution of our business, particularly as improvements in access and execution begin to translate into greater visibility, predictability and operating leverage.

For the first quarter of 2026, total revenue was $22.7 million, including $17.5 million in U.S. net product revenue for neffy. We had $2.5 million in revenue from collaboration agreements and $2.7 million in supply revenue from our international partners. The $2.5 million in collaboration revenue from international partners was part of a total $5 million milestone payment from ALK triggered by the approval of neffy 1 milligram in the EU. The majority of the balance of $2.5 million was recorded to the financing liability on the balance sheet.

U.S. net product revenue remains the clearest indicator of neffy demand. As access improves and pending the outcome of the CVS Caremark process, we would expect more consistent prescription capture and improved revenue through the second half of the year. R&D expenses were $4.3 million, reflecting continued investment in our development programs, including our chronic spontaneous urticaria study.

SG&A expenses were $72.2 million, reflecting our commercialization investments across DTC and field execution. We are continuing to refine how we allocate those resources. As we move further into 2026, the focus is shifting from infrastructure build to optimizing spend toward the highest return commercial activities. This is reflected in the expansion of our sales force in May, which is being funded through reallocation of existing resources. We continue to expect our overall SG&A run rate for 2026 to be slightly higher than the run rate for the second half of 2025.

Turning to gross to net. We remain in the low to mid-50% range and continue to target approximately 50% at a steady state. Importantly, the economics underlying our CVS Caremark proposal are in line with our overall long-term gross to net retention target. We ended the first quarter with $201 million in cash, cash equivalents and short-term investments. This provides flexibility to support commercial execution, pipeline advancements and progress toward cash flow breakeven.

As a reminder, this is a refill-driven category where adoption builds over time. Accordingly, we expect revenue to be weighted toward the second half of the year as we start the back-to-school season, prescribing patterns evolve and early refill dynamics begin to contribute. In summary, we are building a more predictable commercial franchise with neffy with disciplined spending and a clear path to profitability. We remain focused on sustained durable growth.

Let me pass the call back to Rich for closing remarks.

Thank you, Kathy. It's been a strong start to 2026, and we're underway on multiple work streams to continue to build and grow our neffy business. We expect neffy prescription growth to expand with the new initiatives we discussed that reduce provider and patient friction and which support current analyst consensus. A favorable CVS Caremark decision would only further accelerate our trajectory. I'm encouraged by the progress we've made and confident in our ability to execute in the months ahead.

Thank you for joining us. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from Roanna Ruiz with Leerink Partners.

I have a few questions from me. First one, just on the CVS coverage front and the goal of removing prior auths. Can you talk a little bit more about your level of conviction there going into the July 1 effective date? And could you explain a little bit more about how that could tie in with the back-to-school surge expectation later this summer?

Rich, could you check your mute button? We can't hear you. Eric and Kathy, are you guys still there?

Yes, I can hear you.

Eric, do you want to take that until we hear back from Rich?

Sure. As Rich mentioned and in my comments as well, we are nearing the process here of the approval process with CVS Caremark. When we look at what they represent in terms of the number of covered lives, CVS is 15%, Anthem is 5% and Aetna is 4%. So we do feel confident on the conversations that we've had with them.

And as Rich said, the updated proposal that we provided back in April, this would align nicely with kind of that July 1 start. And all the initiatives that we have going on through marketing, through our DTC campaign as well as our field force in terms of messaging and focusing on the top 12,000 physicians out there that really represent about 50% of the overall prescriptions.

Okay. That helps. And I noticed you were talking a bit about the refill contribution in the prepared remarks. Can you talk a bit about what magnitude of lift we might expect from refills going into later this year? And potentially, how should we think about that trend in 2027?

Yes, I can -- certainly, Rich, are you on yet?

I was on, but it wasn't working. Can you hear me?

You can take this.

Okay. So yes, we would expect that our lots expire kind of at the end of the year, beginning of next year of initial launch lots. However, many parents are going to need to get renewal prescriptions over the summer to have a prescription that lasts for the full school year. So we would expect that to start to contribute over the summer period for the peak season.

Got it. And the last question for me. I did want to ask about the -- it sounds like a lot of the high-decile accounts are prescribing neffy. When would you expect a little bit more broadening of prescribing to the lower decile accounts, thinking about all your initiatives that are going on right now and how that could progress into the future?

Yes. Eric can speak to this more, but I think that's already happening with the expansion of the base of physicians that have prescribed. And as we've described in the past, typically, there's a period of time where they're adopting a product, they try it out, they trial it. And then after they get comfortable, they become more of a frequent prescriber. So by seeing that very broadening of the prescriber base, I think we're already seeing that type of action.

And I would just add, Roanna, to the point Rich is making, too. We have over 28,000 physicians that have prescribed the product. So obviously, we're focused on about 12,000. Our partnership with ALK in the U.S. is focused on about another 8,000. So I think a lot of our nonpersonal promotion, DTC is also getting to those physicians. We do a significant amount of advertising through HCP media as well, the various conferences.

And we do see higher shares, as I mentioned, in our high-volume decile accounts, but we're also seeing traction with some of the lower decile, which they're not seeing as many patients on a monthly basis, but we are seeing some share growth in those groups as well.

Our next question comes from Lachlan Hanbury-Brown with William Blair.

Maybe just picking up on that last point, Eric. How should we think about market share growth sort of now into summer? Obviously, getting more coverage will probably be a big factor in that. But even before that with the new sales force or expanded sales force, I should say, in the field, should we expect to see market growth or market share growth over the next couple of months for...

Yes, Lachlan. So yes, we are expecting to see meaningful market share growth and our projections at least are that we would be on track with current consensus even without Caremark. So Caremark would add to that, of course, but we're fairly confident that we're going to be seeing the necessary market share growth week-over-week and month-over-month to consensus. And one thing I'll note is that we come back to analyst guidance on not necessarily the year numbers, but on proportion of the allotments to the various quarters because base, for example, if we compare to last year, [indiscernible] a little bit on the high end and a little bit on the low end. [indiscernible].

And Lach, I would just add to Rich's comments there. I think when you think about the programs that we mentioned in terms of streamlining prescribing, simplifying it, we believe there's definitely a halo effect there of making it easier for the doctors, for staff and for patients to get this. Our existing sales team is well trained. This is the second season for back-to-school, really strong relationships, tightening the message as well and making sure we're pulling through the market access wins.

And then when you think about the new team, they've been trained, they've been out in the field for a couple of weeks now, and they have all the same materials and approaches and strategies from the office. So we feel confident again going into the back-to-school season.

And maybe I realize it's probably still early, but have you seen any sort of traction or positive metrics in the efforts you're making to try to penetrate the electronic refill market?

Eric, do you want to take that?

Yes. A lot of this -- a couple of things. really has to do with each office and what the representative can establish with the folks that deal with electronic refills in the office. So we are focusing on that to make sure that we can interrupt that process. Often, it is messaging from one of the nurses or somebody that is in the office that takes those calls or takes them electronically. We're also -- we have implemented certain things into EHR systems, smart phrases.

So when the prescription comes in, there's some advertising and some information about neffy that pops up and kind of interrupts that process as well. So we'll continue to do that. But I think the combination of the other things that we talked about, access, these programs that make it even easier where, again, they can send it to retail, if there is any type of rejection, it flips over to $199 is going to help us get more of those prescriptions.

And maybe a final one. I know we've talked a lot about CVS, and there's been a lot of folks on that. But I think, Rich, you've also mentioned in the past a few other smaller plans that you were maybe expecting wins in the first half. Are there any updates there on those sort of smaller commercial plans outside of CVS Caremark?

Yes. The smaller ones we're focused on are mainly the Blue Cross companies. And of course, we're also working very hard with Medicaid, and that's progressing very, very well. So we will still be working to get additional state Blue Cross companies across the finish line coming into the summer season.

Our next question comes from Ryan Deschner with Raymond James.

Can you walk us through your strategy for raising awareness among physicians and pulling through the sales after the point you're able to potentially close on the deal with Caremark? And then I have a follow-up question.

Yes. I can talk a little bit to that, and Eric can follow up with additional. But -- so we are positioned with our sales force and also marketing teams to make sure we get out there ahead of the summer, ahead of when it goes on formulary to inform doctors that the coverage will be changing and exactly where.

We have a lot of also tools for the doctors that we already have implemented or we are implementing, which will help not only with them prescribing so that they know who's on formularies that are covering neffy, but also with those formularies that are still not covering neffy to help with prior authorizations.

So the marketing and sales team are pretty much aligned and ready to go with that. Once we get final confirmation from Zinc, CVS Caremark, we will be able to implement that very quickly and get ahead of it so that doctors are aware that the formulary will change as of July 1.

And just to build on that to Rich's comments, as I mentioned, I mean, we're focused on 12,000 physicians plus about another 8 or 9 on the ALK side. So Ryan, to all the points around messaging and resources, we have the materials ready to go, so we can just press a button and hit that switch. A lot of it is really focused on the prominence of a majority of commercial patients are covered, 0 co-pay, send it to retail. This is a smooth and easy process for you and your staff and for your patients.

In addition to that, the marketing team also has broad media, whether it's online search, banners, education online and the prominence of the coverage is going to be a focal point. We still want to make sure that we're selling on all the attributes that make neffy a better option in terms of safety, size and portability, temperature excursions and shelf life, but that front and center around the coverage is going to be critical.

And then we also implemented in addition to traditional speaker programs with health care providers, speaker programs for staff members that do a lot of the operations in the office, whether back to the point around the electronic refill, any back-to-school stuff, handling anything, we want to make sure that they're on board with everything around the product and how to easily get it for their patients.

Got it. And the other question, a few parts to the automated conversion process for denied claims. Curious kind of how this works operationally? Is it still being rolled out? Or is it already rolled out? And what proportion of scripts are currently being abandoned? And how big of an impact do you think this will have on those script volumes in the near term?

Yes. So again, I'll start out and then Eric can add in on some of the statistics. But we've already implemented just -- actually just recently. So just in this week, it's been implemented at the pharmacy level. So right now, I mean, we think that will have a significant impact. And it's -- a lot of it is just the noise. We've always had the $199 option, and we've made doctors well aware of that and how to get the $199 option.

But when you think about it, if a patient gets a prescription, goes to the pharmacy, they don't know if they're covered yet or not at that point and they get a very high retail price from the pharmacy, it's very negative and it comes back to the doctor as a negative situation, right? So this would at least convert that immediately at the pharmacy level to $199 price, which doctors feel is very reasonable.

It's consistent with cash prices for auto-injectors, cash and even less than AUVI-Q's cash price. So that would hopefully temper or expected to temper a lot of that negative noise to the doctors about the price. And then -- but it would be automatic at the pharmacy level. So patient would never see that retail price. They would automatically at most see a $199 price. They would still, in some cases, come back to the doctor and ask for the prior authorization. but at least they're not getting those very high retail prices, which could be as high as $1,000 at some pharmacies.

Rich, I can just add a few points to that as well. Ryan, there's 3 main vendors that do this type of work, as Rich said, at point of sale. So it's done instantaneously. If the prescription comes in, it's a covered claim, they get their co-pay, hey, it's $10. If it's anything around on the back-end rejection, it doesn't even go through that, just says here's the price. So these 3 vendors, we already work with them for our co-pay program.

So these are well-established programs. They work smoothly. There's no interruption where the pharmacist says to the patient, hey, you're not covered in this and we can do that. So this makes it a lot easier. They cover about 90% of pharmacies. So it's a pretty good coverage. About 55% of our prescriptions right now are going through retail. The other 45% are going through our Blink program. But we anticipate that to go up as we get more coverage and make this easier for doctors where they could just send their patients to retail.

So the abandonment that we see in the category overall is very similar for neffy. It's in the mid 22%, 23%. But then you also have patients that when it is a rejected claim, there are a lot of patients that are lost to follow up where nothing really happens or they go back to their treatment. So we think this is a really simple solution. It's something that is easy to implement. And again, it's all about making the prescribing process to simplify it, but making sure when a doctor writes this, that the patient gets it and making it easy for their staff as well.

So it's a really simple message that our reps and through our other promotion, we're obviously directing to health care providers and their staff.

Our next question comes from Josh Schimmer with Cantor.

First, for the comment about being funded to breakeven. Maybe you can help us with some of that math given the burn this quarter in cash position. It doesn't seem entirely obvious to me how you get there? And then second, what was the royalty payment from ALK in the first quarter? I wasn't able to find that in the 10-Q.

Yes. So I think we -- in our projections, we will get to cash breakeven by mid-2027. We expect our loss to go down over time. First quarter, as you know, I mean, looking at this quarter is the worst quarter of the year historically for epinephrine. So in our case, last year, it was 11% of our annual sales. So I think we believe that through the second half of this year, the loss will be significantly less at least runway into next year, and we'll have breakeven sometime before the middle of next year, so first half of the year.

So that's our projections right now. And again, I think it depends on the allocation of how you're looking at funding across the quarters. And we are also, Josh, looking at our burn. Donn Casale will be coming in soon. We're having a lot of discussions about how to reallocate funding to what's giving us better return on investment. We now have a lot of experience with our DTC campaign, and we may end up moving some of that money around and even cutting some of the expenses. So that will be something that's ongoing and will also help us achieve that goal.

And Josh, with respect to the ALK payment, it was less than $100,000 for the quarter. ALK is -- which is the reason we didn't call it out in the quarter. ALK is really just getting up and running with multiple countries. And so they're just starting their run rate. So we do expect that to grow going forward.

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.

Good morning, and welcome to ARS Pharmaceuticals Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I will now turn the call over to Justin Chakma, 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 Karas, 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. Neffy is the only FDA-approved needle-free treatment for type 1 allergic reactions, including anaphylaxis. Real-world data from our neffy 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 neffy's profile as a safe, effective and reliable treatment, which reinforces confidence among health care 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 neffy.

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, neffy has relied on new prescriptions, and we have not yet reached the point where expired neffy 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 in 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 planned 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 neffy on Us program at getneffy.com offers commercially insured patients a free virtual visit with a prescriber along with a zero co-pay for eligible patients. getneffy.com is designed to reduce administrative barriers and streamline patient transition from auto-injectors to neffy. In parallel, we refreshed our DTC campaign early this year to emphasize practical real-world use, including fear-free administration and portability of neffy.

We are still early in building up the getneffy.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 3 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 and 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 neffy. 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 IIb trial. This is an indication with peak sales potentially as large as neffy and anaphylaxis. We remain on track to finish this study by the end of 2026 with Phase III beginning in mid-2027.

In summary, neffy 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 neffy'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 4 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 health care providers have prescribed neffy, representing significant growth from midyear 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 neffy is gaining traction in high-volume 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 3 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 have also secured unrestricted coverage for Medicaid patients in 8 states. In other states, Medicaid coverage requires prior authorization, and we are working diligently to reduce barriers for health care 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 neffy 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 neffy, 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 neffy without hesitation when needed. We are also integrating DTC with our digital conversion platforms, including our Get neffy on Us program. Currently, approximately 10% of neffy prescriptions are facilitated through this program, which allows eligible patients to obtain neffy 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 DTC and digital conversion pathways. The long-term objective is clear: build a large base of neffy patients who renew electronically. As this base matures and neffy gains market share, the renewal dynamics will act as a tailwind instead of a friction point. In the broader epinephrine auto-injector market, IQVIA 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 cycling through refill decisions within 1 to 2 renewal periods.

Healthcare providers have multiple touch points to recommend therapy and to introduce neffy 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 refill decisions are made. Embedding neffy into those digital pathways expands our ability to intercept patients at the point of renewal. Encouragingly, early patient surveys indicate strong refill intent amongst neffy 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 are 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. I'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 certain 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 discipline. 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 cost. 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 neffy in the U.S. with continued investment in DTC 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 life cycle of neffy, 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.

[Operator Instructions]

Our first question coming from the line of Ryan Deschner with Raymond James.

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. 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 managing days on hand. So we're very comfortable with that. As we get into kind of the June, July, August and September time frame, 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, we'll watch that closely as share and volume increases in the back-to-school season when the volume picks up.

All right. And actually, if you don't mind, can I ask one more question?

Sure.

How are you looking at the direct-to-consumer spend in 2026? And yes, that's it.

Yes. 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-health care provider advertising. So that's what we're projecting right now.

Our next question coming from the line of Andreas Argyrides with Oppenheimer.

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 neffy program? And then also, how are you thinking about timing on expanding unrestricted access? Yes, maybe a follow-up.

Yes. So first on the getneffy.com. So we're seeing a little bit over 10% of our prescriptions coming through getneffy.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's a prior authorization necessary and also for patients who want to get neffy 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.

Yes. 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 1. 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 1. 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.

Our next question coming from the line of Lachlan Hanbury-Brown with William Blair.

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 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 shift that funding over to the sales force. Kathy, do you want to go into any more detail on that? Kathy, maybe on mute.

I'm sorry, my audio is very garbled. I didn't hear the question.

So Lachlan, do you want to repeat the question or...?

Yes, sure. I mean I was just interested in a bit more color on where the funding for the sales force expansion is coming from or what's being deprioritized? I know you said market research and a few other things in the call, but wondering if there's more you can elaborate on there.

Rich, I can come.

Yes. Go ahead, Eric.

Lachlan, as Rich said, 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. We really did an analysis of the greatest impact in terms of prescribers being there and then we do promotional tracking of them. So we took some of that budget down. As Rich also said, we look to optimize kind of our spend from a media perspective, so took some money from there. And then also just monies that the representatives use in the offices to bring in lunch and things along those lines, a very small portion. But again, we feel very confident that just does not have any impact on our ability to execute what we need to do, but more importantly, to take the sales force from 106 to 150 to make sure that we have that really, really strong account management pull-through and the frequency that we see that really links to higher market share adoption is what we're excited about.

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?

Yes. I think we do. I mean there's different -- 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 could actually trace them back to their activity to going on the website and then getting a 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 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 just 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 neffy is -- works just as well as a needle injector, those points are resonating, and we'll continue to drive those with consumers and physicians.

[Operator Instructions]

Our next question coming from the line of Kevin Holder with ROTH Capital Partners.

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

On 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 neffy. They got perhaps 1 or 2 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 -- that patients, epinephrine parents bring epinephrine to the school that will last for the full year. So a lot of our initial launch lots 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 [indiscernible].

And what were you saying again, the last part of that question, if you can just repeat it.

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

Yes. 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?

Yes. 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, there is volume that will be coming from refills because we're hitting more than that year, 1.5 years mark. We are seeing patients right now too, if you look at kind of the audiences that we've previously shared, like our P1 audience is the patients that currently have an 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 1.5 years to 2 years at that point.

Okay. that's helpful. And then just one more for me. 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.

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.

Good morning, and welcome to ARS Pharmaceuticals Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I'll now turn the call over to Justin Chakma, Chief Business Officer. Please go ahead.

Good morning, and thank you for joining our third quarter 2025 Earnings Conference Call. With me on the call are Richard Lowenthal, our Co-Founder, President and CEO; Eric Karas, our Chief Commercial Officer; and Kathy Scott, our CFO.

This morning, we issued a press release detailing our financial results and commercial highlights. That press release and the slide presentation, which we'll refer to today during today's call, are available in the Investors and Media section of our website at ars-pharma.com. Before we begin, please note that today's remarks and slide presentation 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 to discuss what has been a pivotal quarter for ARS Pharma, driven by the continued momentum of neffy in the U.S. and around the world. Third quarter marks a true inflection point for our business. As you can see on Slide 3, U.S. net product revenue for neffy grew again quarter-over-quarter, reaching $31.3 million in Q3, representing a 2.5-fold increase from the prior quarter and exceeding consensus expectations of $28.3 million. This change reflects a strong growth in new patient starts and overall demand for neffy. Surveys among neffy users indicate that we can expect durable utilization and reoccurring refill behavior. Trends that we expect will continue to build as both coverage and awareness expand. These results show that our multifaceted commercial strategy is delivering results.

Later this month, our first analysis of real-world treatment outcomes from the Neffy Experience program will be published in the annals of allergy, asthma and immunology with a total of 554 patients treated. Finding show that about 9 out of 10 patients experiencing anaphylaxis were effectively treated with a single dose of neffy, which is consistent with outcomes for epinephrine injections where either IM injection or EpiPen require a second dose approximately 10% of the time to resolve the event. Updated results in 680 patients were highlighted in an oral presentation at ACAAI and reinforce that neffy delivers equivalent outcomes to injection products in real-world use. On top of a series of case reports also presented at ACAAI by independent physicians, we expect additional peer-reviewed publications in 2026 that will further validate neffy's clinical experience with injection products.

Before Eric reviews our commercialization details, there are 2 important topics I want to touch on today. First, why neffy's revenue trajectory isn't accurately reflected in IQVIA's script data? And second, what we've learned from recent market dynamics, including back-to-school seasonality. Starting with IQVIA. As we've noted before, the weekly IQVIA rapid data, which are generally available on a paid subscription basis, provide a directional view of prescription activity but are not completely accurate and reliable measures of neffy's true performance or market share. IQVIA data sets often exclude a number of channels that are central to our business. including certain retail, mail order and specialty pharma volumes as well as bulk purchases by institutions and clinics that buy directly through wholesalers. These additional sales are not accurately captured by IQVIA and are variable from week to week and thus cannot be predicted.

Turning to market dynamics. During the back-to-school season, allergists and pediatricians experienced a huge surge in patient visits, including checkups and support physicals. That higher patient volume means that HCPs have significantly less time for an appointment, typically just 5 to 7 minutes per patient, leaving little to opportunity to discuss new treatment options or changing prescriptions. That challenge is even greater for patients who still need prior authorizations. As a result, in the second half of Q2, we saw a temporary pause in market share growth. Importantly though, we view this as a onetime event. Looking ahead to Q4, market share growth has resumed. Although we anticipate Q4 sales will decrease from Q3 given the overall epinephrine market typically declines about 1/3 due to seasonality and the holidays. Then as we move into 2026, we expect to return to quarter-over-quarter growth as both market share and overall prescription volumes rise in parallel.

To further drive adoption and accessibility, we recently launched our new Get neffy on us program at the getneffy.com website. This is an important initiative designed to help patients switch to neffy year round with a hassle-free virtual prescriber interaction at no cost to patients if covered by insurance. This program is anticipated to help accelerate sales growth year round and circumvent the hectic back-to-school season. Eric will share more details, but this program removes much of the patient and physician burden in prescribing neffy by shifting the prescription, prior authorizations if needed and patient training to our virtual physician system. Once patients are on neffy physicians can more easily manage refills electronically or patients can return to getneffy.com to get additional renewal prescriptions. Together with our broader DTC campaign, this initiative makes it simpler than ever for patients to experience the benefits of neffy and represents a key driver of long-term adoption.

In fact, we already have proof of what hassle-free prescribing can do for neffy sales. Your neffy was launched in Germany in late June, where there is a more seamless prescribing experience without additional HCP paperwork. The slope of the market share capture in just the first few months has been 3x higher than what we've seen in the U.S. showing just how impactful growth can be when administrative burdens are not a barrier. This is also a strong signal for our global growth trajectory. neffy received approval in Japan in September with launch anticipated to start in the fourth quarter of 2025. We expect approvals in Canada by the first quarter of 2026, with launch expected in the first half of 2026, and we expect approval in China in the first half of 2026. We expect that as these launches begin, they will start to contribute to the total revenue and cash proceeds in the second half of next year as distribution scales across partner regions.

On the clinical front, Enrollment is ongoing in our Phase IIb urticaria trial, and we are on track for top line data in the middle of 2026. This indication represents a major label expansion opportunity in a 2 million patient market in the United States. Early market research with allergists support that our nasal spray product, if approved, could be prescribed to more than 60% of all of their CSU patients, irrespective of whether those patients are on antihistamine, biologics or combination therapy. Finally, in September, we secured an up to $250 million term loan facility from which we drew down $100 million initially. Strategically, we chose the structure in partnership with our largest shareholder, over other capital vehicles to increase commercial investment and further strengthen our balance sheet without dilution. This reflects our confidence and that of our investors in neffy's durable cash flow profile and long-term potential.

Our planned investments are geared towards expanding the current market and improving adherence and refill rates, reengaging lapsed patients and activating untreated patients as well as converting the current $2 billion annual U.S. epinephrine market at neffy net price. With this financing, we ended Q3 with approximately $288 million in cash, cash equivalents and short-term investments, giving us even more flexibility to support our evolving commercial initiatives. In summary, we're building momentum across every dimension of our business from revenue growth and market share growth to access real-world evidence and global expansion, all while maintaining a strong balance sheet.

I'll now turn it over to Eric to provide more detail on our U.S. commercial performance.

Thanks, Rich. The fundamentals of our commercial execution continue to strengthen, and I'm pleased to share how our strategy is translating into tangible results. Starting with revenue drivers. Our $31.3 million in U.S. net product revenue reflects not only traditional retail pharmacy prescriptions captured in IQVIA data, but also institutional sales to universities and colleges, as well as retail orders from clinics and hospital networks. This quarter, we've observed modest improvements in gross to net retention with cash prescriptions decreasing from about 20% to approximately 12% of total volume. By offering cash prescriptions through BlinkRx and other directly managed programs and optimizing our co-pay buy down program at the point of sale, we've gained greater control which led to favorable gross to net performance and improved profitability. Our DTC campaign is also delivering meaningful engagement as seen on Slide 4.

Consumer awareness has climbed from 20% pre-campaign to 56% as of September, and intent to get neffy remains high. Approximately 80% of surveyed patients say they are very likely or extremely likely to ask their health care provider about neffy after learning about it. The early lift from the campaign aligns with benchmarks for promotionally sensitive brands, and we believe it will continue to improve as awareness grows. To accelerate greater adoption, we're excited to introduce our Get neffy on Us initiative, which is part of our direct-to-consumer campaign. As outlined in Slide 5, this program was designed to simplify access to neffy. Patients can schedule quick virtual visit with the prescriber to get started. Once prescribed, neffy can be shipped directly to their home or picked up at the pharmacy of their choice, typically with a 0 co-pay for most commercially insured patients. Importantly, patients are not required to wait for their current auto-injector prescription to expire. They can transition to neffy immediately without the need of an additional appointment with their HCP.

By minimizing hassle, assisting with coverage in the prior authorization and enabling straightforward auto refills, this program makes it easier than ever for patients to choose neffy and stay protected. We've incorporated the Get neffy on Us program into all of our DTC materials. An early survey feedback shows that a majority of patients are open to using the virtual prescriber option. We believe this initiative will encourage consistent prescription switches throughout the year, extending beyond the usual back-to-school period and maintaining growth even during traditionally low volume months. We are also seeing meaningful expansion in reach and adoption. Turning to Slide 6. To date, over 18,000 health care providers have prescribed neffy, an 85% increase since August of this year. with 81% of prescriptions coming from top decile 7 through 10 prescribers.

Market share amongst new prescribers is at [ 10.3% ], outpacing existing ones with the same call frequency signaling faster uptake as new doctors benefit from refined messaging, an easier prescribing experience and growing real-world evidence. These operational improvements are driving momentum and scaling our efforts. On the pediatric front, our ALK co-promotion has efficiently extended our reach to approximately 9,000 pediatricians, where our market share continues to grow. In addition, approximately 6,500 schools have opted into our neffy schools program, providing access to emergency doses at no cost. Perhaps most importantly, we're seeing early signs that neffy is expanding the overall epinephrine market, not just taking share. We're reaching new patient segments as seen on Slide 7. Amongst patients prescribed neffy, approximately 19% relapsed patients who had stopped filling prescriptions and 7% had never filled at all, despite being diagnosed. These patients who stayed away primarily due to needle anxiety or device complexity. In total, about 1/4 of patients prescribed neffy are from these new segments.

As summarized on Slide 8, patient satisfaction is remarkably high. 87% of neffy patients positive impact on their daily and social life, 95% say they are likely to refill their prescription compared to actual refill rates of around 30% for needle injectors. The current epinephrine market is valued at $2 billion annually at neffy's net price, growing at 6% to 8% organically prior to neffy's entry in branded promotion. And this year, we've seen year-over-year growth at 9% and year-to-date growth at 8% as both neffy share and expands the market through improved refill rates, new patient adoption and higher devices per patient, the opportunity is significant. In summary, our U.S. launch execution is progressing well, and we are gaining momentum. We are excited about the ongoing investment in direct consumer initiatives, the launch of the Get neffy on Us Program, discussions with payers and our efforts in the field to increase market share amongst targeted HCPs. We look forward to driving growth and our commercial infrastructure is optimized to scale sales rapidly through 2026.

I'll now turn it over to Kathy to discuss our financials.

Thank you, Eric. We continue to maintain a strong financial position while investing significantly in the commercial growth of neffy. Looking at our third quarter 2025 financial results on Slide 9. Starting with revenue. We recorded total revenue of $32.5 million. As we've discussed, it's important to look at U.S. net product revenue separately from collaboration and supply revenue. Our U.S. net product revenue from -- before neffy in Q3 was $31.3 million, representing a near 2.5-fold increase from the prior quarter. We recognized $1.1 million in supply revenue from partners during the quarter. We also earned royalties of $0.1 million from ALK related to the launch of neffy in Germany. In accordance with GAAP, these royalties were recorded to the financing liability on the balance sheet rather than our P&L.

Turning to our operating expenses. R&D expenses for the third quarter were $2.8 million. primarily related to our ongoing Phase IIb urticaria trial and continued development expenses for neffy. SG&A expenses were $74.8 million, reflecting our ongoing investment in our national DTC campaign and sales and marketing efforts. While SG&A spend increased with DTC expansion, these are deliberate investments designed to drive durable share growth, we spend efficiency and improving quarter-over-quarter. We remain committed to making substantial investments in neffy to ensure both short- and long-term market share capture and brand awareness. Our gross to net retention in the third quarter was modestly higher than in the second quarter due to certain channel dynamics.

Looking ahead, we expect gross to net retention to remain in the low to mid-50% range even with the reduced $0 co-pay program. Net loss for the third quarter of 2025 was $51.2 million or $0.52 per share. Lastly, as of September 30, 2025, we have cash, cash equivalents and short-term investments of $288.2 million. In September, we secured a senior secured term loan facility with RA Capital, our largest shareholder, and life sciences of up to $250 million. We drew an initial $100 million from this facility, which will be used primarily to accelerate neffy's commercial growth. The funding will also support our marketing and medical affairs initiatives to generate and disseminate real-world evidence about neffy's effectiveness. This financing provides several strategic advantages. First, it's an attractive cost of capital at SOFR plus 5.5%, with interest-only payments through September 2030, 0 dilution and terms similar to recent commercial stage deals such as Verona Pharma. Second, it comes from high-quality investors who understand their business and are aligned as long-term partners. Third, it maximizes our flexibility for commercial initiatives, including DTC campaigns and real-world evidence generation.

Our current cash position is expected to be sufficient to achieve cash flow breakeven without additional equity financing while maintaining the resources needed to fully capitalize on the U.S. commercial opportunity for neffy and benefit from the continued U.S. growth and expanding international revenue.

With that, I'll pass the call back to Rich.

Thanks, Kathy. As we look ahead, we remain laser-focused on our key priorities: first, sustaining and accelerating neffy U.S. market share growth through the fourth quarter and into 2026. Second, enabling neffy global expansion through launches in multiple geographies across our partner network. And finally, advancing our clinical stage or to carry a program towards a potential label expansion. Our momentum continues to build across every dimension of our business, and we are confident in our path towards long-term growth and profitability. Most importantly, we're executing our mission of transforming how severe allergic actions are managed and fundamentally impacting the lives of patients, families and caregivers. Thank you for your continued support.

Operator, please open the line for questions.

[Operator Instructions] Our first question comes from Lachlan Hanbury-Brown with William Blair.

Congrats on the quarter. I guess first question is maybe just -- I know there were obviously some high expectations in Q3, And would be curious to hear how these results sort of stack up to your internal expectations heading into the quarter? [Technical Difficulty]

We apologize for the technical difficulties. Lachlan, you're back on.

The first question was just, I know there was some high expectations heading into Q3 with the back-to-school season. So I was curious how this performance sort of stepped up to your own internal expectations? And yes.

Yes. Lachlan, this is Richard Lowenthal. So I think the performance we've reported obviously was better than analyst expectations. And we met our expectations. I mean we've spoken a little bit about the difficulties over the summer and doctors burden and why we are shifting a lot of our attention towards our Get neffy on Us program. which physicians right now are giving us feedback that they're very, very positive about this approach. So we obviously would have liked to have seen a better performance over the summer. But I think it met our expectations. And I think we learned and adjusted very quickly to avoid the issue of the doctor burden problem that we experienced.

And I would just add too, as we stated in the prepared remarks, I mean, the growth of new prescribers and prescribers overall has been strong in Q3 and throughout the summer. As I mentioned also, what we're seeing with that group of doctors to it I think just really focused messaging, real-world data and then some of the programs that we put in place is a higher share. So that's very encouraging. And then increase that the consumer awareness with our DTC campaign continue to grow through the summer months.

Yes. So Eric, on maybe that point about the higher share in the newer prescribers. Is that a higher share a certain time after writing their first script or just an overall higher share among them than the original prescribers? And if so, maybe why are the initiatives that are getting higher share in the new prescribers not driving further share growth in the prescribers at the same rate?

Rich, I can take -- do you want to take that one?

No, no, you can take it.

I think as I mentioned, the focus on kind of tighter messaging in terms of the unmet need and not only the attributes of needle-free but the totality of what neffy offers continues to drive adoption and writing. I think as Rich said, the volume of overall patients in kind of our core went up quite a bit in the summer. And that's one of the reasons why, again, the neffy on Us program was designed to really help the offices and help the patients. I mean if you look at our allergists, for example, our top I mean the share is higher than the average. So I think we're seeing that kind of across the board where we have good focus, reach and frequency, a tighter message, really focused market access messaging too. Our sales team is able to kind of see within a doctor's patient base, the specifics around where neffy is covered without a PA and then really kind of sharing and educating those best practices has really kind of helped us with adoption that we see kind of with those physicians that I mentioned.

And Lachlan, let me just correct 1 thing because I think what you stated is not really the correct perception. The doctors that are prescribing neffy at the higher tiers continue to expand their use. Their market share continues to go up. We also expand the number of prescribers. But new prescribers tend to be trialing, right? So new prescribers tend to be coming in they try out neffy with some of their patients. And once they have positive experience and they're comfortable, they start then expanding. So while we're seeing a good growth of new prescribers those prescribers are not adding a lot to our market share. But I don't want you to think that existing prescribers are decreasing, they're actually increasing. So when we look at our existing prescribers, they are increasing in market share. And the only reason that market share kind of took a dip over the summer is because the volumes get so large and a large percentage of that volume is renewal prescriptions, which are virtual. So they're not even going to see the doctor. So if we if we could look at just prescriptions that were at a doctor's office, I think we would have had a much higher market share of those prescriptions but you have a lot of renewal -- virtual renewals going on before school starts. And that we will take the advantage of next year. But this year, obviously, we don't have renewals of neffy yet, on an annual basis. So starting next year, we'll start to see the benefit of that virtual prescribing.

All right. And maybe a final one for me. The institutional sales, the point you made was an interesting one. Can you just elaborate on maybe how much volume went through that channel? What the economics are? Like how that opportunity is? What you're doing to capture that beyond the traditional retail setting?

Yes. We're not going to elaborate on that today because it's inconsistent, obviously. And we are just starting up formal marketing efforts in that area. So we are now shifting some of our attention to market directly to institutional buyers and also to provide both discounts and other incentives to them to start boosting those sales going forward. So it's not consistent enough yet for us to give you any kind of guidance, Lachlan. So we'd rather not give too much detail on that at this point.

Our next question comes from Josh Schimmer with Cantor.

Apologies if I missed this in the prepared remarks, but what percent of covered lives now require some form of prior at what trends are you seeing there? And then for the online prescribing option. What is being done to raise awareness of patients that's available to them?

Yes. So I'll take the latter part and then let Eric answer the part about the prioritization, the percent of prior authorizations. I think we are advertising already. So we started to incorporate the new program into our DTC. You will also shortly see new TV commercials, which use the same theme. So same background, same theme, but different voiceover and banners in order to make it very clear to customers that we now have this virtual prescriber option that we're -- it's no cost to the patient or caregiver and again, with commercial insurance at 0 co-pay. So I think that is rolling out. I mean I think virtual ads are already updated. And then also we sent out obviously an e-mail blast to all of our -- everybody on our e-mail list that has been on neffy.com, And also several of the large advocacy groups have put this out on their e-mail lists that ARS has now got the promotion going and is paying for a virtual prescriber if they want to skip the hassle of the physician visit and also that they can get a 0 co-pay now. and they can get multiple packs with 0 cost. So it's more than just 1 box. It's multiple boxes. They can get whatever their insurer will tolerate. And just so you know, on that front, almost all insurers will tolerate 2 boxes in 1 prescription. Some will accept 3 2 packs in 1 prescription. So we are defaulting to 2 packs in the virtual prescriber prescription.

Eric, do you want to talk about PAs?

Yes. Thanks for the question. Overall, when you look at the PA required, and this is through kind of commercial, Medicaid and Medicare. It's about 50%. So that number has come down as we've also shared to specifically within commercial, about 57% of prescriptions patients don't require a PA.

Our next question comes from Roanna Ruiz with Leerink Partners.

So a couple for me. Could you talk about the inventory levels for neffy Neff in the quarter? And how we should think about it exiting for 4Q? And secondly, I also noticed you talked a bit about IQVIA being a bit off in tracking neffy prescriptions. Could you give us a little more detail about what portion of the scripts are flowing through IQVIA versus BlinkRx other channels?

Yes. Let me speak to that first, and then Eric can add on to it. I think the inventory levels that the distributors are maintaining tend to be between 15 and 20 days. It fluctuates, obviously, from week to week and period-to-period. They do build inventory for peak periods. And then what it would be normal is that they're going to reduce down their inventory as the market drops in fourth quarter. So as we said, that's part of the reason why we expect that the overall sales in fourth quarter, although we believe we'll do very well will come down from the third quarter. and part of that is driven by inventory adjustments as well. So that dynamic is pretty fairly normal. But again, this is a -- there is product seasonality to it. and the distributors are well aware of that. So they do adjust their inventory according to that seasonality. But they try -- they seem to be trying to maintain their inventory between 15 and 20 days on hand.

And Eric, do you want to speak to the other part of that?

Yes. I think, when you look at kind of the distribution of the prescriptions being filled, it's slightly higher kind of on the retail side, I think as we kind of transition more were -- had higher coverage and so forth, doctors started sending patients directly to kind of the local pharmacies because that was something easier for the patient to kind of pick it up and get it right away. So it's probably about 55% to 45%. But as Rich mentioned, and we mentioned some of the inaccuracies of capture rates and some of the other channels that we're selling medication to is not necessarily tracked in the IQVIA data overall.

Yes. And it's very inconsistent, Roanna. So we can see that from week to week or period to period, it's not very consistent what IQVIA is capturing.

Our next question comes from Andreas Argyrides with Oppenheimer.

Congrats on the solid quarter here. Couple from us. There was a previous question around prior authorizations. Maybe what are some of the gating factors in reaching unrestricted access. What are your time lines to add? Let's say, CVS care market et cetera, bigger formularies in '26. And how do you anticipate those improvements contributing to growth next year. Now I got 1 or 2 follow-ups.

Yes. So Andreas, I'll start out with an answer on that. So we continue to work obviously with Zinc and Caremark, CVS. We do have some new proposal in with them. So we're very optimistic. What the timing of that we cannot be sure of right now. We believe that it will be in the first half of next year that they will put it on formulary with preferred status. But we're also working with them to possibly remove the PA requirement even as nonpreferred sooner than that. but we can't really promise because CVS is not consistent in their behavior. And we know that in the past when we had an agreement with zinc, CVS did not follow through with that. So we are working with them. They seem to be working with us and Zinc certainly is very, very positive, but we have to just wait until we get through that. but we do have a new proposal with them, and we are talking fairly regularly with Zinc and CVS groups. On the other side, we also are working with Prime and other Blue Cross companies. That's the other piece that we're focused on, and we are making progress in that regard as well. and also with Anthem, which is kind of follows Caremark but is independent of Caremark.

What do you think some of the considerations that these payers look at when they decide to make their decisions? What are some of the data points that you guys are bringing to their attention?

Yes. Well, they see the market growth. I think they understand the medical value, at least most companies understand the medical value of neffy. And I think it's just a matter of -- and it's a little different for different companies. I think it's -- with CVS, there's a little bit different focus on the revenue that they would generate for the Blue Cross companies, I think it's just managing their premiums, managing their costs. So they tend to be delaying coverage for that reason, even if they recognize the medical value. And then there's a handful of companies that are just not covering for other reasons. But it tends to be just managing their costs, and we need to work through that with them.

Okay. Great. And I know you guys aren't necessarily giving guidance here, but just given the strong momentum in Q3, how are you thinking about Q4 sales and then growth into next year?

Yes. As we said, I mean, Q4 will probably be less than Q3. And I think that's anticipated to some extent, even in the analyst estimates. We will continue to grow market share. And again, depending on how well the Get neffy on Us Program does and how much business that drives will probably dictate whether you are well above consensus or not. But I think that, that program, hopefully will solve some of the headwinds that we have been seeing. And then if we can make more progress on access, but that will probably be in the first or second quarter of next year. That will certainly also add to the momentum at that point.

Our next question comes from Kevin Holder with ROTH Capital Partners.

First one for me, I think -- I know you launched in the U.K. with ALK a few weeks ago. Just some commentary on the adoption there. And is it tracking more towards the growth trajectory in Germany or close to the growth trajectory in the U.S. I know a little bit early stages there, but just some commentary would be helpful.

Yes. So yes, it's a little early to say. But what I can tell you is that I think the U.K. physicians and patients' caregivers are very excited about neffy. I think we expect a very good performance. And again, they have a more seamless reimbursement process than the U.S. So we know that they get fairly well covered very quickly or they are already being well covered. So we do expect adoption, I would expect, at least at this stage, again, too early to be sure. but I would expect adoption to be more like Germany more because of the very rapid access that they get in those countries.

That's very helpful. And then just 1 last 1 for me. I think in the slide deck, you show that you're targeting 9,000 with the ALK U.S. sales force. Kind of what is your progress there thus far in penetrating that market?

So Eric, do you want to speak to that?

Yes. Yes, we're seeing a nice increase through the summer months when that team went into the field of share. So we track a couple of things in terms of overall volume new prescribers, and that is progressing nicely. Obviously, we want to kind of see that continue growing at a pace here in Q4 as well. but we're pleased to get to overall about 20,000 physicians. So we're hitting all of those big allergists, the deciles 8 through 10, but then we've been able to expand to about another 9,000 pediatricians that also see patients that need epinephrine.

Our next question comes from Ryan Deschner with Raymond James.

This is Anthony on for Ryan. Congrats on the quarter. So we wanted to know how are you thinking about the impact of the virtual prescriber program over the next several months? And what's patient demographics do you think will have the biggest impact from this program?

Yes, I'll start out, and Eric can add to what I say. We are very excited about this program. We've had a virtual prescriber option on our website, but it wasn't very well utilized only because of the fee and because of us not promoting it, right? We were not advertising it. Again, feedback I got, I was just at the American College of asthma-allergy and immunology is that the doctors are actually looking at this as a really positive thing. I mean doctors allergists, especially are exceptionally busy. They're under a lot of pressure to see as many patients as they can. And the time it takes to cancel patients on a new drug and switch them takes up a lot of their time. So by introducing this program, not only to the patients and caregivers, but to the doctors, the doctors are coming back with a very positive attitude towards it that they can actually talk to their patient and then switch them over to getneffy.com, and we would take care of the rest.

We would take care of the prescription, a PA, if necessary, training, everything for the patient so that, that burden is removed from the doctor. On top of that, patients and caregivers will now have the opportunity to get neffy without awaiting time, typical waiting time to see an allergist is 3 to 6 months. They don't need to travel down to the doctor's office and sit at the doctor's office. And it's fairly quick. So there's also probably less drop out because you're going to have a very quick interaction virtually and then the prescription goes to the pharmacy or gets filled through the mail order system. And it's going to go really, really quick. So less chance of a patient deciding that they changed their mind or don't want to go to the doctor, cancel the appointment for other various reasons, like for instance. So we expect it to have some meaningful impact. I mean, how much impact we can tell you. But I think the positive response of the doctors we're getting has been very reassuring because they see it as a way for them to switch their patients without having to take up too much of their time. But I think that's an important aspect in today's world when they're under pressure to see just 1 more patient each day.

Eric, do you want to add anything?

Yes. A couple of points to build on what Rich mentioned. As Rich said, we were just at the college conference. And even before the conference started, we did an advisory board about 12 physicians. One of the things that we went through is this program and the response was very positive. So we will see how, obviously, we're watching really closely and as we mentioned earlier, to, making sure we're promoting this through our DTC efforts as well. And then we've also done market research specifically with caregivers, parents and patients -- and as Rich mentioned, they see this as time savings, making the product really easy to get ease of use, the cost aspect of not having to pay lower co-pay. And then just over the product overall. I mean, when you start thinking about the unmet need and the patients kind of see this again, needle-free the temperature excursions, the simplicity, ease of use, the feedback that we're getting, again, from across patients and parents about this program has been positive.

That concludes today's question-and-answer session. This will conclude today's conference call. Thank you for participating. You may now disconnect.

Good morning and welcome to the ARS Pharmaceuticals Conference Call. [Operator Instructions] Please be advised today's conference is being recorded. I'll now turn the call over to Justin Chakma, the Chief Business Officer. Please go ahead.

Good morning, and thank you for joining our second quarter 2025 earnings conference call. This morning, we issued a press release detailing our financial results and commercial highlights, which is available in the Investors & Media section of our website at ars-pharma.com. With me on the call are Richard Lowenthal, our Co-Founder, President and CEO, who will review recent corporate updates and achievements. Eric Karas, 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. Please refer to our earnings 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 to discuss our commercial momentum with neffy 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. Neffy 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 neffy.

In Q2, we achieved $12.8 million in net product revenue in part driven by the availability of our 1-milligram pediatric dose starting in May and steady traction we have made with payers. With 93% commercial coverage today, neffy is accessible to the vast majority of patients with commercial insurance. Perhaps more importantly, this momentum has translated into strong and accelerating growth in neffy prescriptions, a clear indicator of demand and commercial execution.

From the end of the first quarter to the end of the second quarter of 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. Second, our U.S. pediatric co-promotion with ALK 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 neffy prescriptions in the third and fourth quarters of this year.

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

Looking ahead, we expect additional regulatory decisions on neffy in Canada, Australia and Japan by the end of 2025 and in China by the first half of 2026 followed by commercial rollout starting in the first half of next year. We also expect approval of the 1-milligram pediatric dose by the European Medical Agency in the first half of 2026, which would trigger another $5 million milestone payment from ALK. 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 with sites in the U.S. and Europe, and we anticipate top line data in the first half of 2026.

Let me now turn the call over to Eric to review our U.S. commercial performance in more detail.

Thank you, Rich. Starting first with physician engagement and demand, our 118 person sales organization at ARS has now reached approximately 15,000 health care providers. More than 9,700 of them have a dispensed prescription for neffy with over 70% coming from the highest 3 deciles of prescribers. These figures reinforce the strength of our physician targeting and engagement strategy. The neffy Experience program, which now includes the 1-milligram dose, has successfully enrolled over 2,800 allergists and approximately 20,000 doses of both the 1-milligram and 2-milligram neffy have been distributed for use in offices during oral food challenges.

With hundreds of uses already recorded, the real-world exposure is helping to build confidence in the effectiveness and safety of neffy. We anticipate sharing more outcomes data from this program later in the year. Over 3,200 schools have joined our neffyinSchools program, establishing neffy as a preferred epinephrine treatment in educational settings. With the 1-milligram pediatric dose availability, participating schools can now carry both 1-milligram and 2-milligram doses for emergency use. Since the end of first quarter, 14 states have updated their legislation to allow designated school employees to administer our needle-free epinephrine lowering emergencies. This change reflects the strong demand for neffy. The advocacy for neffy was also clearly expressed at the National Association of School Nurses Conference that ARS 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 PAs for patients to fill neffy. For those payers that do require a PA, health care professionals can now manage the process more easily. The prior authorization approval rates for neffy with payers under the major PBMs 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 neffy dispenses, in line with the overall epinephrine market. This is despite more than 3/4 of CVS Caremark members still requiring PAs. It's encouraging to note that these PAs are being approved more than 80% of the time. For patients with commercial insurance, our co-pay assistance program ensures that most individuals only pay $25, which is significantly less than the average $40 for a generic injector. Additionally, co-pay support is now automatically applied at the point of sale in 95% of pharmacies, including all of 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 neffy when they need it the most. Together, these changes represent a meaningful shift for our early launch phase. Broader coverage and streamlined prescribing are enabling a more confident and seamless experience for HCPs. And as neffy volume increases in the coming months, we expect additional PBMs to remove PA requirements and adopt contracts that recognize the value of neffy at terms that are consistent with our 50% long-term gross to net retention guidance. This will further eliminate potential barriers to access for patients.

Turning to consumer engagement. Our direct-to-consumer campaign, "Hello neffy, 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 neffy by name. Since the campaign began in late Q2, aided awareness has increased significantly. In the second half of July, Cantor, a market research firm conducted patient and caregiver surveys. The results show that nearly 50% of respondents recognized and recalled our DTC advertisement for neffy, which is higher than the Cantor norms across approximately 150 other DTC campaigns.

The branding for the neffy ad was also notably strong, with half of the response stating that they could not help but remember that it was for neffy, this also exceeded Cantor norms. As awareness grows, we expect a continued increase in demand for neffy over time. Historically, DTC campaigns for pharmaceuticals start to show an impact about 12 to 16 weeks after they begin. Additionally, we know that the average consumer needs to see an ad about 7 to 8 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 neffy prescriptions. Feedback from our sales organization indicates increased adoption across all patient segments. 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 neffy 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 health care 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.

Thank you, Eric. We continue to maintain a strong cash position while investing significantly in the commercial growth of neffy. Starting with our revenue for the second quarter of 2025, we recorded total revenue of $15.7 million. As we go forward, it's important that we look at revenue in terms of product revenue from our core U.S. commercial efforts and then collaboration and supply revenue separately. That distinction is key as U.S. net product revenue reflects underlying demand and loss penetration with neffy. The milestone and supply revenues, while important for our overall financial performance, represent onetime or partnership-related income streams. Our U.S. net product revenue for neffy in Q2 was $12.8 million, 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 million milestone payment from ALK was triggered related to the launch of EURneffy in Germany in June, and we generated an additional $0.3 million in supply revenue from our partners. Of the $5 million milestone, we recognized $2.6 million of revenue and the remaining $2.4 million was recorded through the financing liability on the company's balance sheet in accordance with the GAAP accounting treatment of our original licensing agreement with ALK.

With regard to the EURneffy 1-milligram dose in the EU, we anticipate EMA approval in the first half of 2026, which would trigger an additional $5 million milestone payments from ALK. Similarly, approximately half of that $5 million would be recognized as GAAP revenue in the first quarter of 2026, and the other half would be added to the financing liability on the balance sheet.

Turning to our operating expenses. R&D expenses for the second quarter were $4 million, primarily related to the initiation of our Phase IIb urticaria trial and continued clinical and development expenses for neffy. SG&A expenses were $54.3 million, reflecting our investment in a strong National DTC campaign and continued sales and marketing efforts for neffy. We remain committed to making substantial investments in the launch of neffy to ensure both short- and long-term patient and physician awareness and market share capture. As a reminder, for modeling purposes, the bulk of our DTC campaign investment of approximately $50 million will be recognized in our SG&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 onetime inventory reserve for older inventory. This is not expected to recur and COGS for neffy remains 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 yields has progressed as we anticipated. Our GTN retention moved from about 70% in the fourth quarter of 2024 to the mid-60% range in the first quarter of 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 neffy prescription is now covered without prior authorization and therefore, eligible for rebate payments under our payer contracts.

We have 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 3 years of operating runway, remains foundational to our corporate strategy enabling us to advance our commercial efforts with focus and stability.

We ended the second quarter of 2025 to cash, cash equivalents and short-term investments of $240.1 million. This balance sheet strength means we are well positioned to fully capitalize on the U.S. commercial opportunity for neffy, while maintaining financial discipline and resilience in a dynamic market environment.

With that, I'll pass the call back over to Rich.

Thank you, Kathy. As we move into the second half of 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 neffy's global expansion through the international launches across our partner network, including in the U.K. later this year; and finally, advancing our urticaria program towards a potential label expansion.

We are fundamentally changing the treatment of type 1 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 neffy, and its delivery is easy for both patients and caregivers. Backed by neffy'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 Instructions] Our first question comes from Lachlan Hanbury-Brown with William Blair.

Congrats on the progress. First question would be, can you confirm sort of the number of prescriptions written or shipped during the quarter? And second, it sounds like you're seeing 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 and patients asking for it or anything along those lines?

Yes, Lachlan. Rich Lowenthal. So yes, I mean, with regards to number of prescriptions, you can calculate it. It's -- we have $12.8 million in net sales and gross net was roughly 52%. So it's about 35,000 prescriptions in the quarter, packs, 2 packs, I should say. Some prescriptions are for 2 or 3, 2 packs, but 35,000 2 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 beginning of July. And normally, the norm in the industry is 12 to 16 weeks to start seeing significant impact from that return on investment. But we are getting a lot of feedback. Certainly, a lot of people, even just people that are trying to find the case are mentioning the ads, the DTC campaign and seeing the neffy carry case in the ad and 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. But that -- we would expect it to take 12 to 16 months to start seeing significant impact.

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

Yes, I can take this one. 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. Those are -- 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.

Our next question comes from Roanna Ruiz with Leerink.

[ Mazi ] on for Roanna. Just one from us. So congratulations on the remarkable progress in commercial coverage. Just one on that. So the CVS Caremark is acquiring the prior auth for some payors under Zinc, what's the realistic ceiling for coverage without prior authorization? And would you be able to quantify the revenue impact of moving that remaining Zinc portion over the full coverage?

Yes. I'm not sure -- sorry, [ Mazi ], I'm not sure exactly what you're asking with regards to the ceiling.

Ceiling in terms of commercial coverage, do you expect that 93% is the peak? Or do you think that there's still room to grow?

Yes. So hopefully, I'm answering your question correctly. But -- so about 25% of the CVS companies under CVS under Caremark are covering neffy without prior authorization, right? And then the rest are requiring a prior authorization, but there are no companies within the Zinc network that are blocking neffy, 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. 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.

No, no. Actually, that's exactly what I mean.

Our next question comes from Andreas Argyrides with Oppenheimer.

Congrats on the quarter, guys. I'll try to keep it to 1 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? And then maybe one follow-up.

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 ALK. So they're focused on the pediatricians, 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. 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, we'll see these ads and realize there is a new product and research it.

And then obviously, that sales force expansion. 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.

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

Yes. So with the DTC campaign, first of all, 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 '26.

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. But we do want to do that assessment over time and it's pretty typical at this stage.

And then sorry, what is your -- the multiple packs. We are seeing a lot of orders coming in for 2 or 3 packs of neffy, 2 packs. And certainly, with the case ordering as well, we're seeing a lot of people asking for 2 or 3 cases. And that, we think, is a good sign that people are looking to get multiple packs of neffy. 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 pack 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?

Yes. Andreas, we like track kind of 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 to the points you made, especially with kids. Parents want the kids to have one with them at all times. They want to have one in the house, just in case.

So as Rich said, we are seeing multiple paths. It's messaging that will continue to drive. And there's a lot of programs, too, that we're doing through neffyconnect, 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 to $25 for multiple cartons. So again, we see this as an opportunity to drive that even higher in the months to come. But definitely, really nice increase that we're seeing over the last couple of weeks and months in terms of number of cartons per prescription.

[Operator Instructions] Our next question comes from the line -- sorry, Ryan Deschner with Raymond James.

Congratulations on the quarter and the script growth. I wanted to ask, how are you thinking about the time line for feeling the full impact of the DTC campaign ramp, expanded reach from the ALK promotion and availability of the 1 mg neffy? And do you feel like these factors have come online quickly enough to take -- to fully take advantage of the August epinephrine peak? And will these factors still be enough of an acceleration mode to potentially even sustain quarter-on-quarter growth in 4Q despite seasonality? And then...

Yes, Ryan, I'll start out on that. So the typical norm is 12 to 16 weeks, but we do know that because of the especially the August, September peak. And we would expect that, that awareness that we're seeing to have an impact right during that period because people have already had their appointment schedule. But 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 3-month waiting list to get an appointment. So once they've seen it multiple times and they decide, hey, I think I'm interested in that schedule and appointment 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.

So -- sorry, what was your second question?

Yes. 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 neffy 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?

Yes. 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, but 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 neffy.

We even had some investors that were allergy patients that have never gone on an auto-injector because they don't like them and have gone and got a neffy. 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 kind of the easier low-hanging fruit patients that have those auto-injectors, they already are conscious about having epinephrine, very accepted epinephrine in general, and then they just don't like either carrier or use the auto-injector, so they're switching. But we do hear anecdotally that there's people coming from all segments.

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.

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.