Good morning, everybody. My name is Alexa Deemer, and I am here with the Cantor Biotech Equity Research team. This morning, I have the honor of sharing the stage with the ARS Pharma team. We have CEO Donn Casale and CCO Meg Smith. Thank you both for joining us this morning.
Thank you.
Unfortunately, we only have 30 minutes to talk about a lot, so let us just get started.
Sure.
For those newer to the story, maybe you can provide a brief overview of ARS Pharma, where the company stands today, and what has changed over the last few years.
Sure. ARS Pharma, it's a company that our lead product is neffy, and we've been in the marketplace for now two years. We're launching neffy and quite frankly, we're looking forward into continuing to drive the launch and success of neffy. With neffy also, we have our pipeline with CSU. We can certainly talk about that quite a bit. But right now, our goal is execution around the neffy launch, continuing to drive revenue each quarter, continued gains of market share year-over-year from a quarter standpoint. With a goal, we communicated to achieve cash flow breakeven and profitability by end of 2027, establish the foundation with neffy and continue to execute on our CSU program.
Got it. neffy's been on the market for about two years now. I guess what aspect of the story do you believe is still underappreciated by investors?
I think the story is, you have to start at the market overall. There's 20 million patients who are diagnosed with Type I allergies, so it's a really large market. But unfortunately, only 3 million patients receive a prescription every year. There's a huge unmet need from the standpoint of the market and really penetrating the market. neffy obviously is a highly differentiated option and solution. The biggest challenge right now is that most of the market doesn't understand some of the limitations that exist out there with auto-injectors. Our job really is to inspire and motivate the marketplace providers around those limitations, because really, neffy offers such a tremendous solution or protection. That's what we're doing each and every day around that.
Okay, got it. I guess, what key milestones and execution priorities are you focused on that could continue to drive shareholder value over the next 12 months?
Continue to increase market share. We reported our market share, both not only total market share, but field targeted market share. Total market share 5%, and where we send our field team, it's 8%. We see quite a bit of a difference in the field targeted universe. Then where we don't send our field team, it's only 1%. We're really excited about the fact that with our field sales team, we can continue to drive market share. That's certainly going to be a metric and something we continue to monitor. An important milestone obviously is, as I said earlier, being cash flow breakeven and profitable because that really establishes the foundation, enables really optionality for ARS moving forward.
We'll certainly talk about the milestone as it relates to some interim data for our CSU program as well in the first quarter of next year. We have a lot of exciting things ahead of us, and we're really excited about building this company moving forward.
All right. Great. Let's get into neffy's launch. You've been CEO now for several months. I guess, what in your view has worked well with the launch, and I guess where do you see the greatest opportunities for improvement?
What's worked well is we have really high awareness around neffy. The awareness both by providers and consumers is they know neffy exists. There's been a lot of work driving awareness around the brand, and that's the first important step. What we need to continue to do, though, is really drive and shift the focus away from broad awareness from the marketplace and consumer, and really start to focus our efforts on provider, whether it's the physician, the nurse, the MA, because ultimately they own the decision around the identification and the recommendation for neffy. We need to focus on the problem that exists to inspire them to change and change with the solution, which is neffy.
Okay, great. I guess maybe Meg, if you want to elaborate a little bit more on that, what specific plans do you have for the sales force to carry out these plans?
Yeah. I think one of the things we'll bring, being relatively new, is just a discipline and a focus about which part of the market we're going after. Don mentioned that our strategic imperative is to change prescriber behavior and conviction around the fact of appreciating some of the limitations with auto-injectors, and then therefore neffy becomes the solution. That's going to require our sales team to really work with the prescribers and everybody in their staff to get them to understand the challenges and then help them figure out how they get neffy actually all the way through the pipeline to the patient.
We're just beginning the process right now of conveying that strategy to our team, making sure they understand who the right targets are, what the right messages are, what the sequence of that message should be that can drive lasting prescriber change and drive the output we want. That's where we are right now. It's a good start. It's a great foundation to start with as far as the brand and the market that we're in. But that's how we're going to win, and the team's really excited and motivated to be on this next phase of the journey of the launch.
Great. Maybe you can remind us on the number of sales reps that you currently have, and I guess in your view, what makes a successful sales rep? What's that ideal phenotype?
Sure. Yeah. We have 148 sales professionals. That includes sales representatives, but also leaders. The phenotype for a market like this is we look for both a skill set and a mindset because there are components of what we have to do to wake up an entrenched market, if you will, and to change that prescriber behavior that aren't just about delivering messages. They're about standing in front of our customers, which are prescribers, but also nurses and MAs, and getting them to stop and think and appreciate the challenges that exist in this marketplace. We look for representatives that are up for that challenge, to not only deliver a clinical message, but to have some account management mindset to understand how the workflow happens in a practice and also who the people are driving the patient engagement in the office.
Those are the types of people that we need on this ARS journey. Our initial read is that we have a team that can do this. What they'll benefit from is some, I think more specific strategic direction and guidance for exactly how we need them to execute. There's 148 professionals. We feel good about where we are in the marketplace as far as coverage and our ability to execute against it. The phenotype is both a skill to be able to deliver a clinical message, but also help them figure out how to get from prescription to fulfillment and touch everybody in the office that touches the patient.
Okay. It's really all about changing this mindset for more effective engagement.
Sure. Both with our own team, but then for our team to then go convey to the customer, right?
Yeah.
Whether it's a prescriber or a nurse or an MA. We have to be able to stand in front of them and inspire them to do something different, to make sure their patients walk out not only with neffy but with epinephrine that they'll actually carry with them and achieve protection.
Got it. How are you both envisioning growth from here on out? Do you expect an inflection point or pretty much more linear growth going forward?
I think a fair thing to think about is more linear growth. As Meg mentioned, it's an entrenched market, and both of us have experience launching products in entrenched markets. When you think about neffy and the profile, it's a highly differentiated profile. It is the obvious choice, and it should be. At the same time, inspiring change takes time, and we understand and we know that. We know how to win in these types of markets with a team. That's why I'm putting so much focus on the sales team, because it's going to take provider-by-provider engagement. With that, we see growing share each quarter. From a year-over-year basis, we anticipate and expect market share gain. We also expect the market to grow.
That is one of the things we continue to focus in on is the fact that, as I said earlier, this is a very big market. Unfortunately, it is underserved in the fact that there is only 3 million prescriptions in a market where 20 million patients are diagnosed. When you think about neffy and the value proposition of neffy, there is an opportunity to pull more patients into that funnel. But it is going to take time, and we need to drive change not only by inspiring our team, as Meg mentioned, to inspire others, but to also inspire the market to think differently.
I think you both, you were the CCO at Dynavax, and I believe, Meg, you also were at Dynavax as well. Maybe you both can touch upon the similarities and differences of the hepatitis B market compared to the anaphylaxis market.
Sure. I will start and then add some color. There's a lot of similarities and parallels. That's what actually, quite frankly, drew me to this opportunity, is that when you think about the hepatitis B market, it's a very entrenched market that's been the same way for decades. When we launched HEPLISAV-B, it was the obvious choice around highly clinically differentiated from the competition. But it took time to inspire change. That parallel around having something like neffy, which is highly differentiated in an entrenched market, is the identical market and challenges that faces us. We talk a lot about the fact that neffy or the anaphylaxis market is somewhat like a prevention or vaccine market because we need to inspire folks to do something different today for something that may happen to them in the future.
That's just a different mindset, not only for the providers, but also for the consumer and patient as well. There's a lot of learnings and parallels that we can draw and bring to this launch to drive success.
Okay.
Yeah, I can add to it. I think the nuance in what you have to do in an entrenched market, even when you have a differentiated product. I think it's easy to look at the product and say, well, it's obvious. 10 out of 10 people, prescribers say, yeah, neffy's great. But what you have to do in this market is instead of just selling the clinical attributes of a product, you have to take the time to establish what the challenges are in the market right now, right? That's what you'll see from us, is that what we learned with the work in our hepatitis B market is that the product's clearly better, but if they don't understand the challenges with what they're doing today, they have a great solution to a problem they don't know they have. I think it's the same in the epinephrine market.
There's a lot of limitations to the auto-injector that are leaving patients unprotected. You have to start there and have some discipline there before the solution of neffy makes sense. It's tempting to just go in and talk about clinical differentiation of a product, but that really only lands when you've defined what the problem is and you get the customers to see, okay, yeah, now that I have something better, I can do something better.
Okay, got it. I'm sure everybody sitting in the audience and those listening in, they've heard of EPIPEN or an epinephrine auto-injector. Maybe people just aren't as aware of the challenges and limitations of those products. Maybe it's worth explaining that and why neffy is the obvious solution here.
We do know that there's quite a bit of awareness around neffy. The marketplace does know that neffy exists. We've made a lot of investments around awareness, not only for the consumer and patient, but also the provider as well. It's less around the product, but more so around the problem. There's just not that appreciation around some of those limitations that exist. Even with our providers, as we've talked about before, it's obvious when they stop and think and really start to connect the dots that what I'm using today is not protecting the patient tomorrow. Again, that takes time to reinstill that, or if it's the nurse or the MA that realizes they're the last line of defense before that patient leaves that afternoon. To really personalize that is really our job and to inspire that change.
We're doing it, as I said before, provider by provider. The idea of the solution of neffy, we feel we're in a good spot around that awareness. We know the solution. Unfortunately, the market doesn't know the problem, and that's again, some of the parallels and what we've learned in launching vaccines or the story around Dynavax is really highlighting the problem and the gap that exists. Then that solution becomes obvious, and I'm willing to do extra effort, whatever it takes, to ensure the patient leaves with the appropriate solution, which in this case would be neffy.
Okay, great. Maybe you can touch upon the ALK co-promote and how that's progressing.
It's progressing great. They're a great partner for us, not only obviously, with the co-promote, but globally as well. Again, what we like in certainly that co-promotion is it reinforces what we believe works, which is sales professionals engaging providers each and every day. We're prioritizing that investment. We're prioritizing that strategy so it supports our goal and what we're trying to achieve in the market.
Okay, great. Then I guess for accounts that haven't been reached yet, what's the plan to target those?
What's interesting in this marketplace, it's very similar to the market that we were in before. It has a very long tail. Where we target right now is where we see depth of prescribing. We target about 45% of the epinephrine market. The other part of the market is a very long tail that has over 450,000 prescribers that prescribe less than 10 prescriptions a year. Again, that's an area of focus that we're not going to prioritize in our first leg of this launch. We're going to focus on what's right in front of us, grab share where that is, and then from there, establish the base and the foundation. There is opportunity, as I said before, to reach into not only those prescribers in the long tail, but also the patients who don't receive a prescription in the first place.
The other piece of it as well is a lot of that long tail are physicians that are primary care physicians that their patient went to the allergist first, and they're getting their refill at the PCP office. There'll be an opportunity if we win with the allergy and pediatrician segments. That actually transfers into the long tail as well.
Why is there that discrepancy between physicians that prescribe more and then some physicians prescribe less than 10 auto-injectors a year?
A lot of it is going to be more primary care. Predominantly, our targets are allergists and pediatricians who see more patients, obviously, that are going to need neffy versus, again, the long tail. It is just mainly going to be primary care, general practitioners, and so their volume of patients that need or have Type I allergy is much, much smaller. About 10% of the population have Type I allergy, so approximately 40 million patients, 20 million get diagnosed, and again, as I said before, only 3 million get a prescription.
Okay. Got it. I believe you are still waiting on coverage from one large PBM. Maybe you can provide an update on those discussions as well as any potential updates on timing.
Yeah. We continue to engage with that PBM and all PBMs and stakeholders, Medicaid as well. That is part of the strategy, obviously, and we will continue to update as we have coverage decisions. It is one component of the challenge that is out there. Certainly, it is around access, but also we will talk about driving that conviction within the office as well. But it is a parallel strategy that we will continue to engage to ensure we can reduce friction across all payers, PBMs, and Medicaid.
Okay.
Stakeholders.
All right. Great. There's a few other needle-free epinephrine products that are in development with one potentially coming to the market next year. I guess how are you thinking about how both products or even more than two products could drive meaningful growth by expanding this market instead of just taking share from one another?
Yeah, I believe, as we've said before, there is a problem in the marketplace, a lack of appreciation around that problem that exists. More voices in the market benefits neffy. So we welcome more voices because, again, if we can highlight the problem that exists, the fact that 17 million patients who are diagnosed don't get a prescription, or the vast majority that are on auto-injectors don't either have it on them, don't use it correctly, or don't use it at all. There's plenty of room for solutions such as neffy to really make inroads in this marketplace. More voices certainly help, and I think it drives this awareness and appreciation for the fact that there's massive gaps in this marketplace, and a solution like neffy is the best choice to ensure patients are protected.
Okay. Now let's move on to the CSU program, which I know you guys are starting to get a lot more questions on. You're evaluating intranasal epinephrine, and it's technically named differently, ARS-2. Maybe you can just explain the role for epinephrine in managing these acute flares in CSU.
Well, this is a compelling and interesting opportunity for sure because starting first with the challenge and the problem that exists, obviously CSU, there is a lot of treatments that are out there. There is a whole treatment algorithm. There is a lot of biologics out there, but there is nothing out there that is FDA-approved for CSU flares. Right now, for patients, the choice is go on prednisone, which has many limitations as we know, or do nothing at all and just sit it out and wait it out. What is interesting is, we know epinephrine, the molecule, works. It is indicated for urticaria, has been since the 1930s. The challenge has never been the molecule. It has always been around the delivery and the dose.
We have our intranasal technology, which gives us the opportunity to apply epinephrine and bring epinephrine back to the patient that is suffering from CSU flares. We are excited about the opportunity because we can see a clear path to the opportunity. Again, if there is nothing available for patients, there is a huge unmet need. We continue to monitor. We have our phase II data, and we have our phase II-B data that we will continue to assess the outcome of the trials and both the dose and the effectiveness.
How often do these CSU patients experience these flares?
There's various literature out there. One of the challenges is we need to do more understanding of the market. But typically, you'll see anywhere from two to four flares per month. It's not just the number of patients, it's the number of flares. When you start to think about the size of the market, it's really the number of flares you see per year. It's quite substantial. But what's interesting is, and we're going to be doing this work, is really sizing the market because there is literature, as I mentioned, but again, no one's really focused on the failure. What we're going to do is look at retrospectively from a claims analysis, what truly is this market? What is the patient journey on a biologic? How many times are they on prednisone? What does that look like? To have a better idea of what this market opportunity really is.
Are these patients treated by the same physicians as patients that would go into the office and get neffy?
Yeah, that's really, for us, an exciting reality and the fact that we see a clear path for this product and this opportunity. But what's even more exciting from a value driver is the fact that we basically put this entire franchise on top of the neffy infrastructure. It's allergists, there's some dermatology as well, but we think about the whole infrastructure for ARS, whether it be G&A, the sales force, all the commercial infrastructure. That can all be leveraged with this opportunity, which is certainly exciting for a company our size to be able to drive tremendous value.
Okay, got it. I think you're evaluating a lower dose for this product than what is used for neffy. Maybe you can explain the benefits that using a lower dose could create along the lines of just creating a totally separate brand.
Certainly there's the opportunity to create a separate brand, and it'll be that way regardless. But as it would be with any product, you always want to find the lowest effective dose. We've seen through our phase II data that both 2 mg and 1 mg have an impact relative to placebo. So the phase II-B is looking at 0.5 mg as well as 1 mg. We'll be sharing those results, interim results, the first quarter of next year. We're excited to see if 0.5 mg does have an effect, because that then becomes a compelling opportunity for us to think about that moving forward.
Okay. Then maybe you could just quickly review the design of the ongoing phase II study, and explain what it's intended to establish beyond the findings from the prior phase II.
Sure. It's not confirmatory, it's exploratory. But essentially, every patient is going to receive both 0.5 mg, 1 mg, and placebo. There's a period zero where every patient will have their first flare with prednisone, and then from there, go on the study medication. So it's a crossover placebo, and against 42 patients that we're looking to enroll. Then we'll have the interim results, as I said, in Q1.
Okay. How are you thinking about pricing ARS-2 relative to neffy?
So we're going to do the research now. In fact, we'll do that for the next quarter to really understand from a payer perspective the right price. Now, it depends on where it's placed as well. There's an opportunity to be complementary to the biologic, or there's a consideration to take it in front of the biologic as well. Both of those scenarios have different considerations as it relates to pricing. So we're going to do that work, and then with the interim readout in first quarter of next year, we hope to have a more extensive review of what the market looks like with our own pricing research as well as the claims analysis I mentioned earlier.
All right. So you plan to share results in the first quarter of 2027. Maybe you can just go over your thoughts on what a potential phase III study could look like, the number of patients that you're planning to enroll, what the study design could look like, how long this study might take to complete.
Well, part of the first quarter is going to be looking at those results, the interim results. That's really going to help drive what that looks like, because as I said before, depending on the market, where we want to go after will really drive the phase III trial. So when we get to Q1 of next year, we're going to be in a better place to really give more details of what that looks like based upon not only what comes out of the interim results, but also our findings from a payer perspective, a pricing perspective, as well as the size of the market and the opportunity we want to go after.
Okay. Then I guess, looking ahead, how do you think about ARS Pharma's long-term strategic path, I guess, including remaining independent and diversifying versus potentially becoming a part of a larger organization?
As I look ahead, I see a tremendous future for ARS. It's why I joined. We're building a company. Obviously, neffy is the foundation, is the first important step. Becoming profitable, cash flow break even is critical. It's the milestone we want to achieve, and we will achieve. But as we do that, in parallel, we're running the CSU program, as we just talked about, and that's very intriguing as we think about the value unlock that that can provide for ARS. When we get to that point, there drives a lot of optionality for ARS and the size of who we are. You think about the company, we have all the capabilities and the infrastructure, so we get to those milestones, we have a lot of things we can do.
That's kind of what we are trying to do here, is really build something unique and special that really drives value, not only in the near term, but certainly in the long term as we think through both neffy, CSU, and other options as we look forward.
All right. Then, I guess, where do you see the greatest opportunities, I guess, in terms of spending to improve operating efficiency without compromising any sort of commercial momentum?
We made a lot of decisions over the last few months around shifting our focus to the provider from consumer. That has enabled us to really be more efficient, and I would argue effective, on our commercialization and the launch. A big part of that is around moving away from broad-based DTC and being more efficient with the spend. What we shared during the earnings call, I guess a month ago, was the fact that our guide for OpEx, from a non-cash perspective, is going to be in the range of $100 million-$110 million for the semester. We anticipate that to trend out for the rest of 2027 as well. We feel very confident in that number, and we feel that it is the right level of investment for what we need to achieve for the launch of neffy, as well as to support our pipeline with CSU.
You just mentioned that you previously had this broad-based DTC campaign. I guess, how do you plan to change or amend that going forward?
We are just going to not put so much effort into TV. We are still going to have digital advertising, social media to consumer, where we can target better. We are going to still invest in media to position and provider, where we can target much better. It is just not going to be broad based, in the fact that you are not going to see linear TV, closed circuit TV ads. It is very expensive. Unfortunately, it is not overly efficient. It drives awareness, and we have the awareness we need to support the strategy moving forward.
All right. Before we close, maybe you can just remind us of your current cash position and runway.
Our cash position, $144 million. We feel very good about our cash position given the spend guidance that we've given, as well as the revenue we anticipate and expect over the next several quarters. We feel very good about that looking ahead.
All right. I guess, over the next 12 - 18 months, what are some of the important milestones that investors should be paying attention to?
Let's pay attention, obviously, immediately to our market share, both in field targeted as well as total market share every quarter. Look at it from a year-over-year basis. That will be very critical. Our milestones certainly around readings of the phase II-B interim and final as it relates to CSU, as well as achieving cash flow breakeven and profitability. Those are all critical milestones over the next 12 - 18 months for the company.
Okay. Last question, I promise. I guess, going forward for your earnings reports and calls, what metrics do you plan to share so that investors can kind of gauge how the launch is progressing?
We will always share market share. Both field and total market share will be the metric that is going to drive our assessment of how we are doing in the market. That is probably the most critical one. We will also continue to share the number of unique prescribers to understand the breadth of prescribing, as well as depth of prescribing. Those metrics are the critical metrics as it relates to neffy moving forward.
Okay, great. Donn and Meg, thank you so much for joining us today.
Thank you.
Thanks, Alexa.
Thank you to everybody in the audience for tuning in. Hope you have a great rest of the conference.
Thank you.
Thank you.
Thank you both.
Take care.