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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

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

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

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.