Prepared remarks
Good morning, and welcome to ARS Pharmaceuticals First Quarter 2026 Earnings Conference Call. (Operator provided 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 a 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 timeline 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 WAC 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.
Questions and answers
(Operator provided instructions.) Our first question comes from Roanna Ruiz with Leerink Partners.
I have a few questions. 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 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 based on the conversations that we've had with them. As Rich said, the updated proposal that we provided back in April would align nicely with 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? Yes. So we would expect that our initial launch lots expire at the end of the year and beginning of next year. 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 wanted to ask about this: it sounds like many of the high-decile accounts are prescribing Neffy. When would you expect prescribing to broaden to lower-decile accounts, considering your current initiatives and how that might progress in the future?
Eric can speak to this more, but I think that's already happening with the expansion of the base of physicians that have prescribed. As we've described in the past, typically there's a period of time where physicians adopt a product, they try it out, they trial it. Then after they get comfortable, they become more of a frequent prescriber. By seeing that broadening of the prescriber base, I think we're already seeing that type of action.
And I would just add to Rich's point. 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. A lot of our nonpersonal promotion and DTC is also reaching those physicians. We do a significant amount of advertising through HCP media as well, and various conferences. We see higher shares in our high-volume decile accounts, but we're also seeing traction with some of the lower decile accounts. They don't see as many patients on a monthly basis, but we are seeing some share growth in those groups as well.
(Operator provided instructions.) 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, should we expect to see market growth or market share growth over the next couple of months?
Yes, Lachlan. 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. 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. One thing I'll note is that we come back to analyst guidance on not necessarily the year numbers, but on the proportion of the allotments to the various quarters because the base, for example, if we compare to last year, allocations were a little bit on the high end in some quarters and a little bit on the low end in others.
And Lach, I would add to Rich's comments. The programs we mentioned—streamlining prescribing and simplifying it—should have a halo effect making it easier for doctors, staff and patients. Our existing sales team is well trained; this is the second season for back-to-school, and we have strong relationships and a tightened message. The new team has been trained, they've been out in the field for a couple of weeks, and they have the same materials and approaches. So we feel confident going into the back-to-school season.
And maybe I realize it's still early, but have you seen any 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?
A couple of things. It depends on each office and what the representative can establish with the folks that handle electronic refills. We are focusing on interrupting that process. Often it is messaging from a nurse or someone in the office that takes those calls or handles them electronically. We've implemented certain things into EHR systems, such as smart phrases, so when the prescription comes in, there's some advertising and information about neffy that pops up and interrupts the process. We'll continue to do that. The combination of access improvements and programs that make it even easier—where a denied claim flips to $199 at retail—will help us get more of those prescriptions.
And maybe a final one. I know we've talked a lot about CVS, and there have 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. We will still be working to get additional state Blue Cross companies across the finish line coming into the summer season.
(Operator provided instructions.) 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.
I can talk to that a bit, and Eric can follow up. We are positioned with our sales force and marketing teams to make sure we get out there ahead of the summer and ahead of when it goes on formulary to inform doctors that the coverage will be changing and exactly where. We have a lot of tools for doctors that we already have implemented or are implementing, which will help with prescribing so they know who's on formularies that are covering neffy, and for formularies that still don't cover neffy we can help with prior authorizations. The marketing and sales teams are aligned and ready to go. 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.
To build on Rich's comments, we're focused on 12,000 physicians plus about another 8 or 9 on the ALK side. We have materials ready to go and can press a button to hit that switch. Messaging and resources emphasize that the majority of commercial patients would be covered with low or zero co-pay, sending prescriptions to retail as a smooth, easy process for staff and patients. Marketing will include online search, banners, education online, and prominence of coverage will be a focal point. We'll still sell on attributes that make neffy a better option—safety, size and portability, temperature excursions and shelf life—but the coverage message will be front and center. We've also implemented speaker programs for staff members who handle operations in the office so they're on board with the process for electronic refills and back-to-school handling.
Got it. And the other question, a few parts to the automated conversion process for denied claims. Curious 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? How big of an impact do you think this will have on those script volumes in the near term?
We've actually implemented it recently at the pharmacy level this week. We think it will have a significant impact. We've always had the $199 option and have made doctors aware of it and how to get it. But when a patient gets a prescription, goes to the pharmacy, they don't know if they're covered yet and they may get a very high retail price from the pharmacy, which is negative and reflects back to the doctor. This program converts that immediately at the pharmacy level to the $199 price, which doctors feel is reasonable and consistent with cash prices for auto-injectors. It would be automatic at the pharmacy level, so the patient would never see that very high retail price; they would at most see the $199 price. They might still come back to the doctor to ask for a prior authorization, but at least they won't see those very high retail prices, which could be as much as $1,000 at some pharmacies.
Ryan, there are three main vendors that do this type of work at point of sale, and it's done instantaneously. If the prescription comes in and it's a covered claim, the patient gets their co-pay; if it's a back-end rejection, it just returns a price. These three vendors we already work with for our co-pay program. They cover about 90% of pharmacies, so it's pretty broad. About 55% of our prescriptions currently go through retail and 45% through our Blink program, but we anticipate retail share to increase as we get more coverage and make it easier for doctors to send patients to retail. Category abandonment for prescriptions overall is in the mid-22% to 23% range, and there are also patients lost to follow up when claims are rejected. We think this is a simple, easy-to-implement solution to reduce abandonment and improve fill rates.
(Operator provided instructions.) Our next question comes from Josh Schimmer with Cantor.
First, regarding the comment about being funded to breakeven, maybe you can help us with some of that math given the burn this quarter and the cash position. It doesn't seem entirely obvious how you get there. And second, what was the royalty payment from ALK in the first quarter? I wasn't able to find that in the 10-Q.
In our projections, we expect to get to cash breakeven by mid-2027. We expect our losses to go down over time. The first quarter is historically the worst quarter of the year for epinephrine; last year it was 11% of annual sales. We believe that through the second half of this year, the loss will be significantly less, and we'll reach breakeven sometime before the middle of next year. That depends on how funding is allocated across quarters. We're also looking at our burn and Donn Casale will be joining soon; we're discussing reallocating funding toward areas with better return on investment. We now have experience with our DTC campaign and may move some of that spending or cut some expenses, which will help achieve the breakeven goal.
Josh, with respect to the ALK payment, it was less than $100,000 for the quarter, which is why we didn't call it out separately in the quarter. ALK is just getting up and running in multiple countries, so they're just starting their run rate. We do expect that to grow going forward.
I'm not showing any further questions at this time. As such, this concludes today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.