ARS Pharmaceuticals, Inc.

Previous wording

We are a biopharmaceutical company focused on the commercialization and development ofneffy(previously referred to as ARS-1 and currently identified in the European Union (“EU”) by the trade name EURneffy) for the needle-free intranasal delivery of epinephrine for the emergency treatment of Type I allergic reactions, including anaphylaxis. neffyis the first and only U.S. Food and Drug Administration (“FDA”) and European Commission (“EC”)-approved needle-free epinephrine product, and the first new delivery method for epinephrine in more than 35 years. neffyis a proprietary composition of epinephrine with an innovative absorption enhancer called Intravail®, which allows neffyto safely provide intranasal delivery of epinephrine at a low dose within the exposures of approved injectable products across a range of dosing conditions (including repeat dosing and allergen challenge).

Current wording

We are a biopharmaceutical company focused on the commercialization and development ofneffy(currently identified in the EU by the tradename EURneffy) for the needle-free intranasal delivery of epinephrine for the emergency treatment of Type I allergic reactions, including anaphylaxis. neffyis the first and only FDA and EC-approved needle-free epinephrine product, and the first new delivery method for epinephrine in more than 35 years. neffyis a proprietary composition of epinephrine with an innovative absorption enhancer called Intravail, which allows neffyto safely provide intranasal delivery of epinephrine at a low dose within the exposures of approved injectable products across a range of dosing conditions (including repeat dosing and allergen challenge). We believe the market opportunity forneffy in the United States alone is significant. At the current list price for a two-pack ofneffyand our target total gross-to-net yield, the estimated 6.5 million patients currently prescribed an epinephrine autoinjector in the United States represents an initial addressable market opportunity of approximately $3 billion in annual net sales, while the remaining 13.5 million diagnosed patients that have not been prescribed an epinephrine product represent an additional addressable market opportunity of approximately $7 billion in annual net sales.

Previous wording

We believe neffy’s “no needle, no injection” approach addresses a significant unmet need in the use of epinephrine, which, except forneffy, is currently approved only in injectable formulations for the emergency treatment of Type I allergic reactions. There are approximately 40 million people in the United States who experience Type I allergic reactions. Of this group, over the last three years, approximately 20 million people have been diagnosed and experienced severe Type I allergic reactions that may lead to anaphylaxis, and approximately 6.5 million were prescribed an epinephrine autoinjector. However (in 2023, for example), only 3.2 million filled their active epinephrine autoinjector prescription, and of those, only half consistently carry their prescribed autoinjector with them due to the many drawbacks of these devices. In aggregate, we estimate that up to 90% of patients prescribed an epinephrine device are not achieving an optimal treatment outcome today.

Current wording

We believe neffy’s “no needle, no injection” approach addresses a significant unmet need in the use of epinephrine, which, except forneffy, is currently approved only in injectable formulations for the emergency treatment of Type I allergic reactions. There are approximately 40 million people in the United States who experience Type I allergic reactions. Of this group, approximately 20 million people have been diagnosed and experienced severe Type I allergic reactions that may lead to anaphylaxis, and approximately 6.5 million were prescribed an epinephrine autoinjector. However (in 2023, for example), only 3.2 million filled their active epinephrine autoinjector prescription, and of those, only half consistently carry their prescribed autoinjector with them due to the many drawbacks of these devices.

Previous wording

These drawbacks include the use of needles in the devices, which can result in patient and caregiver injury as well as hesitation and delays in administration due principally to apprehension and pain of needles, allowing the allergic reaction to progress in severity leading to symptoms that seriously impact patient quality of life, to potential need for emergency services and/or hospitalizations, and to life-threatening symptoms or events. Intra-muscular injections also are subject to dosing errors and risk of accidental blood vessel injections, which can cause a significant spike in the intravascular delivery of epinephrine potentially leading to serious cardiovascular complications or events. We believe neffy’s “no needle, no injection” delivery that eliminates apprehension, pain and safety concerns, small size allowing for ease of portability, ease of use, and high reliability provide it with a user-friendly profile that will increase prescriptions for epinephrine and make it more likely for patients and caregivers to administer epinephrine sooner, achieve more rapid symptom relief and prevent the allergic reaction from progressing to a level of severity that could lead to hospitalization or even death.

Current wording

These drawbacks include the use of needles, which can result in patient and caregiver injury as well as hesitation and delays in administration due principally to apprehension and pain of needles, allowing the allergic reaction to progress in severity leading to symptoms that seriously impact patient quality of life, to potential need for emergency services and/or hospitalizations, and to life-threatening symptoms or events. In particular, intra-muscular injections are subject to dosing errors and risk of accidental blood vessel injections, which can cause a significant spike in the intravascular delivery of epinephrine potentially leading to serious cardiovascular complications or events. In aggregate, we estimate that up to 90% of patients prescribed an epinephrine device are not achieving an optimal treatment outcome today.

Previous wording

Data from our studies ofneffy demonstrated nasally delivered epinephrine reached blood levels comparable to those of already approved epinephrine injectable products, and produced statistically significant responses compared to injection on pharmacodynamic surrogates for efficacy even one minute after dosing with neffy.

Current wording

Data from our studies ofneffy and our intranasal epinephrine technology product candidates demonstrated nasally delivered epinephrine reached blood levels comparable to those of already approved epinephrine injectable products across single dosing, repeat dosing, self-administration or allergen challenge conditions, and produced statistically significant responses compared to injection on pharmacodynamic surrogates for efficacy even one minute after dosing with neffy and our intranasal epinephrine technology product candidates.

Previous wording

On August 9, 2024, the FDA approved neffy 2 mg for the treatment of type I allergic reactions, including anaphylaxis, in adults and children who weigh 30 kg or greater. As a result, we initiated commercial launch ofneffy 2 mg in the United States, with product becoming available for shipment on September 23, 2024. A supplemental New Drug Application (“NDA”) forneffy 1 mg dose for the treatment of type I allergic reactions, including anaphylaxis, in adults and children who weigh 15 to 30 kg was filed with the FDA on September 6, 2024. In November 2024, the FDA granted this supplemental NDA priority review and assigned a Prescription Drug User Fee Act target action date of March 6, 2025.

Current wording

On August 9, 2024, the FDA approved neffy 2 mg for the emergency treatment of Type I allergic reactions, including anaphylaxis, in adults and children who weigh 30 kg or greater. As a result, we initiated commercial launch ofneffy 2 mg in the United States, with product becoming available for shipment on September 23, 2024. This commercialization effort currently includes a direct sales force of approximately 120 individuals targeting high-volume epinephrine prescribers that is supported by branded direct-to-consumer marketing, disease awareness campaigns with advocacy groups and non-personal promotion including continuing medical education programs in collaboration with allergist societies, speaker bureaus, peer-to-peer programs and participation in regional and national medical conferences. On March 5, 2025, the FDA approved neffy 1 mg for the emergency treatment of Type I allergic reactions, including anaphylaxis, in patients who are four years of age and older and weigh 15 kg to less than 30 kg. As a result, we initiated commercial launch ofneffy 1 mg in the United States, with product becoming available on May 7, 2025.

Previous wording

Our launch strategy forneffyin the United States involves direct sales force outreach to high-volume prescribers of epinephrine accounting for 40% to 45% of prescriptions in the last year through an efficient sales force comprised of 118 individuals serving as sales reps, virtual reps and areas sales managers that began field operations in early October 2024; active participation starting in November 2024 of more than 1,000 physician offices in ourneffy experience program that allows healthcare professionals to useneffy firsthand as rescue therapy for anaphylaxis during in-clinic allergen challenge; extensive non-personal promotion including continuing medical education programs in collaboration with allergist societies, speaker bureaus, peer-to-peer programs and participation in regional and national medical conferences; engagement and contracting with payers to obtain timely coverage with favorable gross-to-net discounting; ourneffy Connect program that provides support to physicians and patients including our $25 co-pay savings card, $199 cash price and patient assistance programs; a telemedicine service to conveniently obtain a prescription online; partnerships with patient advocacy organizations including disease awareness campaigns in 2025; and celebrity spokesperson-based direct to consumer advertising that is expected to commence in 2025.

Current wording

Our launch strategy forneffyin the United States involves an initial direct sales force outreach to high-volume prescribers of epinephrine accounting for approximately 55% of prescriptions in the last year through an efficient sales force. Our sales force is comprised of approximately 120 ARS Pharma employees, who serve as sales reps, virtual reps and areas sales managers that began field operations in early October 2024, as well as approximately 60 sales reps via our co-promotion partner, ALK-Abelló, Inc. (“ALK U.S.”, an affiliate of ALK-Abelló A/S (“ALK”)), who we anticipate will begin field operations in early June 2025 and will target up to 9,000 specified pediatricians and other prescribers in the U.S. Our sales force outreach has included: active participation since November 2024 of approximately 2,500 healthcare professionals in ourneffy experience program that allows healthcare professionals to useneffy firsthand as rescue therapy for anaphylaxis during in-clinic allergen challenge; extensive non-personal promotion including continuing medical education programs in collaboration with allergist societies, speaker bureaus, peer-to-peer programs and participation in regional and national medical conferences; engagement and contracting with payors to obtain timely coverage with favorable gross-to-net discounting; ourneffyconnect program that provides support to physicians and patients including our $25 co-pay savings card, $199 cash price and patient assistance programs; a telemedicine service to conveniently obtain a prescription online; partnerships with patient advocacy organizations including disease awareness campaigns in 2025; and branded direct to consumer advertising that is expected to commence in the second quarter of 2025. We also initiated a U.S. post-marketing registry-based study forneffyfor the treatment of anaphylaxis in oral food challenge or allergen immunotherapy clinics in the second quarter of 2025.

Previous wording

On August 22, 2024, the EC granted marketing authorization in the EU for EURneffy (the tradename forneffy in the EU), for the emergency treatment of allergic reactions (anaphylaxis), in adults and children who weigh 30 kg or greater. Through our collaboration with ALK (discussed below), we anticipate that EURneffy will be made available to patients in certain EU member states in 2025. We anticipate additional regulatory filings forneffy in Canada, the United Kingdom, China, Japan, and Australia by the end of 2024.

Current wording

On August 22, 2024, the EC granted marketing authorization in the EU for EURneffy(the trade name forneffy 2 mg in the EU), for the emergency treatment of allergic reactions (anaphylaxis), in adults and children who weigh 30 kg or greater. Through our collaboration with ALK (discussed below), we anticipate that EURneffy will be made available to patients in certain EU member states in 2025. Regulatory review ofneffy is ongoing in Canada, the United Kingdom (“U.K.”), China, Japan, and Australia with filings submitted by the partners, or by ARS Pharma on behalf of our partners, during the fourth quarter of 2024. neffy has been approved or is under regulatory review in countries representing approximately 98% of the current global epinephrine autoinjector sales. Regulatory decisions are anticipated by mid-2025 in the U.K., the second half of 2025 in Japan, year-end 2025 in Canada and Australia, and in the first half of 2026 in China. Commercial launches are expected by mid-2025 in Germany, as well as in the U.K. pending receipt of U.K. regulatory approval.

Previous wording

We reported positive topline results demonstrating statistically significant and clinically meaningful improvements in treatment-refractory chronic urticaria patients at the American Academy of Allergy and Immunology medical conference in February 2024, and anticipate initiating a Phase 2b clinical trial in the outpatient urticaria setting in early 2025, followed by the potential initiation of a single pivotal efficacy study.

Current wording

We reported positive topline results demonstrating statistically significant and clinically meaningful improvements in treatment-refractory chronic urticaria patients at the American Academy of Allergy and Immunology medical conference in February 2024, and anticipate initiating a Phase 2b randomized, placebo controlled outpatient clinical trial in chronic spontaneous urticaria patients on a chronic treatment regimens who still experience flares or exacerbations. This Phase 2b study is anticipated to initiate in the second quarter of 2025, with topline data anticipated in early 2026, followed by the potential initiation of a single pivotal efficacy study in 2026.

Previous wording

Since our inception in 2015 as ARS Pharmaceuticals, Inc., we have devoted substantially all of our efforts to developing intellectual property, conducting product development and clinical trials, organizing and staffing our company, business planning, raising capital, building infrastructure, pre-commercial and commercial activities, and providing general and administrative support for these operations. We began commercial operations in September 2024 and therefore have had limited net product sales. We have funded our operations primarily with proceeds from the Merger (see Note 1 to the notes to the condensed consolidated financial statements included in this report), private placement of convertible preferred stock, licensing, supply and distribution arrangements with our commercialization partners, and bank debt. From inception to September 30, 2024, we have raised $262.3 million in cash, cash equivalents and short-term investments, net of transaction costs, from the Merger; net proceeds of $76.3 million from the issuance of convertible preferred and common stock; $30.0 million from our collaboration, licensing, supply and distribution arrangements; and $10.0 million from bank debt. As of September 30, 2024, we had cash, cash equivalents, and short-term investments of $204.6 million.

Current wording

Since our inception in 2015 as ARS Pharmaceuticals, Inc., we have devoted substantially all of our efforts to developing intellectual property, conducting product development and clinical trials, organizing and staffing, business planning, raising capital, building infrastructure, pre-commercial and commercial activities, and providing general and administrative support for these operations. We began commercial operations in September 2024 and therefore have had limited net product sales. We have funded our operations primarily with proceeds from the Merger (see Note 1 – Nature of Business to the notes to the condensed consolidated financial statements included in this report), private placement of convertible preferred stock, issuance of common stock, licensing, supply and distribution arrangements with our commercialization partners, bank debt, and limited net product sales. As of March 31, 2025, we had cash, cash equivalents, and short-term investments of $275.7 million.

Previous wording

We have incurred net losses from operations since our inception. Our net losses were $41.9 million and $47.2 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, we had an accumulated deficit of $173.2 million. Until we consistently generate positive net income, if ever, our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials, our expenditures on other development activities, the cost for regulatory filings, expenses for commercial activities to establish, maintain and enhance sales, marketing and distribution capabilities forneffy, the timing and volume of our product sales, and our ability to earn potential regulatory and commercial milestones under our license and collaboration arrangements.

Current wording

We have incurred net losses from operations in most years since our inception. Our net loss from operations for the three months ended March 31, 2025 and 2024 was $37.2 million and $13.2 million, respectively. As of March 31, 2025, we had an accumulated deficit of $157.2 million. Until we consistently generate positive net income, if ever, our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials, our expenditures on other development activities, the cost for regulatory filings, expenses for commercial activities to establish, maintain and enhance sales, marketing and distribution capabilities forneffy, the timing and volume of our product sales, and our ability to earn potential regulatory and commercial milestones under our license and collaboration arrangements.

Previous wording

We do not own or operate manufacturing facilities. We currently rely on third-party manufacturers and suppliers forneffy, and we expect to continue to do so to meet our nonclinical, clinical and commercial activities. Our third-party manufacturers are required to manufacture our product under cGMP requirements and other applicable laws and regulations.

Current wording

We do not own or operate manufacturing facilities. We currently rely on third-party manufacturers and suppliers forneffy and our intranasal epinephrine technology product candidates, and we expect to continue to do so to meet our nonclinical, clinical and commercial activities. Our third-party manufacturers are required to manufacture our product under cGMP requirements and other applicable laws and regulations.

Previous wording

In November 2024, we entered into a collaboration, license and distribution agreement (the “ALK Agreement”) with ALK-Abelló A/S (“ALK”). Pursuant to the ALK Agreement, we granted to ALK a worldwide (other than the United States, Japan, mainland China, Hong Kong, Taiwan, Macau, Australia and New Zealand), exclusive license under certain of our patents and know-how to develop, manufacture and commercialize products containing epinephrine administered intranasally, including EURneffy (the trade name forneffy in the European Union) (epinephrine nasal spray) (“Products”), for all human uses, including the immediate or emergency treatment of allergic reactions (including Type I) and anaphylaxis and urticaria, and other future indications as agreed by the parties. If we develop any new intranasally administered product that contains epinephrine and files a new drug application in the United States for such product, upon ALK’s request such new product will be included as a Product under the ALK Agreement, subject to ALK bearing the costs of development of such new product for its licensed territory.

Current wording

In November 2024, the Company entered into a collaboration, license and distribution agreement (the “ALK Collaboration Agreement”) with ALK. Pursuant to the ALK Collaboration Agreement, the Company granted to ALK a worldwide (other than the United States, Japan, mainland China, Hong Kong, Taiwan, Macau, Australia and New Zealand) (“ALK Territory”), exclusive license under certain of the Company’s patents and know-how to develop, manufacture and commercialize products containing epinephrine administered intranasally, including EURneffy(the tradename forneffy 2 mg in the European Union) (“Products”), for all human uses, including the immediate or emergency treatment of allergic reactions (including Type I) and anaphylaxis and urticaria, and other future indications as agreed by the parties. If the Company develops any new intranasally administered product that contains epinephrine and files a new drug application in the United States for such product (“New Product”), upon ALK’s request such New Product will be included as a Product under the ALK Collaboration Agreement, subject to ALK bearing the costs of development of such New Product for its licensed territory.

Previous wording

Under the ALK Agreement, we are obligated to transfer to ALK the existing marketing authorizations for the Products in ALK’s territory. We are also required to conduct certain development and regulatory activities for Products in support of obtaining further regulatory approval of Products in ALK’s territory, and will transfer such regulatory approvals to ALK. ALK is obligated to use commercially reasonable efforts to obtain and maintain regulatory approval for Products through the European Commission and within specified countries within ALK’s territory. Following such approval for a Product in each indication within specified countries within ALK’s territory, ALK is obligated to use commercially reasonable efforts to commercialize such Product in such indication in such countries and to achieve first commercial sale of a Product in certain countries in accordance with a timeline specified in the ALK Agreement.

Current wording

Under the ALK Collaboration Agreement, we are obligated to transfer to ALK the existing marketing authorizations for the Products in ALK’s territory. We are also required to conduct certain development and regulatory activities for Products in support of obtaining further regulatory approval of Products in ALK’s territory, and will transfer such regulatory approvals to ALK. ALK is obligated to use commercially reasonable efforts to obtain and maintain regulatory approval for Products through the European Commission and within specified countries within ALK’s territory. Following such approval for a Product in each indication within specified countries within ALK’s territory, ALK is obligated to use commercially reasonable efforts to commercialize such Product in such indication in such countries and to achieve first commercial sale of a Product in certain countries in accordance with a timeline specified in the ALK Collaboration Agreement.

Previous wording

Under the ALK Agreement, ALK will make an upfront payment to us of $145.0 million in November 2024. We are eligible to receive regulatory and commercialization milestones of up to $20.0 million and sales-based milestones of up to $300.0 million, provided that $55.0 million of such sales-based milestones are contingent upon us obtaining regulatory approval for the Product in Canada by a specified time. We are entitled to receive tiered royalty payments on net sales in the mid- to high-teens, subject to certain standard reductions and offsets. Royalties will be payable, on a Product-by-Product and country-by-country basis, until the latest of the expiration of the licensed patents covering such Product in such country, 15 years from first commercial sale of such Product in such country, or expiration of regulatory exclusivity for such Product in such country.

Current wording

Under the ALK Collaboration Agreement, ALK made an upfront payment to us of $145.0 million in November 2024. We are eligible to receive regulatory and commercialization milestones of up to $20.0 million and sales-based milestones of up to $300.0 million, provided that $55.0 million of such sales-based milestones are contingent upon us obtaining regulatory approval for the Product in Canada by a specified time. We are entitled to receive tiered royalty payments on net sales in the mid- to high-teens, subject to certain standard reductions and offsets. Royalties will be payable, on a Product-by-Product and country-by-country basis, until the latest of the expiration of the licensed patents covering such Product in such country, 15 years from first commercial sale of such Product in such country, or expiration of regulatory exclusivity for such Product in such country.

Previous wording

Either we or ALK may terminate the ALK Agreement in the case of the other party’s insolvency or in the event of an uncured material breach of the other party, except that we may not terminate the ALK Agreement for ALK’s material breach of its commercial diligence obligations. ALK may terminate the ALK Agreement for convenience upon prior written notice or for a safety or regulatory concern. We may terminate the ALK Agreement in the event ALK makes certain challenges to certain of our patents. Prior to a change of control and outside of a set period of time after which we commence change of control negotiations, we may terminate the ALK Agreement with respect to all countries in the European Economic Area upon prior written notice to ALK and payment of a termination fee that is the higher of an agreed mid-nine digit amount and the fair market value of the Products business in the European Economic Area at the time of such termination. We may also terminate the ALK Agreement if ALK commercializes a non-injectable epinephrine product or manufactures such a product in the United States.

Current wording

The contract will expire upon the expiration of the last to expire royalty term for all Products in the ALK Territory, unless terminated earlier. Either we or ALK may terminate the ALK Collaboration Agreement in the case of the other party’s insolvency or in the event of an uncured material breach of the other party, except that we may not terminate the ALK Collaboration Agreement for ALK’s material breach of its commercial diligence obligations. ALK may terminate the ALK Collaboration Agreement for convenience upon 12 months’ prior written notice or for a safety or regulatory concern. We may terminate the ALK Collaboration Agreement in the event ALK makes certain challenges to certain of our patents. Prior to a change of control and outside of a set period of time after which we commence change of control negotiations, we may terminate the ALK Collaboration Agreement with respect to all countries in the European Economic Area (“EEA”) upon prior written notice to ALK and payment of a termination fee that is the higher of an agreed mid-nine digit amount and the fair market value of the Products business in the EEA at the time of such termination. Except with respect to ALK’s activities pursuant to and in accordance with the ALK Co-Promotion Agreement (as defined below), we may also terminate the ALK Collaboration Agreement if ALK commercializes a non-injectable epinephrine product or manufactures such a product in the United States.

Previous wording

On November 9, 2024, in connection with the ALK Collaboration Agreement, ARS and ALK also entered into a commercial supply agreement (the “Supply Agreement”), under which ARS will supply ALK’s requirements (and ALK will purchase from ARS its requirements) of Products for five years for a specified supply price, after which ALK may elect to transition to itself or its contract manufacturer the manufacture and supply of Products.

Current wording

In November 2024, in connection with the ALK Collaboration Agreement, ARS and ALK also entered into a commercial supply agreement (the “ALK Supply Agreement”), under which ARS will supply ALK’s requirements (and ALK will purchase from ARS its requirements) of Products for five years for a specified supply price, after which ALK may elect to transition to itself or its contract manufacturer the manufacture and supply of Products. Either the Company or ALK may terminate the ALK Supply Agreement in the event of an uncured material breach of the other party.

Previous wording

We have recognized limited net product sales in the United States since the commercial launch ofneffy in September 2024. We have signed collaboration and license agreements including supply and distribution forneffyfor all geographies outside of the United States, Australia and New Zealand. We have signed a license and distribution agreement including supply forneffyin Australia and New Zealand. The terms of these agreements may include payment to us of one or more of the following: non-refundable, up-front license fees; clinical, regulatory, and/or commercial milestone payments; clinical development fees; and royalties or a transfer price on net sales of licensed products ifneffy receives marketing approval in these regions. We expect product revenues to fluctuate in future periods as we continue with the commercial launch ofneffy. We expect revenues under collaboration agreements to fluctuate in future periods based on our ability to meet various regulatory milestones, and contingent on successfully obtaining regulatory approval forneffyin the licensed regions, commercial milestones, royalties or transfer price earned from our partner’s net sales and the supply of commercial product as set forth in the agreements described earlier.

Current wording

We have recognized limited net product sales in the United States since the commercial launch ofneffy in September 2024. We have signed collaboration and license agreements forneffyfor all geographies outside of the United States. The terms of these agreements may include payment to us of one or more of the following: non-refundable, upfront license fees; clinical, regulatory, and/or commercial milestone payments; clinical development fees; and royalties or a transfer price on net sales of licensed products ifneffy receives marketing approval in these regions. We expect product revenues to fluctuate in future periods as we continue with the commercial launch ofneffy. We expect revenues under collaboration agreements to fluctuate in future periods based on our ability to meet various regulatory milestones, and contingent on successfully obtaining regulatory approval forneffyin the licensed regions, commercial milestones, royalties or transfer price earned from our partner’s net sales and the supply of commercial product as set forth in the agreements described earlier.

Previous wording

Cost of goods sold consists primarily of direct and indirect costs related to the manufacture ofneffyfor commercial sale, including third-party manufacturing costs, raw material and component costs, packaging services, freight, storage costs, distribution fees, amortization of capitalized in-licensed costs, and royalties on product sales. Prior to the FDA approval ofneffyin August 2024, costs incurred for the manufacture ofneffy were recorded as research and development expenses, which resulted in zero-cost inventory. As a result, the cost of goods sold related toneffy will initially reflect a lower average per unit cost of materials, as previously expensed zero-cost inventory is utilized for commercial production and sold to customers. We expect the cost of goods sold forneffyto increase in relation to product revenues as we deplete these inventories. As of September 30, 2024, we had $13.0 million in zero-cost inventory remaining and based on our current forecast, we expect zero-cost inventory to be depleted by mid-2026.

Current wording

Cost of goods sold consists primarily of direct and indirect costs related to the manufacture ofneffyfor commercial sale, including salaries and related expenses for personnel, stock-based compensation, third-party manufacturing costs, raw material and component costs, packaging services, freight, storage costs, distribution fees, amortization of capitalized in-licensed costs, and royalties on product sales. Prior to the FDA approval ofneffyin August 2024, costs incurred for the manufacture ofneffy were recorded as research and development expenses, which resulted in zero-cost inventory. As a result, the cost of goods sold related toneffy will initially reflect a lower average per unit cost of materials, as previously expensed zero-cost inventory is utilized for commercial production and sold to customers. We expect the cost of goods sold forneffyto increase in relation to product revenues as we deplete these inventories. As of March 31, 2025, we had $10.9 million in zero-cost inventory remaining and based on our current forecast, we expect zero-cost inventory to be depleted by mid-2026.

Previous wording

To date, our research and development expenses have been related primarily to clinical development, process development and manufacturing costs ofneffy. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

Current wording

To date, our research and development expenses have been related primarily to clinical development, process development, and manufacturing costs ofneffyand our intranasal epinephrine technology product candidates. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

Previous wording

Our external research and development expenses forneffy consist primarily of fees, materials and other costs paid to CROs, CMOs, consultant and contractors. Our clinical, regulatory, manufacturing, and non-clinical development costs for the periods presented below reflect an allocation of expenses associated with personnel costs, equity-based compensation expense, and indirect costs incurred in support of overall research and development, such as facilities-related costs.

Current wording

Our external research and development expenses forneffy and our intranasal epinephrine technology product candidates consist primarily of fees, materials and other costs paid to CROs, CMOs, consultant and contractors. Our clinical, regulatory, manufacturing, and non-clinical development costs for the periods presented below reflect an allocation of expenses associated with personnel costs, stock-based compensation expense, and indirect costs incurred in support of overall research and development, such as facilities-related costs.

Previous wording

We expect our research and development expenses to increase in 2024 compared to 2023 based on our planned clinical development and manufacturing activities. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future clinical trials and the manufacturing costs ofneffydue to the inherently unpredictable nature of clinical development and manufacturing activities. Clinical development and manufacturing timelines, the probability of success and development costs can differ materially from expectations. In addition, we cannot forecast to what degree our licensing, supply and distribution arrangements would affect our development plans and capital requirements.

Current wording

We expect our research and development expenses to remain relatively consistent in 2025 based on our planned clinical development and manufacturing activities. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future clinical trials and the manufacturing costs ofneffyand our intranasal epinephrine technology product candidates due to the inherently unpredictable nature of clinical development and manufacturing activities. Clinical development and manufacturing timelines, the probability of success and development costs can differ materially from expectations. In addition, we cannot forecast to what degree our licensing, supply and distribution arrangements would affect our development plans and capital requirements.

Previous wording

The duration, costs and timing of clinical trials and development ofneffy for the treatment of additional indications will depend on a variety of factors that include:

Current wording

The duration, costs and timing of clinical trials and development ofneffyand our intranasal epinephrine technology product candidates for the treatment of additional indications will depend on a variety of factors that include:

Previous wording

A change in the outcome of any of these variables with respect to the development ofneffy could significantly change the costs and timing associated with the development of that future product candidate. The process of conducting the necessary clinical research and manufacturing to obtain regulatory approval is costly and time-consuming. The actual probability of success for any future candidates may be affected by a variety of factors. Further, a number of factors, including those outside of our control, could adversely impact the timing and duration of our product’s or any future candidates’ development, which could increase our research and development expenses.

Current wording

A change in the outcome of any of these variables with respect to the development ofneffyand our intranasal epinephrine technology product candidates could significantly change the costs and timing associated with the development of that future product candidate. The process of conducting the necessary clinical research and manufacturing to obtain regulatory approval is costly and time-consuming. The actual probability of success for any future candidates may be affected by a variety of factors. Further, a number of factors, including those outside of our control, could adversely impact the timing and duration of our product’s or any future candidates’ development, which could increase our research and development expenses.

Previous wording

Selling, general and administrative expenses consist primarily of salaries, benefits, equity-based compensation for personnel in executive, finance, business development, sales and marketing and other corporate administrative functions. Selling, general and administrative expenses also include pre-commercial launch activities prior to product launch, the initiation of commercialization activities in September 2024, legal fees incurred relating to corporate and patent matters, professional fees incurred for accounting, auditing, tax and administrative consulting services, market research costs, and insurance costs.

Current wording

Selling, general and administrative expenses consist primarily of salaries, benefits, stock-based compensation for personnel in executive, finance, business development, sales and marketing and other corporate administrative functions. Selling, general and administrative expenses also include pre-commercial launch activities prior to product launch, the initiation of commercialization activities in September 2024, legal fees incurred relating to corporate and patent matters, professional fees incurred for accounting, auditing, tax and administrative consulting services, and insurance costs.

Previous wording

We expect that our selling, general and administrative expenses will increase substantially in 2024 compared to 2023. The increase in expenses is due to our sales force which was established in the third quarter of 2024, the development and commencement of our marketing campaigns and initiatives, the hiring of additional sales and marketing personnel to support full commercialization activities, and the addition of infrastructure and programs to support commercialization activities. We expect to continue to incur audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, board of director fees, investor relations costs associated with operating as a public company, patent costs and defense, and general and administrative personnel.

Current wording

We expect our selling, general and administrative expenses to increase substantially in 2025. The increase in expenses is due to our sales force which was established in the third quarter of 2024, the development and commencement of our marketing campaigns and initiatives, the ALK Co-Promotion Agreement, the hiring of additional sales and marketing personnel to support full commercialization activities, and the addition of infrastructure and programs to support commercialization activities. We expect to continue to incur audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, board of director fees, investor relations costs associated with operating as a public company, patent costs and defense, and general and administrative personnel.

Previous wording

Revenues. Revenues were $2.1 million and $0.0 million for the three months ended September 30, 2024 and 2023, respectively. Revenues for the three months ended September 30, 2024 include $0.6 million in net product revenues for sales ofneffyand $1.5 million in revenue for the first event milestone under the Seqirus Agreement.

Current wording

Revenues. Revenue for the three months ended March 31, 2025 was $8.0 million, as compared to $0 for the three months ended March 31, 2024. Revenue for the three months ended March 31, 2025 includes $7.8 million in net product revenues for sales ofneffyand $0.2 million in revenue for regulatory services performance obligations under the ALK Collaboration Agreement.

Previous wording

Cost of Goods Sold. Cost of goods sold were $0.1 million and $0.0 million for the three months ended September 30, 2024 and 2023, respectively. Since prior to August 2024 costs incurred for the manufacture ofneffy were recorded as research and development expenses, the cost of goods sold for the three months ended September 30, 2024 utilized zero-cost inventory and therefore consisted primarily of distribution fees, royalties, and intangible assets amortization.

Current wording

Cost of Goods Sold. Cost of goods sold for the three months ended March 31, 2025 was $1.1 million, as compared to $0 for the three months ended March 31, 2024. Since prior to August 2024, costs incurred for the manufacture ofneffy were recorded as research and development expenses, product sales for the three months ended March 31, 2025 utilized zero-cost inventory and therefore consisted primarily of distribution fees, royalties, and intangible asset amortization.

Previous wording

Since our inception, we have incurred significant operating losses and negative cash flows from our operations. We have recognized limited net product sales since the commercial launch ofneffyin September 2024. We have funded our operations to date primarily with proceeds from the Merger, the sale of preferred and common stock, revenue earned under collaboration, licensing, supply and distribution agreements and bank debt. From inception to September 30, 2024, we have raised $262.3 million in cash, cash equivalents and short-term investments, net of transaction costs, from the Merger, net proceeds of $76.3 million from the issuance of convertible preferred and common stock, $30.0 million from our collaboration, licensing, supply and distribution arrangements, and $10.0 million from bank debt. As of September 30, 2024, we had cash, cash equivalents, and short-term investments of $204.6 million.

Current wording

Since our inception, we have incurred significant operating losses and negative cash flows from our operations. We have recognized limited net product sales since the commercial launch ofneffyin September 2024. We have funded our operations to date primarily with proceeds from the Merger, private placement of convertible preferred stock, issuance of common stock, licensing, supply and distribution arrangements with our commercialization partners, bank debt, and limited net product sales. As of March 31, 2025, we had cash, cash equivalents, and short-term investments of $275.7 million.

Previous wording

The following table summarizes our cash flows for the nine months ended September 30, 2024 and 2023 (in thousands):

Current wording

The following table summarizes our cash flows for the three months ended March 31, 2025 and 2024 (in thousands):

Previous wording

During the nine months ended September 30, 2024, net cash used in operating activities was $28.5 million. This consisted primarily of a net loss of $41.9 million, an increase in our operating liabilities of $8.7 million, a decrease in our operating assets of $0.1 million, and non-cash charges of $4.6 million. The increase in our operating liabilities was primarily due to an increase in accounts payable and accrued liabilities of $8.7 million. The decrease in our operating assets was primarily due to a decrease in prepaid and other assets of $1.1 million, partially offset by an increase in accounts receivable of $0.8 million and an increase in inventories of $0.2 million. The non-cash charges consisted of non-cash stock-based compensation of $10.3 million, partially offset by $5.7 million in net amortization of discounts on short-term investments.

Current wording

During the three months ended March 31, 2025, net cash used in operating activities was $40.7 million. This consisted primarily of a net loss of $33.9 million, an increase in our operating assets of $14.4 million, an increase in our operating liabilities of $4.0 million, and non-cash charges of $3.6 million. The increase in our operating assets was due to increases in inventories of $8.4 million, prepaid expenses and other assets of $4.8 million, and accounts receivable of $1.1 million. The increase in our operating liabilities was due to an increase in accounts payable and accrued expenses of $4.2 million, partially offset by a decrease in contract liability of $0.2 million. The non-cash charges consisted primarily of non-cash stock-based compensation of $5.3 million and depreciation and amortization expense of $0.3 million, partially offset by $2.0 million in net accretion of discounts on short-term investments.

Previous wording

During the nine months ended September 30, 2023, net cash used in operating activities was $41.9 million. This consisted primarily of a net loss of $47.2 million, an increase in our operating liabilities of $3.0 million, a decrease in our operating assets of $0.5 million, and non-cash charges of $1.9 million. The increase in our operating liabilities was primarily due to an increase in accounts payable and accrued liabilities of $6.1 million, partially offset by a decrease in contract liability of $3.1 million. The decrease in our operating assets was primarily due to a decrease in prepaid and other assets of $0.5 million. The non-cash charges consisted primarily of non-cash stock-based compensation of $7.0 million, partially offset by $5.1 million in net amortization of discounts on short-term investments.

Current wording

During the three months ended March 31, 2024, net cash used in operating activities was $6.7 million. This consisted primarily of a net loss of $10.3 million, an increase in our operating liabilities of $1.3 million, a decrease in our operating assets of $0.9 million, and non-cash charges of $1.3 million. The increase in our operating liabilities was primarily due to an increase in accounts payable and accrued liabilities of $1.3 million. The decrease in our operating assets was primarily due to a decrease in prepaid and other assets of $0.9 million. The non-cash charges consisted of non-cash stock-based compensation of $3.3 million, partially offset by $2.0 million in net accretion of discounts on short-term investments.

Previous wording

During the nine months ended September 30, 2024, the cash and cash equivalents used in investing activities was $4.3 million. This consisted primarily of purchases of short-term investments of $192.6 million, maturities of short-term investments of $191.0 million, payments of milestone obligations under license agreements of $2.5 million, and purchases of property and equipment of $0.3 million.

Current wording

During the three months ended March 31, 2025, the cash and cash equivalents provided by investing activities was $29.1 million. This consisted of maturities of short-term investments of $63.5 million, partially offset by purchases of short-term investments of $34.3 million and purchases of property and equipment of $0.1 million. During the three months ended March 31, 2024, the cash and cash equivalents used in investing activities was $8.5 million. This consisted primarily of purchases of short-term investments of $63.4 million, and purchases of property and equipment of $0.1 million, partially offset by maturities of short-term investments of $55.0 million.

Previous wording

During the nine months ended September 30, 2024, the cash and cash equivalents provided by financing activities was $1.5 million, which consisted of proceeds from stock option exercises and the employee stock purchase plan.

Current wording

During the three months ended March 31, 2025, the $0.7 million of cash and cash equivalents provided by financing activities was attributable to proceeds from stock option exercises. During the three months ended March 31, 2024, the $0.3 million of cash and cash equivalents provided by financing activities was attributable to proceeds from stock option exercises.

Previous wording

Based on our current operating plan, we believe that our existing cash, cash equivalents, short-term investments, and revenues from product sales will be sufficient to meet our anticipated cash requirements through at least the next three years. In particular, we expect our existing cash, cash equivalents, short-term investments, and revenues from net product sales and collaboration and out-licensing agreements will allow us to fund proof of concept clinical trials ofneffyfor additional indications, fund commercial manufacturing and sales and marketing activities, and fund our U.S. commercial launch. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of testing product candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain.

Current wording

Based on our current operating plan, we believe that our existing cash, cash equivalents, short-term investments, and revenues from product sales and cash proceeds from collaboration and out-licensing agreements will be sufficient to meet our anticipated cash requirements through at least the next three years. In particular, we expect our existing cash, cash equivalents, short-term investments, and revenues from net product sales and cash proceeds from collaboration and out-licensing agreements will allow us to fund commercial manufacturing and sales and marketing activities, general operating activities and working capital requirements, and proof of concept clinical trials ofneffyfor additional indications. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of testing product candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain.

Previous wording

Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and disruptions to and volatility in the credit and financial markets in the United States, including due to bank failures, and worldwide resulting from macroeconomic factors. Because of the numerous risks and uncertainties associated with product development and commercialization, we cannot predict the timing or amount of increased expenses and cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Current wording

Our ability to raise additional funds may be adversely impacted by macroeconomic factors that may result in worsening global economic conditions and disruptions to and volatility in the global credit and financial markets, including due to tariffs, trade wars, inflation, high interest rates, recessionary concerns, recessions, bank failures, geopolitical conflicts, and general economic uncertainty. Because of the numerous risks and uncertainties associated with product development and commercialization, we cannot predict the timing or amount of increased expenses and cannot assure you that we will generate profits or positive cash flows from operating activities in the future.

Previous wording

The total amount of unconditional purchase obligations related to the supply of raw materials is $34.1 million as of September 30, 2024. Payments by year are as follows: 2024 and 2025 ($6.8 million in the aggregate), 2026 ($7.6 million), 2027 ($8.9 million), and 2028 ($10.8 million).

Current wording

The total amount of unconditional purchase obligations related to the supply of raw materials is $60.6 million as of March 31, 2025. Our estimated remaining payment obligations by year are as follows: 2025 ($4.0 million), 2026 ($10.5 million), 2027 ($11.8 million), 2028 ($13.8 million), and $2.9 million per year thereafter through 2035.

Previous wording

The total amount of unconditional purchase obligations related to hosted software license subscription fees is $3.9 million as of September 30, 2024. Payments by year are as follows: 2024 ($0.6 million), 2025 ($1.4 million), 2026 ($1.5 million), and 2027 ($0.4 million).

Current wording

The total amount of unconditional purchase obligations related to hosted software license subscription fees is $3.0 million as of March 31, 2025. Our estimated remaining payment obligations by year are as follows: 2025 ($1.1 million), 2026 ($1.5 million), and 2027 ($0.4 million).

Previous wording

In August 2024, we entered into a corporate sponsorship agreement with Food Allergy Research and Education, Inc. pursuant to which we have payment obligations of $9.0 million over a 28-month period. Our remaining payment obligations have been reduced to $8.0 million as of September 30, 2024 due to a $1.0 million payment that was made in September 2024. Payments by year are as follows: 2024 ($1.0 million), 2025 ($4.0 million), and 2026 ($3.0 million).

Current wording

In August 2024, we entered into a corporate sponsorship agreement with Food Allergy Research and Education, Inc. pursuant to which we have payment obligations of $9.0 million over a 28-month period. Our remaining payment obligations as of March 31, 2025 are $5.0 million. Our estimated remaining payment obligations by year are as follows: 2025 ($2.0 million), and 2026 ($3.0 million).

Previous wording

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses, stock-based compensation, and valuation allowances for deferred tax assets. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Current wording

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue, accrued expenses, stock-based compensation, and valuation allowances for deferred tax assets. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Previous wording

We believe the following critical accounting policies involve significant areas where management applies estimates, assumptions and judgments in the preparation of our condensed consolidated financial statements. See our other additional critical accounting policies under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K filed with the SEC on March 21, 2024 and Note 2 - Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

During the three months ended March 31, 2025, there were no material changes to our critical accounting policies or estimates. Our critical accounting policies and estimates are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K filed with the SEC on March 20, 2025 and Note 2 – Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.