ARS Pharmaceuticals (SPRY) Q2 2025: NEFI Scripts Jump 180% as DTC and Pediatric Launches Expand Reach
NEFI’s prescription volume surged 180% sequentially, signaling accelerating demand as ARS Pharmaceuticals leverages direct-to-consumer (DTC) and pediatric initiatives ahead of peak allergy season. With expanded commercial coverage and new international launches, the company is positioned for further growth, though gross-to-net retention has now normalized to long-term expectations. Investors should monitor execution on DTC effectiveness and payer mix as ARS navigates the next phase of its commercial ramp.
Summary
- Prescription Volume Inflection: NEFI unit volume nearly doubled sequentially, reflecting broadening demand drivers.
- Payer Access and Coverage: 93% commercial coverage achieved, but gross-to-net retention now at target levels.
- Global and Pipeline Expansion: International launches and new indications set up a multi-year growth runway.
Performance Analysis
ARS Pharmaceuticals delivered a transformative Q2, with NEFI’s U.S. net product revenue reaching $12.8 million, up 64% from Q1, driven by a sharp acceleration in prescription volume—35,000 two-pack prescriptions versus 19,000 in the prior quarter. The sequential 180% increase in weekly unit volume was attributed to expanded pediatric dosing, broader payer access, and early DTC campaign momentum. Collaboration and supply revenue contributed $2.9 million, including a $5 million milestone (partially recognized) from the German launch.
Operating expenses rose sharply to support the commercial ramp, with SG&A at $54.3 million due to heavy DTC investment and field force expansion. Gross-to-net retention—a measure of revenue kept after rebates and discounts—declined to the low 50% range, reflecting the anticipated effect of improved payer access and higher rebate volume. Cash and equivalents stood at $240.1 million, providing over three years of runway even as ARS ramps spend to capture share.
- Script Growth Outpaces Revenue: Unit volume growth exceeded revenue growth due to gross-to-net headwinds as payer mix shifted.
- SG&A Investment Peaks: DTC campaign and pediatric co-promotion drove a step-up in operating expenses, expected to continue into Q3.
- Collaborative Milestones: International launches triggered one-time payments, but future visibility hinges on continued global rollout and EU pediatric approval.
Underlying demand signals are robust, but investors should weigh the sustainability of script growth against the normalization of gross-to-net yields and rising commercial spend.
Executive Commentary
"NEFI is gaining traction across prescribers, payers, and patients... we expect to see even greater growth in NEFI prescriptions in the third and fourth quarters of this year."
Richard Lowenthal, Co-founder, President and CEO
"We remain committed to making substantial investments in the launch of NEFI to ensure both short and long-term patient and physician awareness and market share capture."
Kathy Scott, Chief Financial Officer
Strategic Positioning
1. NEFI as Platform Disruptor
NEFI, intranasal epinephrine, is positioned as a needle-free, portable alternative to auto-injectors, targeting both patient and caregiver barriers to adoption. The product addresses needle aversion and convenience, unlocking new patient segments and potentially expanding the addressable market.
2. Payer Access and Gross-to-Net Dynamics
Commercial coverage reached 93%, with more than half of payers now waiving prior authorization. However, as payer access improved, gross-to-net retention declined to the low 50% range, reflecting higher rebate obligations. This was anticipated by management and is now embedded in forward revenue modeling, but it limits incremental margin upside from further access gains.
3. Multi-Channel Growth Leveraging DTC and Pediatrics
The DTC campaign (“Hello NEFI, Goodbye Needles”) and pediatric co-promotion with ALK are central to ARS’s strategy to build brand awareness and expand prescribing. Early DTC metrics show above-norm recognition, but full sales impact is expected on a 12-16 week lag. Pediatric dosing and school programs are driving adoption among new and lapsed patients, with legislative wins further enabling in-school administration.
4. Global Expansion and Pipeline Diversification
International launches in Germany and UK, with regulatory decisions pending in Canada, Australia, Japan, and China, provide a multi-year growth vector. The urticaria clinical program, if successful, could further expand NEFI’s utility and addressable market, with topline data expected in 2026.
5. Balance Sheet Strength Enables Aggressive Execution
With $240.1 million in cash and over three years of runway, ARS is well-capitalized to support ongoing DTC, field force, and pipeline investments while absorbing gross-to-net normalization and international launch costs. This financial flexibility is a strategic asset as the company seeks to entrench NEFI’s market presence.
Key Considerations
This quarter marks a shift from launch phase to broad commercial execution, as ARS leverages its DTC, pediatric, and payer strategies to drive script growth and brand adoption. The next phase will test the durability of these drivers amid rising spend and normalizing revenue yields.
Key Considerations:
- Script Mix Evolution: Early data suggests a mix of switchers, lapsed, and new patients, but granular claims analysis is pending.
- DTC ROI Timeline: Full impact from DTC expected in Q3-Q4, with management budgeting for continued investment into 2026.
- Gross-to-Net Ceiling Reached: With gross-to-net now at long-term targets, future revenue growth will track more closely with volume, not access gains.
- International Milestones: Future collaboration revenue hinges on regulatory approvals and commercial launches outside the U.S.
Risks
Key risks include DTC campaign underperformance, potential plateauing of payer access, and gross-to-net pressure from ongoing rebate obligations. Competitive response from entrenched auto-injector brands, regulatory delays abroad, and execution risk in pipeline expansion could also impact ARS’s growth trajectory. Management’s ability to convert awareness into sustained prescription growth will be critical as spend ramps.
Forward Outlook
For Q3 2025, ARS expects:
- Continued sequential growth in NEFI prescriptions, driven by DTC and pediatric channel tailwinds.
- SG&A to remain elevated as DTC investment continues through peak allergy season.
For full-year 2025, management maintained guidance for:
- Gross-to-net retention stabilizing near 50%.
- Cash runway exceeding three years, supporting ongoing commercial and pipeline investments.
Management emphasized the importance of DTC ROI, further payer wins, and international regulatory milestones as key levers for the remainder of the year.
- Monitor DTC conversion rates into scripts as a leading indicator of brand entrenchment.
- Track gross-to-net stability as payer mix evolves and rebate dynamics mature.
Takeaways
Q2 marks a pivotal inflection for ARS, as NEFI’s prescription growth validates the company’s multi-pronged commercial strategy. The normalization of gross-to-net retention and rising SG&A spend set a new baseline for financial modeling, while international launches and pipeline progress offer future optionality.
- Commercial Execution Validated: Script growth and coverage gains confirm NEFI’s disruptive potential, but future upside hinges on sustained DTC effectiveness and payer dynamics.
- Gross-to-Net Now Embedded: With revenue yield at target levels, future growth depends on volume, not further access expansion.
- International and Pipeline Optionality: Global launches and new indications could unlock additional value, but execution risk remains.
Conclusion
ARS Pharmaceuticals has crossed a key threshold in NEFI’s commercialization, with prescription momentum, payer access, and DTC engagement setting the stage for a critical second half. The company’s ability to translate awareness and access into durable market share will determine the sustainability of its growth and the realization of its long-term vision as a platform disruptor in allergy treatment.
Industry Read-Through
NEFI’s rapid uptake and payer acceptance signal a broadening openness to device innovation in allergy and acute care markets, suggesting that entrenched injectable franchises may face accelerating share loss to needle-free alternatives. The normalization of gross-to-net yields highlights the inevitability of rebate pressure as new entrants scale, reinforcing the need for high-volume strategies and strong brand differentiation. DTC effectiveness and pediatric channel leverage are emerging as critical battlegrounds for specialty pharma commercialization, with implications for peer launches in adjacent therapeutic areas.