ARS Pharmaceuticals (SPRY) Q2 FY26 earnings call: guidance and Q&A

Can you discuss the gross-to-net evolution, product margins, and what drives them? Also, how do you plan to substantially increase the 8% market share in field-targeted accounts?

Gross-to-net is anticipated to be around 50%. Gross margin was 62% in Q2 (64% YTD), lower due to short-dated product reserves, manufacturing inefficiencies, and ex-US launch costs, but expected to improve into 2027. Market share growth in targeted accounts will be driven by the fully deployed sales team, evolving messaging campaigns to engage the entire office (physicians, nurses, MAs), and consistent execution.

“So our gross margin was about, excuse me, 62% in Q2 and a little over 64% year-to-date. And that was lower than we project going forward for a few reasons. One is the establishment of some reserves for short-dated product, some manufacturing inefficiencies as we continue to scale production, and costs for the ex-US product launches.”

asked by Joshua Schimmer · answered by Donn Casale

How do you view the progression of payer access and the criticality of Caremark formulary? What will the new DTC strategy look like in terms of channels, media, and spend, and how will it differ from the previous approach?

Payer access is important, but building provider conviction is the critical next step, especially with 90% commercial coverage (57% without prior authorization). The new DTC strategy shifts from broad linear TV to more efficient, targeted channels like social media and search, which are also used for providers, allowing for greater efficiency in SG&A spend.

“As it relates to DTC, obviously when we launched, we had significant DTC, which is linear TV, closed circuit TV. It drove a lot of awareness in the marketplace, and that awareness still exists today. As we look ahead, we're looking towards more efficient consumer campaigns and media spend. That's going to be around traditional channels such as social media, search, those types of channels, which we believe are much more efficient.”

asked by Ryan Deschner · answered by Donn Casale

Could you elaborate on the assumptions baked into the goal of cash flow break-even by the end of 2027? Are you also considering the back-to-school potential tailwind for NEPI next year?

Confidence in cash flow break-even is driven by a significant reduction (over 40%) in cash-based SG&A from H1 to H2 2026, continuing into 2027, combined with anticipated steady revenue and market share gains. The back-to-school period (Q3) naturally offers higher volume, but the core strategy of provider engagement remains consistent.

“a big part of that is being driven around our spend and be more efficient on our spend. As we shared, our SG&A was reduced by over 40% from the first semester to the second semester. And importantly, that trend continues throughout all 2027.”

asked by Unknown Speaker · answered by Donn Casale

You mentioned meaningfully changing provider prescribing habits. Can you elaborate on what specific habits you want to break and the education/detailing strategy?

The goal is to break the decades-long entrenched behavior of using auto-injectors. This requires high-frequency, targeted messaging to get providers to consider the consequences of inaction and appreciate the problem NEPI solves. The field team will tell the story of NEPI's value proposition, understanding that changing habits in prevention-based markets takes time and methodical, provider-by-provider execution.

“The break is this entrenched behavior for decades long of using auto injectors, and that takes time. in these prevention types of markets where providers are doing the same thing over and We believe high-level frequency with the right message at the right time will break those habits.”

asked by Unknown Speaker · answered by Donn Casale

Beyond scripts and revenue, are there other interim metrics for prescriber engagement that you look at to evaluate the current strategy's progress?

While scripts and market share are the best indicators, the company will also monitor activity and frequency of calls by the sales team, and identify which activities drive different behaviors and outcomes. The significant difference in market share (8% in targeted vs. 1% in non-targeted areas) provides confidence in the strategy.

“Well, we'll certainly look at, you know, obviously the best indicator is Scripps and market share, and that's going to be an important metric. As I said earlier, we're going to share every quarter so you can track our progress from a year-over-year perspective. We're going to look at activity and where we look at frequency.”

asked by Lachlan Hanbury-Brown · answered by Donn Casale

The NQ mentioned a July license agreement for worldwide IP rights. Is this a potential pipeline expansion opportunity?

It is an opportunity to consider a line extension for the franchise, but it is too early to comment further at this time.

“Yes, it's really kind of an opportunity for us to think about a line extension and give us some opportunities. for our pipeline. Too early right now to comment on it, but right now It's an opportunity for us to think about line extension for the franchise.”

asked by Lachlan Hanbury-Brown · answered by Donn Casale