Good afternoon and welcome to ARS Farmers Third Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the company's prepared remarks, we will open the line for questions. Please be advised that today's conference is being recorded. I will now like to turn the call over to Monique Allaire, IR Representative for the company. Please go ahead.

Good afternoon, and thank you all for joining us. With me on the call today are President and CEO Don Casale, Chief Commercial Officer Meg Smith, and our Chief Financial Officer Kathy Scott. Earlier today, we issued a press release outlining ARS Pharma's commercial highlights and financial results for the third quarter of 2026. That press release can be found in the Investors and Media section of the company's website at ars-pharma.com. Before we begin, please note that today's remarks may contain forward-looking statements and 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 Don.

Thank you, Monique, and good afternoon, everyone. In August, I outlined a new strategic direction for ARS and laid out three corporate priorities to build a durable, profitable business. The first is disrupting the legacy epinephrine market with NEFI, delivering steady market share gains through targeted provider commercial execution. The second is reaching past low break even by year end 2027, based on greater financial discipline that will continue through 2027. The third is expanding our epinephrine delivery platform beyond anaphylaxis, and unlocking value with a potential first on-demand treatment of breakthrough flares and chronic spontaneous urticaria, or CSU. I'm very proud of our progress last quarter and the team's execution against each of these priorities. In the third quarter, NEFI continued to capture market share, delivering $33.4 million in U.S. net product revenue. Total U.S. market share surpassed 5%, up from 4% in the third quarter of 2025. This was driven by a 42% year-over-year increase in NEFI end-user demand. We recorded more than 19,000 unique prescribers in the third quarter, up 49% year over year, for a total of nearly 45,000 prescribers since launch. The impact of our commercial execution is even more evident when you look at market share and field targeted accounts, which represent about 44% of the total market opportunity. Field targeted share increased from 6% in Q3 last year to 9% in Q3 this year. compared with 2% in non-targeted accounts. So where our field team engages, NEFI wins. On our second priority, we have implemented strict financial discipline that we will maintain going forward. Operating expenses in Q3 were in line with the guidance we selected and set last year, reflecting our ongoing commitment to reducing SG&A spend. SG&A expenses in Q3 were down by more than 40% compared to the prior two quarters of this year. Based on our revised expense plan, we reaffirmed that we are on track to achieve cash flow breakeven by year-end 2027. Third, on our pipeline, our Phase IIb trial with ARS2 is progressing well, and we expect to report interim data in the first quarter of 2027. An estimated 2 million Americans live with CSU, A debilitating inflammatory condition marked by episodes of severe itch and hives. While biologics have a meaningfully improved disease control for many patients, breakthrough flares are common. About 60% of adults remain symptomatic despite taking four times the standard dose of antihistamines, and a third to more than half of patients on approved biologics are not well controlled. There are no FDA-approved therapies indicated to stop a breakthrough flare in progress today. When a severe flare occurs, physicians typically turn to oral corticosteroids, which have side effects that limit their long-term use. This is the opportunity we see for ARS2, rapid, on-demand relief of breakthrough flares rather than another chronic maintenance therapy. Results from our completed Phase II trial show ARS2 improved both itch and high scores, beginning as early as five minutes after dosing. In our exploratory phase 2b trial, we're evaluating 0.5 milligram and one milligram doses of ARS2 to identify the minimum effective dose. The trial is progressing and we're on track to report interim data in the first quarter of 2027. With the interim data, we also plan to share highlights from an ongoing market assessment, including claims analysis and pair research. The interim findings, along with the full data expected later in 2027, will guide the plans and design of our Phase III registration program. ARS2 could add meaningful platform value as potential first FDA-approved, on-demand treatment for breakthrough flares in CSU, including in patients on biologics. Importantly, this is an indication we could commercialize efficiently and effectively using the same sales force we have for NEFI today. If we execute on each of these objectives, I believe we can create a meaningful value for our stakeholders over both the near and long term. To get there, we have brought in multiple senior leaders with proven track records. We recently appointed Dr. Randall Kaye as Chief Medical Officer. Randall is an allergist and an immunologist with more than 30 years in medicine. We also recently appointed John Fleaver as Chief Legal Officer, bringing expertise across business operations and many more. And in August, Meg Smith joined us as Chief Commercial Officer. Meg is a commercial expert with a record of winning in prevention-type markets. She knows how to lead teams that drive behavior change. With that, let me turn the call over to Meg for a commercial update.

Thanks, Don, and good afternoon, everyone.

I'm honored to be leading the commercial team as we enter the next phase of commercialization for Nessie.

What I've seen in my first two months confirms that NEFI is a meaningful advance in a market where patients need a better solution. NEFI competes in an existing market of more than 5 million U.S. prescriptions annually, almost all of which are needle-based autoinjectors. Only about one in three patients with an autoinjector prescription carry it consistently and roughly half delay or never use it during a reaction. This is an unacceptable gap, leaving patients unprepared and unprotected. A needle-free, easy-to-carry, and easy-to-administer device can close that protection gap and expand the market over time. But when you launch a product into an entrenched market where prescriber behavior has been the same for decades, product attributes alone are not enough to change behavior. That is why my priority was to build a commercial strategy focused on changing this long-standing provider behavior and then to align every function behind it. Our commercial strategy aims to deliver steady, year-over-year market share gains through targeted provider engagement, growing share in the existing market today. Our commercial approach is built around three key areas of focus, where we engage, what we say, and how we convert a prescription into a fill consistently. First, where we engage. We are moving to an account-based approach to sales targeting. Our highest value prescribers often sit with other advanced practice providers, nurses, and office staff. all of whom influence whether a prescription is written and filled. That includes the staff who handle electronic prescriptions, refill protocols, and prior authorizations, as well as those who counsel patients and caregivers, all of which are incredibly important considerations in the epinephrine market. Calling on an account rather than a single provider means one visit reaches the entire care team. That makes our engagement more effective at changing these entrenched prescribing habits and office protocols and also allows our sales representatives to be more efficient. Second is what we say. For decades, the autoinjector has been the default because there was no alternative. We are reframing the conversation with providers around what happens after the prescription for an autoinjector is written, or more specifically, what doesn't happen. What we need to do is not only drive awareness of the problem that exists in the epinephrine market, but also an appreciation for the role that the physician plays in the prescribing decision. A patient can advocate for themselves, but ultimately the decision on a prescription sits with the trusted healthcare provider. Once a physician embraces that there is a problem and assumes responsibility for addressing that problem, NEPI becomes the obvious solution. To anchor this work, we are developing a bold new marketing campaign that we expect to roll out in early 2027. Turning to the third area, how we convert. Once a prescription is written, our team needs to support that prescription all the way through to fulfillment. Today, prior authorization is where we lose the most conversion from prescription to fill and where we can improve the fastest. Prior authorizations are routine in allergy practices, including for the biologics these same physicians prescribe regularly. Because our representatives now engage the full care team, including the staff who manage PA submissions, we can make sure those offices have what they need to complete them. When they do, the majority of submitted PAs are approved. Importantly, every PA submitted also builds documented demand with payers, which strengthens our case for broader coverage. Under new market access leadership, our team is executing a payer engagement approach focused on opening the remaining Medicaid states and expanding access across all commercial plans. These initiatives and others are geared towards establishing NEPI as a standard of care and ensuring that every prescription becomes a filled prescription so that patients have effective protection when they need it. ARS has a tremendous opportunity to reshape this market. Applying fresh thinking to entrenched markets is what I've done throughout my career. We now have a single commercial strategy that drives every decision, a disciplined investment approach that ties every dollar back to it, and a talented, passionate team to execute. It will take time, but I firmly believe the opportunity is within our reach, and I look forward to sharing our progress in the coming quarters. I'll now pass the call to Kathy to review our financials.

Thank you, Meg. Throughout the third quarter, we continued to operate with enhanced financial discipline and operating spend that was in line with the guidance that we provided in August. Starting with revenue, total revenue for the third quarter was $37.7 million. This included $33.4 million in U.S. net product revenue for Nepi, as well as $2.6 million in ex-U.S. supply revenue and $1.7 million in collaboration revenue. This compares with total revenue of $32.5 million in the third quarter of 2025, which included $31.3 million in net product revenue. Moving to our operating expenses. Total operating expenses for the quarter were $71.9 million, including stock-based compensation, which is tracking to our second half 2026 guidance of $114 million to $126 million in aggregate SG&A and R&D expenses, including stock-based compensation. To achieve that, we said we would reduce SG&A by more than 40% in the second half of the year versus the first half and sustain that lower run rate through 2027. In Q3, we delivered on that goal, with SG&A expenses decreased to $43.5 million, a more than 40% reduction compared to the first half of 2026 quarterly average. This reduction was largely driven by the discontinuation of linear TV and reduction in broad consumer advertising, consistent with our provider-focused commercial strategy, along with a more targeted investment within our commercial operations. R&D expenses were $18.3 million for the third quarter, which included a one-time upfront payment of $12.5 million related to a license agreement for exclusive worldwide rights to certain intellectual property, as well as continued development of our ARS-II in breakthrough players in CSU. Finally, we ended the third quarter with $138.4 million in cash, cash equivalents, and short-term investments. Based on our revised expense plan, we continue to see a path to reaching cash flow break even by the end of 2027. As we look ahead, we will continue to operate with the same discipline, keeping spending within our second half guidance and sustaining our lower SG&A run rate through 2027. We plan to provide our full year 2027 financial outlook when we report fourth quarter results. With that, I'll turn the call back to Don.

Thank you, Kathy. In closing, we're delivering on the commitments we made as a company. An F.E. market share and demand are up, our SG&A spend is substantially reduced, and the path to cash flow breakeven is intact. We are changing decades of prescribing habits and expect to complete the operational rollout of our commercial reset over the next quarter, with the financial benefits increasingly visible through the first half of 2027. What you should expect from us is steady progress, measured year over year, on our leading indicator, field-targeted share, alongside strict operating and financial discipline. Beyond our base business, we intend to expand the epinephrine market over time, while also extending the reach of our platform beyond anaphylaxis, led by our ARS2 and breakthrough players of CSU. Our goal is to build a profitable enterprise grounded in durable, recurring Nessie franchise with meaningful pipeline upside. I want to thank the entire ARS team for their focus Lowe, and many more.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Josh Shimmer of Cantor Fitzgerald. Your line is now open.

So much for taking the questions. I have three brief ones. First for Meg, when do you expect your commercial strategy to be fully implemented and what inning would you say you're in in implementing those changes? Two is whether there's any update on the dialogue with CVS, RE formulary coverage for them. And then the last is if you could estimate the gross net for the quarter and expected outlook for that number going forward. Thank you.

Hey, Josh, thanks for the question. Yeah, so, you know, we obviously have completed the commercial assessment, very thorough commercial assessment. Obviously, our biggest takeaway was aligning the team around a uniform commercial strategy. And so we feel really good about where we are, really pleased with the team's reception and ability to execute against it. So there are some operational changes, you know, a new campaign that will support our messaging. You know, as you heard in my prepared remarks, there's kind of three operational components to that is where we engage, what we say, and how we support the prescription all the way from the written prescription all the way to a successful fulfillment. And so some of those components will be in the first quarter of 2027. So you can pick your inning, I suppose. But I'm really pleased with the start and the alignment to the strategy, obviously the strategy around provider behavior change and how the teams embraced it in the early signs of performance. and then I'll go ahead and go to the second question. Obviously we don't comment on specific plans or payers, but we are actively engaged with all plans and payers. And it's important to note that NEFI has really strong payer coverage today. Over 80% of our commercial lives are covered, some of which do require a prior authorization. And then I think it's important for everybody to know that we have an active payer engagement strategy. We are in constant conversation with all the remaining Medicaid states and the remaining commercial plans. And so our strategy is focused on closing those gaps and making sure that all patients have access to NEFI and that the prescriptions are filled. This links back to our strategy. We believe that provider conviction and supporting the prescription all the way from written to FIVOMA and getting a PA where it's required is a core component of that strategy because it prudes demand to the payers and it also puts the patient in the best position to get that prescription filled. And so that's where we are with our payer strategy. And then Don, I'll go ahead and hand it over to you or Kathy for the final question.

Hey, Josh. I'll take the final question. On gross to net, we don't give specifics on gross to net, but as we communicated on the last call for the second quarter call, We're in and around 50%, which, again, we continue to trend towards kind of that range, which really underpins and supports our long-term guide as it relates to year-end 2027 cash flow breakeven. So we're pleased with where that's coming in. Great. Thank you very much.

Thank you.

Thank you. Our next question is from Rana Ruiz of Larrink Partners. Your line is now open.

Hey guys, good afternoon. This is Frank on for Rowana. So it looks like the field targeted account market share increased to 9% this quarter from 8%. And then related to Josh's question, like how should we be thinking about the cadence of that growth and when should we expect an acceleration there?

And then I have another question on the licensing agreement, but I'll hold that.

Hey, Frank. I'll go ahead and take that question. So regarding market share, what we've communicated now on multiple calls is we believe we'll continue to increase from a year-over-year basis field-targeted market share. So we're really pleased with the gains when you look at it from a year-over-year basis from 6% to 9%. Obviously, we say year-to-year due to the fact that there is seasonality, and each of these quarters are different in regards to volume of doses or seasonally prescriptions per quarter. So, again, the way to think about it is a continued increase year-over-year of field-targeted market share, and that, again, supports that long-term guide around cash flow break-even for 2027 year-end. And then I guess just on that license agreement, can you guys give any color there?

I noticed in the 10Q that, you know, there might be, if you develop this product, there might be like royalties related to the sales.

Yeah, so regarding the payment, we're not going to get a lot of specifics right now, but again, it does support expansion of our needle-free delivery platform in and beyond anaphylaxis. The $12.5 million is a one-time payment. As we continue to progress, we'll provide more updates in the future. Awesome. Thank you. Thanks, Frank.

Thank you. Our next question comes from the line of Lachlan Hanbury-Brown of William Blair. Your line is now open.

Hey, guys. Thanks for the questions. Maybe first one is just sort of looking at the change in market share versus change in NEFI sales year over year. It looks like the market share grew more than the sales did. So wondering if you can explain that disconnect. Was that either a change in gross to net slightly or an inventory build between the third quarter this year and last year? And maybe second question is, it looks like you drew down more of the term loan during the quarter, I think. I'm thinking there was that part of the original guidance for cash flow rate even by year end 27, or was that a decision made after that?

Hey, Lachlan. How are you doing? I'll take both those questions. So it relates to kind of the revenue versus market share, even end user demand. So as we mentioned during the prepared remarks, very proud and excited around our end user demand increasing 42% year over year. Net revenue didn't see that same increase. That's primarily due to the fact that we continue to see various changes as it relates to inventory. And so that's going to continue to happen depending on the weeks of each quarter. So there's a little bit of an inventory noise in those numbers. The growth of net, as I mentioned earlier, is in and around the 50% range, which is exactly where we expect it to be. So really it's kind of an inventory issue as it relates to kind of quarter over quarter. We expect that to tighten up as we continue to look forward into future quarters. And then regarding kind of the cash flow breakeven as it relates to the term loan drawdown, as we communicated during, or as I communicated during the last call, we do have access to non-dilutive capital. We've continued to monitor and to assess. As we continue to look ahead and look at not only our expense guidance as it relates to OpEx, as well as our revenue expectations over the several quarters in the future, we feel very comfortable with the comments around break even by year-end 2027. So we saw it as an opportunity. We like the terms as it relates to that non-dilutive capital, so we went ahead and took advantage of it.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.