ARS Pharmaceuticals: Demand Curve Is Key Unknown

seekingalpha11-21 00:55

ARS Pharmaceuticals' Neffy, a first non-injectable epinephrine nasal spray, recently launched in the U.S. and Europe, helping to drive a 140% YTD stock increase.The company has a solid balance sheet ...

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Bill Oxford Today, we are putting ARS Pharmaceuticals, Inc. (NASDAQ:SPRY) in the spotlight. This company has recently become a commercialized concern after the FDA approved its 2mg epinephrine nasal spray for the emergency treatment of allergic reactions, which now goes by the brand name neffy. The company launched this potentially game-changing product into the U.S. market in September, and neffy was approved in Europe in August. A 1mg version of neffy for children 33lbs to 66lbs should be approved in March of next year.   Seeking Alpha As one can see via the chart above, shareholders have been rewarded due to these positive developments to the tune of an approximate 140% move higher in the stock year to date. Can the rally continue, or is profit taking likely in the months ahead? An analysis follows below.   November 2024 Company PresentationNeffy has the first mover advantage as being the first non-injectable delivered epinephrine product available for severe allergic reactions. It also has other potential indications where it is being evaluated in early/mid-stage development (see above). However, ARS Pharmaceutical's near and medium-term trajectory will be driven by how successful it is rolling out neffy for its newly approved indication. Analyst Commentary & Balance Sheet: The analyst community is positive on the company's prospects, although coverage is a bit sparse. In mid-August, Raymond James bumped its price target to $22 a share from $18 previously, while maintaining its Buy rating on the stock. In October, Cantor Fitzgerald ($30 price target) reissued its Buy rating in October and Leerink Partners did the same in November. Approximately 13% of the outstanding float in the shares is currently held short. Several insiders have been frequent and consistent sellers of the shares throughout 2024. So far in November, they have disposed of approximately $3.5 million worth of shares collectively. In addition, a beneficial owner has sold just over $10 million worth of shares so far this month as well.   November 2024 Company PresentationThe company ended the third quarter with just under $205 million of cash and marketable securities on its balance sheet, after ARS Pharmaceuticals posted a loss of $19.1 million for Q3. The firm listed no long-term debt on the 10-Q it filed for the quarter. Earlier this month, ARS Pharmaceuticals signed a licensing agreement with ALK-Abelló for European and most non-U.S. rights to neffy. The deal provided ARS Pharmaceuticals with a $145 million upfront payment, and management has stated it now has funding in place for at least the next three years of operations. The deal with ALK-Abelló will also provide potential milestone payouts (up to $320 million) as well as tiered royalties in the teens on commercialization sales Conclusion:   Yahoo! FinanceARS Pharmaceuticals lost 57 cents a share in FY2023 on no revenues. The current analyst firm consensus has losses falling to 43 cents a share in FY2024 as sales clock in at just over $25 million. They project similar losses in FY2025 even as sales soar to $115 million. It should be noted that revenue estimates from analyst firms vary widely (above). ARS Pharmaceuticals booked $2.1 million in revenues in the third quarter. This consisted of $1.5 million in collaboration revenue and $600,000 for the first week of sales of neffy. The challenge is trying to project what neffy's sales traction will be given it is targeting a large market, and it is the first product approval for the company. The global epinephrine market was just under $2 billion in 2023 and is projected to grow to $4.6 billion by 2032.   November 2024 Company PresentationThe stock is also up better than 140% so far this year, so a lot of good news already seems baked into the stock price. As a recent article on Seeking Alpha recently noted, Aquestive Therapeutics (AQST) and other firms are developing non-injectable epinephrine product candidates as well. Neffy should soon be in most insurance coverage plans.   November 2024 Company Presentation Insiders also appear happy to take some chips off the table and cash in some profits. Therefore, this is a name I will follow up on at some point in 2025 after there are a few quarters of neffy product revenues available and a better projection can be made around the product's sales traction and how that affects the company's quarterly cash burn rate going forward. Until then, prudence seems the better part of discretion, and I have no investment recommendation on SPRY until more data becomes available.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485128012"}