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ARS Pharma’s Clinical Differentiation · Vanguards of Healthcare by Bloomberg Intelligence

• 0:17
  Speaker 1: Welcome to another episode of Bloomberg Intelligence's Vanguards of Healthcare podcast,
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  Speaker 1: where we speak with leaders at the forefront of change
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  Speaker 1: in the healthcare sector. I'm Anne Hunter van Kirk, Senior
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  Speaker 1: Biopharmaceuticals analyst at Bloomberg Intelligence, the in house equity research
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  Speaker 1: division of Bloomberg, and I'm very pleased to welcome today's guest,
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  Speaker 1: Richard Lowenthal, CEO of ARS Pharmaceuticals. AARs Pharma is a
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  Speaker 1: biopharmaceutical company dedicated to protecting patients from allergic reactions that
• 0:48
  Speaker 1: could lead to anaphylaxis. The company is commercializing Nephi, which
• 0:52
  Speaker 1: was approved August of last year, an epernufferin nasal spray
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  Speaker 1: for emergency treatment including anaphylaxi. Rich can we first start
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  Speaker 1: out with your background and what led you to co
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  Speaker 1: found ARS?
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  Speaker 2: Yes, certainly, thank you. I've been in the industry about
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  Speaker 2: little over thirty years. Started my career at the Food
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  Speaker 2: and Drug Administration after graduate school and then moved into.
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  Speaker 3: Industry after about five years at the FDA.
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  Speaker 2: And during my time in industry, I worked on a
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  Speaker 2: number of different programs, including some that were nasal spray
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  Speaker 2: products and including some experience with epinephrin.
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  Speaker 3: More recently, I was one.
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  Speaker 2: Of the people that helped develop Narcan nasal spray and
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  Speaker 2: in fact was the lead representative to the Food and
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  Speaker 2: Drug Administration and got Narcan approved. Also some other emergency
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  Speaker 2: use nasal sprays like Valtoco, where my clinical research organization,
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  Speaker 2: Pacific Link, did all of the clinical work and regulatory
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  Speaker 2: work for that program and we got that approved for
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  Speaker 2: a company called Nereles, which is here in San Diego
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  Speaker 2: as well. And then we worked on a number of
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  Speaker 2: others including op VI, which is the second opioid antagonists
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  Speaker 2: meaning for opioid overdose approved by the FDA. That's a
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  Speaker 2: nasal spray, and then some others like toasamraan and and
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  Speaker 2: and other nasal products that we worked on. So based
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  Speaker 2: on that experience in working with the company that owned
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  Speaker 2: this absorption enhancing technology, we're using Intravail. The company is AGES.
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  Speaker 2: We made an agreement with Ages to license the technology
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  Speaker 2: for an attempt to see if it would work with epinephrin,
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  Speaker 2: and we did that basically as a you know, a
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  Speaker 2: small company. We started AIRS based on that and initially
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  Speaker 2: we are self funded and it was fairly high risk
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  Speaker 2: at the beginning because while interval works very well with
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  Speaker 2: some their drugs that are on the market, a few
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  Speaker 2: of them that are on the market now, all those
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  Speaker 2: drugs get absorbed internasally, but with epinephrine there was literally
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  Speaker 2: zero absorption in anoqueous solution in internasally, so you couldn't
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  Speaker 2: get absorption unless you use solvents and things, but only
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  Speaker 2: at very very high doses, which could be dangerous because
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  Speaker 2: they're above the lethal level of epinephrin.
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  Speaker 3: So it was a little bit of a high risk,
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  Speaker 3: but it ended.
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  Speaker 2: Up working very well that in our first pilot studies
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  Speaker 2: in Australia, we showed that with the intravail formulation that
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  Speaker 2: epinefrin could be very rapidly absorbed, even faster than injection
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  Speaker 2: with a needle and syringe, and you know, could get
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  Speaker 2: to therapeutic levels very very easily with low doses that
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  Speaker 2: we maintain a good safety margin on when we consider
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  Speaker 2: possible over absorption from different conditions, we stay very far
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  Speaker 2: south of where the limit is for inducing certain cardiovascular
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  Speaker 2: and side effects, including cerebral hemorrhag which can occur with epinephrin,
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  Speaker 2: so you need to keep the dose low and.
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  Speaker 3: That was very very important.
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  Speaker 2: So that's a little bit of my background and how
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  Speaker 2: I got into developing epinefforn nasal spray and Nephi in
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  Speaker 2: the very early days about ten years ago when we
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  Speaker 2: started this company.
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  Speaker 1: Fantastic and Nephie is of course, as you've explained, a
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  Speaker 1: differentiated administration, but it's entering a large and highly competitive,
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  Speaker 1: really genericized market. Now, can you break down what it
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  Speaker 1: takes to successfully break into a market like that?
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  Speaker 2: Yeah, well, and as you said, I mean in this market,
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  Speaker 2: EpiPen obviously is the most well known product out there,
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  Speaker 2: and it's been around for about forty years now, so
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  Speaker 2: it's been a very helpful product for the community by
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  Speaker 2: having an option to inject epinephrin right away a community
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  Speaker 2: setting in an emergency situation. And that's really critical because
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  Speaker 2: the way these anaphylactic reactions progress is they start out
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  Speaker 2: with symptoms and if you stop that reaction, that allergic
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  Speaker 2: reaction very very quickly early in the in the course
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  Speaker 2: of the reaction, typically epinephrine is very very effective. And
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  Speaker 2: also if you stop it very very early in the reaction,
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  Speaker 2: there's less comorbidities and risk of hospitalization.
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  Speaker 3: So early intervention is very very important.
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  Speaker 2: In this disease, so auto injectors have allowed that to
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  Speaker 2: occur more more often. The problem is that they people
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  Speaker 2: are very scared to use injection products. They're complicated to
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  Speaker 2: use in general, and people don't especially like to inject
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  Speaker 2: their children, so people tend to hesitate weight they don't
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  Speaker 2: carry the devices. So what you have to do in
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  Speaker 2: a market like that where it is highly genericized is
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  Speaker 2: first you have to have a clinical differentiation. You have
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  Speaker 2: to have a benefit to the community, benefit to the
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  Speaker 2: patient population, and we believe NEPHI achieves that very effectively
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  Speaker 2: by providing an option that is very simple.
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  Speaker 3: It's easy to carry, it's very easy to use.
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  Speaker 2: As you know, we're using the same device we used
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  Speaker 2: for narcan nasal that's now over the counter. So the
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  Speaker 2: device is very simple to use without any training, just
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  Speaker 2: looking at the pictures and you can administer it very
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  Speaker 2: very quickly. It takes a fraction of a second to
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  Speaker 2: put it in the nose and push the plunger and
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  Speaker 2: you're done. It's the child or yourself is medicated, and
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  Speaker 2: that's really very very important. In addition, there's no needle,
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  Speaker 2: so we take away that fear and that hesitancy and
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  Speaker 2: that's really critical in getting really better clinical outcomes. Now,
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  Speaker 2: again we don't believe nephi's better than injection. We believe
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  Speaker 2: it's the same, and all of our data is showing
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  Speaker 2: it's working exactly the same as injection.
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  Speaker 3: However, if you dose it sooner during the course.
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  Speaker 2: Of an allergic reaction, if you're less hesitant to administer it,
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  Speaker 2: that will lead to better outcomes clinically. And so we
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  Speaker 2: believe that differentiation is very well recognized by payers and
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  Speaker 2: also certainly by patients and caregivers.
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  Speaker 3: So we believe that that's what you need.
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  Speaker 2: You need that medical benefit, that product differentiation to be
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  Speaker 2: able to compete against generics.
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  Speaker 3: We also.
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  Speaker 2: Actually focus very much on the consumer and the patient caregiver,
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  Speaker 2: and we have a copay program where our copaid program
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  Speaker 2: actually can provide people with this disease who have commercial
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  Speaker 2: insurance with Nephi at a zero copay price. So the
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  Speaker 2: price to the consumer is actually much less for Nephi
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  Speaker 2: than the generic auto injectors, which don't have the ability
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  Speaker 2: to provide a copay assistance. So our average copay price
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  Speaker 2: is actually less than generic autoinjector.
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  Speaker 1: Wonderful, and so you mentioned this this pediatric population, and
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  Speaker 1: that was actually an expanded label for you. Can we
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  Speaker 1: dig into really the whole market landscape, particularly on the
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  Speaker 1: child's side, and dig into that pricing and payers a
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  Speaker 1: bit more and how you that.
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  Speaker 2: Yeah, So, of the entire current prescription market, now this
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  Speaker 2: is not necessarily the epidemiology of the disease, but the
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  Speaker 2: prescriptions being given out on an annual basis, about fifty
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  Speaker 2: percent are in adults and fifty percent of the prescriptions
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  Speaker 2: are pediatric children under seventeen and under. Our initial approval
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  Speaker 2: was for both adults and pediatric patients who were thirty
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  Speaker 2: kilograms or greater, so there's not typically an age differentiation
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  Speaker 2: in this disease. It's epinephrine is dose by weight, so
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  Speaker 2: for thirty kilograms and above, they would take a two
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  Speaker 2: milligram dose. Earlier this year, we got the one milligram
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  Speaker 2: in dr nasal epinephrine dose approved, which is for children
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  Speaker 2: fifteen to less than thirty kilograms.
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  Speaker 3: The children in that population.
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  Speaker 2: The one milligram dose that got approved earlier this year,
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  Speaker 2: it's roughly twenty four percent of the market of the
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  Speaker 2: prescription market today and we're seeing that market share in
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  Speaker 2: that part of the market growing quite well. And then
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  Speaker 2: of course we are also working on a dose we
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  Speaker 2: called our baby dose, but it's a dose for children
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  Speaker 2: that are seven point five kilograms to fifteen kilograms, so
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  Speaker 2: that's approximately six months of age to a small four
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  Speaker 2: year old or you know, three year old at the
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  Speaker 2: upper end, and we're also working on that and hope
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  Speaker 2: to have that approved sometime late next year.
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  Speaker 1: Fantastic, And so maybe we can switch over to think about,
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  Speaker 1: you know, the PBM reform, and this is an area
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  Speaker 1: that a lot of companies struggle with. You know, what
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  Speaker 1: was your experience dealing with PBMs and do you have
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  Speaker 1: any overarching thoughts on the process.
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  Speaker 2: Yes, well, we're still dealing with pvdams. Of course, we're
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  Speaker 2: about a year into the launch and we have we
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  Speaker 2: have relatively good coverage. We have about ninety three percent
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  Speaker 2: of insurers that will cover NEPHI. Fifty eight percent are
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  Speaker 2: proving NEPHI prescriptions without any prior authorization or other paperwork,
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  Speaker 2: so it's simply send a prescription to the pharmacy and
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  Speaker 2: it's automatically filled. About thirty five percent of the insurers
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  Speaker 2: out there still require prior authorization. The ones that are
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  Speaker 2: still requiring prior authorization or not covering Nephi. It's only
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  Speaker 2: seven percent are not covering NEPHI right now. They're mainly
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  Speaker 2: in the CVS, care Mark, ETNA category and Anthem or
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  Speaker 2: some of the Blue crosses, and some of the Blue
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  Speaker 2: Crosses are covering nephis, some are delaying, some are still
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  Speaker 2: assessing it, and a few of them have decided not
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  Speaker 2: to cover Nephie, although we're working to overturn that decision.
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  Speaker 2: Of course, with regards to PBMs, we've had a mixed
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  Speaker 2: experience so far where express Scripts saw the medical value
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  Speaker 2: of NEPHI very very quickly, and they covered it based
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  Speaker 2: off of medical value.
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  Speaker 3: Now I'll go into the structure of.
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  Speaker 2: These agreements with the PBMs when you're talking about PBM reform,
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  Speaker 2: but certainly express Scripts saw the medical value, and so
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  Speaker 2: did United Healthcare, so United Healthcare, Optum, so Optum, express
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  Speaker 2: Scripts and care Mark are the three big PBM. United Healthcare,
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  Speaker 2: United health Group, United health Care Insurance and Optium covered
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  Speaker 2: NEPHI very very quickly, also within about six months of launch,
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  Speaker 2: and they also did it based off of medical value
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  Speaker 2: that they saw there was a medical need and they
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  Speaker 2: basically move to contract very very quickly. And cover NEPHI
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  Speaker 2: very quickly. Care Mark has been delaying. We've been working
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  Speaker 2: through the issues with care Mark and we're still hopeful
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  Speaker 2: that we will get care Mark to cover NEPHIE very
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  Speaker 2: very quickly without prior authorization. They do approve NEPHI with
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  Speaker 2: prior authorization, so they are typically our second biggest dispenser
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  Speaker 2: of NEPHI right now on a weekly basis, but they
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  Speaker 2: do require prior authorization and we're trying to remove that
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  Speaker 2: restriction because it is a burden on the doctors to
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  Speaker 2: have to deal with writing a priorization.
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  Speaker 3: It takes up their.
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  Speaker 2: Time and cost them money time in doing that. As
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  Speaker 2: a part of the process, Caramark has been very difficult
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  Speaker 2: in dealing with.
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  Speaker 3: It, and we're.
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  Speaker 2: Still working on the final details of that agreement. Now,
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  Speaker 2: with all these agreements, there's now what's called a group
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  Speaker 2: purchasing organization. So all of these PBMs have tried to
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  Speaker 2: create these group purchasing organizations so that the group purchasing
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  Speaker 2: organization is the one negotiating the contract and the PBM
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  Speaker 2: is making the medical decision to cover or not, but
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  Speaker 2: not negotiating on dollars. As part of all these agreements,
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  Speaker 2: there's also a fee that goes to the GPO.
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  Speaker 3: So that's clearly.
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  Speaker 2: Kind of a portion of the prescription cost that is
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  Speaker 2: going directly to the PBM or to the organization.
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  Speaker 3: And it's very clear.
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  Speaker 2: Now that that that is a fee.
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  Speaker 3: What that fee is for is always a question, and
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  Speaker 3: I won't.
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  Speaker 2: Get into that on this call, but certainly there they
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  Speaker 2: are charging a fee in the order of about ten percent,
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  Speaker 2: eight to ten percent, and that fee again is added
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  Speaker 2: on top of the cost of the prescription, and then
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  Speaker 2: they also negotiate rebates. Presumably these rebates go to the
• 14:27
  Speaker 2: downstream payer, but that depends on their agreements with the
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  Speaker 2: downstream payer, and how much of that rebate the PBM
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  Speaker 2: keeps is really not known to us.
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  Speaker 3: As far as PBM.
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  Speaker 2: Reform, I'm not seeing anything specifically that's happening. I know
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  Speaker 2: there are some efforts in Congress to try to.
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  Speaker 3: Come up with some ways to reform.
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  Speaker 2: The system, but it is it is very convoluted because
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  Speaker 2: when we price a drug, we have to take into
• 15:00
  Speaker 2: consideration these rebates and PBM fees, and we have to
• 15:07
  Speaker 2: actually price our drug to include that additional cost, as
• 15:12
  Speaker 2: opposed to simply if that was reformed, if there was
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  Speaker 2: PBM reform, and those fees were removed and rebates were removed,
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  Speaker 2: and decisions were made purely on medical benefit of the product.
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  Speaker 2: We would be able to easily cut our price significantly
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  Speaker 2: so that the downstream payer and the consumer definitely benefited.
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  Speaker 2: But in the current system, with these PBMs, we have
• 15:35
  Speaker 2: to price that into the entire cost of the drug.
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  Speaker 2: And that's why what you see as the wholesale price.
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  Speaker 2: And we can talk about this a little bit. I
• 15:44
  Speaker 2: think you have other questions you're going to ask about this,
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  Speaker 2: but what you see as the wholesale price.
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  Speaker 3: As a manufacturer, the.
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  Speaker 2: Developer of this product and put in all the research
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  Speaker 2: and development money and our investors, and also as the manufacturer,
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  Speaker 2: we get rough fifty percent of that price. So when
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  Speaker 2: we take into account the PBM costs, the rebates back
• 16:06
  Speaker 2: to payers, the distribution costs, and the and the retail
• 16:11
  Speaker 2: pharmacy costs and other in our copay assistance program, we
• 16:16
  Speaker 2: retain about fifty percent of the actual published price of
• 16:20
  Speaker 2: the product.
• 16:22
  Speaker 1: That's a big delta. Yeah, So let's dig in more.
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  Speaker 1: Tell us about how you think about pricing also maybe
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  Speaker 1: kind of the future of pricing and inflation concerns and
• 16:31
  Speaker 1: also maybe in the in the backdrop of a market
• 16:36
  Speaker 1: with tariffs out of all of that play into your pricing.
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  Speaker 2: Yeah, So in our pricing strategy, we try to work
• 16:45
  Speaker 2: very hard to protect the consumer and the patient. So
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  Speaker 2: the patient caregiver, where I say is consumer right, because
• 16:51
  Speaker 2: the large number, it's the caregiver making the decision to
• 16:56
  Speaker 2: buy or which ep an Effort product they want to buy.
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  Speaker 1: So we.
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  Speaker 2: Mainly focused on them so that there's no price barrier
• 17:05
  Speaker 2: to switch to NEFIE. Of course, if they're insurance insurance
• 17:10
  Speaker 2: is not covering NEPHI yet, or or they're denied on
• 17:13
  Speaker 2: a prior authorization, of course there's some price barrier in
• 17:16
  Speaker 2: that regard, but I'll talk.
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  Speaker 3: About that in a minute.
• 17:19
  Speaker 2: But we we focused in that regard to keep that
• 17:23
  Speaker 2: copey as low as possible. We started off with a
• 17:26
  Speaker 2: twenty five dollars copay, but we've now lowered it to zero,
• 17:30
  Speaker 2: so that copey should be zero for any commercially insured
• 17:35
  Speaker 2: person who has who gets coverage and doesn't have very
• 17:39
  Speaker 2: high deductibles. And the reason we focused on that is
• 17:45
  Speaker 2: that that that is the decision maker and getting the product.
• 17:49
  Speaker 2: We think this is a very consumer oriented type of product.
• 17:52
  Speaker 2: It's the allergist practice shared decision making. So if a
• 17:59
  Speaker 2: patient has a strong preference for one epineffrin product over another,
• 18:04
  Speaker 2: the allergists will generally prescribe that because, again their main
• 18:07
  Speaker 2: focus is that you're willing to carry it and use it.
• 18:10
  Speaker 2: So if you tell them I prefer that one. It's smaller,
• 18:13
  Speaker 2: I can carry it, I'm not afraid of the needle.
• 18:15
  Speaker 2: I'm going to use it very quickly when I have
• 18:17
  Speaker 2: a reaction. That's all the allergist needs to hear to
• 18:20
  Speaker 2: be convinced that that's the right product for you. So
• 18:25
  Speaker 2: with that said, I mean our wholesale price had to
• 18:28
  Speaker 2: account for that copay assistance to buy down the copey. Typically,
• 18:35
  Speaker 2: you know, if it's if it's a preferred product, the
• 18:38
  Speaker 2: copay is going to be in the twenty five to
• 18:40
  Speaker 2: forty range, and if it's a non preferred it's probably
• 18:42
  Speaker 2: in the eighty to ninety range on average, And so we.
• 18:47
  Speaker 3: Buy that down to zero.
• 18:50
  Speaker 2: And we price that into the wholesale price of the product.
• 18:54
  Speaker 2: So that's that and the as they've just mentioned, the
• 18:58
  Speaker 2: PBM costs the rebate, it's the distributor costs. Is how
• 19:02
  Speaker 2: We basically price the products that we could retain enough
• 19:05
  Speaker 2: of the net to cover our costs and repay our
• 19:09
  Speaker 2: investors and cost of development. We are lucky at AIRS
• 19:16
  Speaker 2: because we are not very affected by tariffs. We manufacture
• 19:20
  Speaker 2: Nephi in the United States. We do have a couple
• 19:25
  Speaker 2: of the components of Nephi that come from Europe, but
• 19:29
  Speaker 2: we source no ingredients of Nephi or the device from
• 19:36
  Speaker 2: either Asia or India, so nothing coming out of China
• 19:40
  Speaker 2: or India. And going back to Europe, we are selling
• 19:46
  Speaker 2: Nephi in Europe now in Germany, UK it's been launched
• 19:50
  Speaker 2: and there obviously is no tariff going back to Europe,
• 19:53
  Speaker 2: so we've actually are in fairly good shape with regards
• 19:56
  Speaker 2: to the tariffs for Nephi itself because we manufactur sure
• 20:00
  Speaker 2: the product in New Jersey. We are setting up a
• 20:04
  Speaker 2: second manufacturing site in the European region which will eventually
• 20:10
  Speaker 2: provide product for Europe and be a backup site for
• 20:14
  Speaker 2: the United States in case there's any issues that occur at.
• 20:18
  Speaker 3: Our New Jersey site.
• 20:20
  Speaker 2: But otherwise we are not significantly affected by tariffs. We
• 20:23
  Speaker 2: have some very a few of our ingredients that come
• 20:26
  Speaker 2: from Europe, but they're the tariff is fairly minimal, and
• 20:29
  Speaker 2: those are fairly minor components of the product. Of course,
• 20:34
  Speaker 2: for other companies it may be quite dramatic, especially if
• 20:37
  Speaker 2: products are coming out of China or India.
• 20:41
  Speaker 3: I'm not as savvy on whether there's any exemptions being
• 20:46
  Speaker 3: given for some of these, but if.
• 20:47
  Speaker 2: You can imagine a lot of the generic prices products
• 20:50
  Speaker 2: coming out of India, that those companies will be under
• 20:53
  Speaker 2: significant pressure to move those products in the United States
• 20:57
  Speaker 2: in order to avoid those tariffs. So that would be
• 21:01
  Speaker 2: quite quite a large impact on them. But at least
• 21:04
  Speaker 2: for Aras Pharmaceuticals and Nephi were in very good shape.
• 21:08
  Speaker 2: We decided to manufacture in the US at a facility
• 21:11
  Speaker 2: we're very comfortable with and has a lot of experience
• 21:14
  Speaker 2: assembling this device and manufacturing other products like narcan. So
• 21:19
  Speaker 2: we just decided to stay with the facility we're very
• 21:23
  Speaker 2: comfortable with that, we know it was very.
• 21:25
  Speaker 1: Reliable, absolutely, and quality is so important. Is that, you know,
• 21:29
  Speaker 1: how did you weigh the decision to manufacture in the
• 21:33
  Speaker 1: US when obviously so many people choose international locations from
• 21:38
  Speaker 1: a cost perspective.
• 21:40
  Speaker 2: Well, and actually, you know, given the situation around tariff.
• 21:45
  Speaker 2: I mean, serendipity is always the best friend you can have.
• 21:49
  Speaker 2: So you know, first of all, there is not many
• 21:53
  Speaker 2: manufacturers that can assemble this device very well. At the
• 21:58
  Speaker 2: time we started this program, there were only a few
• 22:01
  Speaker 2: and they're all in the United States, and there was
• 22:04
  Speaker 2: only one that had a lot of commercial experience, and
• 22:09
  Speaker 2: that's the one we had worked with with Narcan. And
• 22:13
  Speaker 2: also we actually moved Autoco there after approval, so so
• 22:19
  Speaker 2: we actually went with that manufacturer just because we knew
• 22:22
  Speaker 2: them very well.
• 22:23
  Speaker 3: They're very advanced in the ability.
• 22:27
  Speaker 2: To manufacture this product, so they can manufacture a very
• 22:31
  Speaker 2: very high capacity to quantities of the product at very
• 22:35
  Speaker 2: high speed, and they're they're they're they're the most proven
• 22:40
  Speaker 2: manufacturer of this product in the world. So we just
• 22:43
  Speaker 2: decided to stay with them again low risk.
• 22:46
  Speaker 3: As you said, they're very high quality.
• 22:49
  Speaker 2: And and they really are the state of the art
• 22:51
  Speaker 2: and the business of manufacturing these nasal spray devices. So
• 22:57
  Speaker 2: kind of an easy decision for us at the time.
• 22:59
  Speaker 2: There are a couple manufacturers overseas now, mostly because because
• 23:06
  Speaker 2: of generic competition that's coming in with some of the
• 23:09
  Speaker 2: other nasal.
• 23:10
  Speaker 3: Sprays that are earlier, So we do.
• 23:13
  Speaker 2: We do know there are some other manufacturers in India
• 23:16
  Speaker 2: and in the European region that can manufacture, and that's
• 23:20
  Speaker 2: why we're also looking at one of them in the
• 23:22
  Speaker 2: European region for a second supplier so that we were
• 23:25
  Speaker 2: not sold supply.
• 23:27
  Speaker 1: Fantastic. Maybe let's think about the commercial launch. You received
• 23:31
  Speaker 1: approval of course last August. You know, I know you've
• 23:35
  Speaker 1: done some co promotion and there are certainly regional dynamics.
• 23:38
  Speaker 1: You're now approved across the world tak us through the
• 23:42
  Speaker 1: commercial launch in this in this market.
• 23:45
  Speaker 2: Yes, So we launched Nefi roughly a year ago now,
• 23:49
  Speaker 2: the two milligram first, and then we added in the
• 23:51
  Speaker 2: one milligram a few months back, and I think.
• 23:55
  Speaker 3: The launch is going well.
• 23:57
  Speaker 2: Of course, you know it's slow at the beginning with
• 24:01
  Speaker 2: any launch because of insurance coverage and adoption period of
• 24:05
  Speaker 2: doctors to get used to the product. We also experienced
• 24:10
  Speaker 2: one thing that was a little bit unanticipated given Nefi
• 24:15
  Speaker 2: is a very high volume product but low revenue per
• 24:19
  Speaker 2: script per prescription, so you need a lot of prescriptions
• 24:24
  Speaker 2: to make up the market.
• 24:25
  Speaker 3: And what we.
• 24:26
  Speaker 2: Found is that when doctors are very busy, they tend
• 24:29
  Speaker 2: to have less time to prescribe new medications. New medications
• 24:34
  Speaker 2: always take them more time than just a renewal prescription.
• 24:38
  Speaker 2: So what we believe is one pathway to help with
• 24:44
  Speaker 2: that as we're providing now more support for prior authorizations,
• 24:50
  Speaker 2: so more ways for them to do that, and then
• 24:53
  Speaker 2: more options for the patients as well to get NEFI
• 24:56
  Speaker 2: where they can get it without without going to an
• 24:59
  Speaker 2: office is it with their doctor. So we're working on
• 25:02
  Speaker 2: those types of things to further boost the market share,
• 25:07
  Speaker 2: and again over time, as we get into a cycle
• 25:11
  Speaker 2: where people have NEPHI and they're looking at renewal prescriptions,
• 25:15
  Speaker 2: that's less burden on the doctor. But initial initially that
• 25:19
  Speaker 2: burden was also a little bit of drag on our
• 25:22
  Speaker 2: on our market share and our sales increase. But we
• 25:26
  Speaker 2: believe that that will resume a fairly wrap it up
• 25:30
  Speaker 2: up tick where our market share will start to climb
• 25:33
  Speaker 2: fairly rapidly in the near future, and we're pushing.
• 25:38
  Speaker 3: Very hard in that direction.
• 25:39
  Speaker 2: We're just launching We launched our DTC campaign back in July,
• 25:46
  Speaker 2: so end of June, beginning of July, where we started
• 25:49
  Speaker 2: direct to consumer advertising, and now we're launching a new
• 25:53
  Speaker 2: promotion which is we call it get Nephie on US
• 25:58
  Speaker 2: where we're lowering the copey to zero and we're also
• 26:01
  Speaker 2: providing a virtual prescriber option. So we believe that that
• 26:06
  Speaker 2: will also help facilitate patients who want to get a
• 26:09
  Speaker 2: NEFI but their doctors don't have time or Unfortunately, in
• 26:13
  Speaker 2: this indication, alleries tend to have three to six month
• 26:18
  Speaker 2: waiting lists to get an appointment. So even if you're
• 26:21
  Speaker 2: a patient and you want an extra appointment to go
• 26:24
  Speaker 2: in and ask for a prescription, it's going to take
• 26:28
  Speaker 2: quite a long time to get that. So we believe
• 26:32
  Speaker 2: having a virtual prescriber option is also important for a
• 26:35
  Speaker 2: lot of patients who want to switch, and we're just
• 26:37
  Speaker 2: starting that program up now.
• 26:39
  Speaker 1: Fantastic And the direct consumer market is of course receiving
• 26:43
  Speaker 1: a lot of attention now with several untied or increase
• 26:48
  Speaker 1: in the untitled FDA letters. From your perspective, and the
• 26:53
  Speaker 1: US is of course one of the only places where
• 26:55
  Speaker 1: direct to consumer is allowed. From your perspective, how does
• 26:58
  Speaker 1: that kind of change marketing in the rest.
• 27:00
  Speaker 2: Of the world for you, Well, for the rest of
• 27:03
  Speaker 2: the world, it doesn't really change the approach.
• 27:06
  Speaker 3: Obviously.
• 27:08
  Speaker 2: The our partner ALK who's launched in Germany and UK
• 27:14
  Speaker 2: markets mainly the doctors, although there are websites and things
• 27:17
  Speaker 2: consumers can get to so that so we we do
• 27:21
  Speaker 2: see a lot of consumer activity even from Europe asking
• 27:24
  Speaker 2: questions about Nephi and your Nephi. In Europe it's called
• 27:27
  Speaker 2: your Nephi. We had a little issue with one country,
• 27:31
  Speaker 2: and of course in Europe all countries have to agree,
• 27:34
  Speaker 2: so we had issue with one country with the name Nephi,
• 27:37
  Speaker 2: but otherwise we decided to use your Nephi eu R Nephi,
• 27:42
  Speaker 2: so we keep the Nephi name. And in Japan it's
• 27:45
  Speaker 2: approved now but hasn't launched yet. It should launch in
• 27:47
  Speaker 2: a few months and it's it is Nephi in Japan.
• 27:51
  Speaker 2: So just to get back to the to the to
• 27:54
  Speaker 2: the U S side, you know, we we don't believe
• 27:59
  Speaker 2: there's much impact on us currently with the DTC.
• 28:04
  Speaker 3: You know, I don't know how to describe it.
• 28:06
  Speaker 2: It's not a concern, but the effort of the agency
• 28:09
  Speaker 2: on direct to consumer Nephi is actually a kind of
• 28:13
  Speaker 2: a poster child of a drug you want to advertise
• 28:17
  Speaker 2: directly to consumers. There's a there's an underutilization of epinephrine.
• 28:23
  Speaker 2: Only about fifteen percent of the patients that really should
• 28:27
  Speaker 2: have epinephyrin have it, and on top of that, very
• 28:33
  Speaker 2: very few.
• 28:33
  Speaker 3: Of them carry it and use it.
• 28:34
  Speaker 2: So there's a lot of lack of education and a
• 28:38
  Speaker 2: lack of understanding in this market, especially, and by advertising
• 28:43
  Speaker 2: directly to the consumers and getting them to even go
• 28:46
  Speaker 2: to a website and check out, you know, research, well,
• 28:51
  Speaker 2: what options do I have? I didn't know there was
• 28:53
  Speaker 2: an option other than injection, and I didn't want to
• 28:55
  Speaker 2: get an injection because I won't inject myself.
• 28:58
  Speaker 3: Just just people like that who we know. Fifty percent of.
• 29:01
  Speaker 2: The autoinjective prescriptions are refused, are not filled because people
• 29:06
  Speaker 2: don't want them so and it's not really a cost
• 29:09
  Speaker 2: issue as much as people just don't want to get
• 29:12
  Speaker 2: an injection. The doctors prescribe in any way for liability reasons,
• 29:16
  Speaker 2: but the people refuse to fill them. So there's a
• 29:19
  Speaker 2: huge benefit actually of informing them, educating them about different
• 29:23
  Speaker 2: options and about the need for appinefrin in general. And
• 29:27
  Speaker 2: it's also why we're in partnership with Food Allergy Research
• 29:31
  Speaker 2: and Education also called FAIR. They're the largest advocacy group
• 29:36
  Speaker 2: in the World for Food Allergy and Venomalergies, and we're
• 29:39
  Speaker 2: in a partnership with them. We provide a sponsorship to them.
• 29:45
  Speaker 2: They're running public service announcements and we're supporting that because
• 29:51
  Speaker 2: it's not just about nephi, it's about the market in
• 29:53
  Speaker 2: general and the fact that there's so there's such a
• 29:57
  Speaker 2: huge percentage of this market that is not using epineffrin,
• 30:01
  Speaker 2: not well educated. So in that context, DTC is actually
• 30:06
  Speaker 2: important to help inform patients, and the public service announcements
• 30:12
  Speaker 2: we're sponsoring are really to help inform patients of the
• 30:16
  Speaker 2: need for repin effort and whether they when they go
• 30:19
  Speaker 2: to do the research, whether they choose to get nephi
• 30:22
  Speaker 2: or they choose to get an auto injector, it's their choice.
• 30:25
  Speaker 2: But by stimulating that discussion to sit, stimulating that research,
• 30:30
  Speaker 2: and that that thinking of the patient that maybe I
• 30:32
  Speaker 2: should get something to protect myself, that that that is
• 30:36
  Speaker 2: actually a net positive for the community and the patients themselves.
• 30:40
  Speaker 2: So I think I think Nephi is a good example
• 30:42
  Speaker 2: of a product where I think DTC is appropriate. I
• 30:47
  Speaker 2: won't get into it, but I can I can say
• 30:49
  Speaker 2: there are some products where DTC may not be appropriate.
• 30:52
  Speaker 2: Where patients can't make their own decision and they have
• 30:55
  Speaker 2: a certain type of cancer, refractory cancer with certain biomarkers,
• 30:59
  Speaker 2: and and they're not going to be capable of making
• 31:02
  Speaker 2: that decision. They need an expert physician in that field
• 31:07
  Speaker 2: to make that decision for them. So in that case,
• 31:09
  Speaker 2: I can understand an argument why DTC may not make sense,
• 31:13
  Speaker 2: but in our case, I think it makes great sense.
• 31:17
  Speaker 2: With that said, we did get a couple what I
• 31:20
  Speaker 2: consider to be minor comments from the Food and Drug
• 31:23
  Speaker 2: Administration about our DTC campaign. I don't think we agree
• 31:27
  Speaker 2: with their comments. I don't think advocacy agrees with their comments,
• 31:32
  Speaker 2: but we did make some minor adjustments to our DTC
• 31:35
  Speaker 2: advertising to accommodate the FDA's comments, and some of them,
• 31:40
  Speaker 2: for example, we showed people enjoying themselves out eating, and
• 31:45
  Speaker 2: of course patients with allergy.
• 31:48
  Speaker 3: Go and eat out.
• 31:49
  Speaker 2: They want to enjoy their life. They don't obviously try
• 31:55
  Speaker 2: to eat antigens. They avoid antigens as much as they can,
• 31:58
  Speaker 2: but if they make a mistake and they know they
• 32:01
  Speaker 2: have a product with them that they're carrying that they're
• 32:03
  Speaker 2: willing to use, it's a positive message. And most of
• 32:06
  Speaker 2: the advocacy groups thought it was very, very positive, and
• 32:10
  Speaker 2: n FDA had an issue with showing people eating food
• 32:14
  Speaker 2: because they felt that we were encouraging people to eat antigens.
• 32:17
  Speaker 3: And I think it's kind of an i don't know,
• 32:21
  Speaker 3: a naive.
• 32:22
  Speaker 2: Comment to the agency or a very odd common in
• 32:25
  Speaker 2: a way. But we did remove those scenes of the
• 32:28
  Speaker 2: actual allergy patient eating food just to accommodate them. But again,
• 32:34
  Speaker 2: people live their lives with this disease. They want to
• 32:37
  Speaker 2: enjoy themselves, They want to they don't want to be
• 32:40
  Speaker 2: fearful of going out, so that's one of the benefits
• 32:44
  Speaker 2: of having epen effort with them in case they make
• 32:46
  Speaker 2: a mistake. Of course, avoidance of an antigen is always
• 32:50
  Speaker 2: the first line of defense, but there are always, you know,
• 32:56
  Speaker 2: situations where people just don't know they they're exposed to something,
• 33:01
  Speaker 2: mix ups in the kitchen, restaurants, other things. But again,
• 33:05
  Speaker 2: people don't want to hide in their home and not
• 33:08
  Speaker 2: be able to live their life because they have a
• 33:10
  Speaker 2: disease like this, so I think it's very important that
• 33:13
  Speaker 2: we show that type of environment, enjoying yourself, having a
• 33:17
  Speaker 2: good time, being able to relax and not have the
• 33:20
  Speaker 2: anxiety of going out to eat. And we have many,
• 33:23
  Speaker 2: many examples that, including one of our board members daughters,
• 33:27
  Speaker 2: who is always terrified of going out to eat, and
• 33:31
  Speaker 2: now she's used Nephie a few times. She actually has
• 33:34
  Speaker 2: had it for quite a while and she's very comfortable
• 33:38
  Speaker 2: to go out. She's it's quality of life issue, right,
• 33:41
  Speaker 2: you have less anxiety to go out and enjoy yourself,
• 33:44
  Speaker 2: even though she has multiple food allergies, and it's you know,
• 33:48
  Speaker 2: there is sometimes where she's going to make a mistake
• 33:51
  Speaker 2: and eat some things she shouldn't. But again, you know,
• 33:55
  Speaker 2: that's the benefit of Nephie really is to help improve
• 33:59
  Speaker 2: that quality of life.
• 34:00
  Speaker 3: By knowing you have something.
• 34:01
  Speaker 2: Hopefully you don't need to use it, but at least
• 34:03
  Speaker 2: you have something with you that you're willing to use
• 34:06
  Speaker 2: and protect yourself if something happens.
• 34:09
  Speaker 1: Certainly, certainly, and the I know the allergies of course
• 34:15
  Speaker 1: are increasing across the US and young children, and I
• 34:18
  Speaker 1: know you've done a lot partnering with schools. Can you
• 34:21
  Speaker 1: tell us about those efforts and how you work with
• 34:25
  Speaker 1: schools there.
• 34:26
  Speaker 3: Yes, yes, certainly.
• 34:27
  Speaker 2: The prescription market is climbing about six percent a year
• 34:31
  Speaker 2: over the last twenty five years, and the prevalence of
• 34:33
  Speaker 2: the disease is actually going up a little bit more
• 34:35
  Speaker 2: than that based on epidemiology, so eight to ten percent
• 34:38
  Speaker 2: a year. So it's a growing concern. You know, there's
• 34:44
  Speaker 2: very I won't get into various reasons why the market
• 34:46
  Speaker 2: the population of people with this disease are growing, but
• 34:50
  Speaker 2: it obviously manifests itself most of the time in children.
• 34:53
  Speaker 2: There are times when it's you know, develops late in life,
• 34:58
  Speaker 2: but the vast majority of time it's children that develop
• 35:01
  Speaker 2: food allergies even at a.
• 35:03
  Speaker 3: Very young age.
• 35:04
  Speaker 2: The reason the school program is really critical to us
• 35:07
  Speaker 2: and why we decided to do that. Mylin did have
• 35:12
  Speaker 2: a school program sometime back with EpiPen. When they went generic,
• 35:17
  Speaker 2: they discontinued it. But about twenty five percent of the
• 35:21
  Speaker 2: time a child has their very first reaction, So the
• 35:25
  Speaker 2: very first time they have an anaphlactic reaction and they
• 35:28
  Speaker 2: don't even know they have the food allergy or venom allergy,
• 35:32
  Speaker 2: it's at a school. So they go to school, they
• 35:36
  Speaker 2: get exposed to something they'd never been exposed to a food,
• 35:39
  Speaker 2: or they get stung by a bee or wasp, and
• 35:43
  Speaker 2: they never knew they were allergic, and they have an
• 35:44
  Speaker 2: anaphylactic reaction. So the Nephian Schools program is designed to
• 35:49
  Speaker 2: supply Nephi to grade schools, so K through twelve, we
• 35:55
  Speaker 2: provide two packs of Nephi per school at no cost.
• 36:01
  Speaker 2: We replace it when it expires or if it's used,
• 36:05
  Speaker 2: and then the idea is that the nurse then has
• 36:09
  Speaker 2: epinephrine that they can use to treat the child at
• 36:12
  Speaker 2: the school if they have a reaction.
• 36:14
  Speaker 3: And they're not, it's not they're not previously diagnosed and prescribed.
• 36:20
  Speaker 2: Children that are already diagnosed and prescribed bring their own
• 36:23
  Speaker 2: epinefforn to school. So this is not necessarily meant for
• 36:26
  Speaker 2: children that have a prescription. It's really meant for those
• 36:30
  Speaker 2: children that don't have a prescription. And the other thing
• 36:33
  Speaker 2: I want to mention about it is it's not available
• 36:36
  Speaker 2: in all states yet. The states are making great progress
• 36:39
  Speaker 2: and updating legislation, but in order for us to supply
• 36:44
  Speaker 2: Nephi to a school system, the legislation that state has
• 36:49
  Speaker 2: to provide indemnification for the school personnel to use the epinephrin.
• 36:54
  Speaker 2: So laws have been put in place sometime back to
• 37:00
  Speaker 2: to indemnify protect school personnel. But most of those laws
• 37:05
  Speaker 2: say injection. So right now, we know I think more
• 37:10
  Speaker 2: than twenty states have updated their legislation already proactively, also
• 37:16
  Speaker 2: encouraged by the school nursing associations, because the school nurses
• 37:19
  Speaker 2: really want Nephi and they really prefer the Nephi rather
• 37:22
  Speaker 2: than injecting the child.
• 37:25
  Speaker 3: And so the states seem to.
• 37:28
  Speaker 2: All be in the process of updating their legislation, but
• 37:31
  Speaker 2: we know that about twenty of them, a little more
• 37:33
  Speaker 2: than twenty I think, have already completed that process. And
• 37:37
  Speaker 2: we believe that almost all states in the country, probably
• 37:39
  Speaker 2: within the next year, will have their legislation updated to
• 37:43
  Speaker 2: allow the use of Nephi as well, and then we'll
• 37:46
  Speaker 2: be able to supply Nephi to all schools within the country.
• 37:49
  Speaker 1: That's fantastic, all right. And so just thinking, you know,
• 37:53
  Speaker 1: as you've created this incredible drug, a new administration that
• 37:57
  Speaker 1: is beneficial certainly to a pediatric popular as well as
• 38:00
  Speaker 1: everyone else, what are your strategies to optimize capital here
• 38:05
  Speaker 1: and views on sort of the current m and A
• 38:08
  Speaker 1: market and where you go next from here?
• 38:11
  Speaker 3: Yeah, well, on our capital we have, you know, we
• 38:14
  Speaker 3: have we're fairly well off on our cash head airs.
• 38:21
  Speaker 2: We we have enough cash capital to get to what
• 38:25
  Speaker 2: we believe a point of cash neutral to where we'll be.
• 38:30
  Speaker 2: I don't want to say profitable, because you know, we
• 38:33
  Speaker 2: may at the point of getting close to cash neutral
• 38:36
  Speaker 2: want to spend more on direct to consumer other efforts
• 38:40
  Speaker 2: to promote Nefie and build the market share. But we
• 38:45
  Speaker 2: believe we have enough cash now. We did recently, in
• 38:49
  Speaker 2: partnership with our A Capital, obtain a two hundred and
• 38:54
  Speaker 2: fifty million dollar line of credit. We did draw down
• 38:57
  Speaker 2: one hundred million dollars, but in theory we hopefully don't
• 39:02
  Speaker 2: need that money. We are going to put a little
• 39:04
  Speaker 2: bit more into our DTC campaign this year and next year,
• 39:08
  Speaker 2: but the rest of it we're reserving as kind of
• 39:11
  Speaker 2: a buffer on our trough and our cash balance. But
• 39:15
  Speaker 2: it's actually very low cost capital, so we believe that
• 39:20
  Speaker 2: that is the way we're managing our capital. We did
• 39:23
  Speaker 2: not we decided not to do an equity raise, and
• 39:27
  Speaker 2: we think that's a much lower cost given we're commercial
• 39:30
  Speaker 2: and very low risk of having a debt instrument like
• 39:33
  Speaker 2: that in the company.
• 39:34
  Speaker 1: Fantastic, And what are your thoughts for next next steps
• 39:39
  Speaker 1: for the company?
• 39:41
  Speaker 2: So next steps I think, you know, we're really focused
• 39:45
  Speaker 2: on Nephi and the launch of Nephi. I think as
• 39:48
  Speaker 2: we go forward, we'll start to think more and more
• 39:52
  Speaker 2: about the different pathways that ers can take. One is
• 39:57
  Speaker 2: M and A as you mentioned, so as as Nefhe's
• 40:02
  Speaker 2: you know, market starts to mature and companies can clearly
• 40:07
  Speaker 2: evaluate the the ramp and the potential peak sales. I
• 40:12
  Speaker 2: think I think obviously a lot of companies are looking
• 40:16
  Speaker 2: for revenue, they're looking for good products. We believe Nephi
• 40:20
  Speaker 2: is going to be well north of a billion dollars
• 40:23
  Speaker 2: a year in market sales and so you know net sales.
• 40:28
  Speaker 2: So I think I think M and A is a
• 40:30
  Speaker 2: distinct possibility for AIRS, and you know, we're our board
• 40:36
  Speaker 2: is always open to that option and that possibility. At
• 40:40
  Speaker 2: the same time, we have to think about other other
• 40:43
  Speaker 2: needs of the company, and we are looking at other
• 40:46
  Speaker 2: Allergy assets. Since we have a very strong commercial team.
• 40:51
  Speaker 3: In salesforce and allergy.
• 40:53
  Speaker 2: Now that we've built UH, we we would probably be
• 40:56
  Speaker 2: adding on other Allergy assets to help build company.
• 41:00
  Speaker 3: But again, initially, I would.
• 41:02
  Speaker 2: Say for the next nine to twelve months, we want
• 41:05
  Speaker 2: to focus on Nephi and making sure that we start
• 41:09
  Speaker 2: to build that brand as well as we can, and
• 41:12
  Speaker 2: then start looking at other allergy assets that would make
• 41:15
  Speaker 2: sense for our salesforce, which is mainly focused on allergists
• 41:19
  Speaker 2: and pediatricians, and move down that pathway. And I think
• 41:24
  Speaker 2: for that we'd also be agnostic to the root of administration.
• 41:29
  Speaker 2: So if we find a good allergy asset that makes
• 41:31
  Speaker 2: sense for AARs, I don't think we would be, you know,
• 41:37
  Speaker 2: a specific to intranasal products versus other roots of administration.
• 41:41
  Speaker 3: We'd be pretty agnostic to that.
• 41:43
  Speaker 1: Fantastic Richard. Thank you so much for joining us today
• 41:46
  Speaker 1: on Bloomberg Intelligence's Vanguards of Healthcare podcast. I'm Anhunter van Kirk,
• 41:51
  Speaker 1: senior biopharmaceuticals analyst here and we are so pleased to
• 41:55
  Speaker 1: have spoken with Richard Lowenthal, CEO of ARS Pharmaceuticals. Thanks again,