Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis together with our unaudited condensed consolidated financial statements and related notes thereto included in "Item 1. Financial Statements (Unaudited)" of this Quarterly Report on Form 10-Q and the audited financial statements and related notes thereto as of and for the year ended December 31, 2024 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission ("SEC"), on March 20, 2025. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. For a complete discussion of forward-looking statements, see the section above entitled "Forward Looking Statements." As a result of many factors, including those factors set forth in the under the caption "Item 1A. Risk Factors" of this Quarterly Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should carefully read the "Risk Factors" section of this Quarterly Report to gain an understanding of the various factors that could cause actual results to differ materially from our forward-looking statements.

Overview

We are a biopharmaceutical company focused on the commercialization and development of neffy (currently identified in the European Union ("EU") by the tradename EURneffy) for the needle-free intranasal delivery of epinephrine for the emergency treatment of Type I allergic reactions, including anaphylaxis. neffy is the first and only U.S. Food and Drug Administration ("FDA") and European Commission-approved needle-free epinephrine product, and the first new delivery method for epinephrine in more than 35 years. neffy is a proprietary composition of epinephrine with an innovative absorption enhancer called Intravail, which allows neffy to safely provide intranasal delivery of epinephrine at a low dose within the exposures of approved injectable products across a range of dosing conditions (including repeat dosing and allergen challenge). We believe the market opportunity for neffyin the United States alone is significant. At the current list price for a two-pack of neffy and our target total gross-to-net yield, the estimated 6.5 million patients currently prescribed an epinephrine autoinjector in the United States represents an initial addressable market opportunity of approximately $3.5 billion in annual net sales, while the remaining 13.5 million diagnosed patients that have not been prescribed an epinephrine product represent an additional addressable market opportunity of approximately $7.0 billion in annual net sales.

We believe neffy's "no needle, no injection" approach addresses a significant unmet need in the use of epinephrine, which, except for neffy, is currently approved only in injectable formulations for the emergency treatment of Type I allergic reactions. There are approximately 40 million people in the United States who experience Type I allergic reactions. Of this group, approximately 20 million people have been diagnosed and experienced severe Type I allergic reactions that may lead to anaphylaxis, and approximately 6.5 million patients were prescribed an epinephrine autoinjector. However (in 2023, for example), only 3.2 million patients filled their active epinephrine autoinjector prescription, and of those, only half consistently carry their prescribed autoinjector with them due to the many drawbacks of these devices. Those estimated 3.2 million patients who currently fill their active epinephrine autoinjector prescription represent approximately $2.0 billion in annual U.S. net sales at neffy's target total gross-to-net yield based on trailing 12-month epinephrine device unit volume as of September 2025.

The use of needles in epinephrine autoinjectors can result in patient and caregiver injury as well as hesitation and delays in administration due principally to apprehension and pain of needles, allowing the allergic reaction to progress in severity leading to symptoms that seriously impact patient quality of life, to potential need for emergency services and/or hospitalizations, and to life-threatening symptoms or events. Moreover, intra-muscular injections are subject to dosing errors and risk of accidental blood vessel injections, which can cause a significant spike in the intravascular delivery of epinephrine potentially leading to serious cardiovascular complications or events. In aggregate, we estimate that up to 90% of patients prescribed an epinephrine device are not achieving an optimal treatment outcome today.

We believe neffy'sand our intranasal epinephrine technology product candidates' design, particularly the compact size and "no needle, no injection" delivery, eliminates needle-related apprehension and pain, improves portability and ease of use, is highly reliable, and will increase prescriptions for epinephrine, making it more likely that patients and caregivers will administer epinephrine sooner, achieve more rapid symptom relief, and prevent the allergic reaction from progressing to a level of severity that could lead to hospitalization or even death.

Data from our studies of neffyand our intranasal epinephrine technology product candidates demonstrated nasally delivered epinephrine reached blood levels comparable to those of already approved epinephrine injectable products across single dosing, repeat dosing, self-administration or allergen challenge conditions, and produced statistically significant responses compared to injection on pharmacodynamic surrogates for efficacy even one minute after dosing with neffyand our intranasal epinephrine technology product candidates.

On August 9, 2024, the FDA approved neffy 2 mg for the emergency treatment of Type I allergic reactions, including anaphylaxis, in adults and children who weigh 30 kg or greater. As a result, we initiated commercial launch of neffy 2 mg in the United States, with product becoming available for shipment on September 23, 2024. This commercialization effort currently includes a direct sales force of approximately 107 individuals targeting high-volume epinephrine prescribers that is supported by branded direct-to-consumer marketing, disease awareness campaigns with advocacy groups and non-personal promotion including medical education programs in collaboration with allergist societies, speaker bureaus, peer-to-peer programs and participation in regional and national medical conferences. On March 5, 2025, the FDA approved neffy 1 mg for the emergency treatment of Type I allergic reactions, including anaphylaxis, in patients who are four years of age and older and weigh 15 kg to less than 30 kg. As a result, we initiated commercial launch of neffy1 mg in the United States, with product becoming available on May 7, 2025.

neffy U.S. Commercial Launch Initiated in September 2024

Our launch strategy for neffy in the United States involves direct outreach to high-volume prescribers of epinephrine accounting for approximately 55% of prescriptions in the last year through an efficient sales force. As of September 30, 2025, our sales force is comprised of approximately 107 ARS Pharma employees, who serve as sales reps, area sales managers, and national sales directors that began field operations as early as October 2024, as well as 10 virtual sales reps, and approximately 70 sales reps via our co-promotion partner, ALK-Abelló, Inc. ("ALK U.S.", an affiliate of ALK-Abelló A/S ("ALK")), who began field operations in early June 2025 and will target up to 9,000 specified pediatricians and other prescribers in the U.S. Our launch strategy is also supported by: active participation since November 2024 of approximately 2,800 healthcare professionals in our neffy experience program that allows healthcare professionals to use neffy firsthand as rescue therapy for anaphylaxis during in-clinic allergen challenge as well as for the ongoing collection of real-world evidence that supports neffy'sclinical equivalence to injection; extensive non-personal promotion including medical education programs in collaboration with allergist societies, speaker bureaus, peer-to-peer programs and participation in regional and national medical conferences; engagement and contracting with payors to obtain timely coverage with favorable gross-to-net discounting; our neffyconnectprogram that provides support to physicians and patients including our $25 co-pay savings card, $199 cash price and patient assistance programs; our neffyinSchools programs, where more than 6,500 schools to date have opted into receiving two cartons of neffyat no cost with accompanying school nurse education about neffy; partnerships with patient advocacy organizations including disease awareness campaigns; and multi-channel branded direct to consumer advertising including connected television, point of care, endemic and programmatic display, social media, and paid search that initiated on mid-May 2025, as well as linear television advertising that started in late June 2025. To reduce the time burden of an in-person healthcare provider visit, we also launched a new commercial initiative in November 2025 called "Get neffy on Us" that offers patients a free visit with a virtual prescriber, along with a $0 co-pay for eligible patients with commercial insurance. We also initiated a U.S. post-marketing registry-based study for neffy for the treatment of anaphylaxis in oral food challenge or allergen immunotherapy clinics in the second quarter of 2025, which is ongoing.

On August 22, 2024, the European Commission granted marketing authorization in the EU for EURneffy (the trade name for neffy2 mg in the EU), for the emergency treatment of allergic reactions (anaphylaxis), in adults and children who weigh 30 kg or greater. The 1 mg dose of EURneffyfor children who weigh 15 to 30 kg is currently under review by the European Medicines Agency ("EMA"), and a regulatory decision is expected in the first half of 2026. Through our collaboration with ALK (discussed below), EURneffywas launched in Germany in June 2025 and in the United Kingdom ("U.K.") in October 2025. We received approval of neffy2 mg and 1 mg doses in Japan in September 2025, with commercial launch by Alfresa, our partner in Japan, expected to start in the fourth quarter of 2025. Regulatory review of neffy is ongoing in Canada and China with filings submitted by our partners, or by ARS Pharma on behalf of our partners, during the fourth quarter of 2024. neffy has been approved or is under regulatory review in countries representing approximately 98% of the current global epinephrine autoinjector sales. Regulatory decisions are anticipated in the first quarter of 2026 in Canada, with launch expected to start in the first half of 2026, and in the first half of 2026 in China.

In September 2025, we reported survey results of anaphylaxis treatment outcomes in the neffyexperience program, which provides 1 mg and 2 mg doses of neffyto allergists for in-office use during an anaphylaxis event during oral food challenges or allergen immunotherapy. These results showed that approximately 90% of patients experiencing anaphylaxis symptoms were effectively treated with a single dose of neffy, which is indistinguishable from that historically reported for epinephrine injection. The results were presented as an oral presentation at the American College of Allergy and Asthma Immunology in early November 2025.

We reported positive topline results demonstrating statistically significant and clinically meaningful improvements in treatment-refractory chronic urticaria patients at the American Academy of Allergy and Immunology medical conference in February 2024. In the second quarter of 2025, we initiated a Phase 2b randomized, placebo-controlled outpatient clinical trial involving chronic spontaneous urticaria patients, on chronic treatment regimens, who still experience flares or exacerbations. Topline data from this clinical trial is anticipated in mid-2026, followed by the potential initiation of a single pivotal efficacy study.

Since our inception in 2015 as ARS Pharmaceuticals, Inc., we have devoted substantially all of our efforts to developing intellectual property, conducting product development and clinical trials, organizing and staffing, business planning, raising capital, building infrastructure, pre-commercial and commercial activities, and providing general and administrative support for these operations. We have funded our operations primarily with proceeds from the Merger (see Note 1 - Nature of Businessto the notes to the condensed consolidated financial statements included in this report), private placement of convertible preferred stock, issuance of common stock, licensing, supply and distribution arrangements with our commercialization partners, debt, and net product sales. As of September 30, 2025, we had cash, cash equivalents, and short-term investments of $288.2 million.

We have incurred net losses in most years since our inception. Net losses for the nine months ended September 30, 2025 and 2024 were $130.0 million and $41.9 million, respectively. As of September 30, 2025, we had an accumulated deficit of $253.3 million. Until we consistently generate positive net income, if ever, our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials, our expenditures on other development activities, the cost for regulatory filings, expenses for commercial activities to establish, maintain and enhance sales, marketing and distribution capabilities for neffy, the timing and volume of our product sales, and our ability to earn potential regulatory and commercial milestones under our license and collaboration arrangements.

Until such time, if ever, that we can generate substantial product revenue, we may finance our operations through our existing cash, cash equivalents, short-term investments, equity offerings, debt financings and other capital sources which may include collaborations, strategic alliances, marketing, distribution or licensing arrangements or other arrangements with third parties. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. In addition, any future debt agreements may limit our ability to enter into certain debt financings without the consent of the lenders thereunder. On September 29, 2025 we entered into a Credit Agreement (the "Credit Agreement") with RA Capital Agency Services, LLC (as the "Administrative Agent") and affiliates of OMERS Administration Corporation and RA Capital Management, L.P. as lenders (the "Lenders"), which provides for an aggregate principal amount of up to $250.0 million of term loans from the Lenders to us (the "Credit Facility"). Subject to limited exceptions, we are prohibited from incurring additional indebtedness and entering into certain strategic and licensing transactions without the prior written consent of the Lenders pursuant to the Credit Agreement. Our failure to raise capital or enter into such other arrangements when needed would have a negative impact on our financial condition and may require us to delay or reduce our marketing and sales efforts, or delay, reduce or terminate our research and development programs or other operations, or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

We do not own or operate manufacturing facilities. We currently rely on third-party manufacturers and suppliers for neffyand our intranasal epinephrine technology product candidates, and we expect to continue to do so to meet our nonclinical, clinical and commercial activities. Our third-party manufacturers are required to manufacture our product under cGMP requirements and other applicable laws and regulations.

ALK Collaboration Agreement

In November 2024, the Company entered into a collaboration, license and distribution agreement (the "ALK Collaboration Agreement") with ALK. Pursuant to the ALK Collaboration Agreement, the Company granted to ALK a worldwide (other than the United States, Japan, mainland China, Hong Kong, Taiwan, Macau, Australia and New Zealand) ("ALK Territory"), exclusive license under certain of the Company's patents and know-how to develop, manufacture and commercialize products containing epinephrine administered intranasally, including EURneffy (the tradename for neffy2 mg in the European Union) ("Products"), for all human uses, including the immediate or emergency treatment of allergic reactions (including Type I) and anaphylaxis and urticaria, and other future indications as agreed by the parties. If the Company develops any new intranasally administered product that contains epinephrine and files a new drug application in the United States for such product ("New Product"), upon ALK's request such New Product will be included as a Product under the ALK Collaboration Agreement, subject to ALK bearing the costs of development of such New Product for its licensed territory.

Under the ALK Collaboration Agreement, we are obligated to transfer to ALK the existing marketing authorizations for the Products in the ALK Territory. We are also required to conduct certain development and regulatory activities for Products in support of obtaining further regulatory approval of Products in the ALK Territory and will transfer such regulatory approvals to ALK. ALK is obligated to use commercially reasonable efforts to obtain and maintain regulatory approval for Products through the European Commission and within specified countries within the ALK Territory. Following such approval for a Product in each indication within specified countries within the ALK Territory, ALK is obligated to use commercially reasonable efforts to commercialize such Product in such indication in such countries and to achieve first commercial sale of a Product in certain countries in accordance with a timeline specified in the ALK Collaboration Agreement.

Under the ALK Collaboration Agreement, ALK made an upfront payment to us of $145.0 million in November 2024, and we earned $5.0 million for the first commercial sale of EURneffyin the ALK Territory in June 2025. We are eligible to receive additional outstanding regulatory and commercialization milestone payments of up to $15.0 million and sales-based milestone payments of up to $300.0 million, provided that $55.0 million of such sales-based milestones are contingent upon us obtaining regulatory approval for the Product in Canada by a specified time. We are entitled to receive tiered royalty payments on net sales in the mid- to high-teens, subject to certain standard reductions and offsets. Royalties will be payable, on a Product-by-Product and country-by-country basis, until the latest of the expiration of the licensed patents covering such Product in such country, 15 years from the first commercial sale of such Product in such country, or expiration of regulatory exclusivity for such Product in such country.

The contract will expire upon the expiration of the last-to-expire royalty term for all Products in the ALK Territory, unless terminated earlier. Either we or ALK may terminate the ALK Collaboration Agreement in the case of the other party's insolvency or in the event of an uncured material breach of the other party, except that we may not terminate the ALK Collaboration Agreement for ALK's material breach of its commercial diligence obligations. ALK may terminate the ALK Collaboration Agreement for convenience upon 12 months' prior written notice or for a safety or regulatory concern. We may terminate the ALK Collaboration Agreement in the event ALK makes certain challenges to certain of our patents. Prior to a change of control and outside of a set period of time after which we commence change of control negotiations, we may terminate the ALK Collaboration Agreement with respect to all countries in the European Economic Area ("EEA") upon prior written notice to ALK and payment of a termination fee that is the higher of an agreed mid-nine digit amount and the fair market value of the Products business in the EEA at the time of such termination. Except with respect to ALK's activities pursuant to and in accordance with the ALK Co-Promotion Agreement (as defined below), we may also terminate the ALK Collaboration Agreement if ALK commercializes a non-injectable epinephrine product or manufactures such a product in the United States.

ALK Supply Agreement

In November 2024, in connection with the ALK Collaboration Agreement, ARS and ALK also entered into a commercial supply agreement (the "ALK Supply Agreement"), under which ARS will supply ALK's requirements (and ALK will purchase from ARS its requirements) of Products for five years for a specified supply price, after which ALK may elect to transition to itself or its contract manufacturer the manufacture and supply of Products. Either the Company or ALK may terminate the ALK Supply Agreement in the event of an uncured material breach of the other party.

ALK Co-Promotion Agreement

In May 2025, the Company and ALK U.S. entered into a co-promotion agreement, which was subsequently amended in October 2025 (the "ALK Co-Promotion Agreement"), to co-promote neffyto up to 9,000 specified pediatricians and other prescribers in the U.S. Accordingly, we granted ALK U.S. a non-exclusive, royalty-free license to use the neffytrademarks and copyrights and the ARS house marks in the U.S. solely in connection with promoting neffypursuant to the terms of the ALK Co-Promotion Agreement.

Under the ALK Co-Promotion Agreement, ALK U.S. commenced its promotion activities in May 2025 and is obligated to meet specified ramp-up milestones and minimum detail requirements using sales representatives that meet specific qualifications. In addition, during the term of the ALK Co-Promotion Agreement and for 180 days thereafter, ALK U.S. will not market, sell or manufacture any injection product containing epinephrine in the U.S.

We record all sales of neffyin the U.S. and, subject to the terms of the ALK Co-Promotion Agreement, continue to have sole responsibility for all U.S. commercialization activities, including marketing, medical affairs, market access, production, distribution, pharmacovigilance, quality and safety.

We will pay ALK U.S. a base fee to compensate ALK U.S. for its promotion activities. Payments for the first year of the partnership will be deferred and paid in the second year of the partnership. In addition to the base fee, ALK U.S. will be eligible to receive performance-based bonus payments from us starting in the second year of the partnership equal to 30% of the portion of neffynet sales generated from the ALK U.S.-targeted prescribers in excess of a specified initial market share threshold in year two or a 50% market share threshold during years three and four of the partnership.

The ALK Co-Promotion Agreement expires on the fourth anniversary of the commencement of promotion activities thereunder. Either party may terminate the ALK Co-Promotion Agreement in the event of an uncured material breach of the other party or for either party's change of control. We may terminate the ALK Co-Promotion Agreement in the case of ALK U.S.'s insolvency, if ALK U.S. fails to meet specified ramp-up timelines, or if ALK U.S. markets, sells or commercializes any non-injection product containing epinephrine in the U.S. After the first six months, we may terminate the ALK Co-Promotion Agreement if minimum detail requirements are not met for a consecutive three-month period. After the first year, we may terminate the ALK Co-Promotion agreement for any reason or no reason for a fee (as described below). After the first year, ALK U.S. may terminate the ALK Co-Promotion Agreement for any reason or no reason, and we may terminate the agreement in the event ALK U.S. restructures its sales force.

Upon termination of the ALK Co-Promotion Agreement by us for convenience, so long as ALK U.S. has met specified performance thresholds during the term, we are obligated to pay ALK U.S. a specified mid-to-low double-digit percentage of the portion of neffynet sales generated from the ALK U.S.-targeted prescribers in excess of a specified mid-quartile market share threshold that increases over time up to 50% for a specified period after termination, which period decreases in duration the later that the termination occurs. Upon termination of the ALK Co-Promotion Agreement by us in connection with a change of control of the Company, we are obligated to pay ALK U.S. a one-time mid-seven digit to low eight-digit termination fee in an amount that increases the later that the termination occurs.

Financial Overview

Revenues

We have recognized net product sales in the United States since the commercial launch of neffyin September 2024. We have signed collaboration and license agreements for neffy for all geographies outside of the United States. The terms of these agreements may include payment to us of one or more of the following: non-refundable, upfront license fees; clinical, regulatory, and/or commercial milestone payments; clinical development fees; and royalties or a transfer price on net sales of licensed products if neffy receives marketing approval in these regions. We expect product revenues to fluctuate in future periods as we continue with the commercial launch of neffy. We expect revenues under collaboration agreements to fluctuate in future periods based on our ability to meet various regulatory milestones, and contingent on successfully obtaining regulatory approval for neffy in the licensed regions, commercial milestones, royalties or transfer price earned from our partner's net sales and the supply of commercial product as set forth in the agreements described earlier.

Cost of Goods Sold

Cost of goods sold consists primarily of direct and indirect costs to manufacture neffy for commercial sale, including salaries and related expenses for personnel, stock-based compensation, third-party manufacturing costs, raw material and component costs, excess or obsolete inventory adjustment charges, inventory write offs, packaging services, freight, storage costs, distribution fees, amortization of capitalized in-licensed costs, and royalties on product sales. Prior to the FDA approval of neffy in August 2024, certain inventory components were purchased to manufacture neffy and recorded as research and development expenses, resulting in zero-cost inventory components. As a result, the cost of goods sold related to neffy will initially reflect a lower average per unit cost of materials, as previously expensed inventory components are consumed in commercial production and sold to customers.

As of September 30, 2025, we had $8.4 million in zero-cost inventory components remaining, and no zero-cost inventory components were determined to be obsolete. Based on our current forecast, we expect zero-cost inventory components to be substantially consumed in commercial production by mid-2026. The time over which the zero-cost inventory components are included in cost of goods sold will depend on several factors, but primarily the timing of future neffy sales.

Research and Development Expenses

To date, our research and development expenses have been related primarily to clinical development, process development, and manufacturing costs of neffy and our intranasal epinephrine technology product candidates. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

Research and development expenses include:

Our external research and development expenses for neffyand our intranasal epinephrine technology product candidates consist primarily of fees, materials and other costs paid to CROs, CMOs, consultant and contractors. Our clinical, regulatory, manufacturing, and non-clinical development costs for the periods presented below reflect an allocation of expenses associated with personnel costs, stock-based compensation expense, and indirect costs incurred in support of overall research and development, such as facilities-related costs.

We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future clinical trials and the manufacturing costs of neffy and our intranasal epinephrine technology product candidates due to the inherently unpredictable nature of clinical development and manufacturing activities. Clinical development and manufacturing timelines, the probability of success and development costs can differ materially from expectations. In addition, we cannot forecast to what degree our licensing, supply and distribution arrangements would affect our development plans and capital requirements.

The duration, costs and timing of clinical trials and development of neffy and our intranasal epinephrine technology product candidates for the treatment of additional indications will depend on a variety of factors that include:

A change in the outcome of any of these variables with respect to the development of neffy and our intranasal epinephrine technology product candidates could significantly change the costs and timing associated with the development of that future product candidate. The process of conducting the necessary clinical research and manufacturing to obtain regulatory approval is costly and time-consuming. The actual probability of success for any future candidates may be affected by a variety of factors. Further, a number of factors, including those outside of our control, could adversely impact the timing and duration of our product's or any future candidates' development, which could increase our research and development expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries, benefits, stock-based compensation for personnel in executive, finance, business development, sales and marketing and other corporate administrative functions. Selling, general and administrative expenses also include pre-commercial launch activities prior to product launch, the initiation of commercialization activities in September 2024, legal fees incurred relating to corporate and patent matters, professional fees incurred for accounting, auditing, tax and administrative consulting services, and insurance costs.

Selling, general and administrative expenses have increased since the third quarter of 2024 due to the establishment of our sales force, the development and commencement of our marketing campaigns and initiatives, the ALK Co-Promotion Agreement, the hiring of additional sales and marketing personnel to support full commercialization activities, and the addition of infrastructure and programs to support commercialization activities. We expect to continue to incur audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, board of director fees, investor relations costs associated with operating as a public company, patent costs and defense, and general and administrative personnel.

Other Income, net

Other income, net consists primarily of interest income from our cash, cash equivalents, and short-term investments, interest expense on our outstanding debt, and net amortization and accretion associated with our short-term investments.

Results of Operations

Comparison of the Three Months Ended September 30, 2025 and 2024

The following table summarizes our results of operations for the three months ended September 30, 2025 and 2024 (in thousands, except percentages):

______________

*Not meaningful

(1) Includes stock-based compensation expense as follows (in thousands):

Revenues. Revenue for the three months ended September 30, 2025 was $32.5 million, as compared to $2.1 million for the three months ended September 30, 2024. Revenue for the three months ended September 30, 2025 includes $31.3 million in net product revenues for sales of neffyin the United States, $1.1 million in revenue under supply agreements with partners, and less than $0.1 million in revenue for the performance of development and regulatory services performance obligations under the ALK Collaboration Agreement. Revenue for the three months ended September 30, 2024 includes $0.6 million in net product revenues for sales of neffyand $1.5 million in revenue for the first milestone event under the Seqirus Agreement.

Cost of Goods Sold. Cost of goods sold for the three months ended September 30, 2025 was $8.2 million, as compared to $0.1 million for the three months ended September 30, 2024. Prior to August 2024, costs incurred to manufacture neffy were recorded as research and development expenses, and product sales subsequent to August 2024 partially utilized zero-cost inventory components. Cost of goods sold consisted primarily of product costs and royalties in both periods.

Research and Development Expenses. Research and development expenses for the three months ended September 30, 2025 was $2.8 million, as compared to $4.4 million for the three months ended September 30, 2024. The decrease of $1.7 million was primarily due to decreases in product development-related expense of $1.5 million, outside services of $0.4 million, and other research and development expenses of $0.2 million, partially offset by an increase in clinical trial costs of $0.4 million.

The following table summarizes our research and development expenses for the three months ended September 30, 2025 and 2024 (in thousands):

Selling, General and Administrative Expenses.Selling, general and administrative expenses for the three months ended September 30, 2025 was $74.8 million, as compared to $19.3 million for the three months ended September 30, 2024. The increase of $55.5 million was primarily due to increases in marketing-related expenses of $41.6 million, personnel-related expenses of $7.9 million, stock-based compensation expense of $2.2 million, outside services of $1.5 million, travel and meals expense of $1.1 million incurred by our sales personnel, and other general operating costs of $1.2 million.

Other Income, Net. Other income, net for the three months ended September 30, 2025 was $2.0 million, as compared to $2.6 million for the three months ended September 30, 2024. The decrease of $0.6 million was primarily due to a decrease in net accretion of discounts on short-term investments of $0.9 million, partially offset by an increase in interest income of $0.3 million from our cash, cash equivalents, and short-term investments.

Results of Operations

Comparison of the Nine Months Ended September 30, 2025 and 2024

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024 (in thousands, except percentages):

_____________

*Not meaningful

(1) Includes stock-based compensation expense as follows (in thousands):

Revenues. Revenue for the nine months ended September 30, 2025 was $56.2 million, as compared to $2.6 million for the nine months ended September 30, 2024. Revenue for the nine months ended September 30, 2025 includes $51.9 million in net product revenues for sales of neffy in the United States, $2.9 million in revenue for the achievement of the milestone for the first commercial sale of EURneffy and for the performance of development and regulatory services performance obligations under the ALK Collaboration Agreement, and $1.5 million in revenue under supply agreements with partners. Revenue for the nine months ended September 30, 2024 includes $0.6 million in net product revenue for sales of neffyand $2.0 million in revenues under the Seqirus Agreement. The revenues under the Seqirus Agreement consists of $1.5 million for the first event milestone and $0.5 million for the delivery of the license for neffy in the Seqirus Territory in combination with the transfer of know-how.

Cost of Goods Sold. Cost of goods sold for the nine months ended September 30, 2025 was $14.3 million, as compared to $0.1 million for the nine months ended September 30, 2024. Prior to August 2024, costs incurred to manufacture neffy were recorded as research and development expenses, and product sales subsequent to August 2024 partially utilized zero-cost inventory components. Cost of goods sold consisted primarily of product costs and royalties, and during the nine months ended September 30, 2025, the establishment of an inventory reserve.

Research and Development Expenses. Research and development expenses for the nine months ended September 30, 2025 was $9.7 million, as compared to $16.6 million for the nine months ended September 30, 2024. The decrease of $6.8 million was primarily due to decreases in IPR&D expense of $2.1 million from the achievement of the EMA regulatory milestone under the Recordati Termination Agreement during the nine months ended September 30, 2024, product-development related expense of $1.6 million, clinical trial costs of $1.3 million, personnel-related expenses of $0.9 million, stock-based compensation expense of $0.6 million, and other research and development expenses of $0.3 million.

The following table summarizes our research and development expenses for the nine months ended September 30, 2025 and 2024 (in thousands):

Selling, General and Administrative Expenses.Selling, general and administrative expenses for the nine months ended September 30, 2025 was $170.2 million, as compared to $36.2 million for the nine months ended September 30, 2024. The increase of $134.0 million was primarily due to increases in marketing-related expenses of $87.3 million, personnel-related expenses of $25.9 million, stock-based compensation expense of $6.7 million, outside services of $4.0 million, travel and meals expense of $3.8 million incurred by our sales personnel, conference and seminar expense of $2.2 million, audit, tax and valuation fees of $1.5 million, legal fees of $1.3 million, and other general operating costs of $1.3 million.

Other Income, Net. Other income, net for the nine months ended September 30, 2025 was $8.0 million, as compared to $8.3 million for the nine months ended September 30, 2024. The decrease of $0.3 million was primarily due to a decrease in net accretion of discounts on short-term investments of $1.3 million, partially offset by an increase in interest income from our cash, cash equivalents, and short-term investments of $1.0 million.

Liquidity and Capital Resources

Sources of Liquidity and Capital

Since our inception, we have incurred significant operating losses and negative cash flows from our operations. We have recognized limited net product sales since the commercial launch of neffy in September 2024. We have funded our operations to date primarily with proceeds from the Merger, private placement of convertible preferred stock, issuance of common stock, licensing, supply and distribution arrangements with our commercialization partners, debt, and net product sales. As of September 30, 2025, we had cash, cash equivalents, and short-term investments of $288.2 million.

Cash flows

The following table summarizes our cash flows for the nine months ended September 30, 2025 and 2024 (in thousands):

Operating Activities

During the nine months ended September 30, 2025, net cash used in operating activities was $127.4 million. This consisted primarily of a net loss of $130.0 million, an increase in our operating assets and operating liabilities of $40.3 million and $27.7 million, respectively, and non-cash charges of $15.1 million. The increase in our operating assets was due to increases in accounts receivable of $28.4 million and inventories of $12.3 million, partially offset by a decrease in prepaid expenses and other assets of $0.4 million. The increase in our operating liabilities was primarily attributable to an increase in accounts payable and accrued expenses of $27.9 million, partially offset by a decrease in contract liability of $0.3 million. The non-cash charges consisted primarily of non-cash stock-based compensation of $16.4 million, establishment of an inventory reserve of $2.2 million, and depreciation and amortization expense of $1.0 million, partially offset by $4.5 million in net accretion of discounts on short-term investments.

During the nine months ended September 30, 2024, net cash used in operating activities was $28.5 million. This consisted primarily of a net loss of $41.9 million, an increase in our operating liabilities of $8.7 million, a decrease in our operating assets of $0.1 million, and non-cash charges of $4.6 million. The increase in our operating liabilities was primarily due to an increase in accounts payable and accrued liabilities of $8.7 million. The decrease in our operating assets was primarily due to a decrease in prepaid and other assets of $1.1 million, partially offset by an increase in accounts receivable of $0.8 million and an increase in inventories of $0.2 million. The non-cash charges consisted of non-cash stock-based compensation of $10.3 million, partially offset by $5.7 million in net accretion of discounts on short-term investments.

Investing Activities

During the nine months ended September 30, 2025, the cash and cash equivalents provided by investing activities was $32.7 million. This consisted of maturities of short-term investments of $232.0 million, partially offset by purchases of short-term investments of $193.1 million, payments of milestone obligations under license agreements of $5.9 million, and purchases of property and equipment of $0.3 million. During the nine months ended September 30, 2024, the cash and cash equivalents used in investing activities was $4.3 million. This consisted primarily of purchases of short-term investments of $192.6 million, maturities of short-term investments of $191.0 million, payments of milestone obligations under license agreements of $2.5 million, and purchases of property and equipment of $0.3 million.

Financing Activities

During the nine months ended September 30, 2025, the $103.5 million of cash and cash equivalents provided by financing activities was attributable to net proceeds from the term loan under the Credit Agreement of $97.8 million, proceeds from stock option exercises and issuance of common stock under the employee stock purchase plan of $3.9 million, and proceeds from milestone obligations met under license agreements of $2.6 million, partially offset by payments of term loan issuance costs of $0.8 million. During the nine months ended September 30, 2024, the cash and cash equivalents provided by financing activities was $1.5 million, which consisted of proceeds from stock option exercises and issuance of common stock under the employee stock purchase plan.

Term Loans

On September 29, 2025 (the "Closing Date"), we entered into the Credit Agreement with the Administrative Agent and the Lenders, which provides for an aggregate principal amount up to $250.0 million of term loans from the Lenders to us, including an initial tranche of $100.0 million under Term A Loan funded on the Closing Date, $25.0 million under Term B Loan that will be made available during the period commencing on the six-month anniversary of the Closing Date and ending no later than the one-year anniversary of the Closing Date, up to $25.0 million under Term C Loan will be made available at our election during the period commencing on and including the Closing Date and ending no later than the two-year anniversary of the Closing Date, subject to the satisfaction of a certain revenue requirement, and up to $100.0 million under Term D Loan, subject to the consent of the Lenders. The Term Loans will mature on the five-year anniversary of the Closing Date. The Credit Facility enhances our liquidity position and provides additional financial flexibility, subject to the satisfaction of certain customary conditions for future tranches and revenue-based requirements for the third tranche.

Future Funding Requirements

Based on our current operating plan, we believe that our existing cash, cash equivalents, short-term investments, and revenues from product sales and cash proceeds from collaboration and out-licensing agreements will be sufficient to meet our anticipated cash requirements through at least the next three years. In particular, we expect our existing cash, cash equivalents, short-term investments, and revenues from net product sales and cash proceeds from collaboration and out-licensing agreements will allow us to fund commercial manufacturing and sales and marketing activities, general operating activities and working capital requirements, and proof of concept clinical trials of neffy for additional indications. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of testing product candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain.

Our future funding requirements will depend on many factors, including:

Until such time, if ever, as we can generate substantial product revenues to support our cost structure, we expect to finance our cash needs through a combination of our existing cash, cash equivalents, short-term investments, equity offerings, debt financings and other capital sources which may include collaborations, strategic alliances, marketing, distribution or licensing arrangements or other arrangements with third parties. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. In addition, our current or future debt agreements may limit our ability to incur additional debt. Subject to limited exceptions, we are prohibited from incurring additional indebtedness and entering into certain strategic and licensing transactions without the prior written consent of the Lenders pursuant to the Credit Agreement. If we raise funds through additional collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, development programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock.

Our ability to raise additional funds may be adversely impacted by macroeconomic factors that may result in worsening global economic conditions and disruptions to and volatility in the global credit and financial markets, including due to tariffs, trade wars, inflation, high interest rates, recessionary concerns, recessions, bank failures, geopolitical conflicts, and general economic uncertainty. Because of the numerous risks and uncertainties associated with product development and commercialization, we cannot predict the timing or amount of increased expenses and cannot assure you that we will generate profits or positive cash flows from operating activities in the future.

Material Cash Requirements

The total amount of unconditional purchase obligations related to the supply of raw materials is $56.9 million as of September 30, 2025. Our estimated remaining payment obligations by year are as follows: 2025 ($0.2 million), 2026 ($10.4 million), 2027 ($11.8 million), 2028 ($13.8 million), and $2.9 million per year thereafter through 2035.

The total amount of unconditional purchase obligations related to hosted software license subscription fees is $2.2 million as of September 30, 2025. Our estimated remaining payment obligations by year are as follows: 2025 ($0.3 million), 2026 ($1.5 million), and 2027 ($0.4 million).

In August 2024, we entered into a corporate sponsorship agreement with Food Allergy Research and Education, Inc., which was subsequently amended in May 2025, pursuant to which we have payment obligations of $14.0 million over a 43-month period. Our remaining payment obligations as of September 30, 2025 are $7.0 million. Our estimated remaining payment obligations by year are as follows: 2025 ($1.0 million), 2026 ($5.0 million), and 2027 ($1.0 million).

In June 2018, we entered into a License Agreement (the "Aegis Agreement") with Aegis Therapeutics, LLC ("Aegis"), a wholly owned subsidiary of Neurelis, Inc. In November 2024, OrbiMed Advisors LLC ("OrbiMed") entered into an agreement with Aegis, to purchase the rights, royalty interests, and related sales milestone payments on net product sales of neffy. Our remaining payment obligations to OrbiMed under the Aegis Agreement are contingent upon our achievement of certain commercial milestones and have been reduced to $11.0 million as of September 30, 2025. Under the Aegis Agreement, we are also required to make royalty payments to OrbiMed based on a mid-single-digit percentage of net product sales. Future royalty payment amounts are indeterminate since they depend on future revenues, which are uncertain.

In February 2023, we entered into a termination agreement (the "Recordati Termination Agreement") with Recordati Ireland, Ltd. ("Recordati") to reacquire the rights to neffy in Europe and certain European Free Trade Association, Russia/the Commonwealth of Independent States, Middle East and African countries (the "Recordati Territory"). Under the Recordati Termination Agreement, we are required to make royalty payments to Recordati of up to €5.0 million in the aggregate from sales of Recordati Licensed Product(s) in the Recordati Territory, of which up to €4.8 million (approximately $5.7 million in U.S. dollars) remain. Future royalty payment amounts are indeterminate since they depend on future revenues, which are uncertain.

In May 2025, we entered into the ALK Co-Promotion Agreement with ALK U.S. to co-promote neffyto up to 9,000 specified pediatricians and other prescribers in the U.S. Pursuant to the ALK Co-Promotion Agreement, we will pay ALK U.S. a base fee to compensation ALK U.S. for its promotion activities. Payments for the first year of the partnership will be deferred and paid in the second year of the partnership. The total remaining payment obligations under this agreement are $26.8 million as of September 30, 2025. Our remaining payment obligations by year are as follows: 2025 ($0.0 million), 2026 ($4.4 million), 2027 ($14.2 million), 2028 ($4.6 million), and 2029 ($3.6 million). In addition to the base fee, ALK U.S will be eligible to receive performance-based payments from us. Future performance-based payment amounts are indeterminate since they depend on future revenues, which are uncertain.

In September 2025, we entered into the Credit Agreement with the Administrative Agent and Lenders. The outstanding principal of $100.0 million at September 30, 2025 is due upon maturity on September 29, 2030. Estimated interest payments are calculated based on the outstanding principal, the applicable interest rate and expected timing of scheduled payments as of September 30, 2025. As of September 30, 2025, based on the interest rate in effect at such date, total estimated interest payments are $48.1 million, and our estimated interest payments by year are as follows: 2025 ($2.5 million), 2026 ($9.6 million), 2027 ($9.6 million), 2028 ($9.6 million), 2029 ($9.6 million), and 2030 ($7.2 million).

We enter into contracts in the normal course of business with third-party contract organizations and vendors for clinical studies, manufacturing and other services and products. These contracts generally provide for termination after a notice period.

As of September 30, 2025, we have not recognized any reserves related to uncertain tax positions and had no accrued interest or penalties related to uncertain tax positions.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue, accrued expenses, stock-based compensation, and valuation allowances for deferred tax assets. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

During the nine months ended September 30, 2025, there were no material changes to our critical accounting policies or estimates. Our critical accounting policies and estimates are described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Significant Judgments and Estimates" in our Annual Report on Form 10-K filed with the SEC on March 20, 2025 and Note 2 - Summary of Significant Accounting Policiesto our unaudited condensed consolidated financial statements appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Recent Accounting Pronouncements

See Note 2 - Summary of Significant Accounting Policiesto our unaudited condensed consolidated financial statements appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Emerging Growth Company and Smaller Reporting Company Status

We are an emerging growth company, as defined in the JOBS Act. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

We will remain an emerging growth company until the earlier of: (i) the date on which we have issued more than $1.0 billion in nonconvertible debt securities during the prior three-year period; and (ii) December 31, 2025.

We are also a "smaller reporting company" as defined in the Exchange Act.

On June 30, 2025, the aggregate market value of our common stock held by non-affiliates exceeded $700 million, based on the closing price of our common stock on The Nasdaq Stock Global Select Market on such date. Due to recent SEC guidance, we will continue to be a non-accelerated filer through at least our fiscal year ending December 31, 2026. We will also be permitted to continue to comply with the scaled disclosures rules applicable to smaller reporting companies until the filing of our quarterly report on Form 10-Q for the quarter ending March 31, 2026.