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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis together with our financial statements and related notes included in “Item 8. Financial Statements and Supplementary Data” in this Annual Report. The following discussion contains forward-looking statements that involve risks and uncertainties. For a complete discussion of forward-looking statements, see the section above entitled “Forward Looking Statements.” Our actual results could differ materially from those expressed or implied in any forward-looking statements as a result of various factors, including those set forth under the caption “Item 1A. Risk Factors.”

Overview

We are a biopharmaceutical company focused on the commercialization and development of neffy (currently identified in the European Union (“EU”) and United Kingdom (“U.K.”) by the trade name EURneffy and in China by the trade name 优敏速) for needle-free intranasal delivery of epinephrine for 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, also has approvals in the U.K., Japan, Australia, and China. It is 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 neffy in the United States is significant.At the current list price for 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. There are approximately 40 million people in the U.S. who experience Type I allergic reactions. Of this group, approximately 20 million people are reported to have been diagnosed and experienced severe Type I allergic reactions that may lead to anaphylaxis, and approximately 6.5 million of those were prescribed an epinephrine autoinjector. However, in recent years, only an estimated one-half of those consistently carry their prescribed autoinjector with them. We believe the market opportunity for neffy in the U.S. is significant. Those estimated 3.2 million patients who currently fill their active epinephrine autoinjector prescription would represent approximately $1.8 billion in annual U.S. net sales at neffy’s target estimated gross-to-net yield based on epinephrine device unit volume in 2025.

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In August 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, with neffy 1 mg subsequently approved in March 2025 for patients who are four years of age and older and weigh 15 kg to less than 30 kg. 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 December 31, 2025, our sales force is comprised of approximately 106 ARS Pharma employees, who serve as sales reps, key account managers, area sales managers, and national sales directors, as well as 10 virtual sales reps, and approximately 70 sales reps via our co-promotion partner, ALK U.S., who began field operations in June 2025 and will target up to 9,000 specified pediatricians and other prescribers in the U.S. We plan to expand our internal sales force to approximately 150 individuals beginning in the second quarter of 2026. For more information regarding our partners and collaboration agreements, see “Business—Our Collaboration and Licensing Agreements.”

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’s clinical 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 neffyconnect program 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 9,000 schools to date have opted into receiving two cartons of neffy at 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 in May 2025, as well as linear television advertising that started in 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.

The EC has granted marketing authorization in the EU for EURneffy 2 mg (the trade name for neffy 2 mg in the EU and U.K.), for the emergency treatment of Type I allergic reactions, including anaphylaxis, in adults and children who weigh 30 kg or greater and on January 29, 2026, the Committee for Medicinal Products for Human Use of the EMA adopted a positive opinion, recommending marketing authorization in the EU for EURneffy 1 mg for children who are four years of age and older and weigh 15 kg to less than 30 kg. Through our collaboration with ALK, EURneffy 2 mg was launched in Europe, beginning with Germany in June 2025, followed by the U.K. in October 2025. We received approval of neffy 2 mg and 1 mg in Japan in September 2025, which is expected to launch in the first quarter of 2026 by our collaboration partner, Alfresa. We also received approval of neffy 2 mg and 1 mg doses in Australia in December 2025, with commercial launch by our collaboration partner, Seqirus, initiated in February 2026. In December 2025, we received approval in China of 优敏速 (the trade name for neffy 2 mg in China), with commercial launch by our collaboration partner, Pediatrix, expected to start in the first half of 2026. neffy 2 mg is under review by Health Canada, with a regulatory decision expected in the second quarter of 2026 and if approved, with commercial launch by our collaboration partner, ALK, expected to start later in 2026. neffy has already been approved or is under regulatory review in countries representing approximately 98% of the current global epinephrine autoinjector sales.

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Real-world data supports that neffy delivers similar response rates as injections for the emergency treatment of Type I allergic reactions. In September 2025, we reported survey results of anaphylaxis treatment outcomes in the neffy experience program, which provides 1 mg and 2 mg doses of neffy to allergists for in-office use if patients experience an anaphylactic 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 consistent with that historically reported for epinephrine injection. The results were presented as an oral presentation at the American College of Allergy, Asthma and Immunology (“ACAAI”) meeting in early November 2025 and was also published in the Annals of Allergy, Asthma and Immunology, the official peer-reviewed journal of the ACAAI, in December 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. Interim data from this clinical trial is anticipated in the second half of 2026, followed by the potential initiation of a single pivotal efficacy study in mid-2027.

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 with Silverback Therapeutics, Inc. (“Silverback”) in November 2022, 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 December 31, 2025, we had cash, cash equivalents, and short-term investments of $245.0 million.

We have incurred net losses in most years since our inception. Net loss for the year ended December 31, 2025 was $171.3 million, and net income for the year ended December 31, 2024 was $8.0 million. As of December 31, 2025, we had an accumulated deficit of $294.6 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 royalties and 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 neffy and 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.

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Financial Overview

Revenues

We have recognized net product sales in the United States since the commercial launch of neffy in 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 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, royalties on product sales, salaries and related expenses for personnel, and stock-based compensation. 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 December 31, 2025, we had $6.7 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:

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external research and development expenses incurred under agreements with contract research organizations (“CROs”), investigative sites and consultants and other third-party organizations to conduct our clinical studies and development activities;

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costs related to manufacturing neffy and our intranasal epinephrine technology product candidates for clinical trials and process validation studies, including fees paid to contract manufacturing organizations (“CMOs”) and other third-party manufacturers;

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costs related to compliance with regulatory requirements and regulatory filings;

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indirect expenses including insurance and facility-related expenses; and

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salaries, payroll taxes, benefits and stock-based compensation charges for personnel engaged in research and development efforts.

Our external research and development expenses for neffy and 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.

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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:

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per patient trial costs;

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the number of patients that participate in the trials;

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the number of sites included in the trials;

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the countries in which the trials are conducted;

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tariffs and international trade relations;

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the length of time required to enroll eligible patients;

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the number of doses that patients receive;

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the drop-out or discontinuation rates of patients;

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potential additional safety monitoring or other studies requested by regulatory agencies;

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the efficacy and safety profile of neffy and our current and future intranasal epinephrine technology product candidates;

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the cost to seek regulatory approvals for our intranasal epinephrine technology product candidates in additional indications and any product candidates that successfully complete clinical trials;

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the timing, receipt, and terms of any approvals from applicable regulatory authorities including the FDA and non-U.S. regulators;

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maintaining a continued acceptable safety profile of neffy and our intranasal epinephrine technology product candidates;

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establishing or maintaining commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that we or our third-party manufacturers are able to make product successfully;

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significant and changing government regulation and regulatory guidance;

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the impact of any business interruptions to our operations or to those of the third parties with whom we work; and

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the extent to which we establish additional strategic collaborations or other arrangements.

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.

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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 Years Ended December 31, 2025 and 2024

The following table summarizes our results of operations for the years ended December 31, 2025 and 2024 (in thousands, except percentages):

Years Ended December 31, Dollar %

Revenue:

Operating expenses:

Other income (expense), net:

_____________

* Not meaningful

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

Years Ended December 31,

Revenues. Revenue for the year ended December 31, 2025 was $84.3 million, as compared to $89.1 million for the year ended December 31, 2024. Revenue for the year ended December 31, 2025 includes $72.2 million in net product revenues for sales of neffy in the United States,$9.7 million in revenue under collaboration agreements, and $2.4 million in revenue under supply agreements. Revenue under collaboration agreements consists of achievement of regulatory and commercial milestones under the Pediatrix Agreement of $4.0 million, ALK Collaboration Agreement of $2.6 million, Alfresa Agreement of $2.0 million, and Seqirus Agreement of $0.6 million, as well as the performance of development and regulatory services, and royalties attributable to the ALK Territory, excluding the EEA, under the ALK Collaboration Agreement of $0.3 million and $0.2 million, respectively.

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Revenue for the year ended December 31, 2024 includes $81.5 million in revenues under collaboration agreements, $7.3 million in net product revenues for sales of neffy in the United States,and $0.4 million in revenue under supply agreements. Revenue under collaboration agreements consists of $73.1 million under the ALK Collaboration Agreement for the delivery of a license to develop, manufacture and commercialize products containing epinephrine administered intranasally in the ALK Territory excluding the EEA, $0.4 million under the ALK Collaboration Agreement for revenue recognized under the regulatory services performance obligations, $6.0 million from a regulatory milestone under the Alfresa Agreement, $1.5 million for the first event milestone under the Seqirus Agreement, and $0.5 million for the delivery of the license for neffy in the Seqirus Territory in combination with the transfer of know-how under the Seqirus Agreement.

Cost of Goods Sold. Cost of goods sold for the year ended December 31, 2025 was $20.4 million, as compared to $1.0 million for the year ended December 31, 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 year ended December 31, 2025, the establishment of an inventory reserve.

Research and Development Expenses. Research and development expenses for the year ended December 31, 2025 were $13.2 million, as compared to $19.6 million for the year ended December 31, 2024. The decrease of $6.4 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 year ended December 31, 2024, product-development related expense of $1.8 million, clinical trial costs of $0.8 million, personnel-related expenses of $0.8 million, and other research and development expenses of $0.9 million.

The following table summarizes our research and development expenses for the years ended December 31, 2025 and 2024 (in thousands):

Years Ended December 31,

Manufacturing and non-clinical development 6,238 11,547

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the year ended December 31, 2025 was $230.1 million, as compared to $71.7 million for the year ended December 31, 2024. The increase of $158.4 million was primarily due to increases in marketing-related expenses of $111.4 million, personnel-related expenses of $24.2 million, stock-based compensation expense of $7.9 million, outside services of $4.2 million, travel and meals expense of $3.6 million incurred mainly by our sales personnel, conference and seminar expense of $2.5 million, audit, tax and valuation fees of $1.5 million, legal fees of $0.6 million, and other general operating costs of $2.5 million.

Other Income (Expense), Net. Other income (expense), net for the year ended December 31, 2025 was $8.1 million, as compared to $11.4 million for the year ended December 31, 2024. The decrease of $3.3 million was primarily due to interest expense related to the term loan of $2.6 million and a decrease in net accretion of discounts on short-term investments of $2.1 million, partially offset by an increase in interest income from our cash, cash equivalents, and short-term investments of $1.4 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 funded our operations to date primarily with proceeds from the merger with Silverback, 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 December 31, 2025, we had cash, cash equivalents, and short-term investments of $245.0 million.

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Cash flows

The following table summarizes our cash flows for the years ended December 31, 2025 and 2024 (in thousands):

Years Ended December 31,

Net cash and cash equivalents provided by financing activities 104,598 72,399

Net decrease in cash and cash equivalents $ (9,500 ) $ (20,154 )

Operating Activities

During the year ended December 31, 2025, net cash used in operating activities was $170.9 million. This consisted primarily of a net loss of $171.3 million, an increase in our operating assets and operating liabilities of $38.5 million and $18.5 million, respectively, and non-cash charges of $20.4 million. The increase in our operating assets was due to increases in inventories of $22.0 million and accounts receivable of $17.2 million, partially offset by a decrease in prepaid expenses and other assets of $0.7 million. The increase in our operating liabilities was primarily attributable to an increase in accounts payable and accrued expenses of $18.9 million, partially offset by a decrease in contract liability of $0.4 million. The non-cash charges consisted primarily of non-cash stock-based compensation of $22.1 million, establishment of an inventory reserve of $2.2 million, depreciation and amortization expense of $1.4 million, and other non-cash items of $0.3 million, partially offset by net accretion of discounts on short-term investments of $5.5 million.

During the year ended December 31, 2024, net cash provided by operating activities was $13.5 million. This consisted primarily of net income of $8.0 million, an increase in our operating assets of $20.3 million, an increase in our operating liabilities of $18.5 million, and non-cash charges of $7.4 million. The increase in our operating assets was primarily due to an increase in accounts receivable of $8.2 million, an increase in prepaid and other assets of $6.2 million, and an increase in inventories of $5.9 million. The increase in our operating liabilities was due to an increase in accounts payable and accrued liabilities of $16.4 million and an increase in contract liability of $2.1 million. The non-cash charges consisted primarily of non-cash stock-based compensation of $14.5 million, partially offset by net accretion of discounts on short-term investments of $7.3 million.

Investing Activities

During the year ended December 31, 2025, the cash and cash equivalents provided by investing activities was $56.8 million. This consisted of maturities of short-term investments of $307.0 million, partially offset by purchases of short-term investments of $242.0 million, payments of milestone obligations under license agreements of $7.9 million, and purchases of property and equipment of $0.3 million.

During the year ended December 31, 2024, the cash and cash equivalents used in investing activities was $106.1 million. This consisted primarily of purchases of short-term investments of $356.0 million, payments of milestone obligations under license agreements of $7.5 million, and purchases of property and equipment of $0.6 million, partially offset by maturities of short-term investments of $258.0 million.

Financing Activities

During the year ended December 31, 2025, the $104.6 million of cash and cash equivalents provided by financing activities was attributable to net proceeds from the term loan under the Credit Agreement of $96.3 million, proceeds from stock option exercises and issuance of common stock under the employee stock purchase plan of $5.7 million, and proceeds from milestone obligations met under license agreements of $2.7 million.

During the year ended December 31, 2024, the cash and cash equivalents provided by financing activities was $72.4 million. This consisted of $69.4 million from the upfront payment from ALK that was allocated to the EEA License and $3.0 million 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

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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:

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revenue received from commercial sales of neffy;

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the timing and amount of any milestone and royalty payments under the ALK Collaboration Agreement, ALK Co-Promotion Agreement, Pediatrix Agreement, Aegis Agreement, Alfresa Agreement, Recordati Termination Agreement, and the Seqirus Agreement;

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the scope, progress, results and costs of researching and developing our intranasal epinephrine technology for additional indications;

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the scope and costs of clinical and commercial manufacturing of neffy and our intranasal epinephrine technology product candidates;

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the timing of, and the costs involved in, obtaining marketing approvals for our intranasal epinephrine technology for additional indications;

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the number of additional indications for our intranasal epinephrine technology that we may pursue and their development requirements;

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the costs of commercialization activities for neffy and our intranasal epinephrine technology product candidates, to the extent such costs are not the responsibility of any collaborators, including the costs and timing of building and maintaining product sales, marketing, distribution and manufacturing capabilities;

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the extent to which we in-license or acquire rights to other products, product candidates, or technologies;

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our headcount growth and associated costs as we expand our employee headcount and building and maintaining a commercial infrastructure;

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our ability to service our current credit facility under the Credit Agreement and access, if and when needed, additional amounts of principal provided for under the Credit Agreement;

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the costs of preparing, filing, and prosecuting patent applications, maintaining and protecting our intellectual property rights, including enforcing and defending intellectual property related claims; and

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the costs of operating as a public company.

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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.

Future Contractual Cash Obligations

The total remaining unconditional purchase obligations related to the supply of raw materials is $55.3 million as of December 31, 2025. Our remaining payment obligations by year are as follows: 2026 ($9.1 million), 2027 ($11.8 million), 2028 ($13.8 million), and $2.9 million per year thereafter through 2035.

Under the ALK Co-Promotion Agreement, the total remaining payment obligations under this agreement are $20.2 million as of December 31, 2025. Our remaining obligations by year are as follows: 2026 ($8.3 million), 2027 ($5.2 million), 2028 ($4.7 million), and 2029 ($2.0 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 August 2024, we entered into a corporate sponsorship agreement with Food Allergy Research and Education, Inc., which was subsequently amended in May 2025. Our remaining payment obligations as of December 31, 2025 are $6.0 million. Our remaining payment obligations by year are as follows: 2026 ($5.0 million), and 2027 ($1.0 million).

Under the Credit Agreement, the outstanding principal of $100.0 million as of December 31, 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 December 31, 2025. As of December 31, 2025, based on the interest rate in effect at such date, total estimated remaining interest payments are $45.7 million, and our estimated remaining interest payments by year are as follows: 2026 ($9.6 million), 2027 ($9.6 million), 2028 ($9.6 million), 2029 ($9.6 million), and 2030 ($7.2 million).

Under the Aegis Agreement, remaining payment obligations to OrbiMed are contingent upon our achievement of certain commercial milestones and have been reduced to $9.0 million as of December 31, 2025. 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 neffy in the Recordati Territory, of which up to €4.6 million (approximately $5.4 million in U.S. dollars) remain as of December 31, 2025. Future royalty payment amounts are indeterminate since they depend on future revenues, which are uncertain.

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.

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As of December 31, 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 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.

While our significant accounting policies and estimates are described in more detail in Note 2 – Summary of Significant Accounting Policies to our consolidated financial statements, we believe the following accounting policies and estimates to be most critical to the preparation of our consolidated financial statements.

Revenue Recognition

Product revenue, net

Product revenue is recorded net of estimates for variable consideration, including distribution service fees, prompt pay discounts, product returns, chargebacks, rebates, co-payment assistance, and other incentives for certain indirect customers. Reserves for these estimates are recorded in the same period of the related sale and reflect amounts earned or expected to be claimed on those sales. Estimates of variable consideration require significant judgment and are based on factors such as contractual and statutory requirements, known market events, industry trends and data, forecasted customer buying and payment patterns, and historical experience. Variable consideration is included in net product revenue only to the extent it is probable that a significant reversal will not occur in a future period. Estimates are reassessed each reporting period, and actual amounts may differ from those estimates. Any adjustments are recorded in the period differences become known on a cumulative catch-up basis and may affect product revenue and net (loss) income in that period.

Revenue under collaboration agreements

Revenue from licenses to our intellectual property is recorded when the license is transferred and the licensee can use and benefit from it, provided the license is distinct from other obligations. For licenses bundled with other obligations, management evaluates whether performance obligations are satisfied over time or at a point in time and, if over time, determines the appropriate method to measure progress. Milestone payments are included in the transaction price only when it is probable that a significant revenue reversal will not occur, and are reassessed each reporting period. Sales-based royalties or commercial milestones based on product sales where a license is the predominant item are recorded at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Adjustments to estimates are recorded on a cumulative catch-up basis and may affect revenue under collaboration agreements and net (loss) income in that period.

Recent Accounting Pronouncements

See Note 2 – Summary of Significant Accounting Policies to our consolidated financial statements for information about recent accounting pronouncements, the timing of their adoption, and our assessment, if any, of their potential impact on our financial condition and results of operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not required for a “smaller reporting company” as defined under Item 10(f)(1) of Regulation S-K of the Securities Act.

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Item 8. Financial Statements and Supplementary Data

ARS Pharmaceuticals, Inc.

Index to Consolidated Financial Statements

Page

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 122

Consolidated Balance Sheets 124

Consolidated Statements of Operations and Comprehensive (Loss) Income 125

Consolidated Statements of Stockholders’ Equity 126

Consolidated Statements of Cash Flows 127

Notes to Consolidated Financial Statements 128

1. Nature of Business 128

2. Summary of Significant Accounting Policies 128

3. Net (Loss) Income Per Share 137

4. Collaboration, Out-Licensing, and Related Agreements 138

6. Intangible Assets 144

7. Fair Value Measurements 145

8. Balance Sheet Details 146

10. Commitments and Contingencies 147

11. In-Licensing and Supply 149

12. Common Stock and Stockholders’ Equity 150

13. Stock-Based Compensation 151

15. Related-Party Transactions 155

16. Segment Information 155

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of ARS Pharmaceuticals, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ARS Pharmaceuticals, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive (loss) income, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Rebates

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2019.

San Diego, California

March 9, 2026

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ARS Pharmaceuticals, Inc.

Consolidated Balance Sheets

(in thousands, except par value and share amounts)

December 31,

Assets

Current assets:

Prepaid expenses and other current assets 6,194 6,886

Property, plant and equipment, net 2,465 1,066

Liabilities and stockholders’ equity

Current liabilities:

Contract liability, current 609 557

Other current liabilities 588 42

Contract liability, net of current portion 1,130 1,532

Other accrued liabilities 4,605 —

Commitments and contingencies (Note 10)

Stockholders’ equity

Accumulated other comprehensive gain, net 125 220

Total liabilities and stockholders’ equity $ 327,652 $ 351,153

The accompanying notes are an integral part of these consolidated financial statements.

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ARS Pharmaceuticals, Inc.

Consolidated Statements of Operations and Comprehensive (Loss) Income

(in thousands, except share and per share data)

Years Ended December 31,

Revenue:

Revenue under collaboration agreements 9,716 81,529

Revenue under supply agreements 2,370 365

Operating expenses:

Other income (expense), net:

(Loss) income before income tax (benefit) expense (171,378 ) 8,286

Income tax (benefit) expense (80 ) 288

Unrealized (losses) gains on available-for-sale securities (95 ) 171

Net (loss) income per share:

The accompanying notes are an integral part of these consolidated financial statements.

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ARS Pharmaceuticals, Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

Accumulated

Common Other Total

Stock Additional Comprehensive Accumulated Stockholders’

Shares Amount Paid-in Capital Gain (Loss), Net Deficit Equity

Net income and comprehensive income — — — 171 7,998 8,169

The accompanying notes are an integral part of these consolidated financial statements.

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ARS Pharmaceuticals, Inc.

Consolidated Statements of Cash Flows

(in thousands)

Years Ended December 31,

Cash flows from operating activities:

Provision for inventory reserve 2,160 —

Depreciation and amortization expense 1,367 79

Accretion on investments, net of amortization (5,523 ) (7,254 )

Other non-cash items 337 —

Changes in operating assets and liabilities:

Prepaid expenses and other assets 656 (6,191 )

Accounts payable and accrued liabilities 18,881 16,413

Cash flows from investing activities:

Purchases of short-term investments, available-for-sale (242,033 ) (356,038 )

Maturities of short-term investments, available-for-sale 307,000 258,000

Payments of milestone obligations under license agreements (7,860 ) (7,500 )

Purchases of property and equipment (339 ) (563 )

Cash flows from financing activities:

Proceeds from term loan, net of issuance costs 96,257 —

Net cash and cash equivalents provided by financing activities 104,598 72,399

Net decrease in cash and cash equivalents (9,500 ) (20,154 )

Cash and cash equivalents at beginning of period 50,817 70,971

Cash and cash equivalents at end of period $ 41,317 $ 50,817

Supplemental cash flow information:

Cash paid for interest $ 2,452 $ —

The accompanying notes are an integral part of these consolidated financial statements.

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ARS Pharmaceuticals, Inc.

Notes to Consolidated Financial Statements

1. Nature of Business

Description of Business

ARS Pharmaceuticals, Inc. (“ARS”, “ARS Pharma” or the “Company”) is a biopharmaceutical company focused on the commercialization and development of neffy (currently identified in the European Union and United Kingdom by the trade name EURneffy and in China by the trade name 优敏速) for needle-free intranasal delivery of epinephrine for emergency treatment of Type I allergic reactions, including anaphylaxis. neffy is the first and only FDA and European Commission-approved needle-free epinephrine product, and the first new delivery method for epinephrine in more than 35 years.

The Company incorporated in Delaware in January 2016 and is located in San Diego, California. The Company has a wholly owned subsidiary, ARS Pharmaceuticals Operations, Inc., incorporated in Delaware in August 2015, through which it conducts substantially all its operations. ARS Pharmaceuticals Operations, Inc. has a wholly owned subsidiary in Ireland, ARS Pharmaceuticals IRL, Limited, to facilitate the filing of regulatory approval for neffy in European countries.

Liquidity and Capital Resources

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred net operating losses in most years since its inception and had an accumulated deficit of $294.6 million as of December 31, 2025. The Company had cash, cash equivalents, and short-term investments of $245.0 million as of December 31, 2025 and has not generated positive cash flows from operations in most years. To date, the Company has funded its operations primarily with proceeds from the merger with Silverback Therapeutics, Inc. (“Silverback”) in November 2022 (the “Merger”), the private placement of convertible preferred stock, the issuance of common stock, licensing, supply and distribution agreements, debt, and net product sales. The Company’s currently available cash, cash equivalents, and short-term investments as of December 31, 2025 are sufficient to meet its anticipated cash requirements for at least the 12 months following the date these financial statements are issued.

From August 5, 2015 (inception) through December 31, 2025, the Company has devoted substantially all of its efforts to developing intellectual property, conducting product development and clinical trials, organizing and staffing the Company, business planning, raising capital, building infrastructure, pre-commercial and commercial activities, and providing general and administrative support for these operations. The Company has a limited operating history, and the sales and income potential of the Company’s business and market are unproven. Management expects operating expenses to increase for the foreseeable future, and there can be no assurance that the Company will achieve profitability in the future, or if achieved, that it will be sustained on a continuing basis.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”), and Accounting Standards Update (“ASU”), of the Financial Accounting Standards Board (“FASB”). The Company’s financial statements are presented on a consolidated basis, which include the accounts of ARS Pharmaceuticals, Inc., ARS Pharmaceuticals Operations, Inc. and ARS Pharmaceuticals IRL, Limited. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s functional and reporting currency is the U.S. dollar. Assets and liabilities that are not denominated in the functional currency are remeasured into U.S. dollars at foreign currency exchange rates in effect at the balance sheet date except for nonmonetary assets, which are remeasured at historical foreign currency exchange rates in effect at the date of transaction. Net realized and unrealized gains and losses from foreign currency transactions and remeasurement are reported in other income in the accompanying consolidated statements of operations and comprehensive (loss) income. All adjustments considered necessary for a fair presentation have been included.

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Use of Estimates

The preparation of the Company’s consolidated financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. The most significant estimates in the Company’s consolidated financial statements are revenue recognized under collaboration agreements and accruals for variable consideration of product revenue. These estimates and assumptions are based on current facts, historical experience and various other factors 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 and the recording of revenue and expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Fair Value of Financial Instruments

Cash, cash equivalents, and short-term investments are carried at fair value. The carrying amounts of all accounts receivable, prepaid expenses and other current assets, and accounts payable and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments.

Cash and Cash Equivalents

Cash and cash equivalents include cash readily available in checking, money market mutual funds, and short-term investments with remaining maturities when purchased of 90 days or less. The Company considers all highly liquid investments with remaining maturities when purchased of 90 days or less to be cash equivalents.

Investments

The Company invests excess cash in investment grade fixed income securities. These investments are included in short-term investments on the accompanying consolidated balance sheets, classified as available-for-sale, and reported at fair value with unrealized gains and losses included in accumulated other comprehensive gain, net. Realized gains and losses on the sale of securities are recognized in other income, net.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable includes trade accounts receivable from product sales to customers, partner receivables for reimbursable research and development costs, royalties, license fees, and milestone payments due under the Company’s collaboration agreements and supply of neffy under the Company’s supply agreements. Trade accounts receivables are recorded at wholesale acquisition cost (“WAC”), less purchase price discounts, prompt pay discounts, chargebacks, and an allowance for credit losses, if any. The allowance for credit losses is the Company’s estimate of losses over the life of the receivables. The Company determines the allowance for credit losses for accounts receivable based on each customer’s or partner’s accounts receivable balance and age, their financial condition, and the general economic environment.

When the collectability of an invoice is no longer probable, the Company will create a reserve for that specific receivable. If a receivable is determined to be uncollectible, it is charged against the general credit loss reserve or the reserve for the specific receivable, if one exists. The allowance for credit losses was immaterial at December 31, 2025, and no allowance for credit losses was deemed necessary at December 31, 2024.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, and short-term investments. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits and limits its exposure to cash risk by placing its cash with high credit quality financial institutions.

The Company reviews its financial instruments portfolio on a quarterly basis to determine if any unrealized losses have resulted from a credit loss or other factors. As part of the review, management considers factors such as historical experience, market data, issuer-specific factors, and current economic conditions. This review is subjective, as it requires management to evaluate whether an event or change in circumstances has occurred in that period that may be related to credit issues.

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The Company is also subject to credit risk related to its accounts receivable from product sales and revenue under collaboration and supply agreements. neffy is distributed primarily through wholesale distributors and pharmacies. These entities are not obligated to purchase any set number of units, and they distribute neffy on demand as orders are received. The Company enters into collaboration and supply agreements with pharmaceutical companies that have operations outside the U.S. under which the Company is entitled to receive payments for royalties, license fees, milestone achievements, reimbursable costs for research and development services, and supply of neffy. The Company extends credit to its customers and partners in the normal course of business after evaluating their overall financial condition.

Prior to August 2025, the Company operated under the Title Agreement (as defined in the Revenue Recognition policy), under which the Title Agent (as defined in the Revenue Recognition policy) retained all credit and collection risk on product sales to the Company’s wholesale distributors and pharmacy customers. As of August 2025, the Company ceased operating under the Title Agreement and now retains all credit and collection risk on product sales.

At December 31, 2025, five customers accounted for 82% of accounts receivable with each individual customer ranging from 12% to 21%. As of December 31, 2024, one customer, the Title Agent, accounted for 93% of accounts receivable. For the years ended December 31, 2025 and 2024, four and six customers accounted for 79% and 89% of the Company’s gross product sales, with each individual customer ranging from 15% to 22% and 11% to 23% of the Company’s gross product sales, respectively. For the year ended December 31, 2025, three customers accounted for 94% and 90% of revenue under collaboration agreements, with each individual customer ranging from 18% to 43% of the Company’s revenue under collaboration agreements. For the year ended December 31, 2024, one customer accounted for 90% of revenue under collaboration agreements. For the years ended December 31, 2025 and 2024, one customer accounted for 86% and 100% of revenue under supply agreements, respectively. To date, the Company has not experienced any credit losses from its trade and partner accounts receivable.

Inventories

Inventories consist of finished goods held for sale and distribution, raw materials and work in process, and include labor and overhead. Inventories are stated at the lower of cost or net realizable value, and are determined on a first-in, first-out basis. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The Company periodically reviews its inventory to identify obsolete, slow-moving, or otherwise unsalable inventories, and establishes allowances for situations in which the cost of the inventory is not expected to be recovered. Such impairment charges, if any, are recorded in cost of goods sold on the accompanying consolidated statements of operations.

The Company capitalizes inventory costs after regulatory approval, when future commercialization is considered probable, and a future economic benefit is expected to be realized. Prior to regulatory approval, the Company records inventory costs as research and development expenses. As such, when regulatory approval is received, this may result in zero-cost inventory that does not have a carrying value. This inventory is available to the Company to utilize for commercial operations as well as ongoing research and development activities.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, generally five years. Repair and maintenance costs are charged to expense as incurred.

Intangible Assets

Intangible assets are measured at fair value as of the acquisition date or, in the case of capitalized milestone payments, the date they become due. The evaluation of intangible assets includes assessing the amortization period for which the asset is expected to contribute to the future cash flows of the Company. Intangible assets with finite useful lives are amortized over their estimated useful lives, primarily on a straight-line basis when the Company is unable to reliably estimate the pattern of cash flow.

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Leases

The Company determines the initial classification and measurement of its right-of-use (“ROU”) asset and lease liabilities at the lease commencement date and thereafter, if modified. The Company recognizes a ROU asset for its operating leases with lease terms greater than 12 months. The lease term includes any renewal options and termination options that the Company is reasonably assured to exercise. The lease liability is calculated by using the present value of all lease payments, with the present value determined by using the incremental borrowing rate for operating leases determined by using the incremental borrowing rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment as well as a review of peer companies. Variable charges for common area maintenance and other variable costs are recognized as expense as incurred. Rent expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in research and development and general and administrative expenses in the accompanying consolidated statements of operations and comprehensive (loss) income.

Impairment of Long-Lived Assets

Long-lived assets consist primarily of property and equipment, the ROU asset, and intangible assets. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future undiscounted net cash flows which the asset or asset group are expected to generate, including its eventual residual value. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds its fair value. The Company has not recognized any impairment losses from inception through December 31, 2025.

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The provisions of ASC 606 require the following steps to determine revenue recognition: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. At contract inception, the Company assesses the goods or services promised within each contract, determines whether each promised good or service is distinct and identifies those that are performance obligations. The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Product revenue, net

The Company’s product, neffy, was approved by the FDA in August 2024, and the Company began generating product revenue from sales of neffy in September 2024. The Company sells its product to its wholesale distributor and pharmacy customers in the United States. These customers subsequently resell the products to pharmacies and health care providers or dispense products directly to patients.

The Company uses a third-party logistics provider to support the warehousing, distribution, order processing, accounts receivable, and data management. From September 2024 to July 2025, the Company operated under a title model agreement (the “Title Agreement”), pursuant to which an affiliate of third-party logistics provider (the “Title Agent”) purchased and took title of the Company’s product, thenresold it to the Company’s customers. Beginning in August 2025, the Company discontinued the Title Agreement and now sells its productsdirectly to customers. In accordance with ASC 606, the Company recognizes revenue at a point in time when the customers obtain control of the Company’s products, typically upon delivery.

The Company also enters into consignment agreements with certain pharmacies, under which revenue is recognized when the product is sold to a patient and control transfers from the Company to the patient. Consignment agreements were not subject to the Title Agreement.

Product revenue is recorded at the net transaction price, which includes estimates for variable consideration such as distribution service fees, prompt pay discounts, product returns, chargebacks, rebates, co-payment assistance, and other incentives for certain indirect customers. The Company establishes reserves for these estimates based on amounts earned or expected to be claimed on related sales. Reserves are recorded as a reduction to accounts receivable if payable to a customer or as an accrued expense if payable to a third-party or related to product returns.

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The Company uses the expected value method to determine the appropriate amount of variable consideration, considering factors such as contractual and statutory requirements, known market events, industry trends and data, forecasted customer buying and payment patterns, and historical actual data. Estimates are reassessed each reporting period, and adjustments are recorded on a cumulative catch-up basis, which would affect product revenue and net (loss) income in the period of adjustment. Variable consideration is included in net product revenue only to the extent it is probable that a significant revenue reversal will not occur in a future period.

Distribution Service Fees. The Company pays distribution service fees to its wholesale distributors. These fees are a contractually fixed percentage of WAC and are calculated at the time of sale based on the purchased amount. These fees are recorded as other current liabilities on the accompanying consolidated balance sheets.

Commercial Pharmacy Discounts. The Company provides discounts to its pharmacy customers. These discounts are a contractually fixed percentage of WAC and are a direct reduction from the WAC price they are charged. They are calculated at the time of sale based on the amount purchased. These discounts are recorded as contra trade accounts receivable on the accompanying consolidated balance sheets.

Prompt Pay Discounts. The Company incentivizes on time invoice payments through prompt pay discounts. Prompt pay discounts are typically taken by customers, so an estimate of the discount is recorded at the time of sale based on the purchased amount. Prompt pay discount estimates are recorded as contra trade accounts receivable on the accompanying consolidated balance sheets.

Chargebacks. Certain government entities and covered entities (e.g. Veterans Administration, 340B covered entities) can purchase the product at a price discounted below WAC. The difference between the government or covered entity purchase price and WAC will be charged back to the Company. The Company estimates the amount of chargebacks based on the expected number of claims and the related costs associated with the revenue recognized for product that remains in the distribution channel and any chargeback amounts not invoiced to the Company at the end of each reporting period. Estimated chargebacks are recorded as contra trade accounts receivable on the accompanying consolidated balance sheets.

Rebates. The Company provides commercial rebates to pharmacy benefit managers and managed care organizations and is subject to mandatory discount obligations under the Medicare, Medicaid, and Tricare programs. The rebate amounts for these programs are determined by contractual arrangements or statutory requirements. Rebates are owed after the product has been dispensed to a patient and the Company has been invoiced. The Company estimates the amount of rebates based on the expected number of claims and the related costs associated with the revenue recognized for product that remains in the distribution channel and any rebate amounts for product that has been dispensed to a patient but not invoiced to the Company at the end of each reporting period. Rebate estimates are recorded as other current liabilities on the accompanying consolidated balance sheets.

Co-payment Program. The Company offers co-payment assistance programs to commercially insured patients whose insurance requires a co-payment to be made when filling their prescription. The Company estimates the amount of co-payment assistance based on the expected volume and the average buy down rate associated with the revenue recognized for products that remain in the distribution channel and any co-payment assistance amounts not invoiced to the Company at the end of each reporting period. Co-payment programs estimates are recorded as other current liabilities on the accompanying consolidated balance sheets.

Product Returns. Customers have the right to return damaged product, product that is within six months or less of the labeled expiration date, or product that is past the expiration date by no more than twelve months. neffy was commercially launched in September 2024 and due to the limited returns data, the Company uses professional judgment and industry data to estimate returns. As time passes and additional historical sales and returns data becomes available, the Company will update the estimated returns as needed. A reserve for potential product returns is recorded as other current liabilities on the accompanying consolidated balance sheets.

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Revenue under collaboration and supply agreements

The Company enters into collaboration agreements to license certain rights to neffy to third parties and supply neffy for distribution. At contract inception, the Company evaluates whether the collaboration agreement involves joint operating activities in which the parties are active participants and share significant risks and rewards in accordance with ASC Topic 808, Collaborative Agreements (“ASC 808”).Arrangements that meet these criteria are accounted for as collaborative arrangements under ASC 808. This assessment is updated over the life of the arrangement as roles and responsibilities change.

For collaboration agreements within the scope of ASC 808 that include multiple components, the Company determines which components are accounted for under ASC 808 and which components represent vendor-customer relationships accounted for under ASC 606. For components accounted for under ASC 808, the Company applies a consistent recognition approach based on applicable accounting guidance or a reasonable policy election. Amounts due from or payable to collaboration partners are presented in the income statement based on the nature of the underlying activity. When the Company is the principal in sales to third parties, revenues, cost of goods sold, and operating expenses are recorded on a gross basis. When the Company is not the principal, its share of results is recorded on a net basis as collaboration revenue or expense.

If the Company concludes that some or all components of the agreement are distinct and represent a transactions with a customer, the Company accounts for those elements of the arrangement in accordance with ASC 606 by applying the five-step model described above.

The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, upfront license fees; clinical, regulatory, and/or commercial milestone payments; payment for clinical and commercial supply; and royalties or a transfer price on the net sales of licensed products.

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Licenses of Intellectual Property. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, revenue is recognized from non-refundable, upfront payments allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. If the license is subject to repurchase by the Company, at its option, control of the license is not considered transferred to the customer, and in such case, the Company would account for the proceeds allocated to such license as either a financing obligation or a lease in accordance with ASC 606. Future amounts received related to the license which is subject to the Company’s repurchase, such as royalties or milestone payments, would be accounted for as additional financing proceeds and would increase the financing obligation in the accompanying consolidated balance sheet. The Company would record such financing obligation as revenue when the right to repurchase has lapsed or was exercised.

If the license is not a distinct performance obligation, the Company evaluates the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Milestone Payments. At the inception of each arrangement that includes clinical, regulatory or commercial milestone payments, the Company evaluates whether achieving the milestones is considered probable and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the value of the associated milestone is included in the transaction price. In making the assessment of the constraint, the Company considers several factors, such as the stage of product development, the risks associated with the remaining activities required to achieve the milestones, as well as whether the achievement of the milestone is outside the control of the Company. Milestone payments that are not within the Company’s control, such as approvals from regulators or where attainment of the specified event is dependent on the development activities of a third party, are not considered probable of being achieved until those approvals are received or the specified event occurs. Revenue is recognized when the underlying performance obligation has been met.

Transaction Price Allocation. At the inception of each arrangement, the Company identifies its distinct performance obligations and allocates the transaction price to the performance obligations based upon their relative standalone selling prices. Standalone selling price is the price at which an entity would sell a promised good or service separately to a customer. The best evidence of standalone selling price is an observable price of a good or service when sold separately by an entity in similar circumstances to similar customers. Since the Company typically does not have such evidence, the Company estimates standalone selling price so that the amount that is allocated to each performance obligation equals the amount that the Company expects to receive for transferring the promised goods or services. The methods that the Company uses to make such estimates include (1) the adjusted market assessment approach, under which the Company forecasts product sales in the appropriate market, considers probability of commercialization success, and estimates discount rates; and (2) the expected cost of satisfying the performance obligations inclusive of a reasonable margin, also known as the expected cost plus margin approach.

Research and Development Revenues. For arrangements that contain research and development commitments, any arrangement consideration allocated to the research and development work is recognized as the underlying services are performed over the research and development term, if the criteria for over time recognition are met. If the over time recognition criteria are not met, research and development performance obligations are recognized at a point-in-time, when the research and development work is completed.

Clinical and Commercial Supply. Arrangements that include a promise for the future supply of drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered customer options. The Company assesses if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations. Revenue from product sales to the Company’s collaboration partners is recognized at the point-in-time that the collaboration partner obtains control, which is typically based upon the terms of delivery of the product.

Royalty/Transfer Price Revenues. For arrangements that include sales-based royalties or transfer price, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

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Cost of Goods Sold

Cost of goods sold primarily consists of direct and indirect costs related to the manufacture of neffy for commercial sale, including salaries and related expenses for personnel, stock-based compensation, third-party manufacturing costs, raw material and component costs, packaging services, freight, storage costs, distribution fees, amortization of capitalized in-licensed costs, supply agreement fees, and royalties on product sales. Prior to the FDA approval of neffy in August 2024, costs incurred for the manufacture of neffy were recorded as research and development expenses, which resulted in zero-cost inventory. As a result, the cost of goods sold related to neffy initially reflects a lower average per unit cost of materials, as previously expensed zero-cost inventory is utilized for commercial production and sold to customers.

Research and Development Costs

Research and development costs are expensed in the period incurred. Research and development costs primarily consist of salaries and related expenses for personnel, stock-based compensation expense, external research and development costs incurred under agreements with contract research organizations, investigative sites and consultants to conduct clinical studies, costs related to compliance with regulatory requirements, costs related to manufacturing the Company’s product candidates (including neffy prior to FDA approval in August 2024) for clinical trials, and other allocated expenses.

Payments for research and development activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and payments made in advance of performance are reflected in the accompanying consolidated balance sheets as prepaid expenses. The Company records accruals for estimated costs incurred for ongoing research and development activities. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the services, including the phase or completion of events, invoices received and contracted costs. The Company uses judgments and estimates to determine the prepaid or accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates.

Selling, General and Administrative Costs

Selling, general and administrative costs are expensed in the period incurred. Selling, general and administrative costs primarily consist of marketing-related expenses, salaries and related expenses for personnel, including meals and travel-related expenses incurred by the sales team, stock-based compensation, legal fees incurred relating to corporate and patent matters, professional fees incurred for accounting, auditing, tax, and other consulting services, and insurance costs.

Advertising

Costs for producing advertising are expensed when incurred. Costs for communicating advertising, such as search engine marketing, banner advertisements, social media advertisements, and print advertisements, are recorded as prepaid expenses and then expensed the first time the advertising takes place. For the years ended December 31, 2025 and 2024, advertising costs were $99.8 million and $12.5 million, respectively.

Patent Costs

Costs related to filing and pursuing patent applications are recorded as general and administrative expenses in the statements of operations and expensed as incurred since recoverability of such expenditures is uncertain.

License Fees

Costs incurred to acquire technology licenses and milestone payments made under existing agreements are expensed prior to FDA approval and capitalized after FDA approval when technological feasibility has been achieved, based on management’s assessment of the ultimate recoverability and the potential for alternative future use.

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Stock-Based Compensation

Stock-based compensation expense represents the cost of the grant date fair value of stock option grants recognized over the requisite service period of the awards (usually the vesting period) on a straight-line basis. The Company recognizes expense for awards subject to performance-based milestones over the remaining service period when management determines that achievement of the milestone is probable. Management evaluates when the achievement of a performance-based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and recognizes forfeitures as they occur. In the event that stock-based awards are granted in contemplation of or shortly before a planned release of material non-public information, and such information is expected to result in a material increase in the share price of the Company’s common stock, the Company may consider whether an adjustment to the observable market price is required when estimating the grant date fair value.

Income Taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the statements of operations in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

As of December 31, 2025 and 2024, the Company maintained valuation allowances against its deferred tax assets as the Company concluded it had not met the “more likely than not” to be realized threshold. Changes in the valuation allowance when they are recognized in the provision for income taxes may result in a change in the estimated annual effective tax rate.

The Company records uncertain tax positions on the basis of a two-step process whereby (1) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. Any accrued interest and penalties are included within the related tax liability. As of December 31, 2025, the Company had no accrued interest or penalties.

Comprehensive (Loss) Income

Comprehensive (loss) income is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company’s comprehensive (loss) income typically consists of the change in unrealized gains and losses on available-for-sale securities.

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Segment Reporting

Operating segments are components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker for purposes of making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as one operating segment.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)–Improvements to Income Tax Disclosures (“ASU 2023-09”). The new standard requires a company to expand its existing income tax disclosures, specifically related to the rate reconciliation and income taxes paid. The Company adopted ASU 2023-09 on a prospective basis effective January 1, 2025. The adoption of ASU 2023-09 resulted in enhanced disclosures as included in Note 14 – Income Taxes.

Recently Issued Accounting Pronouncements — Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted as of the specified effective date. The Company believes the impact of recently issued standards, other than those noted below, and any issued but not yet effective standards will not have a material impact on our financial statements upon adoption.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). The amendments in this update require disclosure, in the notes to the financial statements, of specific expense categories present within expense captions presented on the face of the income statement within continuing operations of public business entities. The amendments in this update are effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any and all prior periods presented in the financial statements. The impact of adoption of this ASU on the Company’s disclosures is currently being evaluated.

3. Net (Loss) Income Per Share

Basic net (loss) income per share attributable to common stockholders is calculated by dividing the net (loss) income attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period, without consideration of potentially dilutive securities. Diluted net (loss) income per share attributable to common stockholders is the same as basic net (loss) income per share attributable to common stockholders since the effect of potentially dilutive securities is anti-dilutive given the net (loss) income of the Company. For purposes of this calculation, stock options, warrants, and unvested restricted stock units, are considered to be common stock equivalents but are not included in the calculations of diluted net (loss) income per share for the periods presented as their effect would be antidilutive.

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The following table provides the calculation of basic and diluted net (loss) income per share (in thousands, except share and per share information):

Years Ended December 31,

Net (loss) income per share, basic:

Net (loss) income attributable to common stockholders $ (171,298 ) $ 7,998

Shares used in computation:

Net (loss) income per share, basic $ (1.74 ) $ 0.08

Net (loss) income per share, diluted:

Net (loss) income attributable to common stockholders $ (171,298 ) $ 7,998

Shares used in computation:

Weighted-average effect of potentially dilutive securities:

Shares to be purchased under Employee Stock Purchase Plan — 47,237

Restricted stock units — 1,882

Net (loss) income per share, diluted $ (1.74 ) $ 0.08

The following securities are excluded from the calculation of weighted-average dilutive common shares because their inclusion would have been anti-dilutive:

As of December 31,

Warrants to purchase common stock 45,456 —

Restricted stock units outstanding 1,382 —

4. Collaboration, Out-Licensing and Related Agreements

Alfresa Agreement

In March 2020, the Company signed a Letter of Intent (“LOI”) with Alfresa Pharma Corporation (“Alfresa”) for the right to negotiate a definitive agreement for the exclusive license and sublicensable right to develop, register, import, manufacture and commercialize neffy in Japan in exchange for an upfront payment of $2.0 million. In April 2020, the Company entered into a collaboration and license agreement (the “Alfresa Agreement”) for the rights pursuant to the LOI. Under the Alfresa Agreement, the Company delivered a license to neffy technology, completed a required clinical study, and remains obligated to use commercially reasonable efforts to develop and commercialize neffy in Japan. The parties agreed to share the cost of any additional clinical studies required for approval of neffy in Japan. Alfresa is solely responsible for regulatory and commercialization activities and may elect to assume responsibility for manufacturing and supplying drug product for commercial use in Japan. Either party may terminate the agreement for certain breaches of the agreement. Unless terminated earlier by either or both parties, the term of the Alfresa Agreement will continue until the later of (i) expiration of the last-to-expire patent in Japan; or (ii) 10 years after the commercial sale of neffy in Japan.

In December 2025, in connection with the Alfresa Agreement, the Company also entered into a commercial supply agreement (the “Alfresa Supply Agreement”) with Alfresa, under which ARS will supply Alfresa’s requirements (and Alfresa will purchase from ARS its requirements) for a transfer price in the low-double-digit percentage on net sales of neffy in Japan. The Alfresa Supply Agreement is coterminous with the Alfresa Agreement. Either the Company or Alfresa may terminate the Alfresa Supply Agreement in the event of an uncured material breach of the other party. Pursuant to the Alfresa Agreement, at any time, Alfresa may elect to manufacture its own supply of drug product. In the event Alfresa elects to do so, Alfresa is obligated to pay the Company a royalty payment on the net sales of drug product in the Alfresa Territory in an amount equal to monetary value the Company would receive by supplying drug product to Alfresa at the transfer price.

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At inception of the Alfresa Agreement, the Company identified the following performance obligations: (i) the license for neffy;and (ii) research and development services, both of which have been satisfied. The initial transaction price was $7.0 million, which included the upfront payment of $2.0 million and a regulatory milestone of $5.0 million that was deemed not probable of significant reversal at the inception of the Alfresa Agreement. Variable consideration related to future milestone payments was fully constrained at inception and excluded from the transaction price until a significant revenue reversal is no longer probable. The transaction price was allocated to performance obligations based on their estimated stand-alone selling prices.

As of December 31, 2025, the Company has earned an aggregate of $15.0 million for the upfront payment and achievement of regulatory and commercial milestones, and there are no remaining regulatory or commercial milestone payments under the Alfresa Agreement. The Company is also entitled to receive a transfer price in the low double-digit percentage on future net sales of neffy in Japan.

For the years ended December 31, 2025 and 2024, the Company earned milestone payments of $2.0 million and $6.0 million for the achievement of regulatory and commercial milestones, respectively, which were recognized as revenue under collaboration agreements in the accompanying consolidated statements of operations and comprehensive (loss) income.

Recordati Agreement

In September 2020, the Company entered into a License and Supply Agreement (the “Recordati Agreement”) with Recordati Ireland, Ltd. (“Recordati”) for the exclusive license and sublicensable right to develop, import, manufacture or have manufactured commercial product, file and hold regulatory approvals and commercialize 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 Agreement, the Company received an upfront payment of $11.8 million and a regulatory milestone payment of $6.0 million in 2020.

In February 2023, the Company and Recordati entered into a termination agreement (the “Recordati Termination Agreement”), pursuant to which, among other things, the Company and Recordati agreed to terminate the Recordati Agreement. Pursuant to the Recordati Termination Agreement, the Company reacquired all of the Recordati Rights, paid Recordati a one-time upfront payment of €3.0 million ($3.3 million in U.S. dollars), and agreed to pay additional payments upon achievement of certain milestones including: (i) an EMA regulatory milestone payment of €2.0 million, (ii) a milestone payment of €5.0 million upon first commercial sale of neffy in the Recordati Territory, and (iii) royalty payments of up to €5.0 million in the aggregate from sales of neffy in the Recordati Territory (collectively, the “Recordati Rights”).

The Company determined that the Recordati Rights at the time of entering into the Recordati Termination Agreement had no alternative future use and therefore recorded the €3.0 million upfront payment to Recordati as an in-process research and development (“IPR&D”) expense presented within research and development expense. The Recordati Termination Agreement ended the Company’s performance obligations pursuant to the Recordati Agreement and consequently the existing contract liability of $3.1 million previously received from Recordati was recorded against IPR&D expense presented within research and development expense in the consolidated statements of operations for the year ended December 31, 2023. Accordingly, no revenue has been recognized subsequent to the Recordati Termination Agreement.

In June 2024, the EMA regulatory milestone was met and a €2.0 million ($2.1 million in U.S. dollars) expense was recorded in research and development expense in the accompanying consolidated statements of operations and comprehensive (loss) income. In June 2025, the first commercial sale milestone was met for the first commercial sale of neffy in the Recordati Territory. As a result, the Company capitalized the €5.0 million ($5.9 million in U.S. dollars) milestone for the first commercial sale of neffy in the Recordati Territory to intangible assets in the accompanying consolidated balance sheets. The intangible assets will be amortized through cost of goods sold in the accompanying consolidated statements of operations and comprehensive (loss) income on a straight-line basis over the estimated life of the intellectual property of 13.5 years.

For the year ended December 31, 2025, the Company recognized $0.5 million in royalty expense from the sale of neffy in the Recordati Territory, as cost of goods sold in the accompanying consolidated statements of operations and comprehensive (loss) income.

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Pediatrix Agreement

In March 2021, the Company entered into a collaboration and distribution agreement (the “Pediatrix Agreement”) with Pediatrix Therapeutics, Inc. (“Pediatrix”) for the exclusive license and sublicensable right to develop, import, manufacture or have manufactured commercial product, file and hold regulatory approvals and commercialize neffy in the People’s Republic of China, Taiwan, Macau, and Hong Kong (the “Pediatrix Territory”). Under the Pediatrix Agreement, Pediatrix is responsible, at its sole cost and expense, for all ongoing development work that is necessary for or otherwise supports regulatory approval in the Pediatrix Territory, including all clinical trials, and activities related to post-approval commitments and commercialization tests. In addition, Pediatrix is responsible for commercialization activities and may elect to assume responsibility for manufacturing and supplying drug product for commercial use. The Company is responsible for the manufacturing of product for clinical studies as well as commercial supply, all at a negotiated transfer price. Either party may terminate the Pediatrix Agreement for certain breaches of the agreement. Unless terminated earlier by either or both parties, the term of the agreement will continue until the later of (i) expiration of the last-to-expire patent in the Pediatrix Territory, (ii) the expiration of all regulatory exclusivities that cover neffy in the Pediatrix Territory, or (iii) 10 years after the first commercial sale of neffy in the Pediatrix Territory.

At inception of the Pediatrix Agreement, the Company identified the performance obligations as: (i) the delivery of the license for neffy in the Pediatrix Territory; and (ii) the manufacturing of products for clinical studies and commercial supply, both of which have been satisfied. The license was considered distinct from potential supply obligations, which are effectively options for Pediatrix to purchase future goods and do not provide a material right. The initial transaction price was $3.0 million, which includes the upfront payment received at the inception of the Pediatrix Agreement. Variable consideration related to future milestone payments was fully constrained at inception and excluded from the transaction price until a significant revenue reversal is no longer probable. The transaction price was allocated to performance obligations based on their estimated stand-alone selling prices, and variable consideration is reassessed each reporting period.

As of December 31, 2025, the Company has earned an aggregate of $7.0 million for the upfront payment and achievement of regulatory and commercial milestones and is eligible to receive up to $80.0 million in sales-based milestone payments. There are no regulatory or commercial milestones remaining under the Pediatrix Agreement. Since receiving regulatory approval in the Pediatrix Territory, the Company is also entitled to tiered royalties in the low double-digits on future net sales in the Pediatrix Territory and will receive a per unit supply price for commercial supply sold to Pediatrix.

For the year ended December 31, 2025, the Company earned a milestone payment of $4.0 million for the achievement of regulatory and commercial milestones, which was recognized as revenue under collaboration agreements in the accompanying consolidated statements of operations and comprehensive (loss) income.

Seqirus Agreement

In March 2024, the Company entered into a license and distribution (the “Seqirus Agreement”) with Seqirus Pty Ltd. (“Seqirus”), which was amended in December 2025, for the exclusive license to commercialize neffy in Australia and New Zealand (the “Seqirus Territory”). Under the Seqirus Agreement, the Company is responsible for the transfer of know-how, which includes regulatory materials, regulatory data, and commercialization data, and also for the manufacturing of product for commercial supply which is available to Seqirus at a negotiated price. Seqirus is solely responsible for all regulatory and commercialization activities in the Seqirus Territory. Either party may terminate the Seqirus Agreement for certain breaches. Unless terminated earlier by either or both parties, the initial term of the Seqirus Agreement is 15 years from the first commercial sale of neffy in the Seqirus Territory. The Seqirus Agreement will automatically renew for two-year periods unless either party gives a notice to terminate at least 12 months prior to the end of the initial or any renewal term.

At inception of the Seqirus Agreement, the Company identified a single performance obligation: the delivery of the license for neffy in the Seqirus Territory in combination with the transfer of know-how, which has been satisfied. The license and know-how were considered distinct from potential supply obligations, which are effectively options for Seqirus to purchase commercial supply and do not represent a material right. The initial transaction price was $0.5 million, which includes the upfront payment received at the inception of the Seqirus Agreement. Variable consideration related to future milestone payments was fully constrained at inception and excluded from the transaction price until a significant revenue reversal is no longer probable. The transaction price was allocated to performance obligations based on their estimated stand-alone selling prices, and variable consideration is reassessed each reporting period.

As of December 31, 2025, the Company has earned an aggregate of $2.6 million for the upfront payment and achievement of regulatory and commercial milestones and is eligible to receive up to $2.3 million in remaining regulatory and commercial milestones. Since receiving approval in the Seqirus Territory, the Company is also entitled to receive a per unit supply price for commercial supply sold to Seqirus.

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For the years ended December 31, 2025 and 2024, the Company earned milestone payments of $0.6 million and $2.0 million for the achievement of regulatory and commercial milestones, respectively, which was recognized as revenue under collaboration agreements in the accompanying consolidated statements of operations and comprehensive (loss) income.

ALK Collaboration Agreement

In November 2024, the Company entered into a collaboration, license and distribution agreement (the “ALK Collaboration Agreement”) with ALK-Abelló A/S (“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 trade name for neffy in the European Union) (epinephrine nasal spray) (“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, the Company is obligated to transfer to ALK the existing marketing authorizations for the Products in the ALK Territory. The Company is 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 the 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 a $145.0 million upfront payment to the Company in November 2024, and the Company earned $5.0 million for the first commercial sale of EURneffy in the ALK Territory in June 2025. The Company is eligible to receive regulatory and commercialization milestones of up to $15.0 million and sales-based milestones of up to $300.0 million, provided that $55.0 million of such sales-based milestones are contingent upon the Company obtaining regulatory approval for the Product in Canada by a specified time. The Company is 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 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 the Company 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 the Company 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. The Company may terminate the ALK Collaboration Agreement in the event ALK makes certain challenges to certain of the Company’s patents. Prior to a change of control and outside of a set period of time after which the Company commences change of control negotiations, the Company 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 (the “Repurchase Option”). The Company may also terminate the ALK Collaboration Agreement if ALK commercializes a non-injectable epinephrine product or manufactures such a product in the United States.

In connection with the ALK Collaboration Agreement, the Company and ALK also entered into a commercial supply agreement (the “ALK Supply Agreement”) in November 2024, under which the Company will supply ALK’s requirements (and ALK will purchase from the Company 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. The contract term for the ALK Supply Agreement is coterminous with the ALK Collaboration Agreement. Either the Company or ALK may terminate the ALK Supply Agreement in the event of an uncured material breach of the other party.

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Accounting Assessment

The Company concluded that the ALK Collaboration Agreement and the ALK Supply Agreement qualify as a contract with a customer under ASC 606 as one combined arrangement. The Company identified the following performance obligations: (i) exclusive commercialization license in the European Economic Area (the “EEA License”); (ii) exclusive commercialization license in the rest of the ALK Territory (the “ROW License”) and; (iii) five separate development and regulatory services performance obligations. The Company also evaluated the (i) promise to add a New Product and new indications to the ALK Collaboration Agreement, and (ii) the promises under the ALK Supply Agreement, and concluded that these promises did not meet the definition of a performance obligation nor did these promises convey a material right to ALK.

The Company determined that the non-refundable upfront payment of $145.0 million is the estimated transaction price at contract inception. The outstanding regulatory milestone payments (totaling $15.0 million) were fully constrained at contract inception and as of December 31, 2025 as a result of the uncertainty of whether any of the milestones will be achieved. In making the assessment of the constraint utilizing the most likely amount method, the Company considered the stage of development, and the risks associated with the remaining development required to achieve the milestones, as well as whether the achievement of the milestone is outside the control of the Company or ALK. The Company determined that the commercial milestone ($5.0 million) and the sales-based milestones and royalties will be recognized on the later of when the related sales occur or when control of the associated license has been transferred, as the Company determined that such sales-based consideration relates predominantly to the licenses granted to ALK. The Company reevaluates the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur and will include regulatory milestones in the transaction price if it is probable that a significant revenue reversal will not occur in future periods.

At contract inception, the Company determined the estimated standalone selling prices for each performance obligation in order to allocate the transaction price among the performance obligations. The standalone selling price for the licenses was estimated using the adjusted market assessment approach. Under this method, the Company forecasted future cash flows expected in the ALK Territory, the probability of commercialization success, and a market discount rate. To estimate the standalone selling prices of the development and regulatory services, the Company forecasted its expected costs of satisfying each performance obligation inclusive of an appropriate margin for that service.

The Company allocated the total transaction price to each performance obligation on a relative standalone selling price basis and determined whether revenue should be recognized at a point in time or over time. The Company allocated $69.4 million to the EEA License performance obligation; $73.1 million to the ROW License performance obligation; and $2.6 million to the development and regulatory services performance obligations.

In November 2024, the ROW License was transferred to ALK for immediate use and benefit from intellectual property, and the related revenue was recognized at a point in time. Accordingly, the Company recognized revenue under collaboration agreements of $73.1 million in the accompanying consolidated statements of operations and comprehensive (loss) income during the year ended December 31, 2024. In June 2025, ALK completed the first commercial sale of EURneffy in the ALK Territory and earned a $5.0 million commercial milestone, of which $2.6 million was allocated to the ROW License and recognized as revenue under collaboration agreements in the accompanying consolidated statements of operations and comprehensive (loss) income. For the year ended December 31, 2025, the Company recognized $0.2 million of sales-based royalties for product sales in the ALK Territory, excluding the EEA Territory, as revenue under collaboration agreements in the accompanying consolidated statements of operations and comprehensive (loss) income.

As of December 31, 2025, the Company has earned an aggregate of $150.0 million in milestone payments for the upfront payment and achievement of regulatory and commercial milestones, of which $72.1 million has been allocated to the EEA License and is accounted for as a financing liability. The Company is eligible to receive remaining regulatory milestone payments of up to $15.0 million and sales-based milestone payments of up to $300.0 million, of which $55.0 million in sales-based milestones are contingent upon regulatory approval of the Product in Canada by a specified date, as well as tiered royalties on net sales in the mid- to high-teens, subject to customary reductions and offsets. Royalties are payable on a Product-by-Product and country-by-country basis until the latest of: (i) the expiration of the licensed patents covering such Product in such country; (ii) 15 years from the first commercial sale of such Product in such country; or (iii) expiration of regulatory exclusivity for such Product in such country. The Company is also eligible to receive a per unit supply price for commercial supply sold to ALK under the ALK Supply Agreement.

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Contract Liability

The development and regulatory services performance obligations under the ALK Collaboration Agreement each represent a separate performance obligation. The development and regulatory services, which are transferred to the customer over time, were provided to ALK beginning at the inception of the ALK Collaboration Agreement and are expected to continue through 2028. Development and regulatory service performance obligations were initially recorded as contract liabilities, and revenue earned under these performance obligations is recognized as services are performed based on the costs incurred through the end of each reporting period as a percentage of the estimated total costs to be incurred for these performance obligations. For the year ended December 31, 2025, the Company recognized $0.3 million of revenue related to the development and regulatory services performance obligations, which is recorded as revenue under collaboration agreements in the accompanying consolidated statements of operations and comprehensive (loss) income.

A reconciliation of the contract liability from the ALK Collaboration Agreement is as follows (in thousands):

Revenue recognized under the ALK Collaboration Agreement (350 )

Financing Liability

As discussed above, the Company retains a substantive Repurchase Option for the EEA License, which prevents control from transferring to ALK under ASC 606. As a result, the consideration allocated to the EEA License is accounted for as a financing liability because the repurchase price exceeds the original selling price. Accordingly, in November 2024, the $69.4 million allocated to the EEA License was recorded as a financing liability and will remain outstanding until the Repurchase Option lapses or is exercised. Commercial and sales-based milestones allocated to the EEA License are recognized as increases to the financing liability when earned.

A reconciliation of the Financing Liability from the ALK Collaboration Agreement is as follows (in thousands):

Commercial milestone allocated to the EEA License 2,435

Sales-based royalties earned under the EEA License 322

ALK Co-Promotion Agreement

In May 2025, the Company and ALK-Abelló, Inc. (“ALK U.S.”, an affiliate of ALK) entered into a co-promotion agreement, which was subsequently amended in October 2025 and March 2026 (the “ALK Co-Promotion Agreement”), to co-promote neffy to up to 9,000 specified pediatricians and other prescribers in the U.S. Accordingly, the Company granted ALK U.S. a non-exclusive, royalty-free license to use the neffy trademarks and copyrights and the ARS house marks in the U.S. solely in connection with promoting neffy pursuant 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.

The Company is the principal of all sales transactions of neffy in the U.S. and, subject to the terms of the ALK Co-Promotion Agreement, continues to have sole responsibility for all U.S. commercialization activities, including marketing, medical affairs, market access, production, distribution, pharmacovigilance, quality and safety.

The Company will pay ALK U.S. a base fee to compensate ALK U.S. for its promotion activities. Payments to ALK U.S. for the services performed during the first year of the arrangement will be deferred and paid in the second year of the arrangement. In addition to the base fee, ALK U.S. will be eligible to receive performance-based bonus payments from the Company starting in the second year of the arrangement equal to 30% of the portion of neffy net 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 arrangement.

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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. The Company 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, the Company may terminate the ALK Co-Promotion Agreement if minimum detail requirements are not met for a consecutive three-month period. After the first year, the Company 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 the Company may terminate the agreement in the event ALK U.S. restructures its sales force.

Upon termination of the ALK Co-Promotion Agreement by the Company for convenience, so long as ALK U.S. has met specified performance thresholds during the term, the Company is obligated to pay ALK U.S. a specified mid-to-low double-digit percentage of the portion of neffy net 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 the Company in connection with a change of control of the Company, the Company is 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.

The Company evaluated the terms of the ALK Co-Promotion Agreement and concluded it represents a vendor arrangement with ALK U.S. As a result, during the year ended December 31, 2025, the Company recognized $6.6 million in ALK-related selling, general, and administrative expense in the accompanying consolidated statements of operations and comprehensive (loss) income, and the corresponding liability is included in accounts payable and accrued liabilities and other accrued liabilities in the accompanying consolidated balance sheet as of December 31, 2025.

5. Inventories

Inventories consisted of the following (in thousands):

December 31,

Reported as:

Prior to FDA approval in August 2024, costs incurred for the manufacturing of neffy were recorded as research and development expenses, which upon approval resulted in zero-cost inventory. The Company held $6.7 million and $11.7 million in zero-cost inventory as of December 31, 2025 and 2024, respectively, none of which was determined to be obsolete as of each period end. The Company expects to fully utilize its zero-cost inventory in future periods.

6. Intangible Assets

Intangible assets, net, all of which are finite-lived, consisted of the following (in thousands):

December 31,

Less accumulated amortization (908 ) (129 )

______________

(1) As described in Note 4 – Collaboration, Out-Licensing and Related Agreements and Note 11 – In-Licensing and Supply, capitalized milestone payments were recognized from the Recordati Termination Agreement and Aegis License Agreement, respectively.

The amortization expense for the years ended December 31, 2025 and 2024 was $0.8 million and $0.1 million, respectively.

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The weighted-average amortization period of intangible assets is 13.1 years. As of December 31, 2025, estimated future amortization expense for capitalized intangible assets for the next five years is as follows (in thousands):

Year Ended December 31, Amount

7. Fair Value Measurements

The Company categorizes its assets and liabilities measured at fair value in accordance with the authoritative accounting guidance that establishes a consistent framework for measuring fair value and expands disclosures for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

The following table identifies the Company’s assets that were measured at fair value on a recurring basis (in thousands):

Gross Gross Estimated

Amortized Unrealized Unrealized Fair

Level Cost Gains Losses Value

Cash and cash equivalents - Money market mutual funds 1 $ 6,506 $ — $ — $ 6,506

Cash and cash equivalents - U.S. Treasury securities 2 42,382 5 — 42,387

There were no transfers between the Level 1 and Level 2 categories or into or out of the Level 3 category during the periods presented. During the years ended December 31, 2025 and 2024, the Company purchased $242.0 million and $356.0 million in short-term investments, respectively, and there were $307.0 million and $258.0 million in maturities of short-term investments, respectively.

The Company’s short-term investments portfolio contains investments in U.S. Treasury securities that have an effective maturity date that is less than one year from the respective balance sheet date. The Company's money market mutual fund holdings are highly liquid and invest primarily in cash and U.S. Treasury securities.

There was $0.1 million in net unrealized losses and $0.2 million in net unrealized gains on available-for-sale securities for the years ended December 31, 2025 and 2024, respectively. Management determined that the gross unrealized losses on the Company’s available-for-sale securities as of December 31, 2025 were primarily attributable to current economic and market conditions and not credit risk. As of December 31, 2025 and 2024, no allowance for credit losses was recorded for available-for-sale securities. It is neither management’s intention to sell nor is it more likely than not that the Company will be required to sell any investments prior to recovery of its amortized cost basis, which is expected to be at maturity.

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Accrued interest receivable on the Company's available-for-sale securities was $1.0 million at both December 31, 2025 and 2024 and is included in prepaid expenses and other current assets in the accompanying consolidated balance sheets.

The Company’s Term Loan (as defined in Note 9 – Term Loans) are carried at historical cost, adjusted for the debt discount and debt issuance costs, and are not required to be carried at fair value. The fair value of the Term Loan approximates fair value due to the use of current market rates that are repriced frequently.

As of December 31, 2025 and 2024, the Company did not have any liabilities that were measured at fair value on a recurring basis.

8. Balance Sheet Details

Accounts payable and accrued liabilities consisted of the following (in thousands):

December 31,

Accrued marketing related expenses 6,880 1,855

Accrued cost of goods sold 3,165 617

9. Term Loans

On September 29, 2025 (the “Closing Date”), the Company and certain direct and indirect subsidiaries of the Company who may become a party thereto from time to time, as guarantors (the “Guarantors”), and ARS Pharmaceuticals Operations, Inc., as the borrower (the “Borrower” and, collectively with the Guarantors, the “Credit Parties”), entered into a credit agreement (the “Credit Agreement”) with RA Capital Agency Services, LLC (as the “Administrative Agent” and as the “Collateral Agent”), and affiliates of OMERS Administration Corporation and RA Capital Management, L.P., as lenders, and such other lenders who may become a party thereto from time to time (the “Lenders”), providing for an aggregate principal amount of up to $250.0 million of term loans from the Lenders to the Borrower (the “Term Loans”). The Term Loans will mature on September 29, 2030.

Pursuant to the terms of the Credit Agreement, the Term Loans may be advanced in four tranches. The first tranche (the “Term A Loan”) was advanced in the principal amount of $100.0 million on the Closing Date. The second tranche (the “Term B Loan”) in a principal amount of $25.0 million may be advanced at the Borrower’s election 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, subject to customary conditions. The third tranche (the “Term C Loan” and collectively with the Term B Loan, the “Delayed Draw Term Loans”) in a principal amount of $25.0 million may be advanced at the Borrower’s 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 Company achieving trailing 12-month (“TTM”) net revenues for neffy of at least $100.0 million and customary conditions. The fourth tranche (the “Term D Loan”) of up to $100.0 million is uncommitted and may be advanced at the Borrower’s election, subject to the consent of all of the Term D Lenders and customary conditions. The total outstanding principal is due at maturity on September 29, 2030. The Term Loans require interest-only payments and do not require scheduled principal payments prior to maturity. The Borrower may prepay principal on the Term Loans, in whole or in part, subject to a prepayment premium and an exit fee.

The Company received $100.0 million in gross cash proceeds from Term A Loan on the Closing Date, less the upfront fees taken in the form of an original issue discount and third-party fees totaling $3.8 million. The debt discount and the debt issuance costs are recorded net of the Term A Loan balance and are amortized to interest expense over the term of the debt using the effective interest rate method.

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The Term Loans will initially bear interest at a per annum rate of 5.50% plus the greater of (i) the three-month forward-looking term SOFR or (ii) 3.00%, which interest rate may be reduced by 25 to 50 basis points based on achieving certain TTM net revenue milestones. The Credit Agreement provides for interest-only payments on a quarterly basis until maturity. At Borrower’s election and subject to certain conditions, 100% of accrued interest in the first two years, and 50% of accrued interest in the last three years, may be paid-in-kind, in which case the applicable interest rate for the Term Loans shall increase by 1.00% per annum for the portion of such Term Loans that is paid-in-kind. The weighted average interest rate for the year ended December 31, 2025 was 9.49% per annum.

The obligations of the Borrower under the Credit Agreement are guaranteed on a full and unconditional basis by the Company and the Guarantors and are secured by substantially all of the respective Credit Parties’ tangible and intangible assets and property, including intellectual property, subject to certain exceptions.

The Credit Agreement contains customary representations and warranties, covenants and events of default, including a requirement for the Borrower to maintain at all times, a minimum specified amount of unrestricted cash in deposit accounts. The Credit Agreement also includes customary events of default, including, among others, payment defaults, material misrepresentations, breaches of covenants following any applicable cure period, cross defaults with certain other indebtedness or material agreements, bankruptcy and insolvency events, judgment defaults, the occurrence of certain events that could reasonably be expected to have a “material adverse effect,” and the occurrence of a change in control (as defined in the Credit Agreement). The occurrence of an event of default could result in the acceleration of the Company’s obligations under the Credit Agreement and the exercise by the Administrative Agent of other rights and remedies provided for under the Credit Agreement.

The Administrative Agent and Collateral Agent, as well as a Lender, are affiliates of RA Capital Management, L.P. (“RA Capital”). Affiliates of RA Capital collectively hold in excess of 10% of the Company’s outstanding common stock and are currently the Company’s largest stockholder. One of the Company’s board members is a controlling person of RA Capital’s general partner. The Lender affiliated with RA Capital holds a portion of Term Loans in the principal amount of $5.0 million.

The following table summarizes the composition of the Term Loans as reflected on the accompanying consolidated balance sheet (in thousands):

Unamortized debt discount and debt issuance costs (3,626 )

10. Commitments and Contingencies

Contingencies

From time to time, the Company may be involved in various legal proceedings and subject to claims that arise in the ordinary course of business.

On July 24, 2023, Aera A/S, an IP consultancy firm in Denmark representing an unidentified opponent, filed a notice of opposition with the European Patent Office (the “EPO”) in respect of EP 3678649 (the “EP ‘649 Patent”), which is a patent directed to a nasal spray formulation of epinephrine, and uses thereof. Oral proceedings took place on October 7, 2025, and the Opposition Division (the “OD”) of the EPO upheld the validity of all claims in the EP ‘649 Patent. The OD issued a written decision on November 4, 2025. The opponent filed a notice of appeal on December 17, 2025. The deadline to file a grounds of appeal is March 4, 2026.

On March 25, 2025, AptarGroup, Inc. (“AptarGroup”) and Aptar France SAS (collectively, “Aptar”) filed a suit against ARS Pharmaceuticals, Inc. and ARS Pharmaceuticals Operations, Inc. in the United States District Court for the Southern District of New York. Aptar alleges the Company violated the Defend Trade Secrets Act (18 USC § 1836), misappropriated trade secrets under New York state law, and committed various breaches of contract. The complaint was served to the Company, and the Company filed a motion to dismiss on June 12, 2025. Aptar subsequently filed opposition to the motion to dismiss on July 28, 2025. The Company intends to vigorously defend itself in this matter. On September 29, 2025, the Company filed a lawsuit against AptarGroup in the U.S. District Court for the Southern District of California, alleging that AptarGroup violated federal antitrust law in connection with its sale of certain constituent parts of neffy. On December 16, 2025, Aptar moved to dismiss or in the alternative transfer ARS’s lawsuit to the Southern District of New York. On January 27, 2026, ARS filed an opposition to Aptar’s motion to dismiss, and Aptar filed a reply brief on February 27, 2026.

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On August 29, 2025, the Company filed a lawsuit against Lupin, Inc., Lupin Ltd., and Lupin Pharmaceuticals, Inc. (collectively, “Lupin”) in the United States District Court for the District of New Jersey, alleging infringement of U.S. Patent Nos.: 10,576,156, 10,682,414, 11,173,209, 11,191,838, 11,717,571, 11,744,895, 11,918,655, and 12,324,838 and seeking a permanent injunction preventing market entry of a generic product from Lupin prior to the expiry of such patents. The lawsuit follows a Paragraph IV certification notice letter received from Lupin on August 13, 2025, advising the Company that Lupin submitted an Abbreviated New Drug Application to the FDA seeking approval to manufacture and sell a generic version of the Company’s product neffy© 2 mg (epinephrine nasal spray) prior to the expiration of the patents referenced above.

On February 26, 2026, the Company filed a lawsuit against Lupin, Inc., Lupin Ltd., and Lupin Pharmaceuticals, Inc. (collectively, “Lupin”) in the United States District Court for the District of New Jersey, alleging infringement of U.S. Patent Nos.: 10,576,156, 10,682,414, 11,173,209, 11,191,838, 11,717,571, 11,744,895, 11,918,655, and 12,324,838 and seeking a permanent injunction preventing market entry of a generic product from Lupin prior to the expiry of such patents. The lawsuit follows a Paragraph IV certification notice letter received from Lupin on February 6, 2026, advising the Company that Lupin submitted an Abbreviated New Drug Application to the FDA seeking approval to manufacture and sell a generic version of the Company’s product neffy© 1 mg (epinephrine nasal spray) prior to the expiration of the patents referenced above.

Regardless of the outcome, involvement in legal proceedings may have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors. The Company cannot predict the outcome of these suits, and failure by the Company to obtain favorable resolutions could have a material adverse effect on its business, results of operations, and financial condition. The Company’s chances of success on the merits of these suits are still uncertain and any possible loss or range of loss cannot be reasonably estimated and as such the Company has not recorded a liability as of December 31, 2025.

Except as described above, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or other body pending or, to the knowledge of the Company’s executive officers, threatened against or affecting the Company, the Company’s common stock, any of its subsidiaries or its subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Unconditional Purchase Obligations and Commitments

Unconditional purchase obligations and commitments are defined as agreements to purchase goods or services that are enforceable and legally binding (non-cancelable, or cancelable only in certain circumstances). In the normal course of business, the Company enters into arrangements with suppliers, manufacturers, and various other companies that supply goods or services. These arrangements can include unconditional purchase obligations and commitments. Unconditional purchase obligations and commitments are satisfied as services are performed or upon receipt of the related goods.

The total remaining unconditional purchase obligations related to the supply of raw materials is $55.3 million as of December 31, 2025. Purchase obligations by year are as follows: 2026 ($9.1 million), 2027 ($11.8 million), 2028 ($13.8 million), and $2.9 million per year thereafter through 2035. During the years ended December 31, 2025 and 2024, the Company made $8.0 million and $0.2 million in payments under these agreements, respectively.

The total remaining commitments related to the ALK Co-Promotion Agreement is $20.2 million as of December 31, 2025. Commitments by year are as follows: 2026 ($8.3 million), 2027 ($5.2 million), 2028 ($4.7 million), and 2029 ($2.0 million). No payments were made under this agreement during the years ended December 31, 2025 and 2024.

The total remaining commitment related to a corporate sponsorship agreement with Food Allergy Research and Education, Inc. is $6.0 million as of December 31, 2025. Commitments by year are as follows: 2026 ($5.0 million) and 2027 ($1.0 million). During the years ended December 31, 2025 and 2024, the Company made $6.0 million and $2.0 million in payments under this agreement, respectively.

The amounts above do not represent the entire anticipated expenditure in the future but represent only those items for which the Company is contractually obligated. For this reason, these amounts do not provide an indication of the Company’s expected future cash outflows related to purchases and commitments.

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11. In-Licensing and Supply

License Agreement with Aegis

In June 2018, the Company entered into a License Agreement (the “Aegis Agreement”) with Aegis Therapeutics, LLC (“Aegis”). Under the Aegis Agreement, the Company licensed the exclusive, worldwide, royalty-bearing, sublicensable, rights to certain proprietary Aegis technology, patent rights and know-how to develop and commercialize epinephrine products. The Company utilizes this technology in its sole commercial product, neffy. As consideration for the license, the Company paid an upfront license fee of $50,000, which was recorded in research and development expenses in the consolidated statements of operations for the year ended December 31, 2018.

The Company is required to make aggregate milestone payments of up to $20.0 million upon achievement of certain regulatory and commercial milestones. Regulatory milestone payments under the Aegis Agreement are recorded upon completion of the required events, as the triggering events are not considered to be probable until they are achieved. Prior to the FDA approval of neffy in August 2024, regulatory milestone payments were recorded as research and development expenses in the accompanying consolidated statements of operations. The Company made a $0.5 million milestone payment to Aegis upon the achievement of a regulatory milestone during 2019, and a $1.0 million milestone payment to Aegis upon the FDA’s acceptance of the Company’s new drug application submission for neffy, which occurred in the third quarter of 2022. As of December 31, 2025, the Company’s remaining milestone payment obligation is $9.0 million upon the achievement of certain annual net sales.

Since the FDA approval of neffy in August 2024, regulatory and commercial milestone payments have been capitalized as intangible assets in the accompanying consolidated balance sheets upon achievement. Amortization expense for capitalized milestone payments has been recognized as cost of goods sold in the accompanying consolidated statements of operations and comprehensive (loss) income on a straight-line basis over the estimated life of the intellectual property. In August and September 2024, milestone payments of $2.5 million and $5.0 million were recognized for achieving FDA approval of neffy and the first commercial sale of neffy, respectively. In September 2025, a milestone payment of $2.0 million milestone was recognized for achieving certain annual net product sales of neffy.

The Company also pays royalties based on a mid-single-digit percentage of net product sales on its or its sublicensees’ net sales of the Licensed Products (as defined in the Aegis Agreement) on a product-by-product basis. Royalties are recorded to cost of goods sold in the period the related product revenue is recognized.

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. The Company will make all future payments under the Aegis Agreement to an affiliate of OrbiMed. As described in Note 15 – Related Party Transactions, a member of the Company’s Board of Directors is a General Partner at OrbiMed.

The Company is responsible for reimbursing Aegis for certain patent costs incurred in connection with prosecuting and maintaining patent rights that are specific to epinephrine or epinephrine products. For the year ended December 31, 2025, the Company incurred legal patent expenses of $0.3 million under the Aegis Agreement. No legal patent expenses were incurred during the year ended December 31, 2024.

The Company may terminate the Aegis Agreement with 30 days written notice or either party may terminate the Aegis Agreement for certain breaches of the Aegis Agreement. Unless terminated earlier by either or both parties, the term of the Aegis Agreement will continue until the final expiration of all royalty obligations under the Aegis Agreement.

In conjunction with the Aegis Agreement, the Company also entered into a supply agreement (the “Aegis Supply Agreement”) with Aegis that allows the Company to purchase materials for preclinical, development and commercial use at predetermined prices. The Company may elect to have Aegis supply minimum quantities but there are no minimum or maximum purchase obligations under the Aegis Supply Agreement unless this election is made. The parties may terminate the Aegis Supply Agreement at any time by mutual agreement. In addition, the parties may terminate the Aegis Supply Agreement in the event of certain breaches of the Aegis Supply Agreement or upon the earlier of the expiration or termination of the Aegis Agreement or June 2028. The Aegis Supply Agreement term may be extended by mutual written agreement.

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