ARS Pharmaceuticals (SPRY) Risk Analysis

We have built a sales force and entered into the ALK Co-Promotion Agreement to commercialize neffy in the United States. In order to successfully commercialize neffy, we must, among other things, continue to build our sales, marketing, distribution, managerial and other non-technical capabilities. Factors that may hinder our ability to successfully market and commercially distribute our products include: - inability of sales personnel to obtain access to or educate adequate numbers of physicians on the benefits and safety of prescribing neffy;- inability to recruit, retain and effectively manage adequate numbers of effective sales personnel, including ALK U.S. sales personnel;- lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies that have more extensive product lines; and - unforeseen delays, costs and expenses associated with maintaining our sales organization and receiving the intended benefits to be provided by the ALK Co-Promotion Agreement. If we are unable to maintain an effective sales force, including through the ALK Co-Promotion Agreement, for neffy, we may not be able to generate significant product revenue in the United States. In addition, until the commencement of our commercial launch in September 2024, no one in our sales force had promoted neffy. We are required to expend significant time and resources to train our sales force, including through the ALK Co-Promotion Agreement, to be credible in educating physicians and pharmacists on the benefits of neffy. In addition, we must continually train our sales force, including through the ALK Co-Promotion Agreement, to ensure that a consistent and appropriate message about neffy is being delivered to our potential customers. We currently have limited resources compared to some of our competitors, and the continued development of our own commercial organization to market neffy and any additional products we may develop or acquire will be expensive and time-consuming. We also cannot be certain that we will be able to continue to successfully develop this capability. We have entered into the ALK Co-Promotion Agreement with ALK U.S. for the co-promotion of neffy to over 10,000 specified pediatricians and other prescribers in the U.S. The commercial success of neffy in the United States, will be influenced in part by the efforts and allocation of resources by ALK U.S. Currently, ALK U.S. has limited experience promoting neffy, and while we will continue to work with ALK U.S. to optimize their commercialization activities, we cannot guarantee that such efforts will be successful. We also depend on ALK U.S. to comply with all applicable laws relative to the promotion of neffy. Because we do not control the individual efforts of ALK U.S., they may take actions or fail to take actions in a manner that is inconsistent with our interests. As a result, we may not realize the full potential benefits from the ALK Co-Promotion Agreement, and such actions or inactions could result in more limited or reduced sales, reputational harm, or regulatory or other adverse legal implications, any of which could adversely affect our business and results of operations. We entered into exclusive licensing and collaboration agreements for the development and commercialization of neffy with Alfresa Pharma Corporation in Japan; Pediatrix Therapeutics, Inc. in China, Macau, Hong Kong and Taiwan; Seqirus in Australia and New Zealand; and ALK in all other unpartnered geographies outside the United States. If these third parties do not effectively engage or maintain their sales force for neffy if approved in the applicable territories, our ability to recognize milestone payments and royalties from the sales in such territories will be adversely affected. We will need to continue to expend significant time and resources to train our sales forces to be credible in discussing neffy with the specialists treating the patients indicated under the product's label. In addition, if we are unable to effectively train our sales force and equip them with effective marketing materials our ability to successfully commercialize neffy could be diminished, which would have a material adverse effect on our business, results of operations and financial condition.

Successful continued development and ultimate regulatory approval of our current or future intranasal epinephrine technology product candidates and neffy for additional indications is important to the future success of our business. The future regulatory and commercial success of our current or future intranasal epinephrine technology product candidates and neffy for additional indications is subject to a number of risks, including the following: - successful completion of nonclinical studies and clinical trials;- successful patient enrollment in clinical trials;- successful data from our nonclinical studies and clinical trials that support an acceptable risk-benefit profile of our intranasal epinephrine technology in the intended populations and indications;- satisfaction of applicable regulatory requirements, including to satisfy applicable rules governing combination products;- potential unforeseen safety issues or adverse side effects;- receipt and maintenance of marketing approvals from applicable regulatory authorities;- remaining in compliance with post-marketing regulatory requirements;- obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our intranasal epinephrine technology;- making arrangements or maintaining existing arrangements with third-party manufacturers, or establishing manufacturing capabilities, for both clinical and commercial supplies of our intranasal epinephrine technology;- entry into collaborations to further the development of neffy and our current and future intranasal epinephrine technology product candidates in other jurisdictions or for additional indications;- continuing to grow our sales, marketing and distribution capabilities and commercializing any approved products, whether alone or in collaboration with others;- successfully commercializing neffy and our current and future intranasal epinephrine technology product candidates;- acceptance by patients, the medical community and third-party payors of neffy and our current and future intranasal epinephrine technology product candidates;- obtaining and maintaining third-party coverage and adequate reimbursement;- products, following approval, maintaining a continued acceptable safety profile;- effectively competing with other therapies;- ensuring that we promote and distribute our products consistent with all applicable healthcare laws; and - enforcing and defending intellectual property rights and claims. Many of these risks are beyond our control, including the risks related to clinical development, the regulatory submission and review process, maintaining regulatory approval, potential threats to our intellectual property rights and the manufacturing, marketing and sales efforts of any current or future collaboration partner. If we or a collaboration partner are unable to develop, receive regulatory approval for our intranasal epinephrine technology for the additional indications we are developing it for, including urticaria, or if we experience delays as a result of any of these risks or otherwise, our ability to grow our business will be limited.

To obtain the requisite regulatory approvals to market and commercialize our current and future intranasal epinephrine technology product candidate, including for urticaria, we must demonstrate through extensive nonclinical studies and clinical trials that such product candidates are safe and effective for their intended use in humans. Nonclinical and clinical testing are expensive and can take many years to complete, and their outcome is inherently uncertain. Failure can occur at any time during the clinical trial process and our future clinical trial results may not be successful. We may experience delays in completing our clinical trials or nonclinical studies and initiating or completing additional studies or clinical trials. We may also experience numerous unforeseen events during our clinical trials that could delay or prevent our ability to receive marketing approval or commercialize for our current and future intranasal epinephrine technology product candidates, including for urticaria, including: - regulators, IRBs, ethics committees or other reviewing bodies may not authorize or issue positive opinions permitting us or our investigators to commence a clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site;- we may not reach an agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;- a delay in receiving study or clinical trial material from outside the United States;- the number of subjects or patients required for clinical trials of our current and future intranasal epinephrine technology product candidates, including for urticaria, may be larger than we anticipate, enrollment in these clinical trials may be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate;- our third-party contractors, including those manufacturing neffy or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;- we may have to amend clinical trial protocol(s) submitted to regulatory authorities or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to resubmit to an IRB or ethics committee and regulatory authorities for re-examination;- unforeseen safety events may occur during the course of a clinical trial and these events may result in the temporary suspension or termination of a clinical trial, or require urgent safety measures or restrictions to protect human subjects during the conduct of a clinical trial;- regulators, IRBs, ethics committees or other reviewing bodies may fail to approve or issue positive opinions or subsequently find fault with the manufacturing processes or facilities of third-party manufacturers with which we have entered and may enter into agreement for clinical and commercial supplies, or the supply or quality of our current and future intranasal epinephrine technology product candidates or other materials necessary to conduct clinical trials of our current and future intranasal epinephrine technology product candidates, including for urticaria, may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; and - the potential for policies or regulations of the FDA, the EMA, the EU or any other applicable foreign regulatory authorities to significantly change in a manner rendering our clinical data insufficient for approval. Regulators, IRBs and ethics committees of the institutions in which clinical trials are being conducted, or data monitoring committees may suspend or terminate a clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to appear to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. Negative or inconclusive impressions of the results from our earlier clinical trials of neffy for the emergency treatment of Type I allergic reactions or any other clinical trial or nonclinical studies in animals that we have conducted, could mandate repeated or additional nonclinical studies or clinical trials and could delay marketing approvals or result in changes to or delays in nonclinical studies or clinical trials of our current and future intranasal epinephrine technology product candidates, including for urticaria. While data from our studies of our intranasal epinephrine technology product candidates demonstrated nasally delivered epinephrine reached blood levels comparable to those of already approved epinephrine injectable products, we do not know whether any future clinical trials or studies that we may conduct will demonstrate adequate efficacy and safety necessary to result in obtaining regulatory approval to market our current and future intranasal epinephrine technology product candidates, including for urticaria. If later stage clinical trials do not produce favorable results that meet regulatory authority criteria, our ability to obtain regulatory approval for our current and future intranasal epinephrine technology product candidate, including for urticaria, may be adversely impacted. Our failure to successfully initiate and complete clinical trials of our current and future intranasal epinephrine technology product candidates, including for urticaria, and to demonstrate the efficacy and safety necessary to obtain regulatory approval to market our current and future intranasal epinephrine technology product candidates, including for urticaria, would significantly harm our business. Our product candidate development costs will also increase if we experience delays in testing or regulatory approvals and we may be required to obtain additional funds to complete clinical trials. We cannot assure you that our clinical trials will begin as planned or be completed on schedule, if at all, or that we will not need to restructure our trials after they have begun. Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our current and future intranasal epinephrine technology product candidates, including for urticaria, or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize such product candidates, which may harm our business and results of operations. In addition, many of the factors that cause, or lead to, delays of clinical trials may ultimately lead to the denial of regulatory approval of our current and future intranasal epinephrine technology product candidates, including urticaria.

Although neffy is approved for the emergency treatment of allergic reactions (anaphylaxis) in the United States, EU, United Kingdom, Japan and Australia (in the case of neffy 2 mg and 1 mg), and China and Canada (in the case of neffy 2 mg), as part of our longer-term growth strategy, we are evaluating and plan to continue to evaluate our intranasal epinephrine technology, including neffy, for use in other potential indications. We may evaluate opportunities to in-license or acquire other development programs, product candidates, as well as commercial products, including for the treatment of other indications like Type I allergic reactions. Other than our intranasal epinephrine technology, we do not currently have any other programs in development. Our development of our intranasal epinephrine technology for other indications remains at an early clinical development stage and will require significant further investment and regulatory approvals prior to commercialization in such indications. Because we have limited financial and managerial resources, we are focused on specific indications for our intranasal epinephrine technology. As a result, we may fail to generate additional clinical development opportunities for our intranasal epinephrine technology for a number of reasons, including, that our intranasal epinephrine technology may in certain indications, on further study, be shown to have harmful side effects, limited to no efficacy or other characteristics that suggest it is unlikely to receive marketing approval and achieve market acceptance in such additional indications. In addition, we may forgo or delay pursuit of opportunities with other indications that could have had greater commercial potential or likelihood of success. We may not be able to develop our intranasal epinephrine technology for any additional indications based on resource allocation decisions and other reasons. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development activities for specific indications may not yield any commercially viable products. Research activities to identify additional indications for our intranasal epinephrine technology require substantial technical, financial and human resources. Additionally, any future potential indications for our intranasal epinephrine technology will require the selection of suitable patients for our clinical trials and additional clinical development, management of clinical, preclinical and manufacturing activities, obtaining regulatory approval, obtaining manufacturing supply, continued build out of a commercial organization, substantial investment and significant marketing efforts before we generate any revenues from product sales in such additional indications, if approved. We are not permitted to market or promote any future indications before we receive regulatory approval from the FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approval. By such time, if ever, as we may receive necessary regulatory approvals for any potential additional indications for our intranasal epinephrine technology, including urticaria, the standard of care for such treatments may have evolved such that it would be necessary to modify our plans for full approval and commercial acceptance of such products may be limited by a change in the standard of care. Additionally, if we receive the necessary approval for any additional indications for our intranasal epinephrine technology, we may not realize the full potential benefits from the sale of our intranasal epinephrine technology for such indications due to our existing collaboration and marketing arrangements. Even if we develop, license, or otherwise acquire potential product candidates or development programs, and obtain the required financing or establish a collaboration to enable us to conduct pre-clinical and clinical development of such product candidates, we cannot be certain that such development would be successful, or that we will obtain regulatory approval or be able to successfully commercialize any other product candidates and generate revenue. Further, even if any product candidate we develop or acquire was to receive marketing approval, we would continue to bear the risks that the FDA or similar foreign regulatory authorities could revoke, vary or suspend approval of our product candidate or that safety, efficacy, manufacturing or supply issues could arise with such product candidate.

The results of preclinical studies may not be predictive of the results of clinical trials, and the results of any early-stage clinical trials we commence may not be predictive of the results of the later-stage clinical trials. In addition, initial data in clinical trials may not be indicative of results obtained when such trials are completed. There can be no assurance that any of our ongoing, planned or future clinical trials will ultimately be successful or support further clinical development or regulatory approval of our current or future intranasal epinephrine technology product candidates. There is a high failure rate for drugs and biologics candidates proceeding through clinical trials. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical development even after achieving promising results in earlier studies, and any such setbacks in our clinical development could have a material adverse effect on our business and operating results.

From time to time, we may publish interim topline or preliminary data from our clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary or topline results also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between preliminary or interim data and final data could significantly harm our reputation and business prospects.

Undesirable side effects or adverse events caused by neffy or our current or future intranasal epinephrine technology product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay, denial, or withdrawal of regulatory approval by the FDA, the European Commission or comparable foreign regulatory authorities. Although our clinical studies to date have demonstrated that neffy is well-tolerated by patients with no serious treatment-related adverse events, and reported adverse events generally no more severe than grade 1 and comparable with injection products, and with no meaningful pain or irritation based on formal scoring, results of our ongoing or future clinical trials for neffy or our current or future intranasal epinephrine technology product candidates could reveal a high and unacceptable severity and prevalence of side effects, adverse events, or unexpected characteristics. Many compounds that initially showed promise in clinical or earlier stage testing are later found to cause undesirable or unexpected side effects or adverse events that prevented further development of the compound. If unacceptable side effects or adverse events are observed following the commercialization of neffy or our current or future intranasal epinephrine technology product candidates, including for urticaria, we, the FDA or comparable foreign regulatory authorities, the IRBs, or independent ethics committees at the institutions in which our trials are conducted, or the independent safety monitoring committee could suspend or terminate our clinical trials or regulatory authorities could order us to cease clinical trials, restrict us or neffy or our current or future intranasal epinephrine technology product candidates, including withdrawing the marketing approval of neffy or our current or future intranasal epinephrine technology product candidates or deny approval for or all targeted indications. Treatment-emergent side effects and adverse events that are deemed to be drug-related could also affect subject recruitment or the ability of enrolled subjects to complete the trial or result in potential product liability claims, an unwillingness of physicians to prescribe neffy or our current or future intranasal epinephrine technology product candidates for approved indications, patients' unwillingness to purchase neffy or our current or future intranasal epinephrine technology product candidates, or payors' willingness to cover neffy or our current or future intranasal epinephrine technology product candidates. Undesirable side effects or adverse events resulting from the use of neffy or our current or future intranasal epinephrine technology product candidates (whether by patients in our clinical studies or through the commercialization of neffy or our current or future intranasal epinephrine technology product candidates) could adversely affect enrollment in clinical trials, regulatory approval and commercialization of neffy or our current or future intranasal epinephrine technology product candidates. Additionally, there may be negative findings regarding components of neffy or our current or future intranasal epinephrine technology product candidates by other parties. Any negative findings by third parties may impact neffy for its initially approved indications and labeling, or the future approvability or labeling of our current or future intranasal epinephrine technology product candidates, including for urticaria. In addition, all side effects and adverse events may not be appropriately recognized or managed by the treating medical staff. Inadequate training in recognizing or managing the potential side effects and adverse events of neffy or our current or future intranasal epinephrine technology product candidates could result in patient injury or death. Any of these occurrences may harm our business, financial condition, and prospects significantly. In addition, clinical trials of our intranasal epinephrine technology product candidates are and have been conducted in carefully defined sets of patients who have agreed to enter into clinical trials. Consequently, it is possible that our clinical trials, or those of any future collaborator, may indicate an apparent positive effect of our intranasal epinephrine technology product candidates that is greater than the actual positive effect, if any, or alternatively fail to identify undesirable side effects. Finally, our intranasal epinephrine technology product candidates are comprised of epinephrine and Intravail that is delivered via an intranasal device. Intra-muscular injection of epinephrine has been approved by the FDA and other regulatory authorities for the emergency treatment of Type I allergic reactions. In addition, Intravail has previously been included in the formulations of FDA approved products such as VALTOCO and TOSYMRA nasal sprays. The intranasal apparatus we use to deliver our intranasal epinephrine technology product candidates has been used to deliver several drugs approved by the FDA and other regulatory authorities, including VALTOCO, TOSYMRA and NARCAN. Even though neffy has received marketing approval for its initial indication, we are subject to the risks that the FDA, European Commission or similar regulatory authorities could revoke approval of intra-muscular epinephrine injection products, other drug formulations containing Intravail or utilizing the same intranasal apparatus, or that efficacy, manufacturing or supply issues could arise with epinephrine API, Intravail or our intranasal apparatus. This could result in our own products being removed from the market or being less commercially successful.