We came across a bullish thesis on ARS Pharmaceuticals (SPRY) on Value Degen’s Substack by Unemployed Value Degen. In this article we will summarize the bulls’ thesis on SPRY. ARS Pharmaceuticals share was trading at $11.36 as of Sept 6.
A pharmacist in their lab coat preparing a drug-free nasal spray for distribution.
ARS Pharmaceuticals (SPRY) presents a compelling investment opportunity following the recent FDA approval of Neffy, its epinephrine nasal spray designed to disrupt the $1 billion annual EpiPen market. Unlike traditional EpiPens, Neffy addresses needle hesitancy, which causes many patients to avoid or misuse the injection. Approximately 50% of EpiPen prescriptions go unfilled, with around 40% of patients avoiding use during severe allergic reactions due to fear of improper administration. By offering a needle-free alternative, ARS aims to capture a significant portion of the market, appealing to those who prefer an easier-to-use option. With a patent on Neffy as the only nasal spray epinephrine delivery system until 2038, ARS is positioned to capitalize on this new opportunity.
Neffy’s market potential is substantial, with 40 million Americans suffering from severe allergies and over 6.5 million epinephrine prescriptions annually. Should Neffy gain traction, ARS could capture a market worth over $600 million annually in the U.S., excluding additional sales to first responders and clinical settings. International expansion could further enhance this value, with market filings planned in China, Australia, and Japan in 2024. Despite FDA approval, ARS’s stock has only modestly increased from $10.85 to $12.98, leaving room for significant appreciation.
ARS’s potential extends beyond the U.S. market, with opportunities in countries with compatible patent frameworks. The company has already initiated approval processes in major international markets. However, the path to growth involves navigating various unknowns, such as the efficiency of its pharmaceutical representatives in promoting Neffy to the network of immunologists and allergists. Yet, the company is in a strong position, with $200 million in cash reserves dedicated to product commercialization, stemming from a 2022 merger with Silverback Pharmaceuticals.
The leadership team’s track record, particularly Chief Commercial Officer Eric Karas, who has experience in successfully marketing Narcan to a dominant market share, lends credibility to ARS’s strategy. However, challenges remain, including a high short interest that suggests some skepticism about the company’s prospects. Despite these uncertainties, the approval of Neffy provides a strong foundation for growth, whether through organic market penetration or potential acquisition by a larger pharmaceutical entity.
Given the potential for a threefold to tenfold increase in market capitalization, depending on market penetration and expansion, ARS offers a promising but risky opportunity. For investors willing to accept the inherent risks, ARS Pharmaceuticals may represent a valuable addition to a diversified portfolio, particularly in a sector as complex and unpredictable as biotech.
ARS Pharmaceuticals is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held SPRY at the end of the second quarter which was 17 in the previous quarter. While we acknowledge the potential of SPRY as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as SPRY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.