ARS, Seattle Firm to Merge

ARS Pharmaceuticals, Inc. is ramped up and ready to go for its expected commercial launch of neffy – an epinephrine nasal device for treating severe allergic reactions.

On July 21, ARS announced it had entered into a definitive agreement to merge with Seattle-based Silverback Therapeutics (NASDAQ: SBTX) in an all-stock transaction. Once approved by stockholders, the combined company is expected to have approximately $265 million in cash, cash equivalents and securities at closing and will operate under ARS Pharmaceuticals’ name and trade under the NASDAQ ticker symbol “SPRY.”

The merger is expected to close in Q4 of this year.

‘Classic Reverse Merger’

The ARS merger with Silverback comes at a beneficial time for both companies. In March, Silverback shut down its oncology program after reporting disappointing clinical data on its lead experimental therapy for solid tumors. The company’s board of directors determined there was no viability for the program to move forward and began looking for opportunities to invest its sizeable cash reserves.

At the same time, ARS’s initial public offering (IPO) plans were put on pause because of the market’s downturn, said ARS Pharmaceuticals CEO Richard Lowenthal. The plan was to wait until after the FDA submission for neffy to restart the IPO or seek out more private funding, when a mutual bank of both companies introduced ARS to Silverback. Silverback was in the process of reviewing companies to merge with, Lowenthal said, adding that Silverback had about 40 opportunities, did full diligence on three, eventually choosing ARS.

“This transaction represents the result of a thorough and thoughtful strategic review process by Silverback,” said Laura Shawver, Ph.D., chief executive officer of Silverback.

“ARS is an exciting late-stage company with compelling clinical data demonstrated with neffy, a path to near-term commercialization in a large and dissatisfied market, and an expert team with proven experience in launching and commercializing market-leading nasal spray products, such as NARCAN,” Shawver added. “I believe we have found the optimal partner to provide value for our stockholders, and even more so, the potential to transform treatment for millions of people with or at-risk for Type I severe allergic reactions.”

Lowenthal described the deal with Silverback as a “classic reverse merger” that allows ARS to get cash and retain control with roughly 63% of the stock shares to Silverback investors’ 37%, depending on final cash at closing. None of Silverback’s workforce will be retained.
The combined companies, Lowenthal said, will leave ARS with “north of $265 million” and fully funded for the launch of neffy, with “plenty of runway.”

“It is more than we were anticipating,” Lowenthal said, adding that the only downside is “a bit more dilution, but worth it because of the security the cash brings to a comfortable launch the product.”

Opportunity in Epinephrine

ARS plans to launch neffy in 2023.The company has completed a comprehensive registration program with neffy and based on a favorable pre-NDA meeting with the U.S. Food and Drug Administration (FDA), ARS is preparing to submit a New Drug Application (NDA) in the third quarter of 2022.

Lowenthal said, “neffy is on the cusp of achieving what has not been possible before – the ability to deliver epinephrine with comparable pharmacokinetics to an intramuscular injection, but with a simple to administer nasal spray.”

ARS points to the relative ease and safety of a neffy device compared to epinephrine injector products like the EpiPen. “If you look at the label of EpiPen, for example, all the warnings and risks are the needle – lacerations and blood vessel injections that can cause cerebral hemorrhage. But that can’t happen with this,” he said, adding that allergy advocacy groups are excited about neffy because “they see it solving a big problem for their patients – 90% of it is getting rid of the needle.”

The money from the merger with Silverback will also give ARS an advantage in marketing neffy. According to Lowenthal, EpiPen maker Mylan stopped marketing its product in 2016.

“There’s no voice out there anymore,” he said. “It’s only advocacy groups trying to get patients and caregivers to understand the disease, understand what needs to be done and they lost ground because when Mylan stopped marketing, the market dropped; the number of users dropped by about 34%.”

Marketing neffy to those severe allergy sufferers will be “a big benefit,” he added.

ARS Pharmaceuticals, Inc.
Founded: 2017
CEO: Richard Lowenthal
Headquarters: Del Mar
Business: Nasal delivery technologies
Employees: 15
Website: ars-pharma.com
Notable: ARS’ neffy could be the first epinephrine product approved for use outside the hospital setting in China