ALK announced that it has entered into a strategic license agreement with US-based ARS Pharmaceuticals. The agreement grants ALK exclusive global rights to the neffy adrenaline (epinephrine) nasal spray, with the exception of the USA, Australia, New Zealand, Japan and China.
neffy is a needle-free emergency treatment for patients experiencing acute and potentially life-threatening allergic reactions. The European Commission granted EURneffy (the trade name for neffy in the EU) market authorisation in the EU in August 2024. Furthermore, neffy was approved by the US Food and Drug Administration also in August 2024. Submission for regulatory approval in Canada is planned for by the end of 2024.
Exclusive rights to new indications
ARS Pharma is also developing its intranasal adrenaline (epinephrine) technology for the treatment of acute flares in patients with chronic urticaria, with plans to begin a Phase IIb clinical trial in 2025. The license agreement gives ALK exclusive rights for any new indications in the licensed territories. This aligns well with ALK’s strategy, as it enables the ALK to take the first steps in addressing new adjacent disease areas.
Expanding market opportunities
ALK will initially focus on bringing neffy to the markets in Europe and Canada, the world’s second and third largest adrenaline autoinjector (“AAI”) markets. In both markets, the product can be added to ALK’s existing infrastructure and sales channels. The agreement also holds potential in other markets e.g. in Asia and Middle East.
Anaphylaxis requires immediate treatment with adrenaline (epinephrine), which today is predominantly administered intra-muscularly, including using AAIs, such as ALK’s Jext pen. While adrenaline autoinjectors have been shown to be highly effective, there are well-published limitations that result in many patients and caregivers delaying or not administering treatment in an emergency situation.
In Europe, ALK’s main market, more than 20 million people are estimated to be at risk of experiencing anaphylaxis, however only approximately 2 million people are picking up their recommended rescue medication and many also fail to renew their prescription when needed. The combined value of the European and Canadian AAI markets is estimated at approximately DKK 1.6 billion (2023) and has been growing steadily in recent years.
Financials considerations
The agreement supplements ALK’s financial ambitions and is expected to diversify the long-term revenue growth. ALK estimates that neffy holds a long-term annual peak sales potential in anaphylaxis of up to DKK 3 billion in the licensed territories. There may be substantial upsides to this potential from new indications in e.g. urticaria.
Under the agreement, ARS Pharma is entitled to receive an upfront payment of USD 145 million (DKK 1 billion) from ALK. Furthermore, ARS Pharma may receive up to USD 320 million (DKK 2.2 billion) related to regulatory and commercial milestones, potentially over the next 15+ years as well as tiered royalties in the teens on future sales. ARS Pharma will supply finished goods to ALK, while ALK will be responsible for local market access, marketing and sales.
ALK will finance the upfront payment out of its available cash and existing credit facilities, and equally plans to finance future milestone payments and royalties out of ALK’s available cash. Following settlement of the upfront payment, ALK’s net debt to EBITDA ratio for 2024 will expectedly still be below 1.
The first launches are expected to take place in Europe in 2025 once local market access negotiations are completed. The license agreement is expected to contribute to revenue growth from 2025 onwards, with an initially limited impact, and is projected to be earnings accreditive within a few years. The deal is therefore expected to support ALK’s long-term financial ambitions, which remain unchanged.
This announcement does not change ALK’s revenue and earnings outlook for 2024. ALK’s ambition of achieving a 25% EBIT margin in 2025 remains unchanged.
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