ARS Pharmaceuticals, Inc. (SPRY) stock intrinsic value fair value estimate & owner earnings analysis

ARS Pharmaceuticals sells neffy, the first FDA-approved needle-free epinephrine product, a nasal spray for severe allergic reactions. It launched in the United States in September 2024. Partners hold rights elsewhere: Alfresa in Japan, Pediatrix in China, Taiwan, Hong Kong and Macau, Seqirus in Australia and New Zealand, and ALK in Canada, the U.K., the European Union and other countries. What the business earns today. Owner earnings (operating cash flow, less working-capital swings, less stock compensation, less the part of capital spending needed just to keep going) were about negative $1.76 per share in 2025, roughly negative $173 million. The one year near break-even, 2024 (about $0.01 per share), was flattered by a one-time $73.1 million of licence revenue from ALK and is not a normal year. Earlier years (2021 to 2023) were pre-launch losses of $0.68 to $0.87 per share. Only 2025 reflects the business as it now operates, so the earlier years are not a guide to its current earning power. Stock compensation (about $22 million in 2025 and $19.8 million in the first half of 2026) is treated as a real cost. Second-quarter 2026 results show the loss continuing: operating cash flow was negative $105.9 million for the first half of 2026. What has actually been achieved. Net neffy sales were $72.2 million in 2025 (versus $7.3 million in 2024) and, from the second-quarter 2026 report, about $95 million over the latest twelve months, with $26.2 million in the second quarter of 2026. Sales were $51.6 million in the second half of 2025 and $43.7 million in the first half of 2026, or roughly $22 to $26 million a quarter for four quarters, so sales have levelled off rather than kept climbing. Gross margin was about 62% in the second quarter. Against that, selling and administrative costs rose from $71.7 million in 2024 to $230.1 million in 2025, mostly marketing. Management said on its August 2026 call that it will cut second-half spending sharply, to cash operating costs of $100 to $110 million for the half. Balance sheet. Cash and short-term investments fell from $245.0 million at the end of 2025 to $143.8 million at June 30, 2026. The company borrowed $100 million in September 2025 under a term loan due September 29, 2030, secured by substantially all assets including intellectual property, at an interest rate of 5.50% plus the greater of SOFR or 3.00% (9.49% average in 2025). The loan requires at least $25 million of cash at all times. A further $72.1 million (December 2025) is recorded as a liability rather than revenue, because ARS keeps an option to repurchase the European rights it licensed to ALK. We do not subtract debt from value; instead the cost of servicing it is already inside cash flow and drives our downside case. Bear case, $0 per share. Sales stay near $95 million a year and spending stays at management's reduced second-half level. On our estimate, with about $32 million of gross profit for the half against about $105 million of cash costs, the company burns roughly $75 to $80 million in the second half of 2026 and would approach the $25 million lender minimum in the first half of 2027. Equity holders would then have little claim on the business ahead of the secured lenders. We do not assign a negative value, since we cannot show from the filings that the assets are worth less than the debt. Base case, $0 per share. We give credit only for what is documented: sales at the recent level, the 62% gross margin, and spending as guided. That combination loses money and uses up the cash cushion, so it produces no earnings to value. We did not credit further growth, because the increase in sales has slowed, further growth would depend on winning more prescriptions in a market where neffy holds about 5% (management's figure), and management's target of cash-flow break-even by the end of 2027 is an aim rather than something already achieved. We also left out sales milestones of up to $80 million from Pediatrix and other partner milestones and royalties, because they depend on partners' sales that have not yet occurred. Bull case, $0 per share. Even if the spending cuts are delivered on management's schedule and sales hold at the second-quarter 2026 pace (about $105 million a year), our own estimate is that cash by the end of 2027 would be close to the $25 million lender minimum, and stock compensation of roughly $30 million a year still exceeds any operating profit we can point to. No documented driver produces value for shareholders. The real upside is that neffy keeps taking share and the company reaches a profitable scale; the evidence for that does not yet exist, so it is not priced. What would make this wrong. If neffy sales rise well above $95 million a year while spending stays at the reduced level, the company could become profitable and the shares would be worth substantially more than zero. Raising new equity or renegotiating the loan could also extend the runway. This is the first time we have valued this company, so there is no earlier estimate to compare with. Because the cases sit at zero, any value in the shares rests on a future business rather than the current one, and the margin-of-safety price is set at one cent per share, subject to the business condition noted with this estimate. Accounting note. Cash-flow items for 2021 to 2023 come from the restated statements presented after the 2022 merger with Silverback Therapeutics, in which ARS is the accounting acquirer, and not from Silverback's earlier filings. Milestone payments the company made under licence agreements ($7.9 million in 2025) are reported as investing outflows and are not in the owner earnings figures above.