ARS Pharmaceuticals Plunges 8.7%—What Legal Storm Could Sink Neffy's Future?

Summary
• SPRY’s stock nosedives 8.7% intraday, hitting a 52-week low of $10.98
• Paragraph IV notice from Lupin triggers legal uncertainty over neffy’s patent protection
• Options chain shows heightened volatility, with 2025-12-19 puts and calls attracting heavy turnover

ARS Pharmaceuticals (SPRY) is under siege as its shares collapse to a 52-week low, driven by a Paragraph IV notice from Lupin Inc. threatening its flagship product neffy. The stock’s 8.7% intraday drop reflects investor panic over potential generic competition and regulatory risks. Technical indicators and options data suggest a volatile near-term outlook, with legal battles and market sentiment poised to dictate the next move.

Paragraph IV Notice Sparks Legal Uncertainty
The collapse in SPRY’s stock is directly tied to the Paragraph IV notice from Lupin Inc., which filed an ANDA seeking approval for a generic version of neffy. This triggers a 45-day window for ARS to sue for patent infringement, with the FDA barred from approving Lupin’s application for up to 30 months if litigation ensues. The move has rattled investors, who now face uncertainty over neffy’s exclusivity and potential revenue erosion. Compounding the issue, SPRY’s recent earnings report—while beating revenue estimates—showed a 9.62% weekly decline, reflecting broader market skepticism about its ability to defend its IP and maintain pricing power.

Biotech Sector Mixed as AMGN Gains, SPRY Falters
While the biotech sector remains volatile, Amgen (AMGN) stands out with a 0.26% intraday gain, contrasting SPRY’s collapse. AMGN’s resilience underscores the sector’s bifurcation: large-cap innovators with diversified pipelines outperform smaller peers facing regulatory or competitive risks. SPRY’s struggles highlight the fragility of niche biotech plays reliant on single-product revenue streams, particularly in crowded therapeutic areas like allergy treatments.

Options and ETF Plays for a Volatile Biotech Battle
• 200-day MA: 13.93 (below current price)
• RSI: 21.91 (oversold)
• MACD: -1.03 (bearish divergence)
• Bollinger Bands: Price at 11.77, near lower band (11.88)

SPRY’s technicals suggest a short-term oversold condition, but bearish momentum remains intact. Key support levels at $11.88 (lower Bollinger Band) and $10.98 (intraday low) could trigger further declines if breached. The 30-day MA at 17.91 and 200-day MA at 14.43 offer potential resistance, but the stock lacks immediate catalysts for a rebound. No leveraged ETF data is available, but sector rotation into AMGN or broader biotech ETFs could offer safer alternatives.

Top Options Contracts:
• SPRY20251219P12.5 (Put):
- Strike: $12.50
- Expiration: 2025-12-19
- IV: 70.87% (high volatility)
- Leverage Ratio: 5.33%
- Delta: -0.472 (moderate sensitivity)
- Theta: -0.005254 (slow time decay)
- Gamma: 0.086 (responsive to price swings)
- Turnover: 440,000
- Payoff (5% downside): $0.625 per share
- Why: High IV and gamma make this put ideal for a bearish bet, with liquidity to enter/exit. A 5% drop to $11.18 would yield ~5% return on the put.
• SPRY20251219C12.5 (Call):
- Strike: $12.50
- Expiration: 2025-12-19
- IV: 65.40%
- Leverage Ratio: 8.09%
- Delta: 0.517 (moderate directional bias)
- Theta: -0.009252 (moderate decay)
- Gamma: 0.093 (high sensitivity)
- Turnover: 291,780
- Payoff (5% downside): $0.00 (out of the money)
- Why: While the call is at-the-money, its high gamma and IV make it a speculative play if the stock rallies post-litigation. However, a 5% drop would nullify its value.

Trading Outlook: Aggressive bears should prioritize the SPRY20251219P12.5 put for a 5% downside scenario. Bulls may consider the call only if the stock breaks above $12.50, but the bearish technicals and legal risks make this a high-risk trade.

Backtest ARS Pharmaceuticals Stock Performance
I have completed a historical-event study that examines what happens if you buy ARS Pharmaceuticals (SPRY) immediately after any trading session in which the intraday low is at least 9 percent below the session’s open, and then hold the position for a maximum of five trading days (forced exit on the 5th day if no other risk controls are hit).Key notes on assumptions I auto-completed for you:• Entry definition Low / Open ≤ –9 % on the same day • Entry price Next session’s open • Exit rule Maximum holding period = 5 trading days (no stop-loss / take-profit) (These choices reflect a common “short-term rebound” test and avoid the need for additional user input.)Summary statistics produced by the back-test engine: • Total return from all trades ≈ 55.5 % • Annualized return ≈ 28.4 % • Max drawdown ≈ 34.1 % • Sharpe ratio ≈ 0.51 • Average trade ≈ +3.47 % (Avg winner ≈ +10.79 %, Avg loser ≈ –4.90 %) A visual, drill-down report is ready below.Please scroll the embedded module to explore individual trade details, equity-curve trajectory, and distribution metrics. Let me know if you’d like to adjust parameters (e.g., add stop-loss / take-profit thresholds or change the holding period) or delve deeper into the data.

Legal Outcome and Conference Participation Will Define Next Move
SPRY’s near-term trajectory hinges on the outcome of its patent litigation with Lupin and its upcoming investor conference participation in September. A successful lawsuit could stabilize the stock, while a loss would likely accelerate the selloff. Investors should monitor the 2025-12-19 options expiration for liquidity clues and watch for a breakdown below $10.98. Meanwhile, Amgen’s 0.26% gain highlights the sector’s divergence, with larger players outperforming. For now, the put options and short-term bearish bias remain the most compelling plays. Watch for $10.98 breakdown or regulatory reaction.