Allurion pivots to combination therapy strategy while pursuing U.S. market launch

Earnings Call Insights: Allurion Technologies Inc. (ALUR) Q2 2025

MANAGEMENT VIEW

* Shantanu K. Gaur, CEO, stated that "our new strategy doubles down on metabolically healthy weight loss, losing weight, keeping it off and maintaining muscle mass, with a specific focus on combining the Allurion Program with low-dose GLP-1 therapy." The company is shifting its commercial focus towards accounts and distributors that promote comprehensive obesity management, which includes the combination of the Allurion Program with low-dose GLP-1s.
* Gaur highlighted that the company began transitioning away from distribution partners unable to deliver metabolically healthy weight loss and started to find new partners or convert markets to direct operations. He noted, "these accounts grew by 20% compared to the first quarter of 2025."
* Allurion's R&D pipeline is being retooled for innovation that enables seamless combination therapy. The company signed a term sheet with a strategic partner to expand manufacturing capabilities and ex-U.S. distribution, and to jointly develop a novel GLP-1 drug-eluting intragastric balloon.
* Gaur reported the submission of the fourth and final module of the PMA to the FDA, including additional analyses from the AUDACITY Study: "the mean difference in weight loss between the treatment and control groups at 48 weeks was 4.34%, with a super-superiority margin of 3.14%, exceeding the prespecified 3% super-superiority margin."
* Interim CFO Tara Brady stated, "our revenue for the second quarter of 2025 was $3.4 million compared to $11.8 million for the same period in 2024." She added, "gross profit for the second quarter was $2.5 million or 74% of revenue compared to $9.0 million or 76% of revenue for the same period in 2024."

OUTLOOK

* Management is reevaluating guidance for 2025 due to near-term disruption from the strategic shift. Gaur explained, "we are reevaluating guidance for 2025," and announced a plan to align operating expenses with the new direction, anticipating charges of approximately $1.5 million in Q3 2025.
* Gaur indicated expectations for enrollment in the European multicenter combination therapy study to begin by the end of the year, and noted that as combination therapy becomes more standard, more investigator-initiated studies are anticipated.

FINANCIAL RESULTS

* Revenue for Q2 2025 was $3.4 million, reflecting reduced sales in distributor markets undergoing partner transitions, partially offset by growth in direct markets from GLP-1 combination therapy.
* Operating expenses decreased by 48% compared to the prior year, and operating loss improved by 26% compared to prior year, according to Gaur. Cash and cash equivalents as of June 30, 2025, were $12.7 million.
* Sales and marketing expenses were $2.4 million (previous year: $6.7 million), R&D expenses were $1.8 million (previous year: $4.3 million), and general and administrative expenses were $5.2 million (previous year: $7.3 million).

Q&A

* Joshua Thomas Jennings, TD Cowen: Asked about the cost impact of low-dose GLP-1s plus Allurion Gastric Balloon and future cost-effectiveness. Gaur replied that "by adding a lower dose of GLP-1 to the Allurion Program, there's actually minimal cost to the patient" abroad, with expectations for U.S. prices to come down over time. He added that combining the programs solves muscle wasting and side effect problems, leading to longer adherence and lower costs.
* Jennings also inquired about distributor retention and OUS revenue recovery. Gaur stated, "that's going to be a process that's going to play out through the second half of this year."
* Jennings requested an update on FDA approval timing. Gaur responded, "after submission of the last module, FDA typically gives feedback within the first 180 days... there may be a potential that, that timing could be pulled in."
* Keay Thomas Nakae, Chardan Capital: Asked about R&D and G&A run rates. Gaur said, "for the second half of this year, I think that would be appropriate," with expectations for overall operating expenses to decrease by approximately 50% into 2026.
* Michael Toomey, Jefferies: Asked about cash runway and Coach Iris updates. Gaur said, "for now, in the short term, we feel good about the cash that we have on the balance sheet," and no new features for Coach Iris were released in the past quarter.
* Nakae further asked about the impact of the new strategy in France. Gaur noted, "the use of GLP-1s in channels outside of obesity medicine specialists was expanded by ANSM... it should be a tailwind for us in the French market as combination therapy becomes more mainstream."

SENTIMENT ANALYSIS

* Analysts focused on pricing, cost effectiveness, distributor transition, and regulatory timing, with a neutral to slightly positive tone in response to management's strategic pivot.
* Management maintained a confident tone in prepared remarks and responses, frequently emphasizing "we believe" and expressing optimism about the strategic shift, though acknowledging short-term disruption.
* Compared to the previous quarter, there was increased discussion of disruption and transition, but management's confidence in long-term prospects and the new strategy remained steady.

QUARTER-OVER-QUARTER COMPARISON

* Management's focus shifted from expanding the B2B2C model and operational efficiency in Q1 to executing a significant strategic pivot towards combination therapy and new distribution partnerships in Q2.
* Analysts' questions shifted from operational execution and margin sustainability to the cost and adoption of combination therapy and the implications for future growth and market expansion.
* Revenue declined from $5.6 million in Q1 to $3.4 million in Q2, and cash and cash equivalents decreased from $20.4 million to $12.7 million.
* Management's tone remains confident but is more focused on explaining near-term disruption and the rationale for the new strategy.

RISKS AND CONCERNS

* Short-term disruption from transitioning distribution partners and resizing the sales force was highlighted by management, with Gaur stating that "we expect this pivot to continue to be disruptive in the short term."
* Brady indicated year-over-year revenue decline was primarily driven by distributor transitions, lower sales and marketing investments, and the temporary suspension of sales in France.
* Analysts showed concern about how quickly new distribution strategies and combination therapy uptake would translate into revenue recovery.

FINAL TAKEAWAY

Allurion Technologies is executing a significant strategic pivot, emphasizing a combination therapy approach that integrates the Allurion Program with low-dose GLP-1s to address core challenges in obesity management. Management anticipates short-term disruption as distribution channels and sales strategies are overhauled, but expresses confidence that these moves will position the company for long-term success, particularly with a potential U.S. launch on the horizon and a strengthened clinical and R&D pipeline. The company is prioritizing metabolically healthy weight loss, operational efficiency, and alignment of expenses, while navigating a transitional period marked by revenue and cash declines.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/alur/earnings/transcripts]

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* Allurion Technologies Inc. (ALUR) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4813161-allurion-technologies-inc-alur-q2-2025-earnings-call-transcript]
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