Earnings call transcript: Arcturus Therapeutics Q2 2025 results miss expectations

Arcturus Therapeutics, with a market capitalization of $307.55 million, reported a disappointing second quarter for 2025, with earnings per share (EPS) falling significantly short of expectations. The company posted an EPS of -$0.34, missing the forecast of $3.21, resulting in a negative surprise of 110.59%. Revenue for the quarter was $28 million, a decline from the previous year. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics, despite the challenging quarter. This underperformance led to a 4.28% drop in the company’s stock during regular trading hours, although it saw a slight recovery in aftermarket trading, rising by 2.43%.

Key Takeaways

• Arcturus Therapeutics reported a net loss, with EPS significantly below forecasts.
• Revenue decreased by $22 million compared to the same quarter last year.
• Operating expenses were reduced by 43.7% year-over-year.
• The company’s stock price fell by 4.28% after the earnings announcement.
• Positive developments in product pipelines, particularly in mRNA therapeutics.

Company Performance

Arcturus Therapeutics experienced a challenging Q2 2025, with revenue declining to $28 million from $50 million in Q2 2024. InvestingPro data reveals the company maintains a strong liquidity position with a current ratio of 5.64, indicating robust short-term financial health. The company’s financial performance was impacted by a substantial decrease in operating expenses, which fell to $40 million from $71 million the previous year. Despite the cost-cutting measures, the company reported a net loss of $9.2 million, reflecting one of several key metrics available to InvestingPro subscribers through comprehensive Pro Research Reports.

Financial Highlights

• Revenue: $28 million, down $22 million year-over-year.
• Earnings per share: -$0.34, significantly below the forecast of $3.21.
• Operating expenses: $40 million, reduced from $71 million in Q2 2024.
• Research and development expenses: $29.6 million, down from $58.7 million in the prior year.

Earnings vs. Forecast

Arcturus Therapeutics’ EPS of -$0.34 was a stark contrast to the expected $3.21, marking an EPS surprise of -110.59%. This significant miss reflects the company’s ongoing challenges in aligning its financial performance with market expectations.

Market Reaction

Following the earnings announcement, Arcturus Therapeutics’ stock fell by 4.28% during regular trading hours, closing at $11.91. However, in aftermarket trading, the stock showed a slight recovery, increasing by 2.43% to $12.2. This movement reflects investor concerns over the earnings miss, tempered by optimism around the company’s product pipeline developments.

Outlook & Guidance

Looking forward, Arcturus Therapeutics is focusing on its mRNA therapeutics pipeline, with significant developments expected in its cystic fibrosis and OTC deficiency programs. The company anticipates interim data for its cystic fibrosis treatment in September 2025 and plans to initiate Phase III trials in 2026. InvestingPro analysis shows that 6 analysts have revised their earnings upwards for the upcoming period, though the company is expected to remain unprofitable this year. The company’s overall Financial Health Score stands at 2.49, rated as ’FAIR’ by InvestingPro’s comprehensive assessment system.

Executive Commentary

CEO Joe Payne highlighted the company’s strategic focus: "We have streamlined our internal pipeline to focus on our OTC and cystic fibrosis program, which enabled us to extend our runway into 2028." CFO Andy Stossin emphasized cost management: "By the end of this year, we’ll be over 50 subjects of experience with respect to safety."

Risks and Challenges

• Continued financial underperformance could affect investor confidence.
• Regulatory hurdles in product approvals, particularly for mRNA therapies.
• Competitive pressure in the biotech sector, especially in mRNA technology.
• Market volatility impacting stock performance.

Q&A

During the earnings call, analysts inquired about the design and progress of the cystic fibrosis trial, the company’s regulatory strategy, and expectations for safety and efficacy outcomes. Executives provided clarity on development timelines and emphasized their commitment to advancing key therapeutic programs.

Full transcript - Arcturus Therapeutics Holdings Inc (ARCT) Q2 2025:

Conference Operator: Good day, everyone, and welcome to the Arcturus Therapeutics Second Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode.

Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask questions by pressing the star and one on your telephone keypad. Please note this call is being recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Neta Safarzadeh, Vice President, Head of Investor Relations, Public Relations Marketing. Please go ahead.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics: Thank you, operator. Good afternoon, and welcome to Arcturus Therapeutics quarterly financial update and pipeline progress call. Today’s call will be led by Joe Payne, our president and CEO, and Andy Stossin, our CFO. Doctor. Pat Chewbacula, our CSO and COO, will join them for the Q and A session.

Before we begin, I would like to remind everyone that the statements made during this call regarding matters that are not historical facts are forward looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance and achievements to differ materially from those expressed or implied by this statement. Please see the forward looking statement disclaimer on the company’s press release issued earlier today, as well as the risk factors section in our most recent Form 10 ks and in subsequent filings with the SEC. In addition, any forward looking statements represent our views only as of the date such statements are made.

Arcturus specifically disclaims any obligation to update such statements. And with that, I will now turn the call over to Joe.

Joe Payne, President and CEO, Arcturus Therapeutics: Thank you, Neda. It’s good to

Joe Payne, President and CEO, Arcturus Therapeutics: be with you again everybody. I will begin with our ARCT032 program. This is our messenger RNA therapeutic candidate for cystic fibrosis. Arcturus is advancing enrollment of adult CF participants in the open label Phase two multiple ascending dose CF study with daily inhaled treatments of ARCT032 over a period of twenty eight days. There is serious unmet medical need in the CF community, especially with those that do not qualify or benefit from CFTR modulator therapy.

Our present phase two trial is focused on enrolling subjects that do not benefit from modulators including class one or no CF participants. We have completed the enrollment and dosing of all three participants in the five milligram cohort. After a safety review, we were permitted to proceed with enrolling the second cohort at the ten milligram dose level. All six CF participants in this second cohort are expected to complete dosing in early September. Each participant in the second cohort receives two eighty milligrams of ARCT032 over the span of twenty eight days.

And dosing at this level for twenty eight consecutive days is differentiating. And it’s attributed to our modification design and proprietary purification of our mRNA drug substance and to the novel chemical features of our optimized LUNAR delivery technology. The company expects to provide Phase two interim data from these first nine enrolled participants next month in September 2025. And we expect to complete enrollment for this study as planned by year end. Arcturus anticipates meetings with the FDA and regulatory agencies in the 2026 to discuss the Phase two data and plans for pivotal trials, including the enrollment of adolescent and pediatric participants, followed by Phase three initiation in 2026.

I’ll now move on to our ARCT-eight 10 program. This is our messenger RNA therapeutic candidate for ornithine transcarbamylase or OTC deficiency. In June, the company along with key opinion leaders announced positive interim data from two phase two multiple dose studies conducted in the OTC program. In each study and in the combined analysis of both phase two studies, decreases in glutamine levels to within normal range were observed following multiple ARCT-eight ten administrations to participants who remained on their standard of care therapy. Mean ammonia levels were stable within the normal range following at least two doses of ARCT-eight ten and remained stable for approximately twenty eight days after completion of dosing.

During the treatment phase and follow-up, two out of three participants in the Phase two U. S. Study showed increases in relative ureagenesis function to levels observed in asymptomatic OTC deficient patients as measured by a newly developed and optimized 15N ureagenesis assay. The remaining participant demonstrated increased 15N citrulline enrichment. The data taken together suggest improvement of urea cycle function in all three participants.

This orthogonal supportive data adds further confidence to the glutamine normalization data that we observed. ARCT-eight ten was generally safe and well tolerated in single dose Phase one1b and multi dose Phase two studies comprising 40 participants to date and including 20 OTC division participants. The company is preparing for meetings with the US FDA and other regulatory agencies to discuss the clinical significance of the observed biomarker changes in relation to the design of the Phase three pivotal trial and pediatric studies. Phase three biomarker and trial design alignment with the FDA and other regulatory agencies is expected in the 2026. I will now provide regulatory updates to our partnered COVID-nineteen vaccine also known as Costave.

A marketing authorization application to The United Kingdom’s MHRA was filed by CSL, our partner, with an approval expected next month. Moving to Japan, NDA applications were filed by Meiji Seika Pharma to the PMDA for the two dose lyophilized vaccine presentation and for the upcoming seasons COVID variant update with anticipated approvals this fall. US BLA filing to the FDA remains on track for September with an approval decision expected in 2026. Now moving on to ARCT2138, this is our next generation STAR Seasonal Flu vaccine candidate. Under our collaboration with CSL Securis, we conducted a Phase one study in 100 young adults and 35 older adults.

All tested dose levels of ARCT two thousand one hundred thirty eight were immunogenic against all four influenza strains as measured by a hemagglutinin inhibition assay in both age groups, demonstrating a modest dose response within that range of the tested doses. ARCT2138 also induced anti neuraminidase antibody responses at all tested dose levels against all four influenza strains. The frequencies of unsolicited adverse events and medically attended adverse events were similar to comparator vaccines. No major safety concerns were raised from the study results. Overall, the study showed the potential of our next generation STARR vaccine encoding eight antigens to induce an immune response in both young and older adults with a dose as low as two micrograms and was tolerable up to twenty micrograms.

Now moving on to ARCT2304. This is our next gen STAR vaccine candidate for pandemic AH5N1 influenza virus, also known as the bird flu. In April, Arcturus received US FDA Fast Track designation for ARCT2304. This is the program contracted with and funded by BARDA. This contract was highlighted by the HHS in their recent press release as a program that was not impacted by their new budget and vaccine policy.

We’ve completed recruitment of two twelve adults, including 80 participants over the age of 60 years old in a randomized placebo controlled Phase one trial being conducted here in The U. S. All three tested dose levels, one point five, five and twelve micrograms in the Phase one BARDA funded study were well tolerated, with the majority of reported solicited AEs being mild to moderate and short lived. No safety concerns were raised from the available clinical data. The results from this ongoing Phase one study are expected later this year.

And before passing the call on to our CFO, we’re very pleased to announce that Arcturus has appointed Doctor. Monsef Slawi as Chairman of the Board, which became effective as of 07/01/2025. And with that, I’ll now pass the call to Andy.

Andy Stossin, CFO, Arcturus Therapeutics: Thank you, Joe, and good afternoon, everyone. The press release issued earlier today includes financial statements for the 2025 and provides a summary and analysis of year over year performance. Please also reference our most recent Form 10 Q for more details on the financial performance. As we announced on our last quarterly call in May, our restructuring plan is in the final stages of implementation as we continue to consolidate operation. We have streamlined our internal pipeline to focus on our OTC and cystic fibrosis program, which enabled us to extend our runway into 2028.

As I provide a summary of our financial results for the 2025, please take note of the significant reduction in year over year and sequential operating expenses. Revenue for the three and six months ended 06/30/2025, was $28,000,000 and $58,000,000 respectively, representing decreases of $22,000,000 and $30,000,000 compared to the same period in 2024. The declines were primarily driven by lower revenues from the CSL collaboration, reflecting lower supply agreement activity and amortization of the upfront payment as CoState progresses toward global commercialization. Total operating expenses for the three months ended 06/30/2025 were $40,000,000 compared with $71,000,000 for the three months ended 06/30/2024. Total operating expenses for the six months ended 06/30/2025, were $86,000,000 compared to $139,000,000 in the prior year.

Research and development expenses were $29,600,000 for the three months ended 06/30/2025, compared with $58,700,000 in the prior year. The significant decrease was primarily driven by lower manufacturing costs for our COVID, flu and cystic fibrosis program and reduced clinical trial expenses for COVID and OTC. Lower payroll and employee benefits also contributed to the decrease, which were partially offset by higher clinical costs for the CF following the ramp up of Phase II trials in 2025. Research and development expenses were $64,500,000 for the six months ended 06/30/2025, compared to 112,200,000 in the prior year. The decrease was primarily driven by lower manufacturing and clinical costs for the costate program, reflecting the program’s transition from the development to commercial phase.

Additional decreases resulted from lower payroll and benefits expenses and reduced facilities and equipment costs. These reductions were partially offset by higher clinical expenses for the cystic fibrosis program. General and administrative expenses were $10,300,000 and $21,700,000 for the three and six months ended 06/30/2025, respectively, compared with $12,300,000 and $27,200,000 in the comparable period last year. The decreases in both periods were primarily due to reduced share based compensation expense as well as reduced headcount and employee benefits. We expect general and administrative expenses to continue to decrease slightly during the next twelve months.

For the three months ended 06/30/2025, Arcturus reported a net loss of approximately $9,200,000 or $0.34 per diluted share compared with a net loss of $17,200,000 or $0.64 per diluted share in the three months ended 06/30/2024. Cash, cash equivalents and restricted cash were $253,400,000 as of 06/30/2025 and

Joe Payne, President and CEO, Arcturus Therapeutics: $293,900,000

Andy Stossin, CFO, Arcturus Therapeutics: on 12/31/2024. Based on the current pipeline and the reallocation of resources to the cystic fibrosis and OTC program, the cash run rate remains extended into 2028. In summary, the company remains in a strong financial position and has the cash runway needed to achieve multiple near term value creating milestones for both the therapeutic program. We look forward to an exciting 2025 with upcoming clinical data readouts from both our therapeutics and vaccine programs. I will now pass the call back to Joe.

Thanks, Andy. Arcturus had a productive quarter making excellent progress across our mRNA therapeutics and vaccines pipeline. We look forward to sharing two cohorts of Phase II CF data in September. And with that, let’s turn the time over

Joe Payne, President and CEO, Arcturus Therapeutics: to the operator for questions.

Conference Operator: Thank We’ll take our first question from Lily Zongo with Leerink Partners. Please go ahead. Your line is open.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics: Hi, good afternoon. Thank you for taking my question. Maybe two CF related questions. So as we get closer to the readout, can you maybe give us a refresher as to how you think about the bar for success there? And in terms of the patients that have already been enrolled, could you give us a little more granularity in terms of the ratio of modulator eligible to non eligible patients?

Thank you.

Joe Payne, President and CEO, Arcturus Therapeutics: Hey, Lily, thanks for the questions. Yeah, just a refresher for, you know, the historical precedent for cystic fibrosis is all through modulators with respect to regulatory engagement. And what they’ve established is a 3% threshold would be sufficient to advance this into further and develop. Now, I do remind people that modulators are small molecules. They’re systemically distributed throughout the entire body.

And the class of subjects there or participants are typically Delta 508s. So in contrast, Arcturus is developing an inhaled messenger RNA therapeutic that’s topically delivered to the bronchial epithelial cells. And we’re also engaging the most challenging group within the CF community and that’s the class one subjects or modulator non responders. But having said that, the short answer to your question is comes from the regulatory agency. The FDA has said that if you establish safety and tolerability and a positive measurable FEV, then that would significant development to allow us to proceed.

And so what does that mean? Well, we’ll find out. But clearly, we can establish safe and tolerable medicines with a positive FEV, then we’ll be able to proceed further into development. This would be a big breakthrough for for the modulator non responders. But there is a legacy expectation from the modulator space of a, you know, 2.5, 3% threshold that’s required.

So that will likely play a role in the discussions with the regulatory agency. With respect to your second question, you were asking about what percentage I believe or maybe explain further the distribution of modulator non responders in this trial so far. And I can help address that question that I would say a strong majority of these subjects, these nine subjects to date, are class one subjects. We do have representation of modulator that are not class one, but a solid or strong majority of them are class one.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics: Thank you.

Joe Payne, President and CEO, Arcturus Therapeutics: Thanks, Lily.

Conference Operator: Thank you. Our next question comes from Yasmeen Rahimi with Piper Sandler. Please go ahead. Your line is open.

Yasmeen Rahimi, Analyst, Piper Sandler: Good afternoon, team. Thank you so much for taking our questions. I’m very much looking forward to the data in September. One CF related and one OTC related. Team, could you talk about the type of safety or efficacy?

What do you see on a blinded basis, especially around the safety aspect of your product? And then the second one is, could you maybe elaborate as you’re going to engage with the agency on pivotal design alignment of what work has been done between allowing the use of biomarkers as a registrational endpoint and could glutamate be potentially used? So I appreciate if you could elaborate on both of these questions and I’ll jump back in the queue.

Joe Payne, President and CEO, Arcturus Therapeutics: All right. Thanks, Yas. Good to hear from you. In terms of elaborating on the safety, so for the last few decades the industry has been aggressively developing inhaled RNA therapeutics. But unfortunately, they haven’t succeeded.

And the reason for their failure collectively is primarily attributed to toxicology and tolerability issues. And toxicology stems from two, you know, areas, either the lipids are too toxic, you know, the delivery system itself, or the impurities in the mRNA drug substance can be a challenge with respect to toxicology and tolerability. And this is shown in the clinic through bronchospasm, so undesired inflammatory responses and febrile reactions, which are an undesired immune response or elevated fevers for example. So inflammatory responses can typically be credited to or blamed for toxic lipids. And then on the Phe Bio Reaction side or undesired immune responses, those can be attributed to impurities in the mRNA construct.

And what Arcturus has brought forward with this ARCTO32 is strong intellectual property and innovation on the delivery system that addresses this primary concern of accumulating toxic lipids. And then on the we also have purification IP that we’ve been building and working on for over a decade now, that allows us to effectively purify the drug substance and remove the bad actors, these small double stranded and single stranded impurities that can cause these untoward and problematic febrile reactions or undesired immune responses. And that’s what we’re bringing forward there is improvements in addressing what the field has had challenges with over the last couple decades. Shifting to OTC, what’s been done so far with respect to glutamine socialization and familiarity with the regulatory agency is we’ve provided and with respect to our N15 Ureogenesis Assay as well. They’re well versed and understand our strategy with respect to phase two.

They are very well aware that we’re collecting this data and they’re interested in seeing it. We’ve provided them papers to illustrate the impact of these potential biomarkers and the recent paper as well with respect to uriogenesis. We intend to meet with them to share the recent phase two data and throughout the coming months. Whether that’s in a type C meeting or meetings is yet to be determined. And we haven’t communicated the detail of that strategy.

But rest assured they are aware of what we’re trying to do. And achieving alignment with them is a key objective for program. And we would view it as a value catalyst actually, or a value add if we can get alignment with the FDA and other regulatory agencies with respect to the phase three trial. But I’ll pause my comments there. Thank you for the questions.

Yasmeen Rahimi, Analyst, Piper Sandler: Thank you so much.

Conference Operator: Thank you. Our next question comes from Seamus Fernandez with Guggenheim. Please go ahead. Your line is open.

Seamus Fernandez, Analyst, Guggenheim: Great. Thanks for the question. So, you know, I just wanted to confirm that the highest dose data will be sort of fully represented out to twenty eight days, Joe. I just wanted to confirm that, you know, the ten milligram cohort and at least six patients worth of data would be available out to twenty eight days. The second question.

Yep, go ahead, Joe.

Joe Payne, President and CEO, Arcturus Therapeutics: No, yes. So the first question is, yes, absolutely. Twenty eight days, all nine subjects. Most of these would also have their day 56 data. We do collect FEV after fifty six days.

And then there’s even two months follow ups after that. But with respect to the final subject, we’ll just have twenty eight day data. The FEP. And

Seamus Fernandez, Analyst, Guggenheim: can you just remind us how you would define clinically meaningful? I think historically, thought leaders we’ve talked to have said at least 3% on the low end and but 5% would certainly be clinically meaningful from their perspective. Just wanted to get your thoughts around that. And if there’s a bar for what FDA might be looking for in terms of what they would define as clinically meaningful as you had to meet with the agency in the first half of next year.

Joe Payne, President and CEO, Arcturus Therapeutics: Yeah, I think three percent is reasonable. However, I just want to make sure it’s clear that our program is not a modulator. It’s not systemically administered to Delta five zero eight. It’s inhaled mRNA to a more challenging population, where the unmet medical need is more severe. And so that would be part of the conversation with the FDA.

And also taking into consideration theoretical likelihood of the FEV elevating further as you extend the study for a longer period of time will be taken into consideration. And what do I mean by that is if you saw three percent after twenty eight days, then the likelihood of you seeing even more than that in months two or three through extended dosing is theoretically very high. So that would be viewed very positive, even if use whatever the positive number is. So just to reiterate what I’ve said a few times for clarity, is the FDA just wants safety, tolerability and any positive measurable FEV, given that this is a twenty eight day study and that would indicate a lot of positive feelings and response and allow us to advance this further into development as you extend that study even further in Phase three.

Seamus Fernandez, Analyst, Guggenheim: Okay, great. I’ll jump back in the queue. Thanks so much.

Andy Stossin, CFO, Arcturus Therapeutics: Yeah, just to add to Joe’s comment, keep in mind Seamus that this class of population unfortunately has degradation of FEV over on an annual basis and consequently their lifespan is shortened and so an opportunity to increase it or stabilize it for this class of population would be quite remarkable and certainly offer them an opportunity to have an extension of life.

Conference Operator: Thank you. We will move next with Miles Minter with William Blair. Please go ahead. Your line is open.

Miles Minter, Analyst, William Blair: Hi, this is Jake on for Miles. Thanks so much for taking our question. I wanted to ask a couple more on CF. Was sort of wondering what the interest level was in patient enrollment after the VERTEX VERTEX and Moderna trial pause, whether you saw any difference in appetite for your trial? And maybe sort of comment, we’d love your comments on the reopening of that trial and whether you think they’re going to be able to get over the safety issue that was raised with the DSMB there?

Thanks.

Joe Payne, President and CEO, Arcturus Therapeutics: Yeah, with respect to the first question, we have several sites open and recruiting subjects. And in the sites where there was overlap with competitors, if those competitors are no longer recruiting, then yes, that would directly help or impact our recruitment rate there. But only a small number of sites do we have overlap with our competitors. We’re working closely with the CF Foundation and they’ve identified sites that have limited competition for us for recruitment. So from that perspective, no.

With respect to your other question, it would be inappropriate for me to speculate on what’s happening with our competitors like with the Vertex program. And I don’t want to come across as callous, but we frankly don’t care that much. When we started this process, there was a half a dozen of these companies aggressively pursuing this and we’ve just been putting our head down and executing and working hard. And here we are, and I think we’ll just keep doing that. But we definitely have a different delivery technology than our competitors, a different IP estate around purifying.

And I think those are areas of innovation and intellectual property that we tend to emphasize as points of differentiation with our competitors. And we’ll leave it at that.

Evan Wong, Analyst, Guggenheim Securities: Thank you.

Joe Payne, President and CEO, Arcturus Therapeutics: Thank you.

Conference Operator: Thank you. Our next question comes from Whitney Ejem with Canaccord. Please go ahead. Your line is open.

Angela Chan, Analyst, Canaccord: Hey, guys. This is Angela Chan on for Whitney. We have two questions on CF. The first one is, do you intend to proceed to a higher dose cohort, or do you plan to initiate the regulatory conversations based on these two cohorts? And then, the second one, can you just remind us what your preclinical data has suggested at the comparable doses and the degree of dose response?

So, when we think about, you know, the potentially 3% FEV1 benefit, is that something that you believe could be achieved with a lower dose?

Joe Payne, President and CEO, Arcturus Therapeutics: Both good questions. First of all, the present phase two trial design is a 12 subject trial and three doses where we have three subjects at five milligrams followed by six subjects at ten milligram dosing and then an additional three subjects at fifteen milligram dosing. That’s the present plan. We do have flexibility built into that plan because we this is what was initiated and approved upon. But we’ve just been executing according to that plan and the first two cohorts we’ve already discussed are the five milligrams completed and the ten milligram is also completed at least the dosing phase in early September and we’ll be able to communicate some of those interim data.

With respect to the dose response, with respect to the dose response. You would expect that a dose response with a therapeutic like ours. However, we do want to reference the modulator community and the CFTR biochemistry that that has not necessarily been observed in the modulator space. That was more of a threshold situation where you increase the dose until it worked, but then you doubled or tripled the doses and it didn’t improve the efficacy further. So if while we do expect a dose response with respect to our therapeutic, if we don’t see it, that’s also okay because it may just be a threshold type response like you see with the modulators.

And then did I address your question? Angela?

Conference Operator: Yes, yes. Thank you.

Joe Payne, President and CEO, Arcturus Therapeutics: Thank you.

Conference Operator: Thank you. Our next question comes from Pete Stavropoulos with Cantor Fitzgerald. Please go ahead. Your line is open.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics0: Hi, this is Sarah Medeiros on for Pete. Congrats on the progress and thanks for taking our questions. Now back to CF. I assume you’ll be showing both absolute and relative changes for FEV. So, how should we think about presentation and interpretation of the endpoint when taking into consideration the patient’s baseline?

For example, like a high versus a low FEV baseline. And then, just a follow-up, besides FEV, are there any other measurements that you could or will look at to enhance the investigator’s conviction in the program, including like quality of life?

Joe Payne, President and CEO, Arcturus Therapeutics: Okay, I’ll hop there. Good question. In terms of the FEV data and other lung programs and inhaled therapeutic programs look at area above the baseline as we measure FEV throughout the patient experience in the trial. We’ll be looking at kind of area under the curve. And that will be the best way to add the most weight and confidence in the data.

In terms of the baseline characteristics, I know that we’ve included a broad range for formality purposes of 40 to 100% baseline, but it’s more like in that 60 to 80% range for the strong majority of these nine subjects. So I’d say that would be more typical. And then you asked about additional, in addition to FEV responses, we are asking these participants to include a questionnaire and address answers there. There’s about 20 questions, for example, in the respiratory module of the CF questionnaire. This is a well understood quality of life questionnaire that has been used in the modulator space, and we’re using the same thing there.

So as you think of it, just to elaborate this on this a little bit more, You know, as as as I think it’s helpful to think of someone who stops smoking, right, the first week and first month they feel better, but their lung function improves throughout, you know, not just in the initial weeks and a month, but in two and three months. So there’s continuous healing and continued lung function improvements. And so that’s likely what we would expect with an inhaled therapeutic like Arcturus is in the first month that if it’s working that people would see some elevated lung function, feel a lot better, but that could continue on into months two and three. Okay?

Conference Operator: Thank you. Thank you. Our next question comes from Tom Schrader with BTIG. Please go ahead. Your line is open.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics1: Good afternoon. Thank you for taking my questions. I think I’ll have some vaccine questions. Your U. S.

BLA for COVID, is that going to be for approval of an updated vaccine or would that be for the historical vaccine and so you would need for next year to update? And then on the seasonal flu vaccine, that’s obviously getting very interesting. Your thoughts on the interplay of the antigens, do

Seamus Fernandez, Analyst, Guggenheim: you feel like you have

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics1: to be as good on hemagglutinin protective antibodies if you have neuraminidase? Is that understood that neuraminidase could cover for some hemagglutinin? Thank you.

Joe Payne, President and CEO, Arcturus Therapeutics: Good questions. Thanks, Tom. First of all, with respect to The US BLA, yeah, the initial strategy here is to approve the platform and the original multi dose file presentation. It would be fully expected like in other areas and other countries and regulatory agencies that we’ve been interacting with that an updated variant vaccine would be expected on an annual basis. And so yeah, this one that’s getting approved is just basically to set the foundation platform and get that approved in The US.

With respect to answering your question on, it was a seasonal flu question with the interplay of antigens. Let’s see what can I do there? You know, we are sharing the outcome of the phase one clinical study. It’s an eight valent, right? There’s eight antigens including four and four NA antigens in the seasonal influenza vaccine.

And we’re going to evaluate the ability of this platform to induce a balanced immune response against multiple antigens without interference. But the changes of the WHO and the US CDC recommendations on vaccine composition where these sorts of antigens are no longer required, so it will require further development of the candidate. But that’s probably I don’t know if I’m specifically addressing your question. But

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics1: that’s I guess really my question is are your hemagglutinin levels as high as the high dose protein vaccine? Vaccine? Can you say that yet? And do you know then when that would be presented?

Joe Payne, President and CEO, Arcturus Therapeutics: Yes, that’s later this year. We’ll be able to, what we’ve disclosed today is that we saw a nice dose responsive immunogenicity against all four versions of the flu. But with respect to details, that will be forthcoming later this year. Okay, thank you. Yeah, thank you, Tom.

Conference Operator: Thank you. Our next question comes from Yigal Nochomovitz with Citigroup. Please go ahead. Your line is open.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics2: Yes. Hi, Joe and Andy. Thank you for taking the question. On CF, could you just comment on the timing of the end of Phase II meeting with the FDA? Am I correct that it’s been delayed a bit relative to your initial projections?

And if so, is that related to the comments you made regarding seeing continuous improvements in months two and three and potentially wanting to see additional boost on FEV1 beyond the first month that would present a stronger data package to present to the FDA? Thank you.

Joe Payne, President and CEO, Arcturus Therapeutics: Yeah, we’ve indicated or guided that we’ll be completing the phase two trial enrollment process this year with respect to the third cohort. But know, shortly after then we’ll have an engagement with the FDA. If it’s an end of phase two meeting, that would be great. But it’s at that time that we would discuss with them what’s required for a phase three study. I can only speculate, but we’re not expecting to need any other additional trials to allow us to shift or transition to a pivotal trial, especially with adult subjects.

So that’s that’s the expectation at this point is the end of phase two meeting will be in the first half of next year and we’ll be able to initiate phase three as soon as possible in 2026 without the need or requirement to do any additional trials.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics2: And then just am I correct, this is the first time that you’ve actually specified the doses of the five and the 10? And is there a specific driver behind that relative to sharing the data only in September?

Joe Payne, President and CEO, Arcturus Therapeutics: No, people, it just allows us to speak more freely as we enter September bank conference season and engage with investors so that they can now understand that this is a generous dose. Like for example, previous attempts at inhaled mRNA therapeutics maxed out at eighty milligrams per month. And we’re now showing data two eighty milligrams. So that’s a big difference. And if we elevate further to the fifteen milligram dose cohort, that’s four twenty milligrams over four weeks.

So we can now speak to and point to actual data that is more meaningful. That’s why.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics2: Okay, that’s helpful. And then on OTC, any later thoughts, latest thoughts on the higher zero point seven mg per kg? I know earlier in the summer we were debating that possibility. I’m wondering if you have any updates there. Thanks.

Joe Payne, President and CEO, Arcturus Therapeutics: Well, it’s a good question. We don’t have a definitive answer. There’s reasons to proceed at point seven mgs per kg and there’s reasons to truncate the timeline and get this into phase three more quickly. But right now I think it’s a conservative reasonable expectation that will elevate the dose and get some experience at zero point seven mgs per kilogram just to give more therapeutic index comfort to the regulatory agency. But we haven’t officially guided that.

But I think that’s a conservative expectation.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics2: Okay, thanks Joe.

Joe Payne, President and CEO, Arcturus Therapeutics: Thanks, Yigal.

Conference Operator: Thank you. Our next question comes from Yanan Zhu with Wells Fargo. Please go ahead, your line is open.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics3: Great. Thanks for taking our questions. Maybe still on the CF program, given there’s no placebo arm, could you talk about what could we look into the data to get comfort in terms of discerning treatment effect versus placebo effects? Of course, if there’s a dose response, that’ll make things easier, but I’m not sure the sample size and also potential, as you have highlighted earlier, whether there might be one. But just given that background, can you elucidate on potential ways to analyze the data?

Joe Payne, President and CEO, Arcturus Therapeutics: Well, the opportunity to implement a placebo strategy will be in Phase III, and that’s still to be negotiated, the details of that with the FDA. But there will be plenty of opportunity to implement a placebo arm or a placebo strategy into Phase III if requested. It is kind of self controlling. You know, these folks have been measuring their FEV for quite a while and if we’ll be leveraging their past experience as some sort of self control. But with respect to the placebo arm that’s yet to be determined and will likely be included in a phase three trial.

I remind people too that our phase one trial did have 32 subjects in it already. So we have a pretty good experience already with our phase one and then phase 1b and another seven subjects. And then you add on these nine to 12 subjects that we’re going to be looking at in phase two. By the end of this year, we’ll be over 50 subjects of experience with respect to safety. But the shift of the attention from a regulatory perspective will now go to duration.

So we only have twenty eight days of experience, right? That’s the other purpose that the phase three trial will fulfill is an extended duration, whether it’s two, three, four, five or six months will be determined at a later time.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics3: Great. Can I ask a quick follow-up? You mentioned some patients are followed out to fifty six days. Will there be FEV1 measurement in the off treatment period?

Joe Payne, President and CEO, Arcturus Therapeutics: There’s an FEV measurement at day fifty six but not and then there’s two months of follow-up. But there’s my understanding is on clinicaltrials.org, but my recollection of that is that there’s no further FEVs after day fifty six.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics3: I guess the question is would we see any FEV1 data after the treatment period has ended? Perhaps as a way to discern treatment effect?

Joe Payne, President and CEO, Arcturus Therapeutics: Yeah, well that’s the reason why we’re measuring day fifty six because the treatment phase ends day twenty eight. It’ll be interesting to share what happens to the FEV response twenty eight days after dosing has been suspended. So we will be able to share some insight there.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics3: Great, great. Sorry, if I may ask the last question in terms of the kinetics or onset of effect based on your understanding of the translation of the mRNA protein getting into place to start working. What’s the sense of the onset of action and that kinetics? Thank you.

Joe Payne, President and CEO, Arcturus Therapeutics: Yeah, the onset of action is relatively quick, right? In order to get the first cells that are available to be transfected and introduce new CFTR into those cells. But upon subsequent administrations, we also see that even more cells will be impacted. And so the threshold of how many cells will need to be transfected and delivered an mRNA that’s encodes and expresses CFTR. How many of those cells will need to be impacted before we see a physiological response or FEV improvement is the question we’re addressing.

And how long will that take? But for the cells that get our drug, impact is fairly quick. In terms of the biochemistry it’s fairly fast. But biologically that’s a different question. Just like how long will it take for the phlegm to clear after someone stops smoking, right?

It’s a good analogy. Might be weeks or months depending on the person, and variable depending on how long they’ve been smoking, for example.

Neta Safarzadeh, VP, Head of Investor Relations, Public Relations Marketing, Arcturus Therapeutics3: Got it, very helpful. Thank you.

Joe Payne, President and CEO, Arcturus Therapeutics: Yeah. Thank you.

Conference Operator: Thank you. Our last question comes from Evan Wong with Guggenheim Securities. Please go ahead. Your line is open.

Evan Wong, Analyst, Guggenheim Securities: Hey, guys. Just two quick follow ups from Osaka and I. First, with OTC, just wondering when we may see folds out of there, whether that includes the higher dose cohort or not. And then with influenza, I believe the trial includes a comparator arm or arms based on age. Any comments in terms of I guess hemagglutinin response relative to comparator?

Thanks.

Joe Payne, President and CEO, Arcturus Therapeutics: Good question. With respect to the comparator data, the details of that will be forthcoming later this year or at least when CSL feels it’s comfortable to publish that data. So they’ll be providing guidance on the detailed data. Today we just mentioned some high level summary. It’s difficult for us to guide when that detailed data comes to how immunogenicity relative to comparator.

So I won’t be able to comment on that. With respect to your first question, you asked a when question about OTC. Could you restate that because I missed it?

Evan Wong, Analyst, Guggenheim Securities: I’m just curious when we may have fuller data with OTC program.

Joe Payne, President and CEO, Arcturus Therapeutics: Yeah fuller data. Well it depends if we proceeded to the 0.7 kg cohort or truncate the Phase II data as is, because we’ve already shown that it works at zero point three and zero point five. We may not proceed with 0.7. But if we do proceed with 0.7, then that will add a few months to the timeline. So once that decision is made, we’ll be able to give more specific guidance as to the completion of the phase two portion of that.

What we did guide in today’s press release is that we are in parallel socializing the glutamine biomarker strategy and N15 urogenesis. And there’s very likely going to be a Type C meeting or two. And then in the first half of next year, we’ll be in a good position to have alignment with the FDA. And that’s what we’re focusing on now. But in the background and in parallel, whether we do zero point seven milligram per kilogram or not depends on some advice and of course our board approval, etcetera.

Evan Wong, Analyst, Guggenheim Securities: Great, thank you.

Joe Payne, President and CEO, Arcturus Therapeutics: Yeah, thanks Evan.

Conference Operator: Thank you. We actually show one more question. We will move next with Yale Jen with Laidlaw and Company. Please go ahead. Your line is open.

Joe Payne, President and CEO, Arcturus Therapeutics: Good afternoon, and thanks for taking the questions. My first question also is on the CF. Now you reveal that you have a fifteen milligrams that to for the next dose. Just curious, when you designed the study, was fifteen basically just to push the highest dose you could, test the safety and efficacy or any other considerations? Then I have a follow-up.

Joe Payne, President and CEO, Arcturus Therapeutics: Yeah, the five, ten, fifteen milligram dosing strategy was implemented and agreed upon by the FDA when we designed the Phase two trial. And it was based on our experience in the 39 subjects in the CF program. So we explored four dose levels all the way up to twenty seven milligrams in phase one. And then we looked at intermediate dose levels in the phase 1B program. And what this and then the experience we’re the data we’re collecting in the phase two study right now is five, ten, and fifteen milligrams.

And these were already decided and agreed upon a while ago.

Joe Payne, President and CEO, Arcturus Therapeutics: Okay, great. One follow-up here is that both for ’32 or for ATENT, before you conduct meetings with FDA, should we anticipate one more data release of either one of those or what might be the sort of decision?

Joe Payne, President and CEO, Arcturus Therapeutics: Yeah, think it makes sense for us to share additional data for both of these programs as we complete the phase two trials respectively. So we did an interim data release with OTC and a presentation with KOLs in the June. I think it makes sense to share the data set when phase two is completed. And also provide clarity on the phase three trial design once we have that clarity from our conversations with the regulatory agency.

Joe Payne, President and CEO, Arcturus Therapeutics: And then So same thing with the should we anticipate those toward the end of this year or maybe to 2026?

Joe Payne, President and CEO, Arcturus Therapeutics: For the OTC program?

Joe Payne, President and CEO, Arcturus Therapeutics: Yeah, for either one of those additional data update.

Joe Payne, President and CEO, Arcturus Therapeutics: Yeah, well, yeah, we mentioned that we’ll be we expect to complete the phase two study as presently planned for CF this year in 2025. With respect to OTC, it depends whether we include the zero point seven milligram kilogram cohort, a small number of people, whether we do that or not, And that hasn’t been communicated externally yet. So today is not the day to do that.

Joe Payne, President and CEO, Arcturus Therapeutics: Okay, great. Thanks a lot.

Conference Operator: Thank you. And we show no further questions at this time. I will now turn the call over to Joe for closing remarks.

Joe Payne, President and CEO, Arcturus Therapeutics: Hey, thanks, everyone, for participating on the call. If there are any remaining questions, don’t hesitate to reach out to our team, and we’ll get back to you as soon as we can. Good afternoon or good evening, everybody.

Conference Operator: Thank you. And this does conclude today’s program. Thank you for your participation. You may disconnect at any time.

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