Arcturus Therapeutics Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 7, 2024

There are 13 speakers on the call.

Operator

Greetings, and welcome to Arcturus Therapeutics 4th Quarter and Full Year 2023 Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Neda Sapharzadeh, Vice President, Head of Investor Relations, Public Relations and Marketing.

Operator

Thank you. You may now begin.

Speaker 1

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 Pain, our President and CEO and Andy Sassine, our CFO. Doctor. Pat Ciepakula, our CSO and COO, will join them for the Q and A session.

Speaker 1

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.

Speaker 1

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

Speaker 2

Thank you, Neda. It's good to be with you again, everybody. We look forward to providing our updates today on our quarterly investor call. I will begin my remarks with an update on progress regarding our COSTAVE COVID-nineteen vaccine program. Following favorable clinical results from several COSTAVE studies, including a 16,000 subject efficacy study performed in Vietnam, as well as a Phase 3 COVID-nineteen booster trial in Japan, the Japan's Ministry of Health, Labor and Welfare, MHLW, granted approval for COSTAVE, a self amplifying mRNA COVID-nineteen vaccine for primary vaccination and booster for adults 18 years and older.

Speaker 2

This approval marks a historic milestone as the 1st self amplifying mRNA product in the world to be registered. And we are increasingly confident about the future applications of our now proven innovative STAR self amplifying messenger RNA vaccine platform. We look forward to expanding our vaccine platform alongside our global exclusive partner CSL and CSL's partner in Japan, Meiji Seika Pharma. The COState Japan approval is further supported by an active controlled Phase 3 boosters vaccine study conducted in 11 sites in Japan. The study included healthy adults initially immunized with 2 doses of an mRNA vaccine, whether that was Comirnaty or Spikevax and then a third dose of Comirnaty.

Speaker 2

The study was conducted in partnership with CSL's partner Meiji Seika Pharma. This is a global health company based in Japan. The new analysis at 6 months post vaccination shows that COSTAVE induces a broader and more durable immune response compared to Comirnaty for both the original Wuhan strain and the Omicron BA. Fourfive variant and an advantage in antibody persistence. COSTAVE results were achieved with onesixth the dose of Comirnaty.

Speaker 2

Based on the totality of clinical data collected to date, Arcturus anticipates that the advantages of self amplifying mRNA should provide superior protective efficacy against COVID-nineteen disease caused by future emergent variants of SARS CoV-two. The COSTAVE booster study is ongoing and will continue to collect safety data and assess durability of the immune response and participants up to 12 months post vaccination. We are very pleased to report that COSTAVE remains on track to launch Japan this year. Mejiseka Pharma as the party responsible for distributing the vaccine in Japan we'll be providing updates and further detail pertaining to the launch of CoStave in official press releases. In April, the WHO is expected to announce the updated COVID variant.

Speaker 2

In due course, manufacturing runs and the subsequent distribution of COSTAVE in Japan will follow. The commercial case for COSTAVE is becoming clear. A significantly stronger and broader immune response is preferred. The ACIP and other regulatory agencies are presently recommending 2 boosters each year for the approved conventional mRNA vaccines. Thus, it's very apparent that there's a clear need for a more durable once a year COVID vaccine and COSTAVE has the potential to address this important global health need.

Speaker 2

COVID is here to stay and the longer lasting COSTAVE is also here to stay. So moving on to ARCT-two thousand one hundred and thirty eight lunar flu program. This is our quadrivalent self amplifying mRNA vaccine candidate for seasonal influenza. I'm pleased to announce that the company along with our partner CSL initiated a Phase 1 dose finding study in January 2024 with the intention of assessing the dose response of the investigational vaccine and comparing the safety and immunogenicity with the licensed standard of care. Overall, 132 healthy individuals, which includes 84 younger adults and 48 older adults are planned to be recruited in this Phase 1 clinical study.

Speaker 2

I'm now excited to announce that Arcturus has initiated new vaccine discovery programs for Lyme disease and gonorrhea. This decision is supported by the clinical and regulatory validation of LUNAR and STAR Technologies provided by our first regulatory approval of COSTAVE. Our technologies are ideally suited for these infectious disease vaccine opportunities. Our validated vaccine platform is now being applied to 7 global infectious diseases, 5 with our partner CSL Secureis and 2 wholly owned vaccine discovery programs, Lyme disease and gonorrhea. The total estimated global market opportunity for these new vaccine discovery programs exceeds $4,000,000,000 I'll now move on to ARCT810, our messenger RNA therapeutic candidate for ornithine trans carbamylase or OTC deficiency.

Speaker 2

This investigational medicine is designed to functionally replace the deficient or missing OTC enzyme in the liver, restoring urea cycle activity and preventing metabolic crises that cause neurological damage. ARCT810 could reduce the need for ammonia scavengers and ease the rigid dietary protein restrictions that OTC patients face today, thus improving the quality of life for those with this disease. Our Phase 1b single ascending dose study in the United States has completed enrollment and dosing of all cohorts with 16 patients. The Phase 2 study in the United Kingdom and Europe is enrolling up to 24 adolescents and adults with OTC divisions. The ongoing study is evaluating 2 dose levels and includes up to 6 biweekly administrations for each participant.

Speaker 2

The company expects to share Phase 2 interim study data by the end of Q2, 2024. Moving now to our ARCT-thirty two program. ARCT-thirty two is an inhaled messenger RNA therapeutic candidate for cystic fibrosis formulated with Arcturus' LUNAR delivery technology. This investigational medicine is designed to functionally replace the deficient or missing CFTR transporter in the lung, unless restoring the balance of salt and water. We have now completed dosing in a Phase 1 study in New Zealand of 32 healthy subjects across 4 ascending single dose cohorts.

Speaker 2

In addition, we have dosed patients in a Phase 1b clinical study in New Zealand. The Phase 1b study is designed to enroll up to 8 adults with cystic fibrosis with each participant receiving 2 administrations of ARCT-thirty two. We remain on track to share interim Phase 1b data in Q2 2024. In November 2023, ARCT-thirty two received orphan drug designation from the FDA. The designation provides significant incentives to promote the development of the drug including the potential for market exclusivity for 7 years upon FDA approval, eligibility for tax credits for qualified clinical trials, waiver of prescription drug user fee act application fee and eligibility to receive regulatory guidance from the FDA and the design of an overall drug development plan.

Speaker 2

In February 2024, ARCT-thirty two received orphan medicinal product designation from the centralized authorization process, fee reductions and 10 years of market exclusivity. And with that, I'll now pass the call to Andy.

Speaker 3

Thank you, Joe, and good afternoon, everyone. The press release issued earlier today includes financial statements for the Q4 fiscal year ending December 31, 2023, and provides a summary and analysis of year over year financial results. Please also reference our Form 10 ks, which will be filed early next week for more details on the financial performance. Before we begin the financial review, I wanted to give you some highlights from our recent trip to Tokyo, where Joe Payne, Pad Chivakula and I met with the executive teams from Meiji Seika Pharma and Axalid, our JV partner in our Catalyst manufacturing venture. I am happy to report that everyone was very excited about the approval of COSTAVE in Japan and the opportunity to manufacture the world's first self amplifying mRNA vaccine in Japan under the Meiji brand.

Speaker 3

All of our partners are working very with the Japanese and local government officials to prepare for the launch of Coastase in the second half of twenty twenty four. We are deeply grateful to the Japanese government for their financial support of COSTAV and our manufacturing partner, Arcalis. Going forward, officials from Meiji Seika Pharma will provide regular updates on the launch of CoStave in official press releases this year. I will now provide a quick summary of our financial results. We reported revenues of $169,900,000 during 2023 compared to revenues of $206,000,000 during 20.22.

Speaker 3

Revenue recognized from CSL in 2023 was $157,400,000 which slightly increased by $3,000,000 compared to 2022. We also made significant progress with the BARDA pandemic flu vaccine agreement that led to an increase in revenue of $8,800,000 The majority of the decrease in FY2023 revenues was driven by the discontinuation of our collaboration agreements with VIN Biocare and J and J in 2022. In the Q4 of 2023, Arcturus achieved $29,200,000 in milestones from CSL. The milestone payments will continue to be used to fund development activities for the LUNAR COVID-nineteen vaccine and self amplifying mRNA flu programs with CSL. Total operating for the year ended December 31, 2023, were $245,000,000 compared with $193,800,000 for the year ended December 31, 2022.

Speaker 3

For the 3 months ended December 31, 2023, operating expenses were $49,100,000 compared with $38,800,000 for the 3 months ended December 31, 2022. I want to highlight that total operating expenses declined by $15,400,000 sequentially from the 3rd fiscal quarter of 2023 due to lower manufacturing expenses. Our research and development expenses consist primarily of external manufacturing costs, in vivo research studies and clinical trials performed by contract research organizations, clinical and regulatory consultants, personnel related expenses, facility related expenses and laboratory supplies related to conducting R and D activities. Research and development expenses were $192,100,000 for the year ended December 31, 2023, compared to $147,800,000 for the year ended December 31, 2022. The increase in research and development expenses were attributable to our continued efforts to progress the CSL and BARDA program, as well as our internal OTC and cystic fibrosis program.

Speaker 3

Additionally, we have increased investments in early stage and discovery technologies. The company initiated preclinical research related to its Lyme disease and gonorrhea vaccine discovery program. G and A expenses were $52,900,000 during 2023 compared with $46,100,000 in 2022. The increase resulted primarily from personnel expenses due to increased headcount and salaries, increased travel and consulting expenses as well as an increased rent expense associated with the new headquarters facility in San Diego. We anticipate total G and A expenses for 2024 will remain consistent with 2023 totals.

Speaker 3

For the year ended December 31, 2023, Artura reported a net loss of approximately $26,600,000 or $1 per diluted share, compared with net income of $9,300,000 or $0.35 per diluted share in the year ended December 31, 2022. For the 3 months ended December 31, 2023, we reported a net loss of approximately $8,600,000 or $0.32 per diluted share, compared with a net income of $117,400,000 or $4.33 per diluted share for the 3 months ended December 31, 2022. Higher year quarter included a $200,000,000 upfront payment from our CSL collaboration. Cash, cash equivalents and restricted cash were $348,900,000 as of December 31, 2023 $394,000,000 as of December 31, 2022. Since the beginning of our deal with CSL in November 2022, we have achieved approximately $396,000,000 in upfront payments and milestones as of December 31, 2023.

Speaker 3

We expect to continue to receive future milestone payments from CSL that will support the ongoing development of the COVID and flu program and 3 additional vaccine programs by CSL. Finally, I'm happy to report the expected cash runway now extends through the Q1 of 2027 based on the current pipeline and program. I would also like to highlight that total shares outstanding on a fully diluted basis have remained relatively consistent for 3 years in a row at approximately 26,600,000 shares. This demonstrates management commitment to continually improving shareholder value as we execute our strategic business plan. In summary, we believe the company remains in a strong financial position and has the resources to achieve multiple near term value creating milestones for the vaccine and therapeutic program.

Speaker 3

Furthermore, with the COSTAVE product approval in December in Japan, we look forward to beginning to report potential commercial sales in the next few years. I will now pass the call back to Joe.

Speaker 2

Hey, thanks, Andy. We continue to make excellent progress and we are incredibly excited about our first product approval with CoStave. This achievement is an important validation of our mRNA technology and delivery platform. So with that, let's turn the time over to the operator for questions.

Operator

Our first question comes from Evan Wang with Guggenheim Securities. Please proceed with your question.

Speaker 4

Great. Thanks for taking the question guys. 2 from me. First, it was encouraging to see the ACIP recommendation on revaccination of elderly last week. I'm wondering if we've seen similar recommendations internationally.

Speaker 4

And additionally, what kind of regulatory feedback you've gotten on how a more durable vaccine may be implemented? If you could talk both FDA and internationally in markets like Japan and Europe? And second, looking forward to some updates in 2Q from OTC and CF, as we're getting closer to data, wondering if you can share how many patients we can expect from each trial? Thanks.

Speaker 2

Thanks, Evan. Yes, first, I can address the question about the recent recommendations by ACIP. We're very happy to see that they recommended regular COVID vaccination, especially in the elderly. And the fact that they've recommended 2 boosters annually. We, of course, because we're approved in Japan, we wanted to provide some updated new information to the people on this call that they may not appreciate.

Speaker 2

But Japan government has also now communicated that starting April 2024 that routine COVID-nineteen another new update that they recommend twice a year vaccination for the elderly, but also and I'll quote from the actual website in Japan, that people aged 65 and older, those with underlying medical conditions and healthcare workers, so each of these three sets of people, will be vaccinated twice a year, while all of the others will be vaccinated once a year. The vaccinations remain free of charge as well, and that's clearly communicated. So these developments, of course, are very good news for us, because we're addressing a need of durability for the field, but also that there's elevated support for the elderly and those with underlying medical conditions and healthcare workers in Japan and that their vaccinations remain free of charge, which of course is going to be helpful to us commercially. With respect to Europe, there's been no second vaccination recommendation for the elderly there by the European CDC. But that those discussions are ongoing and we'll be looking for those updates shortly.

Speaker 2

Now you also asked additional questions about just enrollment processes for the 2 therapeutic programs, correct, Devin? We remain on track. That's something that we want to clearly communicate that we're on track to communicate some interim data Phase 1b in RCF program and that's recruiting all patients no placebo in that group. 6 to 8 patients is what we're estimating, and we're still guiding interim data to be shared in the Q2. So that's a relatively near term milestone.

Speaker 2

And likewise, we maintain our guidance on the OTC program for the end of Q2. With respect to specific updates and specific numbers, we haven't provided those details. Thank you for your questions.

Operator

Our next question comes from Yasmeen Rahimi with Piper Sandler. Please proceed with your question.

Speaker 5

Hey, good afternoon team. This is Jung Woo on for Yas. Thanks for taking our questions. We have 2. First, what would you say is the rate limiting step for orders in Japan?

Speaker 5

And for cystic fibrosis and MCC, what types of data should we expect the top line? And what would you say is like the bar for success?

Speaker 2

Sure. I can speak to the data for the top line data for the therapeutic programs. But the first question, I'll turn the time over to Andy with respect to what's the what's rate limiting on getting orders in Japan, Andy?

Speaker 3

Yes. No, I think, what we articulated earlier in the call is that, we had some very positive meetings with all the Meiji FECA Pharma officials and executives. And I think they're going to be driving the bus here and they'll be announcing and making press releases as appropriate. So please stay tuned and be patient that is certainly the encouragement was kind of articulated by Joe just now that and this is kind of a recent development that the government is going continue to financially support this population over 65, which is about 32,000,000 to 36,000,000 people, right? That's not including the people that have compromised immune issues and so forth, so or chronic illnesses.

Speaker 3

So you're looking at, if you multiply that by 2, somewhere in the vicinity of 6 C plus 1,000,000 potential doses, right, if everyone gets 2 shots, 2 boosters, right, of conventional mRNA. So we're just kind of reiterating what's in the public domain, what's available and Meiji will certainly give you more concrete information as soon as they can. So stay tuned.

Speaker 2

And then pertaining to the top line data, for CF and OTC, For OTC, we're looking for biomarkers to change in these patients, specifically ammonia to be adjusted to at or near normal levels. Many of these patients are on ammonia scavengers. So if that is indeed the case, there's other biomarkers that we can evaluate and measure including erotic acid in the urine and glutamate is another amino acid impacted by the urea cycle. And then OTC itself can be measured. So plenty of biomarkers to measure in these trials as in terms of top line data.

Speaker 2

With respect to the CF program, we're going to be looking primarily at safety for Phase 1b. This is the first time that this therapeutic has been administered as 2 administrations in actual patients. And so it will be very meaningful for us to establish some sort of track record of safety and tolerability in a spectrum of CF patients. Anything to add to that, Pat, for either program?

Speaker 6

Yes. I think for the CF, I think what we're going to be looking at is mainly safety, you're right. But we're also going to be looking at various respiratory functions and making sure that this dose is well tolerated in a patient population. So I think we will be happy to see some of those results. And then with regard to OTC, we just obviously want to reiterate the Phase Ib that we talked about was primarily a safety study.

Speaker 6

So we will be presenting that data at a conference coming up very soon. So thanks. Thank you

Speaker 5

so much for the detail.

Operator

Our next question is from Whitney Jiem with Canaccord Genuity. Please proceed with your question.

Speaker 7

Hey, guys. Congrats on all the progress. First one from me is on COVID in Japan. I think you stand to benefit from orders there kind of on two fronts, both from a revenue sharing perspective as well as our catalyst. But can you help us understand, how those 2 will flow through your P and L or balance sheet when the orders and the manufacturing do start?

Speaker 2

So yes, with respect to revenue sharing and any sort of additional financial elements due to the Arcalis joint venture? Andy, do you want to address those?

Speaker 3

Yes, certainly, Whitney. Thanks for the question. We typically have not provided details with respect to the revenue sharing opportunity. But if you look at the CSL and our tourist, 6CE40 joint gross profit split, you can try to extrapolate what would a 3 headed or 3 Musketeer type of partnership look like. So it will obviously be very significant and meaningful for us and we're excited about the partnership to be working with all three people in Japan, especially Meiji since they're the number one flu vaccine company in Japan and CSL who's number 2 in the world.

Speaker 3

So you're dealing with 2 very strong commercial powerhouses in their respective categories. So we're kind of fortunate with respect to that. And we're pretty excited. And of course, having it being made in Japan is kind of something that the government and the people of Japan are very proud of and it's going to be under the Meiji brand name. So keep in mind that this is going to be a Japanese vaccine.

Speaker 3

And that's what I think excites them in the government. And we're very fortunate that they gave us this opportunity to compare our vaccine to Pfizer, right? And if we didn't have that opportunity, we would not have this kind of data to share with the world. And the fact that they financially supported the factory. So the bet on the right horse and I think it's going to be an exciting future and European approval is coming this year or 2.

Speaker 3

So we're highly excited about that too and anticipating it as well. So there's a lot on the plate and hopefully that gives you some perspective, but unfortunately we can't really go into too many details at this point in time, but hopefully soon we'll be able to reveal those.

Operator

Our next question comes from Myles Minter with William Blair. Please proceed with your question.

Speaker 8

Hey, thanks for taking the questions. How important is it that the strain for your COVID vaccine actually gets adapted to XBP1.5? I know you have in collaboration with CSL 1 in a Phase 3 immunogenicity trial and I think there was some guidance that maybe we might hear about something in the Q1. So just want to make sure that that's on track. And is that also a gate or a gating factor for the 1st sale in Japan?

Speaker 2

Thanks. Well, yes, thanks for bringing those programs up. There's a lot of there's a considerable amount of late stage clinical data that's being collected for this platform. You touched on a couple of these trials. One was the bivalent Phase III trial where we're comparing bivalent COSTAVE to bivalent Comrinati and that data is forthcoming soon.

Speaker 2

So something that will help us be able to communicate how we perform in a multivalent or a bivalent setting to other technologies out there. With respect to the monovalent XBB trial, that one is designed to incorporate the Southern Hemisphere flu season cycle and we'll be able to share data for that program later this year as well. So you did ask whether these programs are prerequisite for certain regulatory discussions. The answer is no for Japan and Europe, and we'll find out for the United States. But we are collecting it in any case.

Speaker 2

And CSL, our partners, are funding these programs just to strengthen the data packages for each of these programs. And Pat, anything to add?

Speaker 6

Yes. Just I'll just add one other thing is that you might be aware the current circulating strain that it seems to be JN1. So ultimately for the fall season, we will be once the platform has been approved, we will update it and be ready to supply whatever circulating strain is needed.

Speaker 2

Correct. Yes. The WHO will be coming out with the updated variant announcement next month in April. Subsequent manufacturing runs and distribution will be forthcoming and messaged and guided through official press releases by MAGE.

Speaker 8

Okay. And then secondly, just on the CF program, I know you mentioned you'd be looking at respiratory function data from a safety perspective. I mean, would you obviously look at FAV1 from a safety perspective and then have to report that data anyway?

Speaker 2

For CF? Yes, we're collecting well, Pat, why don't you address that?

Speaker 6

Yes. No, of course, we're going to be collecting a lot of the safety signals, but then we're going to be looking at FEU1 and lung clearance indexes as well. And but we again, just to reiterate, we are going to be recruiting relatively stable patients. There could potentially be no patients involved included in the population as well, but this is an all commerce study. So just so you're aware.

Speaker 8

Okay, helpful. Thanks very much.

Operator

Our next question is from Yanan Hu with Wells Fargo. Please proceed with your question.

Speaker 9

Great. Thanks for taking our questions. I have a couple for COSTAVE and a couple for the CF program. On COSTAVE, I was wondering how many booster doses were distributed last year and purchased by the Japan government? And what percentage of that volume is for the 3 groups of people that you touched upon earlier on the call?

Speaker 9

And how would you expect that number to change this year?

Speaker 2

No, it's a good question. First of all, I can speak to what's readily available. In 2022, over 82,000,000 messenger RNA COVID vaccine boosters were distributed in Japan. That number is not tightly understood for 2023, but it was a significant number as you can appreciate. For 2024, we now as we touched on just moments ago, the Japanese government has indicated and communicated clear recommendation that the elderly get 2 booster shots a year.

Speaker 2

And the elderly population is 32,000,000 to 36,000,000 in Japan. So it's a significant number of people. And it was very good to hear that the government of Japan is going to be providing these vaccinations to the elderly free of charge. So speculating what that how that impacts the market is going to be difficult for me to do, more appropriate for analysts on this call to do that.

Speaker 9

Thanks for the information. In prior years, in Japan, were the average booster doses per person under 2?

Speaker 2

Japan is well known to have a high rate of vaccinations per person. Many would say that they have the highest rate of vaccinations for any country in the world, especially relative to U. S. And Europe. So they have a high prevalence for getting vaccinated and the elderly is even higher.

Speaker 2

So a very high rate of vaccination. How we project this into 2024? I think it's reasonable to expect a very high percentage of these people. We'll fill out these cards that they receive in the mail, set up times to go to the clinic to get their free vaccination. But what number that is, it would be inappropriate for me to guide on.

Speaker 9

Sorry, Joe. My question was the prior recommendation or the default number of boosters a person get per year, is that not twice a year? Was that once a year?

Speaker 2

I don't know what the previous recommendation was. All I can comment on is what's clearly communicated on the MHLW website, which is 2 boosters annually for everyone over 65 in Japan.

Speaker 9

Got it. Okay. Thank you. And on the CS program, the Phase Ib portion, those patients got 2 administrations of ARCT-thirty two. I was wondering what's the interval between those two administrations?

Speaker 9

And also, I think you mentioned on the call that FEV1, lung clearance, these measures are being collected perhaps mostly from a safety standpoint. But the question is, will you be preventing those data at the readout? Thank you.

Speaker 2

Well, the first comment was the primary purpose of this Phase 1b data is to ascertain safety and tolerability. We will be looking at severe adverse events and also more specifically side effects associated with the lung as this is a CF program and there's increased sensitivity to lung related side effects like coughing, etcetera. So that's where we're going to be more focused on in terms of externally communicating Phase 1b interim data is severe adverse events and more lung centric side effects. And just summarizing the safety and tolerability in a spectrum, a small spectrum of a relatively small group of CF patients. The other parameters are secondary or even exploratory in nature.

Speaker 2

We're not expecting in a small cohort like this, where many of these people are already on CFTR modulators that we'll see some efficacy readouts or anything like that. But we definitely will have an opportunity to present that data, the Phase Ib data later this year when we have a better idea which conference.

Speaker 9

Great. And the dosing interval?

Speaker 2

Thank you. The dosing interval, we have not shared publicly. This is a competitive environment. We've made it very clear that these are 2 administrations, they're inhaled. We haven't disclosed the dose levels, if they're the same or different and how far apart they are.

Speaker 2

We had considerable learnings from the 32 subjects of data in the 4 cohorts evaluated in Phase 1. So we wanted to and we've applied those learnings to the design of this Phase 1b trial and we just wanted to keep those cards close to our chest at this time.

Speaker 9

Got it. Thank you.

Operator

Thank you. Excuse me. Our next question comes from Yigal Nochomovitz with Citi. Please proceed with your question.

Speaker 9

Hi. This is Amin on for Yigal. Thank you for taking our questions. I have 2 related to cystic fibrosis. First on the upcoming sphere readout, should we expect if you can clarify, should we expect any data from the healthy volunteers there as well?

Speaker 9

And except lung capacity and lung function, have you took bronchi biopsy to look at the CFTR expressions there? Also, what have you seen so far in the healthy volunteer that's suggesting a better tolerability of this drug versus the prior mRNA studies?

Speaker 2

Yes. The CF readout is simply going to be focused on severe adverse events or any sort of adverse events associated with the lung like I just mentioned. I don't think we're going to be sharing any outside data from that. With respect to samples being directly taken from the lung pad, do you have a comment there? There's nothing that we're doing, but anything to comment?

Speaker 6

No. Again, just to reiterate some of the earlier data, we haven't seen any SAEs or severe AEs associated with the Phase or Phase 1b to date. And obviously, we're monitoring that closely. And in terms of lung biopsies, we are not currently or we're looking at the actual function in patients. So we're not doing that.

Speaker 2

With respect to the Phase I data, there is a European CF conference in June that we're preparing to present at.

Speaker 9

Okay, got it. That makes sense. And just one quick follow-up on the OTCD data that you're going to present soon. What do you need to see there to make a go, no go decision there?

Speaker 2

A go, no go decision for the Phase 1b readout?

Speaker 9

For the OTC data.

Speaker 2

For the OTC readout, sorry. Yes, we'd like to make sure we maintain safety and tolerability of multiple doses. That's going to be about most importance because that's one of the challenges that many other competitors and people that have tried to do lipid nanoparticle mRNA therapeutics for OTC deficiency have failed in the past due to toxicity. So this is going to be a significant hurdle to jump through, but that would be the primary objective. Something that we'd be very encouraged by is to show safety and tolerability of multiple treatments in a spectrum of OTC deficient patients.

Speaker 2

Having said that, do we also want to see some biomarker changes? Absolutely. It is a placebo controlled trial, so there would be increased confidence in these readouts as long as we have sufficient numbers. We would be looking for that sort of detail as well to give us confidence going to the next step.

Operator

Our next question comes from Pete Strytopolos with Cantor Fitzgerald. Please proceed with your question.

Speaker 10

Hi, Joe, Andy. So just a question about our Catalyst. Can you leverage that facility for other pipeline candidates and perhaps distribution outside of Japan? And if not already, I don't know if you mentioned it or if I missed it, when do you expect the facility to be operational? And what will be the manufacturing capacity?

Speaker 2

Andy, do you want to grab that?

Speaker 3

Yes, sure. Thanks, Pete. Yes, we've kind of highlighted the timeline for our Catalyst in terms of drug substance. They're currently in production right now in getting GMP qualified. So that is pretty exciting.

Speaker 3

And there'll be some news coming out of them to update the status of what they're doing and are they going to be participating in the orders from Japan for this year. So those are all the things you want to listen for carefully. And obviously the drug product is going to be online probably either later on this year or early next year. And then the plasma business should be on within a couple of years. So within 2.5 years, they should be vertically completely integrated.

Speaker 3

But in the meantime, we can certainly fill the void with our global CDMO partners in terms of Catalent in the United States and Aldebron and ResiPharm and PolyMune in Europe. So we have a really strong core of partners to help us fill the void where until our talent is able to get up to speed. Obviously, if they can make up to a 1,000,000,000 doses, CSL and MAGE have certainly a lot of opportunity to determine whether it's going to be a chance to export the vaccine to other countries. And so that'll be a decision that will be made by certainly CSL and maybe with respect to Japan. Hopefully that helps.

Speaker 10

Yes, it does. Thank you. And so a question on the CF program. So you're having 2 doses. Just curious on the perspective of how much do 2 doses actually derisk, I guess from a safety perspective, when it comes to drug?

Speaker 10

That's one question. And the other one is any learnings from the cystic fibrosis program that you can potentially develop an inhaled vaccine to a respiratory virus, either alone or in partnership with OCSL?

Speaker 2

Yes. Good follow on questions there, Pete. With respect to the do you want to address those questions?

Speaker 6

Yes, sure. In terms of CF, the safety, what we really want to see is even with the single or 2 dose, we want to make sure that there's no respiratory side effects like coughing, chest discomfort, etcetera. We also want to look at some secondary safety endpoints like fever for example, right? So I think we can tell all those things from just 2 doses. So we're looking forward to collecting that data.

Speaker 2

And the reason why this is significant too is our internal team has been doing inhaled therapeutics for decades. They do have a lot of experience here. And what they've shared with us is that if you do see challenges or problems in toxicology with inhaled therapeutics, it's in the first two administrations. So if we get through this trial successfully, the probability of success for this trial is meaningfully moved up. And so that's why this is important.

Speaker 6

And in the second part of your question, if the data is positive, what will it mean for the platform? I mean, obviously, if the data is positive and we do get proof of concept, we will expanding potentially the and thinking about other rare diseases or other diseases that need nebulization. But also this platform, of course, can be applied as potentially a vaccine as well.

Speaker 10

Great. Thank you for taking my questions.

Speaker 2

Thanks, Pete.

Operator

Our next question is from Ed Arce with H. C. Wainwright. Please proceed with

Speaker 9

your question.

Speaker 11

Hi, good afternoon everyone. This is Thomas Yip asking a couple of questions for Ed. Thank you for taking my questions. So first question regarding COSTA for 154. So was that approved in Japan and I believe Andy mentioned that a regulatory decision is expected from in Europe this year.

Speaker 11

Are there any plans by either from the tourists or from CSL or Meiji, any other plans to expand into additional territories?

Speaker 2

Yes. Europe is we're intending on getting that approved this year and also the United Kingdom shortly thereafter. After that, the next big market, of course, is the United States. CSL will be driving that those regulatory efforts. And they'll be providing guidance as to when that's going to be filed and approved.

Speaker 2

But what we can say at this point is we expect first approvals in Europe and then UK and then the United States.

Speaker 11

Understood. Thank you. And then perhaps one question for ASC eight ten in OTC. We recall in the past for the Phase 2 study in Europe enrollment was slightly delayed. Can you discuss briefly how is the study enrolling so far at the Phase 2 study?

Speaker 2

Yes. That's we provided guidance that we remain on track for the end of Q2. And that's the status of that program. With respect to some interim data readout is at the end of Q2.

Speaker 11

Okay, got it. And then perhaps one final question, this one's for Andy. Cash runway, just wonder, does it include any projected revenue from Ecosafe in Japan or now perhaps $154,000,000 in Europe as well?

Speaker 3

No. Thanks for asking that question. The guidance for the 3 year of cash runway at least did not include any revenue from Coast Dave and did not include any commercial milestones from CSL. So as soon as we're able to discuss those, we'll update the guidance with respect to the cash runway. And so hopefully, we will be able to do that soon.

Speaker 3

But at this point in time, we certainly have a long enough runway to be able to achieve a number of milestones this year, which are very critical the opportunity to expand the pipeline within the company. So we're pretty excited and certainly have the resources to be able to address the CF opportunity and the OTC opportunity. And now we're going to be launching 2 additional vaccines and hopefully be able to see some progress in that in the next few years. So pretty exciting year with respect to a number of milestones that are going to be forthcoming and hopefully be able to enhance shareholder value.

Speaker 11

I missed it. Thank you again for taking my questions.

Speaker 2

Thank you.

Operator

Our next question is from Neil Jen with Laidlaw and Company. Please proceed with your question.

Speaker 12

Thanks for taking the question. In terms of Japan's COVID market, is that still mostly government or is that whether there's also a commercial aspect to evolve maybe in this year or in the future? How you guys see?

Speaker 2

That's a good question. Okay.

Speaker 3

Yes. Yes. I mean the good news, Yale, is that the government has given kind of a guidance for what they're going to support, right? And so if you look at just the population of the people over 65, that's pretty substantial, 32,000,000 to 36,000,000 people, right? And then that doesn't include people that are compromised or have chronic illnesses, right, that certainly are going to be in a position to want to be vaccinated as well.

Speaker 3

So when you look at that, that's a pretty significant part of the population, at least something in the 30% to 40%, maybe 50% of 125 million people. So that's quite substantial, right? And so we're very excited about the opportunity and it's not trivial. And remember, it's going to be a Meiji vaccine made in Japan. So there's a lot that I think the government is very proud of and Meiji is very proud of.

Speaker 3

CSL certainly excited to be supporting this program and launching it globally now. So there's a lot of good news behind it. In terms of what it's be private pay versus government pay, maybe we'll make all those announcements when the time is right. But it's something that we're not really concerned about at this point. Yes.

Speaker 3

And the only thing I

Speaker 2

would add to that is that Meiji has a strong track record with working with the government to help with these subsidized vaccines in the flu space. So they've been doing this for years, and we're working with the ideal partner that's done this before. All right.

Operator

We have reached the end of the question and answer session. I would now like turn the call back over to Joe Payne for closing comments.

Speaker 2

Yes. Thanks, everyone, for participating on the call. And if there's any remaining questions, don't hesitate as always to reach out to the team. We'll get back to you as soon as we can. All right.

Speaker 2

Thanks, everyone. Good night.

Operator

This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.

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Earnings Conference Call
Arcturus Therapeutics Q4 2023
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