Arcturus Therapeutics Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
March 6, 2025

There are 15 speakers on the call.

Operator

Please note today's call will be recorded and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Neda Sapharzadeh, Vice President and Head of Investor Relations, Public Relations and Marketing.

Operator

Neda, please go ahead.

Speaker 1

Thank you, operator. Good afternoon, and welcome to Arc Thera Therapeutics quarterly financial update and pipeline progress call. Today's call will be led by Joe Paine, our President and CEO and Andy Sassine, our CFO. Doctor. Pat Cibecula, our CFO and CEO, 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 K 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'tarexia 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

Speaker 3

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 with our vaccine franchise led by COSTAVE. We're very pleased to receive European Commission approval for CoStave, the world's first approved self amplifying mRNA COVID-nineteen vaccine. The centralized marketing authorization of CoStave provided by the European Commission is valid in all 27 European Union member states and three additional European Economic Area countries.

Speaker 3

The approval is based on positive clinical data from several studies, including an integrated Phase onetwothree study demonstrating CoStave's efficacy against COVID-nineteen, safety and tolerability and a Phase three COVID-nineteen booster trial, which achieved higher immunogenicity results compared to conventional mRNA COVID-nineteen vaccine comparator. The European regulatory approval results and milestones from CSL Securus, our global vaccine partner. These milestones will be disclosed in coordination with CSL. Our team continues to work diligently with CSL to prepare CoStave registration for The United States and The United Kingdom. The Picostave U.

Speaker 3

S. BLA filing is anticipated for later this year 2025. On the manufacturing front, Meiji Seika Pharma, our Japanese vaccine partner, submitted a manufacturing and marketing application in February for a new vial presentation of COSTAVE provided in a vial containing two doses to the Pharmaceuticals and Medical Devices Agency or PMDA in Japan. Meiji Seika Pharma aims to receive approval for the two dose vial in time for the autumn season of 2025. The new two dose vial presentation will enhance convenience and daily practice and improve ease of vaccination in an individualized setting such as medical clinics.

Speaker 3

In January, Meiji along with our manufacturing joint venture, Arcalus, received approval from the Ministry of Health, Labor and Welfare or MHLW to add domestic commercial manufacturing sites in Japan for CoStave. Domestically produced products with active pharmaceutical ingredients manufactured at our Calus's facilities and formulated at Meiji Seika PharmaTech are now able to be shipped for commercial use in Japan. We continue to progress our STAR self amplifying mRNA platform pipeline in other infectious disease targets. In January, the company announced the initiation of a Phase one study of ARCT2304. This is a self amplifying mRNA vaccine candidate for active immunization to prevent pandemic influenza disease caused by the H5N1 virus also known as the bird flu.

Speaker 3

The randomized placebo controlled Phase one trial is ongoing at multiple sites in The U. S. And designed to enroll approximately 200 healthy participants. Screening of study participants began in November 2024 with the first participant enrolled in December 2024. The clinical study is fully funded by the Biomedical Advanced Research and Development Authority also known as BARDA.

Speaker 3

Interim data will be available later this year in the second half of twenty twenty five. Moving now to our exciting pipeline of mRNA therapeutics. I will begin with an update on ARCT-thirty two. This is our messenger RNA therapeutic candidate for cystic fibrosis. In December 2024, the company dosed the first participant in an open label Phase II multiple ascending dose study in adults with CF who are not eligible for CFTR modulator therapy or are not taking CFTR modulators due to drug intolerance, poor response or lack of access to modulators.

Speaker 3

Each adult participant in the Phase II CF study is expected to receive daily inhaled treatments of ARCT-thirty two over a period of twenty eight days. Our Phase II trial involves a relatively low number of study visits, only eight study visits and only twelve weeks of follow-up easing the burden of participation for patients across all sites. Safety and tolerability data will be important given that ARCT-thirty two is likely to be a daily or every other day inhaled treatment. With respect to efficacy and based on historical precedence in the CFTR modulator space, an FEV lung function improvement of 3% in our Phase II trial would likely justify advancing ARCT-thirty two further into development. Deteriorating lung function is a significant challenge in CF subjects that do not benefit from modulators.

Speaker 3

Reversing this deterioration would address a very significant unmet medical need in this subset of the CF community. The company expects to provide interim data from CF participants who completed dosing in the ARCTO32 Phase two study by the end of Q2 twenty twenty five. The interim data will likely include multiple subjects at multiple dose levels. Moving on to our ARCT810 program. This is our messenger RNA therapeutic candidate for ornithine transcarbamylase deficiency.

Speaker 3

In December 2024, the company initiated dosing of the first OTC division participant to receive a zero point in a Phase two multiple ascending dose study. Each adult and adolescent participant in the open label Phase two study is expected to receive five intravenous infusions of ARCT810 over a period of two months. The company previously announced the completion of the dosing phase in a placebo controlled European study enrolling eight OTC division individuals. The company expects to provide interim data from participants who completed dosing in the ARCT810 U. S.

Speaker 3

Phase two study by the end of Q2 twenty twenty five. Finally, we are excited to have announced the appointment of Doctor. Moncef Sloughi as Chair designate in February. Doctor. Sloughi has been serving on the company's Board of Directors since June 2024, and he has a strong proven track record in the biotech and pharmaceutical industry.

Speaker 3

We look forward to working with him in this exciting year for Arcturus with multiple clinical studies and their associated data readouts. With that, I will now pass the call to Andy.

Speaker 4

Thank you, Joe, and good afternoon, everyone. The press release issued earlier today includes financial statements for the fourth quarter and fiscal year ending 12/31/2024, and provides a summary and analysis of year over year financial results. Please also reference our Form 10 ks, which will be filed today for more details on the financial performance. Before we begin the financial review, I wanted to give you some highlights from our Coast vaccine program and our Japanese JV partner, Arthalis. We are thrilled about the European Commission approval of COSDASE, and I'm happy to announce that we have achieved several milestones related to this approval.

Speaker 4

More details regarding milestones will be provided on the first quarter earnings call. GSL reported to us, Turos, that our share of gross profit from the sale of Coastwave during the quarter ended 12/31/2024 with approximately $28,000,000 This amount will be credited against Arcturus share of the COVID-nineteen development costs paid by CSL. When CSL recouped 40% of the total development costs of CoastBase 19 program, our tourists will begin to receive shared net profit payments from CSL for all future sales of CoastBase. Ocalus remains an important strategic manufacturing asset for Arcturus with respect to our vaccine and cystic fibrosis program. We are very pleased with the recent $20,000,000 investment by Meiji Saca Pharma, as well as their involvement on the Arcalis Board of Directors.

Speaker 4

Arcalis and Meiji Saca Pharma are committed to advancing the development, production and supply of mRNA vaccines in line with the strategy for strengthening vaccine development and production systems adopted by the Japanese government. This is highlighted by the recent manufacturing and marketing approval of Co State to include domestic manufacturing sites in Japan. Meiji and Arcalis are in the process of obtaining approval for a two dose Lyle coast days vaccine targeting the latest COVID strain. I will now provide a quick summary of our financial results. For the year ended 12/31/2024, we reported revenues of $152,300,000 a decrease of $14,500,000 from the $166,800,000 reported for the year ended 2023.

Speaker 4

The decrease was due to lower milestone achievements from the CSL agreement, offset by increased BARDA revenue due to progress of the pandemic flu program. For the three months ended 12/31/2024, we reported revenues of $22,800,000 a decrease of $8,100,000 from the $30,900,000 reported in the same period in 2023. The decline was attributable to lower milestones achievements from the CSL agreement during the fourth quarter of twenty twenty four. Total operating expenses for the year ended 12/31/2024 were $248,000,000 compared to $245,000,000 for the year ended 12/31/2023. Total operating expenses for the three months ended 12/31/2024 were $56,200,000 compared to $49,100,000 for the three months ended 12/31/2023.

Speaker 4

Research and development expenses were $195,200,000 for the year ended 12/31/2024, compared to $192,100,000 for the year ended 12/31/2023. Additionally, research and development expenses were $43,800,000 for the three months ended 12/31/2024 compared to $36,600,000 for the three months ended 12/31/2023. The increase in R and D expenses for both quarter and the full year was primarily driven by higher clinical trial costs associated with our OTC and CF program, as well as the COVID-nineteen and lunar flu programs in collaboration with CSL. However, the increase was partially offset by a reduction in manufacturing expenses related to clinical trials and drug supply agreements as part of the COVID-nineteen program. General and administrative expenses were $52,800,000 for the year ended 12/31/2024, compared with $52,900,000 for the year ended 12/31/2023.

Speaker 4

Additionally, G and A expenses were $12,400,000 for the three months ended 12/31/2024, compared to $12,500,000 for the three months ended 12/31/2023. These expenses remain relatively consistent between the two periods. We expect general and administrative expenses to decrease slightly during the next twelve months, driven by lower shared base compensation costs and a reduction in general and administrative expenses related to the commercial manufacturing transition of the COVID program to CSL. For the year ended 12/31/2024, Naturus reported a net loss of approximately $80,900,000 or $3 per diluted share compared to a net loss of $29,700,000 or $1.12 per diluted share for the year ended 12/31/2023. Additionally, for the three months ended 12/31/2024, Ocora supported a net loss of approximately $30,000,000 or $1.11 per diluted share compared with a net loss of $11,700,000 or $0.44 per diluted share for the three months ended 12/31/2023.

Speaker 4

Cash and cash equivalents and restricted cash was $293,900,000 as of 12/31/2024 and $348,900,000 on 12/31/2023. Alturas achieved a total of approximately $473,100,000 in upfront payments and milestones from CSL as of twelvethirty onetwenty four and expect to continue to receive future milestone payments from CSO supporting the ongoing development of the vaccine program. For fiscal year 2024 and 2023, we burned about $55,000,000 and $45,000,000 respectively, which was within our internal expectations. We anticipate that our burn will increase in the next two years driven by our CF and OTC program as they progress through their respective Phase two multiple ascending dose trial. Furthermore, as our COVID program transitioned to a commercial phase, our development milestones with CSL will decline over the next year.

Speaker 4

However, I am happy to report that based on the current pipeline and program, the cash runway remains strong and is expected to extend until the end of the first quarter of twenty twenty seven. In summary, we believe that 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. We look forward to an exciting year in 2025 and we anticipate potential interim Phase two data readout for OTC and CF programs along with the continued development of the vaccine program. I will now pass the call back to Joe.

Speaker 3

Thanks, Andy. Twenty twenty four was a historical year for Arcturus as we transition to a commercial company with the launch of CoStave. And as we begin 2025, we look forward to another transformative year with key clinical data for our therapeutics and vaccines programs coming forward. So with that, let's turn the time over to the operator for questions.

Operator

And we'll take our first question from Lily Nesongo with Leerink. Your line is open.

Speaker 5

Hi, good afternoon and thank you for taking my question and for the uptake. I had maybe one question on the vaccine pipeline and I guess another one on the rabies pipeline. So for the vaccine collaboration, how should we think about the cadence of development milestone within the CSL collaboration? And are there any updates in terms of the expectation for the flu vaccine program and a potential combo program with COVID flu?

Speaker 3

I can address the and hi Lily, thanks for calling in. But I'll address the flu question and then Andy can address the cadence of milestones. But CSL generally is providing the guidance for the flu program. We completed our Phase one for the quadrivalent version of the vaccine. And we remind people that CSL has a global license for the flu program.

Speaker 3

This is an area that's very important to them. So they will be providing specific updates on what's next in that area of the flu pertaining to any sort of trivalent or COVID flu combos, etcetera. So we'll be deferring to them. With respect the milestone cadence, Andy, do you want to address that?

Speaker 4

Sure, Lily. Thanks for the question. Yes, we will continue to receive milestones from CSL throughout the year. And as we've articulated, we have earned milestones related to the European regulatory filing. And we'll provide more details with respect to that in the first quarter call.

Speaker 4

Hopefully that will answer your

Speaker 3

question.

Speaker 5

Thank you. And maybe just a quick question moving on to the revenue pipeline, especially as it relates to the CS program. How should we think about potential differentiation from competitors in development, especially within the mRNA, the aerosol mRNA competitors?

Speaker 3

Sure. Yes, we're definitely different from the gene therapy and gene editing approaches. But within the mRNA space, we're different. We're different with respect to the mRNA molecule itself, of course, our lunar lipid nanoparticle delivery technology and even our manufacturing and purification differences. So what do I mean by mRNA?

Speaker 3

I would say the mRNA sequence is likely to be different with increased stability and translation. Our lunar lipid nanoparticle technology is proprietary and clearly different. Our IP and know how and manufacturing and purification may also be meaningful. And all of these differences were showcased in our preclinical animal studies and our data set there and also in our early human clinical studies. So I think there's fundamental chemical and modification differences to both the mRNA and the lipids in the LUNAR technology, but also take into consideration the know how and IP associated with manufacturing and purification of the messenger RNA.

Speaker 5

Thank

Speaker 3

you. Thank you, Lily.

Operator

We'll move next to Yasmeen Rahimi with Piper Sandler. Your line is open.

Speaker 6

Good morning, team good afternoon, team. Thank you so much for the great updates. Would love to spend some time, I think a lot of investors are very much looking forward to the CF interim data that's expected here in 2Q. Could you maybe talk about, sort of I know that you have dosed 12 CF patients sort of at that interim look like what is the size of the cohort? Will we get one or two doses?

Speaker 6

And what do you want to show at this interim look to really establish, it's strong POC in this market? Sorry, that's very deep pronged questions around it, but I appreciate if you could just speak on

Speaker 3

that. Sure, sure. So I think in clinicaltrials.gov, we've communicated that the size of the Phase two trial is approximately 12 people. We do have flexibility to increase that number. In terms of guidance, we've mentioned that we intend to have an interim update that will involve multiple patients in multiple dose levels, but not a specific number has been guided at the end of the second quarter this year.

Speaker 3

In terms of a bar for success or something like that, we highlighted on today's call and I'll reiterate here that an FEV lung function improvement of 3% in our Phase II trial would likely justify advancing ARCTO32 further into development. And this is simply based on historical precedence in the CFTR modulator space. And I believe that's the color you were looking for, Yaz. Is there a follow-up question?

Operator

Yes, maybe you may need to check the mute button.

Speaker 6

Oh, sorry. I was gonna ask, thank you. I was gonna ask, do you plan to present this data when it becomes available or do you hope to get that in at a key conference? I don't know if you have any visibility in terms

Speaker 3

of Yes, we haven't guided how to share the data That

Speaker 6

is a disclosure. Okay.

Speaker 3

Yes, whether it's a press release or a specific call or a conference or a publication, we haven't provided any of that guidance. Just that by the end of the second quarter, we'll be providing interim data.

Speaker 6

Okay, great. I'll jump back in the queue. Thank you.

Speaker 3

Thank you.

Operator

We'll take our next question from Seamus Fernandez with Guggenheim Securities. Your line is

Speaker 7

open. Hi, guys. This is Evan Lang on for Seamus Fernandez. Just for me, first on cystic fibrosis. First, could you just comment on how enrollment has been progressing so far?

Speaker 7

And just given the focus on those complete dosing, I guess, how, I guess, then to say split of Class one and get your CFTR in tolerable patients? And then also, I guess, how quickly or what next steps there would be to advance your pivotal study? And then on COSTAVE, glad to see the European approval there and the first royalties attributed to from Japan. Just can you expect at what point you would expect visibility into orders for 2025? Thanks.

Speaker 3

Okay. So first of all, with respect to enrollment and an update there with CF, we remain on track to provide interim data at the end of the second quarter. We have multiple sites already open and active and we're engaging several more and those are highlighted in different CF tracking sites provided by the CF Foundation. So you can follow updates there and also on clinicaltrials.gov. But it's very active and we remain on track there.

Speaker 3

With respect to the COSTAVE visibility on Japanese sales, is that maybe you want to clarify that for Andy, but can you clarify the question?

Speaker 7

Yes. For Kyiv, just with the kind of order dynamics that may be typical in Japan or Europe, any kind of comments on, I guess, when that ordering pattern happens and what point you or CSL would get more visibility into, I guess, quantity of orders for the next flu season? And then on cystic fibrosis, I also wanted to ask on, I guess, split of Class I versus CFTR in tolerable patients expected? Thanks.

Speaker 3

Okay. Andy proceed with the first question, I'll take the next one.

Speaker 4

Sure, Evan. As you probably noted recently, the AGM, our catalyst and CFL have petitioned the Japanese PMDA to get a two dose Lyo approved here in order to be ready for the next COVID strain and consequently as they go through that process, hopefully it'll happen in the first half of this year. With respect to their orders, we really can't comment on that. It will be an AG that will provide that guidance and hopefully, they'll share that as soon as possible. But we're excited for the new format and hopefully we'll enable them to have a more successful launch with a two dose bio format going forward.

Speaker 3

And with respect to the Class I and non Class I, really it's one group. There's several, several genetic versions of this disease. Class I is well understood because those are considered null patients and they do not have any CFTR in their lungs. But with respect to the other subclasses, these are folks with multiple mutations or just very dysfunctional, not respond or benefit from modulators. You can imagine that they present in a similar manner and their lungs deteriorate in a similar manner to Class one subjects.

Speaker 3

So they're bundled together in this to represent one group where there's eighteen percent approximately within the CF community that do not respond to modulators, if you take that eighteen percent number and cut it in half, that would be nine percent that would represent the Class I null patient population. So you would anticipate approximately half of our of the folks in our Phase II trial to be from Class I. But I want to reemphasize that they're all in the same boat. They're all in the same level of unmet medical need and they all want the same thing, which is a functional CFTR expressed in their lungs. Thank you, Evan.

Operator

We'll take our next question from Myles Mentor with William Blair. Your line is open.

Speaker 8

Hi. Congrats on the progress and the EU approval for cost over. So it's good to see that. Two for me on CF. The first one is just a clarification that 3% improvement bar to take this therapy forward, if you do see that, is that on an absolute FEV1 basis or is that on a percent predicted FEV1 basis?

Speaker 8

It's the first one. The second one is this is an open label study. I believe you're adding solbutamol into the administration process here. So would that have any potential impact on FAV1 readouts alone? And just wondering whether you're factoring that into the interpretation of your data?

Speaker 8

Thanks very much.

Speaker 3

Yes. Well, the first question, yes, this is the precedent that's well established in the modulator space is it was an absolute number. So that's an absolute improvement of three percent. We do remind investors that deterioration rates in the non Delta five zero eight community are more rapid and more significant. So the delta would be actually more significant with a 3% absolute improvement is what I'm trying to emphasize.

Speaker 3

But yes, that's the precedent 3% there and it would be an absolute number. With respect to your question about albuterol, the pretreatment with albuterol will have no, I guess, effect on the analysis of the FED response. The subjects when the subjects come in to have their lung function measured, it's timed before they receive the albuterol for the next treatment, right? So albuterol is very short acting and only lasts a few hours, so it won't have any impact or effect on any measurements on the following day.

Speaker 8

Great. Thanks for the questions.

Speaker 3

Yes. Thanks, Myles. Good to hear from you.

Operator

We'll take our next question from Whitney Iljim with Canaccord Genuity. Your line is open.

Speaker 9

Hi. This is Julien Kim on for Whitney E. Jim. Thanks for taking our question. Maybe two quick ones from us.

Speaker 9

First, can you give any clarity on the magnitude of cost that CSL needs to recoup before our tariffs will begin to receive profit payments? We know you said the 40% of costs, but any specifics on development costs to help flush out that math? And secondly, now that Cost Safe has received approval in the EU, what are the next steps towards commercialization? Specifically, will things go country by country or will there be advanced orders or anything

Speaker 10

you can tell us about what

Speaker 9

to expect next? Thanks so much.

Speaker 3

Andy, go ahead.

Speaker 4

No, thanks for the question. We are excited about the European approval and so is CSL. And the good news is they're in charge of the commercialization process in Europe. And with all of their experience in the flu program, we're kind of in a good position here to rely on them to lead that whole progress. And frankly, I think it would be immature for us to comment on that since it's their program.

Speaker 4

But we're excited and certainly looking forward to it. With respect to the amount that we reported that they shared with us, the $28,000,000 was our share of the revenue, the gross profit that we've recorded, they recorded in the fourth quarter. And so that's good news that we're calling away at the 40% of our total development expenses for the program. We haven't given specific guidance as to what the total is, but it is good progress for us and certainly we would hope that we'd be able to achieve revenue sometime in the next few years. The good news is that it doesn't impact our guidance and our cash runway does not incorporate any revenue from COSA and you per our guidance is until the end of the first quarter of twenty twenty seven.

Operator

We'll move next to Pete Stravopoulos with Cantor Fitzgerald. Your line is open.

Speaker 11

Hi, Joe and Andy. Congratulations on the progress and including the EU approval. I have a question for 32 study. Can you just provide a little detail around the safety monitoring? And what are the key parameters for triggering, let's say, a pause in the study when it comes to LUM or pulmonary based adverse events?

Speaker 11

Is there a low threshold, say, grade one or two or a high threshold, grade three and four?

Speaker 3

Yes. Well, just as a recap, thanks for the question, Pete. Thanks for calling in. There was no serious or severe adverse events observed even at the highest administered doses in our Phase one study in healthy volunteers and CF patients. The first dosed patients in the Phase two study are obviously ongoing.

Speaker 3

And if there was any major events, then we'd have to update the market accordingly there with respect to safety. Phase two, we are reviewing safety and tolerability at predetermined time points. We have a data and safety monitoring committee that's staffed by the CF Foundation TDN, this network of clinical sites under the umbrella of the CF Foundation, all of which have long term experience with clinical trials. So when it comes to a major lung or pulmonary based adverse events, there's an appropriate threshold applied, and but we haven't disclosed the details of that. But I just wanted to provide some context as to our level of experience there.

Speaker 3

Okay. All

Speaker 11

right. Thank you for that. Moving on to 810, can you just briefly touch on the study design, meaning the types of patients that you're enrolling, are they controlled, uncontrolled, standard of care, not on standard of care and any genetic subtypes and age range?

Speaker 3

Great. Yes. For OTC, as we've transitioned a Phase II trial here in The United States, we are gaining access to younger and more advanced disease patients. I can share that. But at the end of the second quarter, we look forward to sharing an update on the impact on these patients.

Speaker 3

But with respect to subtypes, I haven't had line of sight into that personally. So I don't even know what specific genetic subtype of OTC deficiency they are. But I can comment and confirm that generally speaking, we're starting to get access into younger and more advanced disease patients.

Speaker 11

Okay. And one last question, if you don't mind. The Phase one study for H5N1 vaccine, so interim data are expected in, I guess, the second half. What do we expect to see there? Is it doses for multiple cohorts, sorry, data from multiple dosing cohorts and the different vaccination schedules or piecewise?

Speaker 3

Well, just first an update

Speaker 11

on

Speaker 3

we initiated dosing in December, but greater than 80 of the patients have already been enrolled and we're looking to complete enrollment here just at the end of this first quarter. So we're well on track there with respect to recruitment. And then with respect what was the other element of your question?

Speaker 11

So the interim data, what do we expect to see there? Oh, yes.

Speaker 3

The interim data is there's multiple doses and multiple administrative types of administrations, right, prime boost versus others that are being investigated by BARDA in younger and older adults. So it's a really diverse fulsome data set. It will be a couple hundred people and the timing of that is likely in the second half of this year, but it will include a lot of immunogenicity data and different dose levels, different prime boost regimens, etcetera.

Speaker 11

All right. Well, again, congratulations on the quarter and thank you for taking my questions.

Speaker 3

Yes. Thank you, Pete.

Operator

We'll move next to Tom Schroeder with BTIG. Your line is open.

Speaker 12

Thanks for the update. Nice to be involved. A lot of comments about deterioration of lung function. I'm curious what your preclinical data says, how that interplays with your ability to deliver CFTR. If the lung is too inflamed or too coated, does it get very spotty?

Speaker 12

And what kind of data do you collect on patients that might inform us? I'm curious if it works well in some patients and not at all in others, how much of a theory there will be as to why? Then I have a vaccine follow-up.

Speaker 3

Well, Pat can provide some context on the preclinical data set that on yes, go ahead, Pat.

Speaker 10

Yes, I mean, I think it's a great question. When we did our initial preclinical work, we did a lot of work on the effect of mucus, the effect of sort of clogging on the delivery of our nanoparticles and the delivery and the expression of mRNA. And we've optimized our formulations so that they're stable in sputum, for example, and it can diffuse and get into the right cell type. And we did all that work pre clinically, which really led into sort of our doing our initial clinical trial work. Just so you're aware, when patients do come in, they come with a diverse genetic background, right?

Speaker 10

So the lung function varies from different patients, but we do anticipate after the initial dosing, after clearance of the mucus, gradually these the nanoparticles will become more efficacious and over time will be more they should feel it should be delivered to sort of deeper lung and really go at the cause of the disease.

Speaker 8

Got it. And if

Speaker 12

I can follow-up, how excited are you about a seasonal flu vaccine? The other mRNA companies have shown really effective vaccines, but the reactogenicity is so bad, they're not probably competitive. Is that high on your list or is it kind of you have enough to do? Thanks.

Speaker 3

Yes. Definitely these changing viruses are attractive commercial opportunities for the mRNA vaccine space in general because of clock speed advantages in manufacturing and distribution. So self amplifying mRNA is would be considered one of those companies that would be attracted to markets where the virus is changing and that includes COVID and flu. The advantages that we bring to the table versus the competitors in the space is we're self amplifying mRNA. That means the dose would be much lower.

Speaker 3

And also we have shown in with clinical trial data and peer reviewed publications that the duration of immunogenicity is extended to be once a year instead of multiple times a year. So I think most people would like a lower dose option that has an extended more durable immune response and that has complete coverage throughout the year, not just for the season. And that would that's how we would have competitive advantages within the mRNA space.

Speaker 13

Okay. Thank you.

Operator

We'll take our next question. My apologies. We'll take our next question from Ed Ayres with H. C. Wainwright.

Operator

Your line is open.

Speaker 13

Hi, good afternoon, everyone. This is Thomas Yip asking a couple of questions for Ed. Congratulations on the achievement in 2024. So first question on CF, clearly a lot of interest there. And given the evolving landscape for combination treatments in CF, how do you see thirty two setting in either as a competitive or complimentary agents?

Speaker 13

And also can you remind us how large is your total addressable market estimate?

Speaker 3

Yes, in terms of well, first of all, we're very excited about the opportunity in CF. We think that transient mRNA therapeutics and protein replacement therapeutics are ideal, especially for those that do not respond to modulators. And in terms of the size of the CF community would be very interested in something that could address their unmet medical need. That is a massive commercial opportunity, especially for a company of our size. So I think you can look to the competitors in the space and see what the opportunity is there.

Speaker 3

But did I address your question, Ed?

Speaker 4

Yes.

Speaker 13

Thank you. Perhaps, pushing here to ATN, one more question from us for the interim readout and also coming to the second quarter. In addition of safety and PK, what will you consider to be a bar or success from efficacy standpoint in OTC?

Speaker 3

Well, several biomarkers are being measured and evaluated in our clinical studies. So clinical studies, so including ammonia and several amino acids and multiple methods to evaluate urea genesis. So our biomarker strategy is becoming more clear. We haven't communicated that and shared that with the public. We intend to communicate the strategy in more detail later this year, likely concurrent with the interim dataset.

Speaker 3

We haven't promised that, but that's likely. So you can imagine that it's not just about ammonia. There's other amino acids that are implicated in urea cycle disorders like ornithine transcarbamylase deficiency. And we're one of the leading companies to understand what an mRNA therapeutic can do to not only restore a healthy urea cycle, but what impact that will have on what specific biomarkers that could drive and to establish potential clinical endpoints in pivotal studies.

Speaker 13

Understood. Thank you again so much for taking the questions. Looking forward to the progress this year.

Speaker 3

Thank you, Ed.

Operator

We'll move next to Yanan Zhu with Wells Fargo. Your line is open.

Speaker 14

Great. Thanks for taking the questions. So first, I was wondering ahead of the CF data readout, how should we think about variability when we see the data? I wanted to mention that for your Phase one study, there's some variability and in some patients it could be greater than 3% from measurement to measurement. So I guess what could sounds like this will be a few multiple patients, multiple doses, But of course, this is not a very large study that it's easier to a little easier to discern the signal?

Speaker 14

Thanks.

Speaker 3

No, it's a great question, Ann. Thanks for calling in. Variability is something that we have to watch closely. Now in our previous when we shared FEV data previously, that was from a Phase 1b safety study. It was not an efficacy study.

Speaker 3

And so of course, there would be elevated variability with just two administrations. In the Phase two study that we're undertaking, this is twenty eight daily doses and several measurements taken. So that will help alleviate a lot of the concern on variability because this is an efficacy study measuring efficacy with FEV and designed as such. So we believe that will be the case. Now clearly, the higher the FEV, the stronger your statistical conviction on how meaningful this data is.

Speaker 3

But the 3% that I referenced earlier on the call and in the Q and A session is just simply referring to historical precedence in the modulator community as justification to proceed. It states the obvious that we would like to get higher than that to address statistical significance and variability concerns that you just shared.

Speaker 14

That's great to hear. May I also ask is a potential dose response should be something we look for or maybe at this stage it's not in terms of

Speaker 3

No one has ever established that or at least hasn't shared that data in the history of mankind. So we would be or us and our competitors would be the first company ever to show that there is a dose response for inhaled mRNA therapeutics in CF patients. But there's rationale to expect that that could be the case. The higher the dose, the more the coverage, the more of the CFTR, the more the biochemical and pharmacological response. So there isn't any reason to justify that there isn't a dose response.

Speaker 3

We did see a dose response in preclinical animal models as well, especially the challenging ferret model. So I think the general consensus is that we would expect a dose response in human beings, but I like to remind everyone, this is the first of its kind and we just don't know what will happen, but that would be fantastic if we saw that.

Speaker 14

Got it. May I also ask about safety? I think the dosing frequency is daily inhalation. How do we think about an OMP delivered product inhaled daily just in general? Thanks.

Speaker 3

Yes. So we've done a lot of preclinical tox studies that are chronically dosed tox studies for injectable and inhaled therapeutics in our preclinical animal models. And we haven't seen any concerns pertaining to accumulating lipids, for example, or accumulating technology. In our intravenous program for OTC deficiency, we saw that these lipids are no longer measurable after a short period of time. So we have conviction or confidence that we won't see anything too challenging with respect to safety and tolerability, but that's why we have to collect the data with 28 consecutive doses to clearly establish that.

Speaker 3

Did I address your question, Yunnan?

Speaker 14

Yes. If I may ask a quick question on cost save, could you clarify how many doses have been sold in the last quarter? And how do we think about the first quarter relative to the last quarter adjusting for seasonality in general? Thank you.

Speaker 3

Well, yes, Meiji communicated their recent sales guidance in the February on their investor call. But Andy, do you want to provide some color to address this question?

Speaker 4

Yes. Meiji had originally planned to sell around 4,000,000 and they basically changed their guidance to less than half of that. So that's the latest that we've heard from NAGI and CSL. And as soon as we get more clarity, I think, we'll be more than happy to share that with the market as soon as possible. But we're rooting for them and we anticipate that the two dose LIO format will certainly help ease and improve the efficacy of the administration, certainly the logistics around Japan.

Speaker 4

But that's pretty much the latest that we have from Meiji.

Speaker 3

And the only other marketing difference I would add is the last time the Meiji sales force was looking to distribute and sell this vaccine. They were the only country in the world that had approved for COSTAFE. And now there's 31 countries that haven't approved that have approved COSTAFE. And so they'll be armed with that level of confidence and conviction as they enter the 2025 market. So we're definitely cheering for them.

Speaker 14

Great. Thanks for all the additional color. I appreciate it.

Speaker 3

Yes.

Operator

We'll move next to Yale Jin with Laidlaw and Company. Your line is

Speaker 2

open. Good afternoon and thanks for taking the questions and congrats on the progress. In terms of the CF mRNA development, we noticed there's another competitors probably going to report a data about a similar timeframe as yours. So just like to see what do you think about the comparison between these two before they either one of you reporting the data? And then I have a follow-up on the COVID side.

Speaker 3

Yes, it's definitely an exciting competitive space. I think the first round of competitive performance will be evaluated heads up in Phase II trial data. I think everyone will compare our data to the competitors. If any of the other programs make it into Phase III trials, that obviously implies that they saw FEV percentage improvements. And so I fully expect the focus and this is just our my and others here at Arcturus, we expect the focus will elevate on safety and tolerability for a daily treatment.

Speaker 3

But in the near term, the focus will be on FEV. And then as we transition to Phase III trials, I think it will be obvious for a daily inhaled treatment that the focus will look towards safety and tolerability and that will leverage some of the strengths of our lunar technology from others.

Speaker 2

Okay, great. Maybe just a follow-up here in terms of the two dose vaccine, COVID vaccine for the next for the upcoming, I guess, winters. What are the key strength the vaccine was against? COVID-nineteen?

Speaker 3

Yes. The application is in place for the two dose file presentation, but we have not included the updated variant of concern that she typically provided in the spring by the WHO and typically the PMDA and the Japanese regulatory authority aligns with the WHO selection, but that should unfold in the coming months. And that's what we've seen in the past few years and that's what we expect for this year.

Speaker 2

Maybe one last question for Andy, which is that for the $28,000,000 your shares from the sales, I'm just curious, is that just a two way split or three way split because Meiji also I assume is part of that share sharing that revenue that profits?

Speaker 4

Yes, no, very good question. It is a three way split between Meiji and CSL and Artura. And so, as I alluded to in my previous call, there's a two tiered pricing system and this is the first tier of that mechanism. And of course, the second tier would relate to the sell through, right? And how much did they actually sell the vaccine for?

Speaker 4

And they'll be sharing that information with CSL, who will then do the calculation on the differences between the two prices and allocate those revenues accordingly. So hopefully we'll have more color sometime later this year, but the mechanism is a little complex and nevertheless, we're grateful that we have good partners here to help us figure out all these calculations.

Speaker 2

Okay, great. Thanks a lot and congrats on the promise.

Speaker 3

Thank you.

Operator

And this does conclude the Q and A portion of today's call. I would now like to turn it back to Joe Paine for any additional or closing remarks.

Speaker 3

Just to thank you to everyone participating on the call. If there's any remaining questions, don't hesitate as always to reach out to our team. We'll get back to you as soon as we can. Thank you everyone and good night.

Operator

This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful evening.

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Earnings Conference Call
Arcturus Therapeutics Q4 2024
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