Good morning, everyone. Thank you for joining us for this session with Arcturus Therapeutics at the 44th Annual Canaccord Genuity Growth Conference. My name is Whitney Ijem. I'm one of the biotech analysts here at Canaccord, and it is my pleasure to turn it over to President and CEO, Joe Payne. And I will note that Andy Sassine, CFO, will be joining for the Q&A at the end as well. So, Joe.
Yeah, thanks. So, my intent here is just to take about 10 minutes to go over our corporate deck. A lot of some information here will be new, but then we'll turn the time over to our discussion. I look forward to it, Whitney, and thank you for the invitation. Just a couple of things to point out and remind people is that we have to support us in this messenger RNA, you know, vaccines and therapeutics company, we have significant partnerships that help support these programs. On the vaccine side, we have a partnership with CSL that's very meaningful. The CF Foundation supports our CF program, and the United States government, through BARDA, is supporting us in the pandemic flu program for H5N1 bird flu.
The proprietary technologies is, you know, we have expertise in mRNA manufacturing and delivery, and over 400 patents and patent applications. We're known for our delivery technology. This is exceptionally important for therapeutic applications of mRNA, and this is a key point of differentiation for us. We need a biodegradable and highly optimized lipid nanoparticle technology for different cell types. We apply these technologies to our proprietary and pipeline of Arcturus-owned mRNA therapeutics. You can see on the far right, just drawing your attention there, that we have meaningful milestones for both our lead programs. We have phase II interim data that's coming out of Europe. We have 8 subjects that have been participating in a phase II study.
Happy to report that we have completed dosing in that cohort at 0.3 mg per kilogram. Two received placebo and six received drug or... And that data will be read out sometime in Q4, and we look forward to sharing that later this year. And then on the CF program, we recently filed a phase II IND in the U.S. Usually an IND is filed at phase I, but we did our phase I and phase I-B studies outside of the U.S. And so we had a considerable amount of data going into this IND application, and we're very appreciative to the team that we were able to get it done in an efficient manner.
We're now well on track to initiate that phase II trial and start to collect data for the CF program in the second half of this year. The partnered programs continue to progress. We're excited to launch our first product, KOSTAIVE, in Japan. We're well on track for that. The request was for us to manufacture 4 million doses, and we remain on track to deliver those in Q3 and Q4 to support the launch in Q4 and into Q1 of next year for Meiji, our partner, to distribute KOSTAIVE in Japan. We have filed the MAA in Europe, and that process is ongoing. This is an exciting process for us in Europe because this is the first-ever self-amplifying mRNA product there. We're going through that process to get approval of KOSTAIVE in Europe.
Subsequent to that, we fully intend to get this approved in U.K. and the United States of America. We going to, we have a bivalent study, phase III study in the Southern Hemisphere. The reason why this is strategically important for the company is we are collecting data in multiple, ethnicities, and this will help support regulatory applications globally, not just in the U.S. Likewise, with the, the XBB, trial, phase III trial. So we have multiple phase III trials building, a significant database to support, multiple regulatory filings for, for KOSTAIVE. LUNAR-FLU is also a very important, program, to our partner, CSL. Flu remains a priority for them. We have a very active collaboration. Multiple constructs are being evaluated. This one here reads quadrivalent.
That's actively being developed in the clinic, but you should also be aware that the trivalent version of this is also of interest because that's ultimately for a standalone flu shot, is most likely what will be commercially. It will be the commercial product. So, but that's a very active collaboration with CSL, and there's been increased attention in the H5N1 space, bird flu, pandemic flu is also known as. This is a very serious concern for multiple countries, including the U.S., because of the high death rate that H5N1 has read out. Over 50% of the people that get infected with H5N1 die. So that is a serious concern. If this ever becomes pandemic status, this would be of considerable concern. So we have...
The BARDA program is ongoing, and we intend to be in the clinic later this year in Q4. We have, in our slide deck, we do have a background on CSL, our partner, and CSL Seqirus, if for those that need a refresher of who our partners are. We also have a background slide on our partnership. We remind people that we have $4.3 billion in milestone payments that we're scheduled to receive upon successfully delivering on multiple programs. So we continue to live into the pace of these development milestones and commercial milestones now that we're transitioning KOSTAIVE into the commercial space. It's 40% profit sharing for the COVID vaccine and up to double-digit royalties for flu and the other programs in the collaboration.
Meiji is the number one flu shot company in Japan. They are our exclusive distributor of KOSTAIVE in Japan. They're also a publicly traded company and have provided guidance as to what they anticipate for KOSTAIVE sales this year and also next year. So, they anticipate considerable growth, and for this to be a successful launch in Q4. We have a joint venture manufacturing partner called ARCALIS. This is a brand-new state-of-the-art facility. It's over 75,000 sq ft, and they've completed 2 GMP runs, and so they have just a third GMP run to complete, and then they will request GMP certification, which allows them to make commercial material for us, and so this is something we're closely tracking with our manufacturing partner based in Japan.
If they come online, it provides an opportunity for perhaps some additional orders for this year and subsequent years. We've updated our phase III clinical studies slide to. You know, the updates reflect the KOSTAIVE, the original monovalent trial, but also the bivalent trial. We've updated the-- there's a slide here that shows six-month durability and persistence data. People have been asking when our twelve-month persistence data will be, and we're guiding September. So just next month, we'll be able to update this with how we look for twelve months, and we're excited to share that next month. And then going on to ARCT-032, this is our CF program. This is an inhaled messenger RNA.
We have a background slide there, but in terms of the clinical update, we've we've submitted an IND application for a multiple ascending dose study here in the United States to determine safety, tolerability, and efficacy of ARCT-032. We're very pleased with the phase I and phase I-B results. There was 32 subjects evaluated in phase I successfully, healthy volunteers, and then 7 patients, CF, CF subjects in our phase I-B study that received 2 administrations. And we're happy to report that the phase II study, the target dose range that's being evaluated, is one where we've established a nice track record of safety and tolerability, and not even febrile reactions at the doses that we're evaluating in our phase II trial.
So we're optimistic that we can have a successful study there and determine if this is what are some early efficacy markers driven by FEV and lung volume improvements. The CF Foundation remains committed to this, and this is an important feature to help us with recruiting patients. We remind people that the CMO that is overseeing this program who you know led Regulatory Affairs at Vertex. He's very strong in CF. We also have the person at Arcturus that's overseeing recruitment for CF who was one of the top recruiters in the TDN, which is a group of 80-90 clinical sites that recruit CF patients, and he was a top recruiter there, and he's now joined Arcturus to help us.
And so we have a great team of people to help us in this phase II study to successfully recruit patients. The phase II study is focused on Class I and non-modulator responders. So about 15% of the CF population, maybe up to 18%, does not respond to the approved modulators, either because they're Class I, they do not have a CFTR, a transporter in their lungs to modulate, or for many other reasons. And so this is the pool of CF participants that we'll be recruiting from to support this trial. It's... We remind people that we've collected some meaningful and differentiated preclinical data for this asset. We found that it worked in mice and rats, but also in ferrets.
The ferret model is a very stringent, challenging model to determine efficacy in, and we've had consistent success in this model. The CF ferret model is, their lungs are covered in mucus, and we saw successful, you know, biological, you know, proof of concept in the upper and lower sections of the lung in this very stringent, difficult model to establish success in. We've also showed that in the CF ferret model, that we can establish mucociliary clearance after a single administration. Going on to, you know, we've established high levels of CFTR protein expression in actual human cells, ex vivo, from, you know, cells that are donated from CF patients and restored chloride activity in these cells.
So if you take all this data collectively, you can understand our optimism that we've identified what we believe to be a safe dose range, safe and well-tolerated dose range to evaluate in phase II , and we're excited about that opportunity later this year. ARCT-810 is OTC Deficiency, and I'll be wrapping up here shortly, but the OTC Deficiency clinical update slide is in here. We are continuing on with the phase II study in the UK and EU, but we've completed dosing, and we're going to be sharing that data in Q4 out of Europe. We've expanded the trial into the United States to get access to more advanced disease and younger patients. That's where the most unmet need is.
This is a very positive progressing trial, and we're happy with the progress we're making. Coming back to the United States, that will allow us to be more efficient in recruitment. Then just a final touch, we added Moncef Slaoui to our board. He led Operation Warp Speed and had a distinguished career at GSK, leading vaccines and therapeutics and oncology, so he's a great fit for Arcturus. Just to make that aware, but the deck is readily available on our homepage of our website, and now I'll turn the time over to Whitney for some questions.
Excellent. Thank you so much, and for everyone in the room, please feel free to shout out questions if you have them, but I will start. Starting on the vaccine side, and the self-amplifying RNA technology that you talked about, others are now talking about it. You guys have definitively shown, kind of head-to-head data versus regular mRNA, but, as you said, others are starting to talk about it. Can you talk about Arcturus's positioning there from a competitive perspective? Where are you differentiated, or how are you protected from an IP perspective? Is it manufacturing? Is it know-how? Just as saRNA becomes more of a topic.
Well, self-amplifying mRNA is different from conventional mRNA in that it expresses the antigen or a protein for an extended period of time, and this allows us to decrease the dose considerably. Because it expresses the antigen in this manner, this unique mechanism of action allows to extend the duration of persistence or the duration of the vaccine, and that's important. People want a longer lasting vaccine. And then higher antibodies. The longer the body sees the antigen, the more antibodies can be created or generated by the body. So everybody wants more antibodies, everybody wants longer lasting persistence and protection, and people like lower dose and all the benefits that come from potential improved protection, a longer lasting protection, and the safety benefits associated with a lower dose level. The IP is now very strong that we've combined with CSL.
CSL has been working on self-amplifying mRNA for many years prior to the pandemic, so were we. And so by combining our IP, I think we've got a really strong IP position for self-amplifying mRNA. But there's multiple layers of IP in these therapeutics. It's not just the mRNA construct, but it's the manufacturing process. This is actually very, very difficult to make and purify and formulate these very large RNA molecules, and we've gone through that 10-year learning curve. And so we're very competent now with IP in place to make and purify, which is also very important. These impurities are bad actors in mRNA medicines, and we've solved that problem. And then formulating it in our LUNAR delivery technology, which again, is completely different from the field. The field tends to use an older technology, especially by the pandemic.
They didn't have time to innovate, so they went with an older technology. We have been working on a novel, differentiated, chemically different, biodegradable, LUNAR delivery technology that sets us apart. So it's delivery, manufacturing, and the mRNA construct. You combine those, and that's a nice fortress of IP that protects this portfolio.
Mm. Okay, that's helpful. And in the vaccine setting, is there any application where conventional mRNA makes more sense, or is it always, you know, you'd prefer to have more antibodies and longer lasting?
Yeah, I think in general, I think self-amplifying mRNA has its, you know, strong benefits. People want more protection, longer lasting protection, and a lower dose technology. I'm trying to think of, you know, why conventional mRNA was selected for the pandemic, 'cause it was ready to go. Self-amplifying mRNA just needed a couple more years, and that got accelerated by the pandemic, by our trial, this was at the end of the pandemic. But it's a good question, but I can't think of one example in the infectious disease space, why you would go with conventional mRNA. It's one of the key reasons Moncef joined our board. He genuinely believes that self-amplifying mRNA is a next-generation technology that can have a significant impact in infectious disease.
... Perfect. So moving to Japan and the COVID vaccine, KOSTAIVE, that's approved there. Meiji has filed the application for the new variant, as you've said. And per Meiji's slides, they're expecting approval kind of end of September. So what are the next steps? They then go out and start selling the vaccine. Are you guys getting real time updates, or will they just tell you at the end of the quarter, and so there'll be, like, a one-quarter delay versus kind of what we might hear from you all? How should we be thinking about that?
Yeah, no, it's, thank you for the question, Whitney. What is a little bit different about the endemic phase is that the government is not purchasing the vaccine. So as a result, you know, Meiji, being the number one flu company, already had the very established distribution, you know, mechanism within Japan. So we're very fortunate from that perspective to be partnering with the number one flu company. More importantly, you know, they're highly motivated, right, financially, after all the investment they've made in this product. And so consequently, when they are gonna receive the vaccine over a period of months, they'll then go out into their network and sell the vaccine.
They'll report back to CSL what they've sold, and then at that point in time, we will, CSL will calculate the distribution of the profits for CSL, ourselves, and Meiji, and it's a three-way split. They haven't provided specific guidance, but, you know, you can kind of assume that, you know, based on the CSL agreement of 60/40 profit split between us two, that, you know, Meiji probably will get, you know, the majority, and then CSL and Arcturus will split the remainder.
Mm-hmm. Okay. And so if Meiji's reporting their revenue to CSL, their fourth quarter revenue to CSL on January tenth, whatever, will that be kind of real time for you guys, or will you, by the time CSL does its math and kind of distributes, will there be a quarter delay between fourth quarter revenue recorded by Meiji versus fourth quarter revenue?
No, very good question. You know, we're not sure yet because we've never actually, you know, gone through this process. But to be conservative, you probably need to factor in some time element for CSL to review the data, review the collection process, and for Meiji to also collect the data and report it, you know, accurately. So, whether it's fourth quarter or first quarter, you know, it certainly is gonna be over a period of time as they, you know, transition to sell the vaccine commercially. And then, of course, you know, CSL will be, you know, reducing our share of the revenues, up to 40% of the, what you call the development, you know, cost. And once that is all, you know, utilized, then we will, you know, retain all of the profits going forward.
We haven't disclosed that amount either yet-
Mm-hmm.
you can assume that, you know, it'll probably occur sometime in the fourth quarter, first quarter, and probably even second quarter.
Mm-hmm.
-if that helps. At the same time, CSL, and we've announced this, is gonna be paying us a milestone, and that milestone is to offset some of the production, you know, expenses that we've incurred, and that will be offset against the revenue. So it's kind of a balance to help us-
Mm-hmm
... with cash flow in, in that period of time. Hopefully, that answered your question.
Yep, definitely. Definitely. Okay. I have more Japan questions, but I'll move on in the interest of time. So moving over to EU, where approval is also expected in the relative near term, kinda same question, next steps there. CSL then goes out to sell... Well, first they, they order, I guess. So who's manufacturing that? Is that you guys manufacturing, and then you're, you're giving it to CSL, and then where does it go from there? They go out-
Yeah. The tech transfer will take a couple of years with CSL.
Mm-hmm.
They fully intend on implementing all of this tech transfer into their footprint that's already established.
Mm-hmm.
But until that point, we already have GMP facilities that, we've completed that tech transfer and are supplying commercial product right now.
Mm-hmm.
That'll continue. This includes Catalent and Recipharm-
Mm-hmm
... and Aldevron.
Mm-hmm.
We'll be supporting the, you know, the commercial effort until CSL is up and running.
Got it. Got it. Okay.
You can assume CSL will take a few years to build their own factory and production, so in the meantime, they'll probably continue to use the CDMO network.
Okay, got it. Have you talked about the capacity within the CDMO network for COVID vaccine doses?
Yeah, well, in ARCALIS, they can make 5 kilograms in a year. That's 1 billion doses. So we're, we don't have a capacity issue in, in, in ARCALIS with respect to how many doses needed because our dose level is so small-
Mm-hmm
... for self-amplifying mRNA. So that's not an issue at this point.
Okay. So ARCALIS is not reserved specifically for Japanese manufacturing. That can be-
Correct.
Orders can come from there. Okay.
Yeah, yeah.
Okay. Noted. Noted. Okay, and then, kind of on ARCALIS, I guess you've said they've done two GMP batches, and there's another one coming. How important is that facility, approval of that facility? I guess now we know it's, it's a global, could be a global CDMO, but in Japan in particular.
Yeah
... as we think about-
Yeah, the
Japan
... getting ARCALIS online is very important strategically, not only to Meiji, but also the government of Japan. They want to make sure that they're independent-
Mm-hmm
... for any pandemic that comes out in the near or distant future. So getting this across the finish line and GMP certified is not just an objective for Meiji, and ARCALIS, and Arcturus, but for Japan, the government as well. So very motivated to see that get across the finish line.
Mm-hmm.
Just to add, the government has given, you know, ARCALIS JPY 165 million in grants to, you know, build the facility, so. It's a very strategic, you know, facility for the government-
Mm-hmm.
And for the people of Japan to be self-reliant on, you know, future pandemics. Hopefully there won't be any, you know.
Right. Right. Okay, noted. And are there any margin or financial impacts as manufacturing transitions from CDMO partners to ARCALIS that are notable, we should be thinking about?
Well, you know, we do have a favorable supply agreement with ARCALIS because we are, you know, we own 38%. We're one of the, you know, minority investors in that company. So there is a, you know, a more attractive four-year supply agreement for Arcturus.
Okay. Noted. Switching over to CF in the last minute. Can you talk about the... You presented some data on four patients at a CF meeting. Can you talk about the doctor and I guess, patient, response to that data, whatever?
Sure, sure. So, it was really important for us to convey that this ARCT-032 is safe and well-tolerated at the target doses that we're intending to recruit for, for phase II . And we also, you know, shared some early, you know, positive, but, you know, potential data with respect to lung improvement, especially in Class I. And that data was intended and successfully communicated to the CF community in Europe. So all the principal investigator, you know, the PIs and all the, the folks that are gonna be helping us recruit for patients, heard about the safety and tolerability profile of the ARCT-032. And that's very, very important in this business because all the previous attempts have failed due to toxicology. That's why these programs get terminated.
We've now shown that this is looking like a really good shot on goal for us, has that nice window for us to find some efficacy later this year and into next.
Mm-hmm. Okay, and can you characterize patient demand just quickly? Are you already finding patients as you start to think about the phase II study, or will you have to wait for the IND clearance to get it?
No, patients already, patients have already come forward. Families, the Class I subjects and their families have already come forward and expressed interest. We do have the right people helping us recruit for this. We are partnered with the CF Foundation. They have a very tight understanding in their registry and in their TDN, this group of clinical sites where these patients are. So they're gonna be a very valuable partner for us in helping identify and find these folks to support and recruit, to support these trials.
All right. I think that's all the time we have. Thank you very much.
Thank you.
Thanks.
... Good morning, everyone. Thank you. I will note that, Andy Sassine, CFO, will be joining for the Q&A at the end as well, so.
Yeah, thanks. So, my intent here is just to take about 10 minutes to go over our corporate deck. A lot of some information here will be new, but then we'll turn the time over to our discussion. Look forward to it, Whitney, and thank you for the invitation. Just a couple of things to point out and remind people is that we have to support us in this messenger RNA, you know, vaccines and therapeutics company, we have significant partnerships that help support these programs. On the vaccine side, we have a partnership with CSL that's very meaningful. The CF Foundation supports our CF program, and the United States government, through BARDA, is supporting us in the pandemic flu program for H5N1 bird flu.
The proprietary technologies is, you know, we have expertise in mRNA manufacturing and delivery, and over 400 patents and patent applications. We're known for our delivery technology. This is exceptionally important for therapeutic applications of mRNA, and this is a key point of differentiation for us. We need a biodegradable and highly optimized lipid nanoparticle technology for different cell types. And we apply these technologies to our proprietary and pipeline of Arcturus-owned mRNA therapeutics. You can see on the far right, just drawing your attention there, that we have meaningful milestones for both our lead programs. We have phase II interim data that's coming out of Europe. We have eight subjects that have been participating in a phase II study.
Happy to report that we've completed dosing in that cohort at 0.3 mg per kilogram. 2 received placebo and 6 received drug. And that data will be read out sometime in Q4, and we look forward to sharing that later this year. And then on the CF program, we recently filed a phase II IND in the U.S. Usually an IND is filed at phase I, but we did our phase I and phase I-B studies outside of the U.S. And so we had a considerable amount of data going into this IND application, and we're very appreciative to the team that we were able to get it done in an efficient manner.
We're now well on track to initiate that phase II trial and start to collect data for the CF program in the second half of this year. The partnered programs continue to progress. We're excited to launch our first product, KOSTAIVE, in Japan. We're well on track for that. The request was for us to manufacture 4 million doses, and we remain on track to deliver those in Q3 and Q4 to support the launch in Q4 and into Q1 of next year for Meiji, our partner, to distribute KOSTAIVE in Japan. We have filed the MAA in Europe, and that process is ongoing. This is an exciting process for us in Europe because this is the first-ever self-amplifying mRNA product there. So we're going through that process to get approval of KOSTAIVE in Europe.
Subsequent to that, we fully intend to get this approved in the U.K. and the United States of America. We going to, we have a bivalent study, phase III study in the Southern Hemisphere. The reason why this is strategically important for the company is we are collecting data in multiple ethnicities, and this will help support regulatory applications globally, not just in the U.S. And, likewise, with the, the XBB, trial, phase III trial. So we have multiple phase III trials building, a significant database to support, multiple regulatory filings for, for KOSTAIVE. LUNAR-FLU is also a very important, program, to our partner, CSL. Flu remains a priority for them. We have a very active collaboration. Multiple constructs are being evaluated. This one here reads quadrivalent.
That's actively being developed in the clinic, but you should also be aware that the trivalent version of this is also of interest because that's ultimately for a standalone flu shot is most likely what will be commercially. It will be the commercial product. So but that's a very active collaboration with CSL. And there's been increased attention in the H5N1 space, bird flu, pandemic flu is also known as. This is a very serious concern for multiple countries, including the U.S., because of the high death rate that H5N1 has read out. Over 50% of the people that get infected with H5N1 die. So that is a serious concern. If this ever becomes pandemic status, this will be of considerable concern.
So we have the BARDA program is ongoing, and we intend to be in the clinic later this year in Q4. We have, in our slide deck, a background on CSL, our partner, and CSL Seqirus, if for those that need a refresher of who our partners are. We also have a background slide on our partnership. We remind people that we have $4.3 billion in milestone payments that we're scheduled to receive upon successfully delivering on multiple programs. So we continue to live into the pace of these development milestones and commercial milestones now that we're transitioning KOSTAIVE into the commercial space. It's 40% profit sharing for the COVID vaccine and up to double-digit royalties for flu and the other programs in the collaboration.
Meiji is the number one flu shot company in Japan. They are our exclusive distributor of KOSTAIVE in Japan. They're also a publicly traded company and have provide guidance as to what they anticipate for KOSTAIVE sales this year and also next year. So, they anticipate considerable growth and for this to be and for a successful launch in Q4. We have a joint venture manufacturing partner called ARCALIS. This is a brand-new state-of-the-art facility. It's over 75,000 sq ft, and they've completed two GMP runs, and so they have just a third GMP run to complete, and then they will request for GMP certification, which allows them to make commercial material for us, and so this is something we're closely tracking with our manufacturing partner based in Japan.
If they come online, it provides an opportunity for perhaps some additional orders for this year and subsequent years. We've updated our phase III clinical studies slide. You know, the updates reflect the KOSTAIVE, the original monovalent trial, but also the bivalent trial. We've updated the. There's a slide here that shows 6-month durability and persistence data. People have been asking when our 12-month persistence data will be, and we're guiding September. So just next month, we'll be able to update this with how we look for 12 months, and we're excited to share that next month. And then going on to ARCT-032, this is our CF program. This is an inhaled messenger RNA.
We have a background slide there, but in terms of the clinical update, we've submitted an IND application for a multiple ascending dose study here in the United States to determine safety, tolerability, and efficacy of ARCT-032. We're very pleased with the phase I and phase I-B results. There was 32 subjects evaluated in phase I successfully, healthy volunteers, and then seven patients, CF subjects in our phase I-B study that received two administrations. We're happy to report that the phase II study, the target dose range that's being evaluated, is one where we've established a nice track record of safety and tolerability, and not even febrile reactions at the doses that we're evaluating in our phase II trial.
So we're optimistic that we can have a successful study there and determine if this is what is some early efficacy markers driven by FEV and lung volume improvements. The CF Foundation remains committed to this, and this is an important feature to help us with recruiting patients. We remind people that the CMO that is overseeing this program you know led regulatory affairs at Vertex. He's very strong in CF. We also have the person at Arcturus that's overseeing recruitment for CF was one of the top recruiters in the TDN which is a group of 80-90 clinical sites that recruit CF patients, and he was a top recruiter there, and he's now joined Arcturus to help us.
And so we have a great team of people to help us in this Phase II study to successfully recruit patients. The Phase II study is focused on Class I and non-modulator responders. So about 15% of the CF population, maybe up to 18%, does not respond to the approved modulators, either because they're a Class I, they do not have a CFTR, a transporter in their lungs to modulate, or for many other reasons. And so this is the pool of CF participants that we'll be recruiting from to support this trial. We remind people that we've collected some meaningful and differentiated preclinical data for this asset. We found that it worked in mice and rats, but also in ferrets.
The ferret model is a very stringent, challenging model to determine efficacy in, and we've had consistent success in this model. The CF ferret model is their lungs are covered in mucus, and we saw successful, you know, biological, you know, proof of concept in the upper and lower sections of the lung in this very stringent, difficult model to establish success in. We've also showed that in the CF ferret model that we can establish mucociliary clearance after a single administration. Then going on to, you know, we've established high levels of CFTR protein expression in actual human cells ex vivo from cells that are donated from CF patients, and restored chloride activity in these cells.
So if you take all this data collectively, you can understand our optimism that we've identified what we believe to be a safe dose range, safe and well-tolerated dose range to evaluate in phase II, and we're excited about that opportunity later this year. ARCT-810 is OTC deficiency, and I'll be wrapping up here shortly, but the OTC deficiency clinical update slide is in here. We are continuing on with the phase II study in the UK and EU, but we've completed dosing, and we're going to be sharing that data in Q4 out of Europe. We've expanded the trial into the United States to get access to more advanced disease and younger patients.
That's where the most unmet need is, and so this is a very positive progressing trial, and we're happy with the progress we're making. And coming back to the United States, that will allow us to be more efficient in recruitment. And then just a final touch, we added Moncef Slaoui to our board. He led Operation Warp Speed and had a distinguished career at GSK, leading vaccines and therapeutics and oncology, so he's a great fit for Arcturus. So just to make that aware. But the deck is readily available on our homepage of our website, and now I'll turn the time over to Whitney for some questions.
Excellent. Thank you so much, and for everyone in the room, please feel free to shout out questions if you have them. I will start. Starting on the vaccine side, and the SA, self-amplifying RNA technology that you talked about, others are now talking about it. You guys have definitively shown a kind of head-to-head data versus regular mRNA, but as you said, others are starting to talk about it. Can you talk about Arcturus' positioning there from a competitive perspective? Where are you differentiated, or how are you protected from an IP perspective? Is it manufacturing? Is it know-how? Just as saRNA becomes more of a topic.
Well, self-amplifying mRNA is different from conventional mRNA in, in that it expresses the antigen or protein for an extended period of time, and this allows us to decrease the dose considerably. Because it expresses the antigen in this manner, this unique mechanism of action allows to extend the duration of persistence or the duration of the vaccine, and that's important. People want a longer lasting vaccine. And then higher antibodies. The longer the body sees the antigen, the more antibodies can be created or generated by the body. So everybody wants more antibodies, everybody wants longer lasting persistence and protection, and people like lower dose and all the benefits that come from potential improved protection, a longer lasting protection, and the safety benefits associated with a lower dose level. The IP, is, is now very strong that we've combined with CSL.
CSL has been working on self-amplifying mRNA for many years prior to the pandemic, so were we. And so by combining our IP, I think we've got a really strong IP position for self-amplifying mRNA. But there's multiple layers of IP in these therapeutics. It's not just the mRNA construct, but it's the manufacturing process. This is actually very, very difficult to make and purify and formulate these very large RNA molecules, and we've gone through that 10-year learning curve. And so we're very competent now with IP in place to make and purify, which is also very important. These impurities are bad actors in mRNA medicines, and we've solved that problem, and then formulating it in our LUNAR delivery technology, which again, is completely different from the field. The field tends to use an older technology, especially by the pandemic.
They didn't have time to innovate, so they went with an older technology. We have been working on a novel, differentiated, chemically different, biodegradable, LUNAR delivery technology that sets us apart. So it's delivery, manufacturing, and the mRNA construct. You combine those, and that's a nice fortress of IP that protects this portfolio.
Mm. Okay, that's helpful. And in the vaccine setting, is there any application where conventional mRNA makes more sense, or is it always, you know, you'd prefer to have more antibodies and longer lasting?
Yeah, I think in general, I think self-amplifying mRNA has its, you know, strong benefits. People want more protection, longer lasting protection, and a lower dose technology. I'm trying to think of, you know, why conventional mRNA was selected for the pandemic, because it was ready to go. Self-amplifying mRNA just needed a couple more years, and that got accelerated by the pandemic, by our trial, this was at the end of the pandemic. But I. It's a good question, but I can't think of one example in the infectious disease space, why you would go with conventional mRNA. It's one of the key reasons Moncef joined our board. He genuinely believes that self-amplifying mRNA is a next-generation technology that can have a significant impact in infectious disease.
Excellent. Okay, perfect. So moving to Japan and the COVID vaccine, KOSTAIVE, that's approved there. Meiji has filed the application for the new variant, as you've said. And per Meiji's slide, they're expecting approval kind of end of September. So what are the next steps? They then go out and start selling the vaccine. Are you guys getting real-time updates, or will they just tell you at the end of the quarter, and so there'll be, like, a one-quarter delay, versus kind of what we might hear from you all? How should we be thinking about that?
Yeah, no, it's... Thank you for the question, Whitney. What is a little bit different about the endemic phase is that the government is not purchasing the vaccine. So as a result, you know, Meiji, being the number one flu company, already had the very established distribution, you know, mechanism within Japan. So we're, we're very fortunate from that perspective to be partnering with the number one flu company. More importantly, you know, they're highly motivated, right, financially, after all the investment they've made in this product. And so consequently, when they are gonna receive the vaccine over the, a period of months, they'll then go out into their network and sell the vaccine.
They'll report back to CSL what they've sold, and then at that point in time, CSL will calculate the distribution of the profits for CSL, ourselves, and Meiji, and it's a three-way split. They haven't provided specific guidance, but, you know, you can kind of assume that, you know, based on the CSL agreement of 60/40 profit split between us two, that, you know, Meiji probably will get, you know, the majority, and then CSL and Arcturus will split the remainder.
Mm-hmm. Okay. And so if Meiji's reporting their revenue to CSL, their fourth quarter revenue to CSL on January tenth, whatever, will that be kind of real time for you guys, or will you, by the time CSL does its math and kind of distributes, will there be a quarter delay between fourth quarter revenue recorded by Meiji versus fourth quarter revenue?
No, very good question. You know, we're not sure yet because we've never actually, you know, gone through this process. But to be conservative, you probably need to factor in some time element for CSL to review the data, review the collection process, and for Meiji to also collect the data and report it, you know, accurately. So, whether it's fourth quarter or first quarter, you know, it certainly is gonna be over a period of time as they, you know, transition to sell the vaccine commercially. And then, of course, you know, CSL will be, you know, reducing our share of the revenues up to 40% of the, what you call the development, you know, cost. And once that is all, you know, utilized, then we will, you know, retain all of the profits going forward.
So we haven't disclosed that amount either, yet-
Mm-hmm.
... but you can assume that, you know, it'll probably occur sometime in the fourth quarter, first quarter, and probably even second quarter-
Mm-hmm
... if that helps. At the same time, CSL, and we've announced this, is gonna be paying us a milestone, and that milestone is to offset some of the production, you know, expenses that we've incurred, and that will be offset against the revenue. So it's kind of a balance to help us-
Mm-hmm
... with cash flow in that period of time. Hopefully, that answered your question.
Yep, definitely. Definitely. Okay, I have more Japan questions, but I'll move on in the interest of time. So moving over to EU, where approval is also expected in the relative near term, kinda same question. Next steps there, CSL then goes out to sell... Well, first they, they order, I guess. So who's manufacturing that? Is that you guys manufacturing, and then you're, you're giving it to CSL, and then where does it go from there? They,
Yeah. The tech transfer will take a couple of years with CSL.
Mm-hmm.
They fully intend on implementing all of this tech transfer into their footprint that's already established.
Mm-hmm.
But until that point, we already have GMP facilities that we've completed that tech transfer and are supplying commercial product right now.
Mm-hmm.
That'll continue. This includes Catalent and Recipharm-
Mm-hmm
... and Aldevron.
Mm-hmm.
We'll be supporting the, you know, the commercial effort until CSL is up and running.
Got it, got it. Okay.
You can assume CSL will take a few years to build their own factory and production.
Mm-hmm.
In the meantime, they'll probably continue to use the CDMO network.
Okay, got it. Have you talked about the capacity within the CDMO network for COVID vaccine doses?
Yeah, in ARCALIS, they can make 5 kilograms in a year. That's 1 billion doses, so we don't have a capacity issue in ARCALIS with respect to how many doses needed because our dose level is so small-
Mm-hmm
... for self-amplifying mRNA. So that's not an issue at this point.
Okay. So ARCALIS is not reserved specifically for Japanese manufacturing. That can be-
Correct.
Orders can come from there. Okay.
Yeah, yeah.
Okay. Noted, noted. Okay, and then, kind of on ARCALIS, I guess you've said they've done two GMP batches, and there's another one coming. How important is that facility, approval of that facility? I guess now we know it's, it's a global, could be a global CDMO, but in Japan in particular-
Yeah
... as we think about-
Yeah, the-
Japan
... getting ARCALIS online is very important strategically, not only to Meiji but also the government of Japan. They want to make sure that they're independent-
Mm-hmm
... for any pandemic that comes out in the near or distant future. So getting this across the finish line and GMP certified is not just an objective for Meiji, and ARCALIS, and Arcturus, but for Japan, the government as well. So very motivated to see that across the finish line.
Just to add, the government had given, you know, ARCALIS $165 million in grants to, you know, build the facility. So it's a very strategic, you know, you know, facility for the government.
Mm-hmm.
and for the people of Japan to be self-reliant on, you know, future pandemics. Hopefully there won't be any, you know?
Right. Right. Okay, noted. Are there any margin or financial impacts as manufacturing transitions from CDMO partners to ARCALIS that are notable, we should be thinking about?
Well, you know, we do have a favorable supply agreement with ARCALIS because we are, you know, we own 38%. We're one of the, you know, minority investors in that company. So there is a, you know, a more attractive four-year supply agreement for Arcturus.
Okay, noted. Switching over to CF in the last minute. Can you talk about the data you presented on 4 patients at a CF meeting? Can you talk about the doctor and, I guess, patient response to that data when-
Sure, sure. So, it was really important for us to convey that this ARCT-032 is safe and well-tolerated at the target doses that we're intending to recruit for phase II . And we also, you know, shared some early, you know, positive, but, you know, potential data with respect to lung improvement, especially in Class I, and that data was intended and successfully communicated to the CF community in Europe. So all the principal investigator, you know, the PIs and all the, the folks that are gonna be helping us recruit for patients heard about the safety and tolerability profile of the ARCT-032, and that's very, very important in this business because all the previous attempts have failed due to toxicology. That's why these programs get terminated.
We've now shown that this is looking like a really good shot on goal for us. Has that nice window for us to find some efficacy later this year and into next.
Mm-hmm. Okay, and can you characterize patient demand just quickly?
Yeah.
Are you already finding patients as you start to think about the phase II study, or will you have to wait for the IND clearance to kind of-
No, patients have already come forward, families, the Class I subjects and their families have already come forward and said, expressed interest. We do have the right people helping us recruit for this. We are partnered with the CF Foundation. They have a very tight understanding in their registry and in their TDN, this group of clinical sites where these patients are. So they're gonna be a very valuable partner for us in helping identify and find, these folks to support and recruit to support these trials.
Excellent. All right, I think that's all the time we have. Thank you very much.
Thank you.
Thanks.