Welcome to the Cantor Global Healthcare Conference. I'm Pete Stavropoulos, a biotech analyst at Cantor. With us, so we have Arcturus Therapeutics, a company I cover, and I'm pleased to have with us Joseph Payne, CEO, and Andrew Sassine, CFO. Welcome.
Thanks, Pete. It's good to be with you.
Thank you. So, you know, let's start off with a brief description of the company, your platform tech, including the next generation RNA medicines called STARR, and the lipid delivery platform called LUNAR. You know, what differentiates these platforms from other RNA-based therapeutics?
Sure. So, amplifying mRNA, next generation technology and superiority over, conventional messenger RNA in multiple, phase III trials now, and it's an approved product in Japan. And self-amplifying mRNA is different from conventional mRNA in that it expresses the protein. In a vaccine example, it's an antigen, but it expresses that protein for one to two weeks rather than one to two days, which is the time of expression with conventional mRNA. So that's very different, and it translates into not only thirty times plus more protein, but how that shows in the clinic is elevated antibodies, extended durability and persistence of these antibodies, broader spectrum of antibodies, and a dose level that's much, much lower, so less, mRNA and lipid excipients are being injected into the arm. So, a clear differentiator for the business.
We're first movers in self-amplifying mRNA simply because of Vietnam helped us during the pandemic to accelerate this technology and over 16,000 to 18,000 subjects over a very short period of time. That differentiates us from the field. A lot of key vaccine players are very interested in self-amplifying mRNA, but we got differentiatingly accelerated by the pandemic. We're the last efficacy trial in the pandemic. We were able to get this technology evaluated at that time period, which differentiates us from the field as well.
Excellent.
That's on the cell, the mRNA side. Before we speak about lipid nanoparticles, we also have a differentiating manufacturing method to make and purify these mRNA molecules, and purification is very important, and that's differentiating, so the ability to purify these molecules is especially important in therapeutics, and we have strong IP in purification of these messenger RNA molecules. When you're repeating injections, that's a differentiator, and then the final differentiation on the lipid nanoparticle side, the LUNAR delivery technology has been shown to be biodegradable, non-accumulating. That's a differentiating set of data in multiple clinical trials, and we also view the delivery technology as our wheelhouse. This is something that we founded the company on, is expertise in delivery.
So we, you know, consider ourselves experts in optimizing these delivery technologies for specific cell types and organ types, and that's a lot of people would consider that differentiated, that we have a highly optimized delivery technology for bronchial epithelial cells, for hepatocytes in the liver, and for myocytes after an injection in the arm for a vaccine. I'll pause there.
Yeah, one quick question. So, I mean, you mentioned that there was a lower dose, you know, than conventional RNA. You know, just give a sense, you know... We're gonna talk about the vaccines a little bit later, but, give a sense of what that difference is, you know, with your, with your COVID vaccine.
Sure, sure. So the conventional mRNA vaccines range from thirty to close to a hundred microgram injections. Ours is at five micrograms, so that's a dramatic drop. And the reason why that's important is potential health and safety benefits. There's a lot of dose-related toxicology associated with these vaccines. You lower the dose, there's less toxicity, especially the serious adverse events that we're seeing in this field are associated with the dose. So since our dose level is much lower, it gives us a lot of opportunity to showcase the safety benefits, especially the dose-related toxicology, and the lower dose technology allows the self-amplifying mRNA to be multi-antigenic. And what I mean is, you can infuse a lot of antigens into one construct because the dose level is so low, and that's differentiating as well.
So in the vaccine space, you want a technology that's fast, and mRNA is really good at being fast to make and distribute. But you also want it to be durable, and we've now shown that. We're gonna be adding more data to that later this month. Actually, we're gonna be presenting in Australia on that at the end of this month, in a couple of weeks. So you want a more durable, more persistent technology. And then the third aspect, you want it multi-antigenic. And if you look at the successful vaccine companies in this field, they're, some are fast, and they're doing very, very well. The mRNA vaccine companies are doing very well, and then there's other great companies that are multi-antigenic that have shown you can get 30 more antigens into a technology, especially in the bacterial space, and they're doing very well.
But self-amplifying mRNA has all three, and that's what's exciting and differentiated about not just self-amplifying mRNA to other mRNA vaccines, but for the entire field of vaccines. We believe this is an excellent technology.
You need that, Andy, or?
No, no, I-
No.
He covered it. He covered it well.
So, you know, let's talk about a program that I find very exciting. It's your cystic fibrosis program, LUNAR-CF. So in June, you presented phase I-B data at the European Cystic Fibrosis Conference.
Yeah.
Can you just give us a recap of that data for the first four patients?
Sure. So, we've had experience with our CF asset in 39 subjects. 32 subjects were in phase I in healthy volunteers at four dose levels, and then we transitioned to a phase I-B study in seven subjects, and the data that you're referring to is the first four subjects of the phase I-B study. Now, this was a safety study, so we're looking at all the safety parameters that you do in a safety study. We were actually looking at lung function to evaluate and determine any toxicology. Is there any toxicology involved, or is there any deficits to lung function, but what we found is that after just two administrations in patients, that the FEV, this measure of lung function volume, increased by approximately 4%, and it was only two administrations.
It was a safety study, not an efficacy study, but we definitely feel that that is important data to share with the Class I CF community, because one of the patients was a Class I, and Class I means null for the transporter, so they don't have any transporter to modulate, so modulators do not qualify or benefit the this patient population, so we saw an improvement there, too, in a Class I patient of 4% FEV improvement after two administrations. That helps us in recruiting for phase II. The CF Foundation thought it was a great idea for us to present that at the CF conference, so that it'll facilitate this next stage of the asset in phase II very well to help us with recruitment.
Now you do have three other patients that you dosed, I believe?
Yes. Yeah, we completed dosing patients five, six, and seven. They were all high-functioning patients on Trikafta. So they wouldn't qualify for an efficacy study, so there's nothing there to glean from an efficacy perspective, 'cause they're high-functioning and on Trikafta. But we were happy and very pleased that they participated in the safety study. There was no SAEs. There was no adverse events at the dose levels that we're targeting in phase II, so not even minor effects at the phase II dose levels. So we're pleased to complete that study. We shared it with the regulatory agencies, and now we have approval to proceed in phase II, and that's what brings us to today.
Right. And then usually, you know, I guess dosing two times, you know, and then looking at the totality of the phase I and phase I-B data, sort of, you know, how does that de-risk the program?
Yeah, so the totality of the data. You're looking at thirty-nine subjects, no, no severe adverse events in any of them. But is that what you're asking? Or-
Mostly, you know, when you give the CF patients two doses, you know-
Yeah
... there's a de-risk, is there a-
Yeah
... de-risking aspect to that?
Yeah, yeah, it's for inhaled therapeutics, if you see toxicology, most often it's in the first administration or the second administration. The first time the body sees something, it may respond to it, and then there could be a learned immune response for the second administration that we have to work through. So we were very pleased to see that after two administrations in seven patients, that we didn't see any severe adverse events or anything concerning that would hinder our advancement into phase II.
Our previous, or our current CMO previously worked at Vertex, and as a result, you know, through his experience, he felt it was important to get two doses in our, you know, safety trial to see how the patient responded because of his previous experience working in this area. So we're very fortunate that we had someone with experience that understood what was critical from a safety perspective.
Yeah.
Hopefully that adds a little color.
So, you know, the FDA did recently accept your IND. You got green light to move into a phase III. Can you just talk a little bit about the phase II in terms of the design? You know, sort of what type of patients you're enrolling and-
Yeah
... sort of the overall design.
Yeah, very shortly here, we'll be updating clinicaltrials.gov for people to get some of the details. Some high-level information that's helpful is it's not a placebo-controlled trial. There's no lung brushing involved, and so that's also attractive to recruit subjects. They don't wanna participate in a placebo-controlled trial, they don't want a placebo, and they don't wanna get their lungs brushed and samples collected. So that's avoided, and we effectively designed and negotiated that with regulatory agencies. We don't have a placebo group, we don't have lung brushing, and that's differentiating. It's several weeks, it's several doses. That's daily or every other day, so we've informed those. We're evaluating two dose levels. We're very smart now because of our 39 subjects of experience.
We think we've got a couple doses to evaluate that can be big winners for us, so we're looking forward to the data as soon as possible next year.
Those dosage levels that you're evaluating, were they evaluated in both healthy individuals and cystic fibrosis patients, or?
Oh, these will all be patients.
No, no, I'm saying the dose level that you're actually going to evaluate.
Yeah, the dose level that we're evaluating has already been understood in our thirty-nine subjects of experience, but in both the healthy volunteers and the patients, and these dose levels are targeting dose levels where we did not see even minor febrile reactions. So we're encouraged by our preclinical data set that we believe that these dose levels are likely to be or expected to be relatively safe and well-tolerated.
... dosing frequency?
Yes, and dosing frequency is daily or every other day for this phase II trial. Another differentiating aspect-
Is that gonna be an and/or, or I mean, is that gonna be, you know, you're gonna have a certain set of patients once a day or twice a day, every other day?
No, you, you'll have patients that will be daily, and they'll, they may have the opportunity to transition to every other day after the drug is onboarded type concept. And so just one point of differentiation for this product that I neglected to mention was that we use an optimized nebulizer, and that is six times more efficient than baseline. So there was some innovation and learning curve associated that over, I think, a long period of time to get us really smart on how to efficiently deliver this. So the folks aren't sitting in a chair for hours like previous attempts. They're in the chair and receiving an inhalation treatment for minutes, not hours.
Just to add, you know, we are very excited about the trial and for multiple reasons. But, you know, the Class I patient that we're targeting here in this trial and the population, they typically have, you know, FEV decline, you know, every year until they die. So they don't have any, you know, right now therapeutic that can help them. So this would be, you know, a pretty, you know, unique opportunity to help these people. And if you, you know, think about the fact that the one Class I patient we had improved FEV by 4% after just two doses, that's pretty, you know, encouraging. So we hope to repeat those, you know, results plus more.
I hope so, too, you know, and from a mechanistic standpoint, you know, it's it makes complete sense-
Yeah
... just replacing the,
Yeah. Yeah, we're replacing the CFTR. You know, the entire CF industry has been very successful and extraordinarily helpful to the CF community. They're in the business of modulating, we'll say, broken or dysfunctional transporters. That's not what we're doing. I just always remind people, we're not in the business of fixing a broken transporter or modulating. We're in the business of giving someone a brand-new transporter. And for those that don't have any, the null patients, the Class I CF subjects, this is a huge opportunity for us to help them. But as we look forward, of course, we see the opportunity of giving everyone a brand-new transporter. I think everyone in here has had a used car in their life. It might be functional and really good, but everyone wants a new car, so.
All right, for our endpoints that you'll be evaluating, and what are you looking for in terms of outcomes?
Outcomes. Well, the FDA is very clear, FEV. It was very straightforward. From an efficacy standpoint, we want to see elevated lung function. That would be fantastic because this is a several-dose trial over several weeks, not months, but several weeks, and that's what we'd like to see is elevated, improved lung function.
What's the bar?
The bar, that's the great question. There is no bar. If you look at the successful CF companies out there, the first modulators that became mega blockbusters, they improved FEV by 2.7%, the very first ones. And then they built and optimized, and now it's a mixture of components that help them out much more. But when you're entering a field where there is no treatment, no standard of care, like what Andy referred to before, this patient population has decreasing lung function. They would love to just stabilize it. That's not what we're trying to do. We're functionally replacing the CFTR, so we hope that we see elevated lung function. But the bar is something.
Yeah.
That's the bar because right now there's nothing. So, the bar is actually quite low, so we believe that there's a sense of optimism that we'll be able to provide something for them, but we've got to prove it in this phase II trial.
Right. You know, so, will albuterol be administered, you know, prior to zero three two, sort of like you did in the first study?
If yes, then, you know, will there be a need to sort of tease apart the effects of Albuterol?
Uh-
versus zero three two?
Yeah. The majority of the CF population uses Albuterol on a very regular basis right now, so this is just something that they're very familiar with. So they'll just have to if there's an Albuterol pretreatment, which helps you open up the bronchioles and allows the drug to access more cells to do the biology that we need. Now, there will likely be an off-boarding process if we if this is successfully onboarded. But the CFTR, this protein, is built into their lungs. We don't anticipate them maintaining Albuterol pretreatments. But for the onboarding phase, yes, it'll help, and we've already shown that at phase I and phase I-B trial.
Keep in mind that many patients use it for antibiotic, and so consequently, it, it's pretty common, and if you think about it, Pete, there is no hope for this class of population, so if they have to use Albuterol, I'm not sure if we're gonna be concerned about any-
Yeah, no
... impact on commercialization because it will help these people hopefully survive longer.
Yeah.
Right, and then, you know, I'm excited about the program, you know, great potential to have a meaningful clinical impact in this population. So, when did-- should we expect to hear data from this?
Yeah, right now, we're saying next year, as soon as possible. At subsequent quarterly calls, we'll be able to give more narrow guidance as to when the data can be expected. But, we're just pleased that we got approval to proceed with the phase II trial here in the States. We have the CF Foundation supporting us... but they've got an amazing network of clinical sites here and abroad. So, we're just anxiously engaged in real time in recruitment and getting sites onboarded with the help of the CF Foundation. So-
So-
That's where we are today.
It's open label, correct? So-
Yeah.
So you're gonna be able to see the data as you proceed. Are you gonna show us cuts or?
It may be tempting to show cuts, but we want to see with the phase I-B data set. We cut the data because of the CF conference and because the CF Foundation wanted us to cut the data to help with the phase II recruitment process. Now, we're in a different space, so there's not pressure for us to share any data. You know, we haven't given any guidance of when we're gonna cut the data and provide it, at least at this time.
All right, so let's move on to your COVID vaccine. You spoke a little bit about it earlier. You know, just some, just a quick brief background in terms of partnerships.
Partnerships. Well, the self-amplifying mRNA franchise is partnered with CSL. They're one of the biggest players in the world for endemic vaccines, like the flu shot. They're number one or number two in most regions, so we're partnered with the right folks in the U.S. and Europe. We also have a distribution partner called Meiji. This is the number one flu shot company in Japan, and so Meiji's helping us in Japan. We had both of these partnerships built in parallel. After we consummated the relationships with Meiji and CSL, we brought them together, and now CSL and Meiji have a partnership. So CSL has the global rights to our COVID vaccine, but Meiji has rights for it in Japan. So in the U.S. and Europe, we split the profit share 60/40.
CSL gets 60%, we get 40% for the COVID shot, and in Japan, that's split three ways. We share some of the profits, you can say, with Meiji. But it's only the relationship we have with CSL is limited to COVID, flu, and three other respiratory infectious diseases, so it's just five targets. And there's a lot of infectious diseases out there, and there's a lot of applications of self-amplifying mRNA that are truly extraordinary. So it's a fairly narrow relationship, and I just want to highlight that, too.
All right. You did actually get a recent sort of positive data and approval to move forward with a variant vaccine in Japan. So, do you know what are the key gating factors to actually getting the partner Meiji that vaccine match?
Yeah, so we've already received approval for the platform last November, and then we received formal approval of the JN.1 variant to be distributed, so it's a commercial distribution approval. We received that just last week, so very recently. In fact, Andy and I are flying to Japan in early October to receive the vaccine, which is just a really cool experience for us. There's gonna be some public relations and media associated with that to help with marketing and Meiji. So it's gonna be exciting for us to participate in that, but it is an approved product in Japan, and then the next steps is to work with CSL to get this approved in Europe, U.K., and U.S. CSL is a publicly traded company. They're well-known.
But they’ve already communicated that they’re committed to this COVID vaccine that we call Kostaive, with a K. So Kostaive is, there’s a commitment from our partners, not only in Japan but also in Europe and U.S., and they’ve now communicated their commitment to this product to commercialize it.
Right, so, you're going to Japan, you're gonna get the shot. How much are they gonna charge you?
Well, believe it or not, they're gonna charge us the full $100 per vaccine, which we're delighted to pay-
Yeah
... frankly,
We're not Japanese citizens, so we don't qualify for the subsidy.
Okay.
We have to go through this process.
So it is gonna be about $100, is what you're-
Yeah, yeah.
All right.
We have to pay $100.
Yeah.
All right, so, any milestone payments associated with the approval of,
Yeah, we've articulated that. There'll be... Because Meiji was a partnership that was conceived, you know, parallel with the CSL deal, we did not have, you know, specific commercial milestones associated with Japan. So subsequent to the deal closing, we had to amend the agreement to enable us to get a milestone, a commercial milestone, upon first patient, you know, injection in Japan. And CSL agreed to pay us a milestone, and we incorporated that milestone in our three-year runway, Pete.
So it's already factored in, and we anticipate receiving it in the fourth quarter. And of course, you know, the good news is that you know what our cash balance is, you know what our runway is. So the only thing not included in our runway would be actually the profit share from the revenue, from the sales. So whatever those are gonna become, then we will be splitting those revenues, and that'll be incremental to our, you know, runway when we actually receive those proceeds.
Okay, two questions. Number one, have doses been ordered by-
Yeah. Yeah, four million doses, and we shipped them, and so now that it's approved, there's just a release process that they're undergoing right now. And then what Meiji's communicated is that they'll initiate the distribution of that in the first week of October, starting early October.
They're manufactured already?
We actually have our Carlit, our JV in Japan, that is in the process of getting qualified, GMP qualification, for commercialization-
For additional doses?
And so, they actually had just completed their run, and the PMDA is in the process of conducting an audit.
... GMP batches. And so, assuming approval of, you know, Arcalis for commercial, anticipate that Meiji may also give them a small order so that it'll be truly made in Japan. Of course, next year they'll be in a very strong position to be able to produce, you know, most, if not all, the vaccine.
Okay, and, that's above the four million, or?
Yeah, correct.
And then 2025?
We, Meiji, we can't really give guidance, but if you go back and look at Meiji annual, or not annual, actually, their semiannual presentation for financial, they had verbally indicated that they hoped they would be able to order 10 million doses next. So, that's the initial kind of forecast given by our partner. But at this point in time, we can't really comment.
Yeah. So, later this month, I think, you're gonna present additional data at Options, for this vaccine. Just, what do we expect to see, and, what's gonna be the significance of that data?
We have the twelve-month durability of Kostaive relative to approved mRNA vaccine. People are gonna be wanting to see that data, because this is the new endemic COVID market. We're coming out of this pandemic market, and we're now creating what is ultimately the endemic COVID vaccine market. So people want to see how do these new endemic COVID vaccines, where we're one of them, and how we compare with the approved mRNA vaccines. So there's gonna be a lot of attention on the twelve-month data that we're gonna be presenting on. But also we have other phase III trials, so we have a bivalent trial that has been ongoing, and people are gonna want to see how does that one perform relative to a bivalent, a conventional mRNA vaccine.
Because the multi-antigenic element of self-amplifying mRNA, we need to open that story. There's a lot of opportunity for other infectious diseases that are multi-antigenic. They're more complicated bugs, more complicated viruses and bacteria that require multiple antigens.
That's 2301 ?
Yeah. So just an additional... So there could be some data presented on other phase III trials, not just the 12-month data.
All right, you do have another study going on with 2303, which I believe it's a COVID vaccine in combination with various,
Yeah, so we have a biva. So we have the original Kostaive trial, and then we also have a bivalent Kostaive, and then we have a different variant called XBB. This trial is being conducted in South America, and this is a great trial to just strengthen our safety database in multiple ethnicities. The bulk of our data is in Southeast Asia, in Vietnam, Japan, and Singapore. But this data set coming out of the XBB trial in Southern Hemisphere is gonna get us the Caucasian, African American, Latin American data set that we bolt on for the application to the BLA early next year for the U.S.
But you want to do that in combination with the influenza vaccine, not RNA-based, but with commonly available?
Yes, there is some... There's multiple flu trials that are ongoing with CSL. They've elevated their financial investment in this self-amplifying mRNA technology for the flu. It does include multiple constructs and different combination, we'll call it, strategies, but I'm not allowed to describe those. I don't wanna say it like that, but I've, they've requested that I do not comment on that.
So I won't be able to provide details, but CSL will be the party to address all questions pertaining to their flu program.
Okay. Then last question is, EMA, for this program. You know, just does it remain on track for regulatory?
Correct, yes. We remain on track to get meaningful advances to the European process. This is the first self-amplifying mRNA therapeutic ever for Europe, so you can imagine the cyclic process, but it's progressing very well, and on track for meaningful updates there.
Right. Andy, is there a milestone associated?
Believe it or not, yes, I have communicated that in our last conference call, and we've incorporated that milestone in our three-year runway. So, we're excited about, you know, the opportunity to work with our partner in Europe.
Okay, have you disclosed the amount?
No, we haven't yet, but we will, as soon as we, you know, get the payment, probably in early 2025.
From a qualitative aspect, you know, is it meaningful or not meaningful?
Oh, for us, it's very meaningful.
Yeah.
You know, both milestones will, you know, certainly be very important factors in the contribution to our runway.
Right. We're running out of time, so, if we're sitting here a year from now, what would you like to say were the key value creating events for Arcturus?
Oh, there, there's a lot going on. We wanna make sure that we get successfully launch our product with Meiji distributing in Japan. So some sales is gonna be closely tracked by us. It's very important for Meiji to be successful there. We also want to see the Kostaive product advance in Europe and the U.S., with approval in Europe and U.K., and as we go, and initiate the application process with the BLA in the United States. The flu program will continue to progress with CSL. We'll be tracking that. We're working with BARDA in the U.S., for the pandemic flu program. For H5N1, we haven't had a time to chat on that, but that's going into the clinic later this year.
And then on the therapeutic side, we've got very meaningful data sets for the platform for CF and for OTC deficiency in the liver, which is another great commercial opportunity for us for a rare liver disease, for Ornithine Transcarbamylase deficiency. That phase II data set, the first cohort of data is coming in the fourth quarter, coming up here in a few months, and then subsequent quarters, we're bolting on additional phase II data with higher doses in younger, more advanced disease patients here in the U.S. So a lot of therapeutic, meaningful data there. We talked about the franchise. We're gonna be looking at, you know, advancing Gonorrhea, Lyme disease. Our early programs that we own 100%, those are unpartnered bacterial vaccine programs. I'm sure I'm missing stuff.
Hopefully, we'll be able to report revenue then next time. N ext, this time next year, and, you know, with any luck, and, stuff on behalf of our partners, and hopefully, be able to report, you know, continued.
Yeah, so there's a lot to summarize in 90 seconds, what's happening in the next three quarters. But just exceptional value creation in the data, in the franchises, in sales, and in commercial pipeline advancement with our partners. So gonna be exciting few months for us.
So a lot going on at the company. I look forward to hearing all the progress throughout the year. We'll see you here next year, and I'll discuss again. So, thank you very much for attending. Appreciate it.
Thanks for the support, Pete and Cantor. Thank you.
All right.