Good afternoon, everyone. Welcome to our Piper Sandler Healthcare Conference. My name is Yaz Rahimi. I'm a senior biotech analyst here at Piper. Excited to have the team from Arcturus Therapeutics here. Joe and Andy, wonderful to have you. Lots to cover as we have a big 2025 ahead of us. Maybe a good place to start off would be an update with, obviously, a lot of investors have been eagerly waiting and seeing the great progress and uptake of your COVID vaccine. So where are you in terms of your partner, in terms of more orders being placed in Japan for 2025, as well as maybe also talking about the regulatory approval in other jurisdictions?
Sure, sure. So we're very pleased with our partner, Meiji, in Japan, as they're working very hard to educate the physicians and the community there about this new next-generation vaccine called KOSTAIVE. We're happy with their efforts. They're working hard. I think it's nice to have a data-centric story that showcases the superiority of our vaccine. And we're also excited to expand now from the early efforts in Japan into Europe. And I think that's where we're focused on now, as we have a CHMP opinion that's going to be provided here within a couple of weeks, later this month. So we're excited about expanding KOSTAIVE, this COVID vaccine, and providing it to Europe. And not just the asset itself, but it also represents the flagship for the platform in Europe as a vaccine technology. It's the first self-amplifying mRNA product in Europe, potentially.
And then how that can positively impact the efforts in Japan. So the salesforce in Japan can now point to other regulatory agencies and other countries that are supporting this effort.
Just to add to what Joe has articulated, Meiji is eagerly anticipating the PMDA approval of the ARCALIS batches, commercial batches. And so Meiji ordered an extra, roughly, million doses. So they'll have about a total of 4.5-5 million doses to sell. Obviously, they're very motivated to earn as much money as they can. And I think once they get approval, I think they'd love to be able to announce, "This is a made-in-Japan vaccine." And that'll be, I think, pretty well received by the Japanese people. So combine that with the European approval, I think it'll give Meiji and CSL a lot of momentum in Japan in the first quarter.
What have they communicated about their commitment in terms of build-out in Europe and what the demand there will be?
Europe is a. This is where we're going to be leaning heavily on CSL. It's taken them well over a decade to establish a commercial presence in their flu shot business, and so we have the right partner to help us. I think that's a key part of the puzzle, is just establishing a commercial presence there, and so we're going to be looking to them to drive the commercial strategy there. There's a lot of options that are unfolding in the COVID arena, so we get questions about the standalone shot and how we're going to compete and what's going to be combined or co-marketed or co-promoted, but thankfully, we're not taking that burden on ourselves. CSL is the experienced partner. That's why we encourage investors to divert those questions to them.
We look forward to establishing a presence in Europe and continue to grow that with CSL as our partner. Not just for COVID, but other products. That's the power of having a platform approved. It's not just the asset. It opens the door to changing the payload and pursuing other opportunities, like flu and others.
The good news is that none of our forecasted cash runway is dependent on any vaccine sale. So any incremental vaccine sale, whether it's Europe, Japan, or U.S. in 2026, will only be incremental. And that'll enable us the opportunity to hopefully extend the runway. Now, the only milestone that is near-term would be the European approval, which we articulated will be similar to the Japan milestone. So we're looking forward to that commercial milestone achievement, and that'll help us financially.
Okay, and then I think, team, do we have an idea in terms of when orders are placed or how big the COVID market was in 2024 in Europe?
I think the field understands who's successful in that area right now. I think one of the approved conventional mRNA vaccines is doing most of the business there. And thankfully, we've established multiple phase III trial sets of data to show that we have a superior immunogenicity profile and extended durability package in our vaccine technology. So we're happy to see that the vaccine that we have collected a lot of comparison data to doing very well in Europe. It'll simplify the market and help CSL and their salesforce educate people of the benefits of our vaccine, if that makes sense.
Yeah. I think also maybe 2025, 2024 was a year where a lot of investors were just tracking COVID sales and wanting to kind of look at Arcturus as sort of like, "Okay, as the revenue comes in, it's just a value story." But maybe in 2025, between the CF readout and the OTC readout, and obviously the approval, it's a validation of the platform and the strength that it brings. So maybe we should spend quite a bit of time on CF now and talk about the data that's expected in 1H, right? So you've said you're running an open-label phase II study. The data is on track in 1H. You're going to fine-tune sort of when that comes in. But what is that study? I think what do you expect the size of the study to be? How many doses are you exploring?
Yeah, there's.
Which ones? Yeah.
There's a lot of details in the phase II study design, but some of the key aspects you've touched on, I just want to emphasize that it's not placebo-controlled.
Yeah, open-label controlled.
And that'll facilitate recruitment. You want to look at certain elements of the design that does not include bronchoscopy or lung scraping or brushing. And that, again, encourages participants to be included in the study. It's daily dosing. So it's fairly straightforward there. If you look at some of the hallmarks of efficacy are determined either on Cmax or maintaining a threshold. And with daily dosing, you can maintain a threshold of CFTR, for example. So we're beginning to appreciate more so the design of the trial from a daily dosing perspective at maintaining a.
For how long are you planning to dose into the open label or like?
We've said it's multiple weeks. It's not multiple months. We haven't given those details. We are going to be providing an update on ClinicalTrials.gov that people can reference, and that's relatively soon. We've just simply delayed that process so that we can maintain some confidentiality on the structure and the design of it. That's been worked on and negotiated with the FDA, but.
And the size? Like how many dose cohorts? How many size?
Yeah, it's a multiple-ascending dose study. The doses have been smartly chosen based upon our 37 subjects of data that we've collected to date with healthy volunteers and patients. So several doses have been evaluated. And building off that collective data set, we've selected a multiple-ascending dose study that's all.
How many patients will you have per dose cohort? Do you know?
It's a relatively small number, and again, this has been discussed and negotiated with the FDA. Sufficient to get us into a phase III study, a pivotal study.
Okay. And how are you thinking about patients that are CFTR-experienced, modulator-experienced versus not? Are you enrolling mostly all experienced patients, washing them out, or on top of it? Yeah.
The modulator therapies are focused on 82% of the CF population. There's approximately 18% of the CF population that does not respond to, qualify, or benefit from modulators at this time, and so that's where the most unmet medical need is. That's the fastest path to not only recruit, but to get approval. So we're focused on that for this phase II study: the modulator non-responders, non- they don't qualify or benefit from that. It includes Class I CF. These are often called the nulls. They have no CFTR. So it makes sense that they could potentially benefit from this trial.
What do you think the distribution is going to be between Class I and the F508?
Based upon just the data, I said that 18% number before. Nine of that 18 or half is Class I. The other nine is multiple mutations, people that don't respond or benefit for there's many reasons in that remaining 9%.
Okay. And then where are you in terms of the TOX package completion for the program? So it's going to allow.
Yeah, definitely. We've completed all the TOX studies necessary to support this phase II study, and you can imagine we're in the process of collecting TOX data to support planning for success of phase III study, so we're well positioned there.
I think also in your CF study that you ran and the phase I study, the I-B, you had patients that were pretreated, right? I mean, the regimen seemed to work. Are you planning to have the same regimen in place?
Yes. Yeah.
With the Salbutamol or.
Yeah, Albuterol. It's just a pretreatment that opens up the airway so that we can access more cells. For the onboarding phase for a topical drug like this, this is the best way to get the drug onboarded to as many cells as possible to give us the highest likelihood of success. It is reasonably expected that after we go through an onboarding phase, and if it's successful and there's a purging process, and once the drug is fully on board, that pretreatment may become optional.
You may be well aware of it, though, but these patients, when they take antibiotics on a regular basis, they use albuterol to help them. And so they're used to it. So it's not like something that is uniquely tailored for this particular therapeutic.
Team, what do you need to see, right? An FEV and then sort of a positive POC study from the open label.
It's a great and fair question. And it's the right question. What's needed? Well, for this patient population, anything observed would be very significant. Unlike the 82% that's being treated with modulators, these folks, especially the null patients, their lung function decreases at a more rapid rate in life. So if we could suspend that and just elevate lung function a little bit, that would be really meaningful for this. Of course, we want as big as FEV number as we can get. But if you're looking at a minimum, we just need to stabilize the disease because their lung function is deteriorating. That would be the first of its kind if we could showcase that. But the shorter answer is, of course, we'd like as big a number as possible.
But is there a certain I think the thing is that FEV change in month one was like 14% placebo-adjusted, with TRIKAFTA . So I think the question that investors have is like, is that a good bar that you want to be like?
No, it's more fair to look at another good question. The very first modulator that was approved had a 2.7% FEV improvement, and then you had a second and a third to become TRIKAFTA, and that's where you just represented that, but when you're entering the market for the first time where there's unmet medical need, the first modulator had a 2.7% increase. That became a very successful product, and then you build the franchise from there. I'm not implying that that's what our number is going to be, but that's the precedent.
Yeah, so you're saying you can be as low as two. It can be as high as 14. It could be somewhere in between.
Or the bull would say it would be higher if you want it to be bullish because we're not in the business of modulating a broken transporter. That's what Vertex does very well. They do a very good job. But we're in the business of building a brand new transporter. So it's like the difference between not one, not two, but three molecules fixing a busted-up CFTR, a dysfunctional one, versus a brand new one. That brand new one would arguably, theoretically, be superior than a fixed-up broken transporter. But we'll see.
How soon post the CF data can you engage open label data? Can you engage with the regulatory agency to discuss pivotal design?
We've already initiated those kind of conversations. It was very interesting to learn that the FDA is totally okay with the FEV portion. The efficacy portion of our phase II trial is just hyper-focused on FEV, and that's it. There's so many other things that we could explore, but FEV is what is key to them that would set the stage for a pivotal trial. How large that FEV improvement is will determine how large the phase III study is. The higher the FEV number in phase II, the smaller, more efficient the study is in phase III. But if it's modest, then we have a more significant powering of phase III. And so the market's going to be looking at the FEV number and the impact that has in the phase III study.
Okay. And if you could talk about also you're already in the process of tech transfer for CF and ARCALIS, which is your manufacturing facility. So what work is being done to get sort of ready for that, for scaling up manufacturing-wise?
Our technology team is working very closely with ARCALIS to enable them to be able to manufacture the cystic fibrosis mRNA, the drug substance. And so obviously, they've already done that at some of our other CDMOs like [audio distortion] and [audio distortion]. So enabling that at ARCALIS can only help us in terms of our ability to be able to diversify our manufacturing productivity and enable us to be able to utilize the fact that we own 38% of ARCALIS. So it's an economic benefit to us as well. And so the demand for the CF is just for the Class I patient. It's going to be roughly 17 kilograms a year. So that's a significant amount of mRNA. And we're going to need contributions from ARCALIS to help us round out that amount of drug substance that we're going to need to provide to the patient.
Okay. Team, let's maybe transition to ARCT-810 for OTC. I think that open label data is also expected in 1H 2025. Do you have an idea of what sequence is going to come first, whether it's CF and then OTC or OTC?
We don't know at this point. We've guided the first half of 2025. It depends on a variety of factors, but we'll learn in the same pace as you will.
So in this phase II study, it's an 85-day phase II study in the U.S. And I guess the question is, you're going to be presenting U.S. and Europe data from both of the cohorts. And you're going to present biomarker data. What are we going to get at least at?
We've completed a cohort in Europe at 0.3 mg/kg. That was an N of eight, cohort size of eight. We've transitioned to the U.S. and we're recruiting patients there at multiple dose levels. What we're going to learn with the collected set of data is multiple dose levels and establishing some sort of early proof of concept data. What's unique about the OTC program is the market would also like to understand our biomarker strategy because the phase III studies in OTC can be a little bit cumbersome if you don't have a biomarker to drive it forward. The key biomarker in OTC deficiency is ammonia. Most people, if not all people in the phase III study, are going to be on an ammonia scavenger.
So it's very important that we not only communicate proof of concept, but what is our biomarker strategy? We haven't given any clarity on that yet. So the one-two punch for OTC in the first half of next year is some interim proof of concept data, ideally, and also communicating what our biomarker strategy is so that the analysts in Wall Street can figure out what our phase III trial is going to look like. Can we avoid things like a diet-based endpoint or an offboarding with a certain treatment? It can be biomarker-driven.
So what will be the next steps post that biomarker to meet with the agency and ask if you could get regulatory approval?
We've already discussed this strategy with the FDA. That was one of the purposes of the U.S. trial because we transitioned from Europe to U.S. and we wanted to get some buy-in from our learnings in Europe and also what we're hopefully continue to learn here and in the U.S. pertaining to the biomarker strategy. That's already been socialized and understood and part of our phase II trial. There's reasons to be optimistic that we can leverage this strategy in the phase III study, but until it's official, I can't guide it. I think it'll be more than just data for the phase II study in OTC. It's a data and a biomarker strategy.
Okay. And maybe for the last few minutes, it's just ARCT-2138, which is a phase I study that's your influenza vaccine that you're running. When do you expect to have top-line data? And what do you need to show to be competitive?
Well, that study is already functionally completed. That's CSL's program. So we're extra sensitive on guidance on there. So I'm choosing my words carefully here. But CSL has updated their deck and they're communicating an additional program, which is a trivalent program. Our data that we're doing, the 2138 program, is a quadrivalent. And I think the street and people generally understand that the regulatory agencies would like a trivalent version. So those learnings have been applied to this trivalent program. And so we have two programs in parallel right now. And there's other activity, but we can't speak to the details of it because we don't want to unveil any commercial strategy pertaining to whether it's bundling or combos or things like that in addition to the standalones.
But in summary, the trivalent vaccine that CSL has put on their external IR communications is something that we'll be closely watching next year.
Then, team, what is cash runway? You noted too, you're not looking at additional sales to guiding cash runway, but yeah, I would love to get your thoughts on.
Yeah. On the third quarter call, we guided to cash runway basically till the first quarter of 2027, and so we have about $300 million of cash on the balance sheet, and we're burning about $100 million a year, so that should give you plenty of comfort that that first quarter is reasonable.
Yeah. And then I think with the commitment, right? I think investors were wondering commitment in Japan of the 4.5 million vaccines. What would that translate in terms of cash flow?
If they sell all 4.5 million vaccines, that'll be a real nice revenue opportunity for Meiji, right? I mean, assuming that just for hypothetical purposes, it's $100 a vaccine, you're looking at $450 million, right? That's a meaningful amount of.
And you get a third, yeah.
And so we would then have to split that among all three partners, assuming Meiji gets the majority. CSL would get the next portion, and then we would get the final portion. And once you offset our 40% of our development cost associated with that program, the KOSTAIVE, then all that capital will be coming free and clear to us going forward, irrespective of what region. So this is a one-time type of event. And that's why CSL gave us the $25 million commercial milestone to help offset that. So it's pretty helpful. And it wasn't in our original CSL deal. So they went out of their way to help us here. So I would view that as quite a favorable gesture on their part.
Okay. Perfect. Well, team, thank you so much for being part of our conference and an exciting 2025 ahead of us. So let's say thank you for the team.