Welcome, day three. Hope everyone is enjoying the festivities. My name is Alex Buckley. I'm with the Healthcare Investment Banking Group at J.P. Morgan. And it is my pleasure to introduce Joe Payne from Arcturus, CEO. There'll be some time at the end for questions, but I won't waste any of Joe's time. So, hand over.
All right, thanks, Alex. And it's good to be with you, everybody, and to those that are joining from the web. Arcturus is a next-generation mRNA medicines and therapeutics company, and there's a little bit of feedback. We may have to adjust that a little bit. But it's exciting to be here for the first time as we are now introducing ourselves as not only a global mRNA medicines company, but we're now a commercial company. We have our first product approved called Kostaive in Japan. We recently received a CHMP positive opinion in Europe. And we have active clinical trials in five continents. So that's substantial progress and growth as we've built this company since 2013. We're headquartered in San Diego. For those that ever come, feel free to come on by. We're right on Science Center Drive with a lot of other biotech companies in San Diego.
We have flagship therapeutic programs that are very important to our company. We have LUNAR OTC, which is pursuing a rare liver disease called ornithine transcarbamylase deficiency, and LUNAR CF, going after cystic fibrosis, and these represent not only fantastic assets for our company, but can prove out transformative platform technologies for the lung and the liver. Our partners are listed on this slide. CSL works with us on the vaccine enterprise. CF Foundation has generously funded our CF program, and we work with BARDA with pandemic flu or avian influenza, but we're different. Arcturus is a different messenger RNA medicines company with differentiating technologies. Our mRNA technology is particularly important with respect to the vaccine enterprise. We use self-amplifying mRNA. We call this technology STAR for self-transcribing and replicating RNA. It's a very low-dose vaccine technology that we've proven out in the clinic.
That's different from what everyone else is doing. On the delivery side, we use a proprietary delivery technology that is chemically and significantly different from others. And this helps us differentiate ourselves from others in the space in the therapeutics arena, especially when you're chronically dosing and regularly dosing people, you need to have a proprietary and differentiated delivery technology. And you can see, as summarized there, intravenously dosed or inhaled dosing or intramuscular dosing, different routes of delivery, and we're accessing different cell types. There's 200 different cell types in the body, and Arcturus is very good at three of them. And there's substantial commercial opportunity in each of those areas. And then the third element of innovation is on the manufacturing side. This is no longer our grandparents' aspirin that we're making. This is a sophisticated lipid nanoparticle encapsulated mRNA therapeutic.
And the ability to make, purify, formulate, fill, finish, lyophilize on scale is extraordinarily challenging. And we've gone through that learning curve. And we now communicate this as a strength of our company as our manufacturing know-how on drug substance. The formulation process, purification especially, is very important and differentiating in the therapeutic space. So just touching on self-amplifying mRNA, this is a molecule that tends to be around three times larger than conventional mRNA. And this is a key differentiator, again, in the vaccine arena. We've seen superior immune responses in clinical trials compared to conventional mRNA. This means higher neutralizing antibodies, a broader spectrum of antibodies, a more durable immune response. And we do this at a much lower dose level. And the manufacturing speed remains the same.
It's still an mRNA molecule, so the clock speed advantages on manufacturing are still present, except the dose is much lower. So for each manufacturing run, we can get things done more efficiently. We have great videos on our website that we can encourage people to look at if they'd like more details there. The differentiator on the therapeutic side is our LUNAR delivery technology. It's proprietary. We've mentioned that. It's also biodegradable and optimized for each cell type. The key to a good delivery technology, well, there's so much there. I could speak for an hour just on our LUNAR delivery technology. But it needs to be able to get to the right cell type, enter that cell, and break out of an endosome. This endosomalytic process has been engineered into this technology, and then the mRNA can be translated to any protein of interest.
We have a LUNAR delivery technology for intramuscular delivery that we use for vaccines, and also a different one for inhaled applications, and also for intravenously dosed applications to hepatocytes. Our Arcturus-owned mRNA therapeutic candidates are listed here. These are our flagship assets I mentioned in the introduction. Ornithine transcarbamylase deficiency has a global prevalence of over 10,000 folks. Our upcoming milestone is a Phase 2 interim data in the first half of this year. Likewise, in our respiratory franchise, our CF program, where there's about 100,000 global prevalence, we also have Phase 2 interim data coming out in the first half of this year. Each of these is a significant commercial opportunity as the asset, but I want to reemphasize that they're flagship assets for a platform. Very disruptive technology. We could follow this on with many programs if these are indeed successful.
We partnered our vaccine enterprise with CSL, our Kostaive product that's been recently approved in Japan. It is progressing as we speak. They're selling it actively right now in Japan. We also anticipate a full EMA approval in the first quarter of this year. I mentioned in the introduction that we have a CHMP positive opinion already in place. So that's a very near-term event for us. But I just want to capture that the Kostaive franchise has collected a copious amount of data, not only in the monovalent setting, but in the bivalent setting, and updated variants, including XBB and others, including the JN.1 variant that's presently sold in Japan. So we have quite a collective body of data supporting this new, exciting self-amplifying mRNA technology, the STAR mRNA technology. Behind that, we're maturing flu programs and different constructs that we're evaluating with CSL.
CSL is a big player in the flu, and we'll touch on that shortly, and then finally, BARDA is funding our H5N1 program for pandemic influenza, avian flu. Just for those that are unfamiliar with CSL, we've worked very effectively with them in the last two years. They've been a great team to work with, very confident of what they do. They're not only a very large company, but they're also very successful in the flu business. And you can see they have over $2 billion in annual revenue. They're one of the world leaders in flu vaccines. Our CSL vaccine partnership was established two years ago, but not only did we appreciate that upfront payment, but we've lived into hundreds of millions of dollars of development milestones since inception, and we're now just entering the commercial milestone phase of this collaboration. We received our first commercial milestone last year.
Our next commercial milestone is associated with European approval. So we look forward to building the relationship with CSL under this partnership. If you see on the we also have a 40% profit-sharing relationship with CSL in Europe and in the U.S. So we, of course, are cheering them on now that we've licensed this COVID vaccine to CSL. And we have up to double-digit royalties for the flu programs and any additional we have three infectious disease vaccines there within the scope of the relationship. Meiji is a fantastic company to work with in Japan. We, of course, worked very closely with them during the pandemic and also now that we've launched a product with them. A very successful, highly reputable, respected brand in Japan. And we've had nothing but success working with this team. And they're responsible for distributing our vaccine as we speak.
So we look forward to growing a relationship with them. We also have a manufacturing presence in Japan. Arcalis, our joint venture, received over $165 million of grants from the Japanese government. The picture is shown here. It's a beautiful, state-of-the-art, 78,000 sq ft facility that's expanding. And what's new this year is, based upon the success of the program and the vaccine, Meiji has now purchased an equity stake in Arcalis. So the big players in Arcalis are mentioned here: Arcturus, Meiji, and Axcelead. But it's important that we establish a manufacturing presence in Japan as we mature not only Kostaive, our COVID vaccine, but any other products in the future with them. Kostaive has been evaluated in multiple Phase 3 studies. There's a lot here. We don't have the time to walk through all of the data.
But the monovalent Kostaive had a very successful Phase 3 trial and established non-inferiority in safety and immunogenicity. We achieved both the primary and secondary endpoints of this trial compared to the conventional mRNA and approved vaccine combination. It was generally safe and well tolerated. And we've now published on it in The Lancet. Building on that, we've also, again, continued to collect data on the bivalent version of this. And the results were consistent with the monovalent trial of Kostaive. We saw superiority in neutralizing antibody response. And we continue to monitor both these trials. And this led to what was the historic first approval of self-amplifying mRNA ever. So you can imagine our scientific team is very excited about being the first to get this next-generation technology approved. And we look forward to further products. We now have three programs in the clinic.
We just advanced our third program into the clinic of this technology. Since approval, we've collected durability data, and that's highlighted here. It just continues to show promise to be a more durable immune response relative to conventional mRNA, so not only do you get higher neutralizing antibodies, but you get a broader spectrum of neutralizing antibodies. And that combination produces a more persistent immune response, and this is very important for viruses that are always changing. You want to stay ahead of them, and you also want to survive the changing virus, so we view this as very positive, and it'll continue just to add momentum to the franchise as not only a more substantial, higher immune response, but a higher durability of immune response compared to approved mRNA vaccine. Moving on to H5N1.
Just early this year, a couple of weeks ago, the New England Journal of Medicine continued to publish on H5N1 and caution the scientific community at large that this is becoming a significant concern. They're showing threefold increases in infections on a quarterly basis. If that continues, this is going to be an even more significant challenge next year, and then right after that publication, there was an individual that died of H5N1 infection in Louisiana, so this has been getting more attention in the press, so we thought it was warranted that we do a press release and give people an update on our H5N1 vaccine because we knew we were going to get some questions on it and elevated interest on it during the J.P. Morgan conversations, but this is funded by BARDA. We received clearance to proceed from the FDA in November of last year.
The first subject was treated in December. We initiated our Phase 1 just last month. Again, this was our third self-amplifying mRNA vaccine candidate to enter the clinic. It's about 200 subjects who are participating in this trial. It's designed to enroll that many, both young adults and older adults. Again, we received around $63 million to fund this effort from BARDA. The primary objective is just to evaluate safety and immune responses of three different dose levels and two different vaccination schedules. We look forward to not only collecting more data on this platform, but this is a multi-antigenic vaccine. We're going to mature the asset and the enterprise value and understanding a vaccine with multiple antigens involved.
We get to be able to incorporate new methods and processes in our manufacturing and introduce those improvements into our platform and generously funded by BARDA. So there's a lot of value collected from this. And then we strengthen our relationship with the U.S. government as well. H5N1 influenza, just to update people, has been very challenging. The 130 million poultry have been sacrificed due to this virus. So this is becoming not just annoying and pesky, but a significant concern in animal health and all those that are exposed in the dairy industry, the farming industry, anyone who's working with food. So we're closely monitoring this with BARDA as we go forward. Now on to our therapeutics. We're excited to provide an update on our CF program. This is our first inhaled messenger RNA therapeutic candidate.
I'd like to remind people that there's a lot of different cells in the body that are valuable in the pharmaceutical industry, but the bronchial epithelial cell in our lungs is an extraordinarily valuable cell type in our business. People understand the value of our lungs, and so if we can demonstrate proof of concept in delivering these amazing mRNA molecules to where they need to be safely and effectively, this will be disruptive, so there's a lot of eyes on this program. CF is a well-understood rare disease because of very successful companies in this area. There's about 100,000 of these subjects worldwide. It's caused by a dysfunctional transporter in the lung, so you and I have a normal CFTR that transports salt or chloride ions to establish homeostasis in our lungs.
But if you have a dysfunctional transporter, then that results in elevated inflammation, swelling, cirrhosis, fibrotic disease, and ultimately, folks can no longer breathe properly. And it's very serious and can lead to death. So what we're in the business of doing is not modulating the transporter. Arcturus is different. We're in the business of providing a brand new, expressing a new CFTR transporter for these subjects. And so there's about 15%-18% of the CF community that does not respond or benefit from or qualify for modulator therapy. So there's significant unmet medical need in the CF community for something that can address this disease. And an mRNA therapeutic could be not just a great option, but could be ideal. It could be functionally curative from a topical lung perspective. So the data we've collected preclinically, I believe, is best in class.
We've clearly showed that we can deliver mRNA in healthy animals, whether it's mice or rats or ferrets or primates. And we've done that successfully and attributed again to our differentiated LUNAR technology. Then we went to a very challenging CF ferret model. And whether it was the trachea or the bronchus, the upper or the lower respiratory tract, you can see beautiful images that we're getting there. And this is a big deal because these diseased animals have phlegm covering all of the cells. So one of the huge challenges is not only how do you nebulize these therapeutics and retain the integrity of the particles, but once they're in the lungs, how do they biodistribute effectively and survive the phlegm? And we had to go through a 10,000-fold optimization process over years. It resulted in these beautiful images.
So it resulted in when it was first presented, there was spontaneous ovation and applause from the scientific community. It was a very proud moment in the history of the company and for the scientists that shepherded this program. But then we also put this ARCT-032 or LUNAR CF in the CF ferret model in MCC and evaluated mucociliary clearance. And we're very happy to see these results that after a single administration, that's the blue line at the top, it outperformed that green line, which is Kalydeco positive control in this model. And to see something work so effectively is now strong evidence that this is not only getting to where it needs to be, but it's doing what it's supposed to do. And that's building new CFTR in these animals. So what about any sort of human data? We have human cellular data.
We were fortunate to get some cell donations from the actual CF patients. And we looked at CFTR expression in these cells. And we saw high expression of and high levels of expression of CFTR protein in actual human cells from CF patient donors. And we restored chloride activity to normalization. So if you take this all into consideration, that's why I'm saying this is an exciting preclinical data package. But where are we clinically? Well, we've now, in 2024, we said we were going to complete a Phase 1 and Phase 1b study. And we did that. We now have 39 subjects of data. 32 subjects were healthy volunteers. We evaluated four dose levels. And we successfully navigated our way through that. And we established safety, tolerability, and got some PK data that supported transitioning to a Phase 1b study.
The Phase 1b study now involved two administrations instead of a single administration study like in Phase 1 . There were seven CF subjects. These were all CF patients. We, again, established safety and tolerability of two administrations and the PK that supported transitioning to a Phase 2 study. Very happy and pleased with the study. We did see some early promising data after just two administrations. It was teasing data, frankly. We're hoping that this translates into some more substantial Phase 2 data here shortly this year. We initiated the trial, our Phase 2, in December just last month. It's a multiple-ascending-dose open-label study. We are, again, evaluating safety, tolerability, and efficacy. We are looking at lung function before, during, and after a 28-day treatment. This is daily dosing for just minutes a day.
They will be able to not only look at safety and tolerability, but can we improve lung function in these folks that have no real option? This will be a significant set of data if this is successful. The CF Foundation has committed $25 million to advance this program for us. So we want to thank them. They do have a small single-digit royalty associated with that. But they are very supportive. And we're very appreciative of their support. And we've received a rare pediatric disease designation, the orphan drug designation from the U.S. FDA, and orphan medicinal product designation from the European Commission. So this allows us to have competitive comfort as we enter these more advanced clinical trials and hopefully prepare for commercialization. On to OTC. Ornithine transcarbamylase deficiency is a rare liver disease.
This, instead of inhaling the mRNA for CF, we're injecting it intravenously to access hepatocytes. This is also a significant commercial opportunity for a company of our size. OTC is the number one urea cycle disorder. It's a 10,000 prevalence in just U.S. and Europe. The urea cycle is responsible for controlling ammonia, and if that's a dysfunctional urea cycle, then ammonia levels rise. Ammonia is a Windex for the non-chemists in here, and ammonia can cross the blood-brain barrier, and that's not good. We need to control the urea cycle to make sure we control our ammonia levels in our blood and systemically. The present standard of care is to take ammonia scavengers, to drink lots of water, and urinate very regularly to try to suppress ammonia. Unfortunately, these ammonia scavengers do not necessarily prevent hyperammonemic events.
When people eat the wrong food, there's a surge of ammonia that surges through the protective elements of ammonia scavenging, so it results in coma, death, and liver transplants. What we need is a functional cure, everybody. We need to get into these livers and provide what these patients are missing or correct what's dysfunctional, whether it's a dysfunctional OTC or a missing OTC. We need to get in there and reestablish, restore, or replace a functional normal ornithine transcarbamylase enzyme, and the way to do that is mRNA. That's why we're excited about the theoretical rationale for this. Preclinically, we had very strong data in the mouse, and not only in mouse liver, but in the periportal portion of the mouse liver, which was historically a challenge to get RNA to. The periportal portion of the liver is where the urea cycle happens.
We just don't want to access the liver. We want to get to the right cell types, the right hepatocytes. And so we looked at this at multiple dose levels. And we saw extraordinary success in animals. You can genetically engineer these animals without OTC. And if you don't treat them, they all die. So it's a very aggressive animal model. But on drug, they're all happy and spinning in a wheel. And the only explanation for that is that we're replacing ornithine transcarbamylase. And we hope that we can transition this to the clinic. How much OTC do we need to make? The literature is now clear on this. It's just less than 5%. So if we can restore 5% normal OTC in human beings, we believe that this will be a dramatic or at least a significant improvement in managing this disease. So where are we clinically?
We've completed successfully Phase 1 study in healthy volunteers up to 0.4 mg per kg. There were 24 subjects and generally safe and well tolerated there. This is a big deal for, again, injectable, systemically administering RNA with our LUNAR delivery technology. Phase 1b , it was a single ascending dose study in adults. We dosed it up to 0.5 mg per kg now in actual patients in a single ascending dose study. That brings us into Phase 2 . We completed a 0.3 mg per kg cohort in Europe in a placebo-controlled manner. Now we've transitioned back to the United States in a non-placebo-controlled open label study, which includes elevated doses such as 0.5 mg per kg. We announced recently that we initiated our first dosing at 0.5 mg per kg just last December.
This program is also, just like our CF program, received orphan drug designation, fast track designation, and rare pediatric disease designation from the U.S. FDA, and again, orphan medicinal product designation from the European Commission. And this, again, gives us those competitive advantages in the rare disease space. And finally, I'd just like to touch on we added a new board member this year. And he's present. Dr. Moncef Slaoui is with us today. We're fortunate to have him join our board. He did an exceptional job leading research and development at GSK for decades, not just vaccines, but therapeutics. He was invited by the president to join operation and lead Operation Warp Speed. So his name might be familiar to you. But we're just fortunate to have him on our board.
He's been giving us great guidance not only into the vaccine programs and the commercial outlook of kind of new stuff that we're doing, but also on our therapeutic program. So we're fortunate to have him. I just wanted to make sure you guys were aware of that new addition to our board. And that leads us to a final slide before we transition the time to your questions. But at the end of every J.P. Morgan talk annually, we provide a 2025 outlook. And I haven't seen a better outlook in the history of our 11 years of doing this. We have two Phase 2 trial readouts in the first half of this year. They're interim data readouts. But nonetheless, they represent very exciting therapeutics. And they represent flagships for platform opportunities. And that's happening now.
So everything that we've been working on therapeutics for the last decade has culminated to what's about to happen in the next six months. So you can imagine the anticipation and the excitement we have as a company. And then providing security, cash flow, which people like to see stability in biotech investments. We have an approved product that's partnered with exceptional groups and funded effectively by CSL, Meiji, and BARDA. And that includes so we're looking at Kostaive commercial sales in Japan and then regulatory approvals that we're anticipating for Europe or for the EU in the first quarter of this year and later United Kingdom. And then we aim to file our BLA filing as soon as possible in 2025, be in a position to get that approved hopefully next year.
And then our LUNAR H5N1 Phase 1 interim data is also going to be reading out in the second half of this year. So that is a mouthful. A lot's happening all in 2025. And we did what we said we were going to do last year. And we said we were going to set up all these trials. But this is the year of the harvest, everybody. This is the year we get our sickle. And we bring in some data. And we're going to find out how valuable and how Wall Street views this company this year. And so we look forward to that. And with that, I'd like to transition back to you, Alex. And maybe we can go with some Q&A.
Absolutely. Thank you, Joe. That was fantastic. So we'll start maybe taking questions from the room.
If you want to raise your hand, we can pass the mic around. Otherwise, I've got some on the screen here.
We have multiple mics here, too. If there's questions for Moncef or our CFO, they're more than happy to come up here and address your questions as well. They're both present.
Why don't I start us off? As you mentioned, Joe, 2025 really does seem like a very significant year for the story with the CF readout and the OTC readout and obviously a potential approval and a real validation of the platform. As I understood it, the CF and OTC readouts are coming first half of this year. Can you comment on the potential sequencing of those? Do you have any sight on that yet?
Oh, that's a good question. A lot of the investors that we've been talking to have been asking that similar question is, what's going to come first? And we don't know. We may co-communicate these at the same time. But of course, there's too many variables involved. So the answer is we don't know yet. But I hope we have the good problem that we'll have to communicate both at the same time.
Absolutely. And on the COVID program, what are your views and your partner's views on the buildout in Europe for that and the sort of demand that you might expect there?
Yeah, so getting approval in the European Union is a big deal. We have 27 countries that are going to be coming on board, and it's already partnered and licensed to CSL, and CSL's got an extraordinary track record in Europe with the flu shot, so we're partnered with the right commercial partner because we don't have any commercial footprint in the U.S. In terms of timing of sales, we're going to deflect that question to CSL because it's licensed to them. Once it's approved, I think they'll start to provide some guidance as to when those sales will occur, but it would be inappropriate to guide at this point.
Understood. In terms of the CF program, you're obviously targeting a separate patient population to the modulators, as you mentioned. And it's obviously a population with a large unmet need. The Phase 2 is an open label study. How should we be thinking about the efficacy bar, I guess, in terms of FEV that you would hope to expect to achieve with those two kind of considerations in mind, the more severe population and also the open label?
Yeah. Yeah. That's a great question, and everyone should ask what's needed to get this approved. If you look at the history of modulators in CFTR, I'd like to start there as I address this question. So the first blockbuster in the modulator business had an FEV improvement of 2.7%, and so people are going to be comparing the FEV to that. But there's historical data that may be over 20 years old now. But there's some studies on FEV and what's considered significant. And the conclusions of those papers that are relatively old, but they're saying about 4%. And then people are going to be comparing to our Phase 1b data set, even though it was just two administrations. And it was a safety study. So I want to preface my comments on that.
But we did see an early 4% FEV improvement in those Phase 1b subjects, especially the Class I subject. So people will be comparing to that. But what are we expecting? What are we guiding? I want to make this very clear. If we suspend the degradation of the lung and we simply just flip the script, if we start to improve, we see improvements in FEV, that's going to be transformational for this group. If you look at what happened in the outstanding company, Vertex, they did a five-year study on tracking their patients. And you saw that initial FEV improvement. But once that FEV improvement was completed, they tracked them for five years. And there was no additional lung function improvement. What they did is dramatically impact lives. Lives were saved, dramatically improved lung transplant occurrences. And that's why they're a dramatically successful company.
So we would like to do the same. That's the precedent. We would like to see something, some sort of improvement in FEV sufficient to get approval, and then establish a tolerability track record that would be significant enough to keep people on our drug because this is anticipated to be daily, perhaps every other day, administration. But in terms of a specific FEV number, I know what people will be comparing to. But as long as we see something positive, I think this will justify approval. But that's just my opinion.
Fantastic. Thank you. I'll open it up once more for the room. Any other questions? OK. Thank you. Well, very exciting 2025 ahead. So thank you very much for joining us.
Thank you, everyone.
Thank you all.