Joe Payne, CEO and President, will be presenting today. I'll pass it over to you.
All right, thanks, Colette, and thanks, J.P. Morgan. Arcturus Therapeutics is a messenger RNA medicines and therapeutics company. We have next-generation technologies that we leverage to do some exciting new innovative medicines. We were founded in 2013, and we're based in San Diego. But what has occurred in the biotech industry has also impacted Arcturus in that we are now a much leaner and more focused company than we were a couple of years ago. Our employee count is now at approximately 100, and we're focused on some value-creating assets that we'll be emphasizing or reviewing today. On the left-hand side of the slide, you'll see that we have a product, a COVID vaccine product called Kostaive, that's now approved in over 30 countries, including Japan, the United Kingdom, and the European Union. We also have an H5N1 pandemic flu funding from BARDA in the United States.
So these partners, the Kostaive asset is partnered with CSL. It's distributed in Japan by Meiji as well. And BARDA has partnered with us on the pandemic efforts here in the U.S. But I'm going to be focusing the remainder of my talk today on the messenger RNA therapeutic candidates in our pipeline. That's on the right-hand side of the slide. Ornithine transcarbamylase deficiency is our flagship liver program asset, followed by cystic fibrosis. This is our flagship asset in the lung, and that's funded in part by the CF Foundation. We have expertise in mRNA technology, and also we're well known for our differentiated LUNAR delivery. This is a lipid nanoparticle delivery technology that sets us apart from others in the field.
We now know how to deliver effectively to hepatocytes after an intravenous administration, to myocytes after an intramuscular administration, and also to airway cells in the lung after inhaled mRNA therapeutics. Manufacturing know-how is extremely important for mRNA therapeutics, whether you're making the drug substance itself, mRNA. It's a beautifully complex, large, highly charged molecule, and we have proficiency on scale to make and purify the mRNA and then formulate it with our LUNAR lipid nanoparticle technology and also the fill, finish, and lyophilization expertise, and this is a significant differentiator for us as well. Just highlighting our lipid nanoparticle, I mentioned it is differentiated. It's because it's chemically different. It's not just proprietary, but it's designed to be biodegradable and non-accumulating, and it's highly optimized for a specific cell type.
This is what many people in the mRNA community appreciate or understand or recognize from Arcturus' innovative delivery capabilities. Our pipeline of Arcturus-owned mRNA therapeutics candidates is summarized here. We have a flagship asset for the liver for OTC deficiency. I want to focus your attention on the right-hand column where our key upcoming milestone there is a pivotal trial strategy alignment with regulatory agencies. This program has established safety and tolerability, and it works. However, there's certainty and clarity to be gained in our regulatory conversations later this year, in the first half of this year. On the respiratory division, it's led by our CF program, and that has an upcoming milestone: it is a phase II, 12-week study initiation also in the first half of this year. But very significant commercial opportunities. I'm going to start by summarizing where we are with our CF program.
Again, this is an inhaled messenger RNA therapeutic candidate for cystic fibrosis. It's desired to be able to inhale mRNA. It's been an extraordinary challenge for the field because of safety and tolerability issues. Us, human beings, do not like to inhale lipids and mRNA and the impurities from the manufacturing process. It's just not something that, collectively, as a community, we've been able to do effectively. But thankfully, we've now positioned this technology to be in a good place with respect to safety and tolerability. To date, we're in phase II studies, and we have a good—we've achieved that threshold. Arcturus is preparing to initiate a phase II that's actually our fourth cohort study in about approximately 20 CF participants. This is a daily treatment over a period of 12 weeks. The CF Foundation is partnered with us. I've alluded to that already.
They've committed approximately $25 million to this asset. We've received the Rare Pediatric Disease designation and Orphan Drug designation from the U.S. FDA, as well as the Orphan Medicinal Product designation from the European Commission. The market opportunity for CF is well understood. We don't need to go through this slide in detail, but there's well over 100,000 worldwide of individuals that have cystic fibrosis. It's caused by a dysfunctional transporter or protein in the lung that's either missing or broken. When that transporter is not running well, then the salt in your lungs becomes out of balance, imbalanced. That leads to swelling and fibrotic disease and cirrhotic disease and difficulties and sticky mucus and airways that causes significant damage in the lungs and respiratory failure. It's a huge unmet medical need.
And what our product aims to do is different from what several others in the field. We're not in the business of fixing or modulating a broken transporter. We're actually in the business of establishing or building a brand new CFTR protein in the lung using mRNA as a therapeutic. And that's a different approach. Our initial target population, because of this approach, is Class I cystic fibrosis. These people are also called null for the transporter. They do not have any transporter. So the present standard of care, and these modulators, are irrelevant for these patients because there's nothing to modulate. So it's a significant commercial opportunity. But the highest unmet medical need in the CF space is these folks that are ineligible for CFTR modulators. And our approach is ideally designed for them and others that do not qualify for CFTR modulators.
As a quick recap for this program, phase I study in healthy volunteers was completed successfully in 32 subjects, four ascending doses. It was safe and well tolerated. We moved on to a Phase 1 B, seven subjects. This time, these folks were all CF subjects and participants. We did a two-dose regimen, and so it was a multiple-dose regimen as well. And it was sufficient safety and tolerability to advance into phase II. And that's where we presently are. We've completed three or we've completed two cohorts, and we're ongoing with a third cohort at 5 mg dosing, 10 mg dosing, and 15 mg dosing over a period of 28 days of daily dosing. And I've already touched on this, and I'll emphasize it again before the talk's through.
But we have a new 12-week study enrolling a fourth cohort in up to 20 CF participants that's planned to begin as a near-term event in the first half of this year. So looking more closely at our phase II study that's ongoing, we want to establish safety, tolerability and some preliminary efficacy in adults with CF and those individuals, again, that do not qualify for CFTR modulator therapy, the majority of which are class I individuals. It's an open-label study, multi-centered. We have three cohorts that we've summarized. But the first and second cohorts, we've completed the dosing phase. The third cohort is nearing completion of the dosing phase. So we are preparing for that fourth cohort, which is an open-label multi-centered N equals 20. The dose, whether it's 10 mg or 15 mg, is yet to be finalized.
But we're just waiting to see any last remaining data from the third cohort. But this will be daily inhaled treatments over a period of 12 weeks. And again, plan to initiate that in the first half of this year. So our phase II interim data that we've shared recently is. I'm going to summarize that. I want to emphasize one thing, that mucus plug reduction is important because Arcturus is evaluating not just lung function, but also the structure of the lung. See what happens after 28 days of treatment with ARCT-032. We're utilizing high-resolution CT scans to take pictures or images of the lung before and after treatment using Thirona's FDA-cleared AI technology. And lung structure changes, something I want to emphasize today, is these lung structure changes are an important predictor and precursor of lung function improvements.
Lung function improvements are very important to communicate to the FDA to have a path to approval or even an accelerated path to approval, so these lung structure changes, because they're predictors and precursors to lung function improvements, we're looking closely at them. Studies have shown that these lung structure abnormalities like mucus plugs are correlated with lower lung function, whether it's FEV1 or other types of lung function measurements, and these chest HRCT scans can provide an early readout of likely long-term success for CF patients, and this is already known, so the mucus plug reduction interim results, I briefly summarized here. I'll go into it a little bit more, but no mucus plug reduction was observed at our first cohort. This is the five-milligram dose level, so we doubled the dose and went to 10 mg and we saw significant mucus plug reductions observed at that cohort.
The third cohort at 15 mg is ongoing, and it's near completing the dosing phase. So to summarize the second cohort, four out of six of these subjects exhibited mucus plug or mucus reduction, and not just the number of plugs, but the mucus volume. You're looking at 28%-33% reduction, whether it's in number of mucus plugs or mucus volume for those that responded, the four participants that exhibited mucus reduction. So this is considered very encouraging. But rather than showing you a table, I think it's more impactful to show you what an image of an HRCT scan looks like. The image on the left is what an adult lung looks like. You and I have healthy lungs.
But if you look on the right, it's pretty easy to see that there's a lot of congested imaging that can be easily looked at with the analytics and AI. And if you go through Thyrona's analysis, it's more easily discernible what is a mucus plug versus what is mucus or what is water and what is congestion or fibrotic disease. And so those red, the mucus plugs are highlighted and colored in red on the right. And it's very easy now to see the difference between a healthy lung and a sick lung. So let's see what happens in some of this. The person on the left here is our second patient in cohort two. At day zero, you can see that they have a collection of mucus plugs that are almost completely resolved at day 28.
If you look at someone with more advanced disease, and this included patient number five, where they had copious amounts of mucus plugs, and they're much larger. So if you focus on the circled area there, you can see these are very large mucus plugs, not small. And they were resolved after 28 days in the lower register. And now, if in your mind's eye, I want you to take a marble, and I want you to go to the top of the bronchus, and you drop it. Where is it going to go? And when we talk to pulmonologists and folks that specialize in lung therapeutics, they can tell right away that this is an inhaled therapeutic because the lower register was addressed first because that's what you would expect with an inhaled therapeutic.
The fact that we're seeing the lower register being addressed in the first part of the healing process is also encouraging proof of concept here to show that what we're seeing is a real drug effect. And also, I think it's helpful to understand what the standard of care is for these Class I patients. There are no drugs for these. So what do they do? I want you to imagine a vest, a lung vest that wraps around them, and it physically shakes them for an hour. And then they inhale a saline solution, like salty steam. And they do this every day. And yet, this is what their lungs look like. It doesn't prevent or the accumulation of these mucus plugs.
When these patients saw their images for the first time, you can imagine how excited they were, their doctors and their families, that they now have something that they can hold on to, something that is hopeful. Summarizing the phase II data, it continues to be safe and well tolerated at all tested dose levels. That is a differentiator. No one's done that in the history of the field, so we're very proud of that. But also, the meaningful trends of clinical activity with these high-resolution CT scans showing mucus plugs and volume, this suggests that we could, through extended treatment and elevating the dose, a larger, longer duration study, which we're planning to initiate in the first half of this year, could be very exciting and very meaningful. We're looking forward to that. Moving on to OTC. This is ornithine transcarbamylase deficiency.
This is our flagship liver program. There's about 10,000 of these folks in the U.S. and Europe, and this is a disease where when the urea cycle, if it is dysfunctional, you have ammonia in the blood that elevates. Ammonia is very bad. For those that are non-chemists, it's Windex, right, and ammonia crosses the blood-brain barrier and is disruptive neurologically, damage, coma, and death, so it's a horrible disease, and it's all about controlling ammonia, and the present standard of care is ammonia scavengers and a very aggressive diet. They cannot eat any protein, and they take ammonia scavengers, which are very pricey, and they control their ammonia that way, but even then, they have challenges with elevated glutamine that crosses the blood-brain barrier and releases ammonia there. And they have challenges with maintaining their diet.
There's folks that have severe disease that the present standard of care just does not address it. What our drug does is, instead of sequestering the ammonia or going through a very aggressive diet, we simply replace what's missing. In this case, it's the ornithine transcarbamylase enzyme in the liver. A clinical summary of where we are today is in phase I study in healthy volunteers that we evaluated this at multiple doses up to 0.4 mg per kilogram, 24 subjects. It was generally safe and well tolerated. We went to a phase 1B study, elevated the dose further to 0.5 mg per kg, no serious or severe adverse events. This involved 16 subjects in that study. We transitioned to a pair of phase II trials.
One was in Europe, and the other is ongoing here in the U.S., just wrapping up relatively soon. And ARCT-810 has received orphan drug designation, fast track designation, and rare pediatric disease designation from the FDA and orphan medicinal product designation from the European Commission. So the objectives of this trial was, again, safety and tolerability. But we wanted to evaluate biomarker responses of glutamine, ammonia, and ureogenesis as well because this is a urea cycle disorder. And so if we can elevate urea, that's a sign that this drug is working. And there were eight subjects, again, evaluated in Europe, two on placebo. And we're finishing up. We're close to getting our sixth subject, and we want to wrap that up relatively soon in U.S. But now, here's the interim data that we've shared. First of all, normalization of glutamine.
This is the highest, most difficult biomarker to establish normalization in the field, and you can see, even in folks with very high glutamine levels, that we're able to significantly reduce glutamine levels following administration of just a handful of doses. High glutamine levels are normalized, and approximately one month after we remove treatment, we start to see it elevate again. So that's further evidence that we have a drug that's working, so on the ureogenesis side, there's a new assay called the 15N or N15 ureogenesis assay. It's a way to track ureogenesis, the ability of the body to make urea, and RUF is called the relative ureogenesis function. We saw that increase by 15% after just 28 days, after just five doses. We saw two out of these three participants have a greater than 50% RUF. This is significant.
And the data suggests that we're clearly increasing the OTC enzyme in the liver to improve urea cycle function. And then we looked at ammonia, and it maintained stability and within normal range. So the ammonia data adds further robustness to the favorable glutamine and ureogenesis data. So to summarize the phase II interim data, we have significant and consistent reduction in glutamine levels in multiple phase II studies, going from clearly abnormal to normal levels. This is a meaningful biomarker in the field. And then significant increase in urea or ureogenesis with this new assay, which gives additional evidence of urea cycle improvement. Ammonia was stable and within normal. That's encouraging. And it continues to be safe and well tolerated at all tested dose levels. So the next value, we have an asset here that is safe and well tolerated. It's working.
But Wall Street and what investors are looking for now in 2026 is the regulatory path clarity. That's what we need to show. We need to say, "How are we going to take this data now and convert it to a product?" And the way to do that is through a couple of conversations, Type C meetings with the regulatory agencies, and establish alignment around the pivotal trial strategy for both severe pediatric subjects. These folks are six years and younger, severe disease, and also the more stable adolescent and adult populations. They're two separate conversations, two separate pivotal clinical trials. Once we have alignment with that, we'll be able to share that publicly and provide that clarity that's desired by the market and by investors to understand when can we get this exciting therapeutic approved. So I'm going to summarize. This is my last slide.
Just the key near-term objectives to help people focus on what's happening in the next six months, next few months for our therapeutic clinical programs for OTC deficiency ARCT-810, establish clarity and alignment with the FDA on the regulatory development paths for the pediatric and the adult populations. And for CF, we want to receive the approval to proceed with the phase II fourth cohort. And we believe that this is a well-designed protocol and study to give us meaningful data that can really get people excited about this new therapeutic for inhaled mRNA. Each of these programs, again, are platform assets. They represent flagships for a lot of commercial opportunity behind it. And we're aware of that. And even though we're laser-focused, we do have a small part of our budget that's looking at additional programs.
Today is not the appropriate time to unveil what's next in our pipeline, but we'll be able to do that likely later this year as well. Thank you for your attention. Now, look forward to some Q&A. I'll stand. That's fine.
Thank you very much, Joe. We'll open up the floor for any questions.
Do you have any sense as to when you're going to be in the therapeutic range in the CF program?
Yeah. Just to repeat the question, do you have any sense of the therapeutic range on which program?
The CFTR.
Yeah, CFTR. We've looked at five mg, 10 mg, and 15 mg. And each of these are daily administrations. This is inhaled. And we've collected a lot of data, not just from phase II, but also from our phase I efforts and phase 1 B.
We've dosed all the way up to 27 mg in humans. So we feel comfortable that 15 mg is likely to be our dose that's going to be the one we're going to be looking at going forward. We haven't finalized that yet. We'd be happy with 10 mg. We're already seeing clinical activity after just 28 days. But whether it's 10 or 15 mg, we think that will be the ultimate dose. In terms of therapeutic index, we haven't seen anything that's alarming or concerning from anything related to our delivery technology or the mRNA. There are two reasons why safety and tolerability have been a big issue, and actually a terminal critical issue for this field of inhaled mRNA. One is the impurities in the mRNA.
We've resolved that through intellectual property and innovation on how we purify the mRNA molecule itself to prevent all those undesired immune responses to the impurities of the mRNA. The other is with respect to the lipids and the delivery system. These lipids can accumulate or they can be aggressive, and they can be inflammatory. Our lipids are just chemically different. They've been designed from day one to be relatively benign, safe, and biodegradable. That is a competitive advantage, frankly. That's the reason we're dosing this high. No one has dosed 15 mg daily in the history of the field, not even close, unless there's some undisclosed data out there that hasn't been disclosed. The reason for that is the purification protocol of the mRNA and the lipid nanoparticle.
We don't know which of these is to blame for why others have struggled with safety and tolerability, but those are areas of differentiation.
Thank you.
Any other questions?
I have a few otherwise.
Okay. Go ahead, Colette.
You've demonstrated very encouraging imaging data showing mucus reduction for CF. As you now transition to the expanded 12-week study in the first half of 2026, how will this longer duration allow the LUNAR platform to more fully demonstrate its ability to improve lung function for Class I CF patients?
Yeah. Yeah. So we saw mucus plug reduction and overall mucus reduction in the majority of patients in the second cohort. And we're collecting that data in the third cohort at 15 mg. But the real question that people want to answer internally, our scientists and our team, is what will happen when we extend the duration of this treatment?
What will happen? Because this is an inhaled therapeutic that's being inhaled to a diseased congested lung, you can imagine that whatever we inhale, whatever a CF subject inhales, is not going to be able to access every cell upon first inhalation. It just makes sense that as the body, there's going to be a certain percentage of the cells that are accessible. And then we correct those cells, and then that allows mucociliary clearance and healing, and then more cells are accessible. So there's a lot of strong theory to suggest that if we just simply extend the duration of treatment, that we can see some very, potentially even very meaningful improvements. So we're excited to see what can happen upon extending this from one month to three months.
Something to emphasize in our 28 days is that there's actually a one- to two-week onboarding phase from our limited experience so far. So really, we have this onboarding phase, and then we really only have two weeks of what we've been evaluating. It'll be nice to see what happens instead of that little two weeks at the back end of our 28-day study, what happens if we add another eight weeks? And you can imagine that there's a lot of theory to suggest that more healing can occur, and we just got to let that happen.
Great. Thank you. Any other questions in the meantime? Yep.
It's great that you've purified the mRNA sufficient so it's no longer has impurities. But as RNA is inherently, in many cases, inflammatory or foreign to the body, how have you wrestled with that?
First of all, I think it's helpful to correct that our entire body, every protein from our fingernails to our hair on our heads was made by mRNA. So our body is filled with mRNA right now. It's extraordinarily safe. When Pad and I started the company 14 years ago, everyone was under the assumption that mRNA was the reason for all of the toxicology. But then we modified it, and then we purified it, and we realized that that's not the case. It was the purification of it. The whole field learned collectively that it's these impurities that were the small single-stranded and double-stranded impurities. That's what the body thinks is a virus. That's what the immune response is to. So just a simple correction is I think the mRNA molecule itself is relatively benign. What you have to be careful is what does it express?
What does the mRNA molecule make? And in this case, it's a CFTR protein that is made inside of a cell that is going to be extremely helpful for a CF patient. Whereas the other comment is if you're making an antigen, then you have to worry about the toxic side effects to not just the mRNA and the lipids, but the antigen it's making and the vaccine. And that's being well understood now after the pandemic.
Otherwise, I have another one. Okay. About the phase two interim data showed statistically significant glutamine reduction, which is a major milestone for the OTC program. With the FDA meeting scheduled for the first half of 2026, what are the key goals for aligning on a pivotal study design that could accelerate this therapy towards potential approval?
Yeah.
I think this is a good time to emphasize, if not reemphasize, that glutamine is a very important biomarker for stable adults and adolescents. But for severe pediatric patients, these folks are still, unfortunately, passing. They're dying, even though there are ammonia scavengers. So there's huge unmet medical need in these folks. So the biomarker that's going to be likely of most interest to the severe pediatric patients will be a traditional ammonia biomarker. But glutamine is going to be very relevant for adult patients because all the adults are on ammonia scavengers. They've survived. They're stable. They're eating an aggressive diet. But many of them still go into the doctor, and they complain that they're not feeling very well. And then they do blood work, and they realize that glutamine levels are high. So why are glutamine levels high even though they're on these ammonia scavengers already?
It's because excess ammonia is first converted to glutamine before it's scavenged by the ammonia scavengers, so this ammonia converts naturally to glutamine, crosses the blood-brain barrier, and then gets converted back to ammonia and does neurological deficits and problems and issues and talks, so these people that are on ammonia scavengers, these OTC deficient subjects, still, they closely track their glutamine levels, and they would like that to normalize, and what we have seen so far is the patients that have been on our therapeutic have reported just really great surveyed results. They feel great. Many of them have said that it's the best they've felt in many, many years. And the reason they're feeling well is because the glutamine is reduced. That's the theory. And that's what we're suggesting, so that addresses your question.
Great. Thank you.
If there's no more questions, I have otherwise one last question to round it off. You've successfully extended the cash runway into 2028. How does this financial stability give you flexibility to aggressively pursue your 2026 clinical milestones while also continuing to innovate on the LUNAR platform?
Yeah. Yeah. We went through the necessary expense reduction process and restructuring in order to focus the company. What that's done is allowed us to leverage our strong cash position. I know the biotech market has gone through a couple of years that has been pretty tough, but we've come out the back end of this with a strong balance sheet because we've made some operational decisions to give that flexibility and optionality to it. So we're now in a position to use this strong balance sheet to focus it on key value-creating milestones this year.
And really, that's just an exciting data set to be collected for CF, but also to get regulatory clarity on OTC. And we've touched on that four or five times now. But I think that we now have sufficient resources to get that information, get that regulatory clarity, get that data, and still be in a position to have a strong balance sheet after to give us the most options once that's in place.
Great. Thank you very much. And thank you once again. Thank you for your time.