Okay, great. Well, good afternoon, everyone. Thanks for joining us for another Fireside Chat Discussion. Here to my left are Arcturus CEO Joe Payne. And to his left is CFO Andy Sassine. I'm Seamus Fernandez, one of the biopharma analysts here at Guggenheim Securities, and this is our annual Rare Disease and Genetic Medicines Conference. In that context, of course, as an mRNA company, we sort of have to start with vaccines, and then we'll jump right into the rare disease side of things. You know, Joe, maybe, just to start us off, I will start with a couple of vaccines questions.
On the cusp of data, from Meiji in the head-to-head trial, maybe you can just recap the design of the study, for investors, and then, you know, maybe, just help us understand, what success might look like, from an approval standpoint, and then commercially.
Sure. Sure. The phase III study that's being funded by Meiji in Japan is designed to be a non-inferior immunogenicity study. We already have approximately 20,000 subjects of data, the government of Japan wants to see a direct heads-up comparison in an immunogenicity study with approximately 800 subjects. We've completed enrollment there, and we're just gonna be looking the prerequisite data, the important data for the Japanese NDA filing is the one-month immunogenicity data. We've completed enrollment, we've completed the one-month follow-ups, and the one-month blood draw. That data is gonna be key for us. It's just to directly compare apples to apples, monovalent to monovalent, antigen to antigen for a self-amplifying mRNA to conventional mRNA, the Arcturus vaccine to Comirnaty.
Just to clarify, as a booster specifically.
As a booster specifically, yes.
Okay.
Absolutely.
Great. The baseline treatment for the patients in that study from a background vaccination perspective would be the Pfizer vaccine as well?
Correct. Yeah.
Both are.
Yeah.
All of those-
They've received an mRNA vaccine.
S ort of compared doses are. Okay, great. Got it.
They've received doses of an mRNA vaccine.
Okay, excellent. You know, maybe you can just talk a little bit about what the implications of success would potentially be from the Meiji study.
Sure.
Where can you sort of, where can Arcturus take those data? Perhaps where can your partner CSL...
Yeah.
take those data?
Well, I think it's more important to reference our partner's perspective on this. They're the ones that are gonna be on the front lines commercializing this if it's successful, and they're gonna be very, very happy if we establish equivalence in this phase II study. If we have equivalent or non-inferior immunogenicity, then the platform is superior because the dose level is dramatically less. Whether it's six-fold or 10-fold less dose, that brings with it all of the potential safety benefits, cost of goods benefits, speed of manufacturing or clock speed benefits associated with that.
Yeah.
The lyophilization or the lyophilized design or nature of the vaccine is also a potential benefit. Even if we establish equivalence there, our partners are gonna be very excited because they think, and of course we do as well, that we'll have a superior platform.
Okay. Those data are something that CSL can access, but you and the team actually executed, I think, a really important milestone in the context of that collaboration.
Yeah.
Can you talk about the milestone?
Yeah.
.W hat was baked into the milestone specifically?
Sure. We invoiced $90 million of milestones in Q1.
That's in addition to $200 million that you'd already received in the fourth quarter.
Thank you for highlighting that. We're very happy to have a productive and meaningful collaboration with CSL. That the $90 million number, that's associated with milestones being achieved to the bivalent COVID vaccine and the seasonal flu vaccine. We selected candidates for each of those while Meiji in Japan is progressing the monovalent vaccine. In U.S. and Europe, our direction and strategy there is to also implement and advance the bivalent COVID vaccine and of course, the seasonal flu shot.
Right.
That's very meaningful to, you know, whether the monovalent is the ultimate winner for the franchise, or if we need to update it with the bivalent, we're in a good position to advance either asset.
Great.
Seamus.
Yeah, go ahead.
I f I could add on top of the, our partner, you know, obviously being very keen on approval in Japan, so is the Japanese government. The Japanese government has stated multiple times that they wanna be independent of, you know, future pandemics or even during an endemic phase of, you know, this COVID, you know, virus, to be able to be independent manufacturing-wise and to have their own product. As you may or may not remember, we have a manufacturing partner called ARCALIS in Japan that we established a little over a year and a half ago, and we own 40% of them in the JV. They're gonna be coming online next year.
The timing of the manufacturing partner in Japan, the Japanese government, you know, wanting to be independent and vertically integrated and prepared for the endemic phase and future pandemic, bodes really well for our vaccine and our partners.
Great. you know, the one other aspect that you mentioned was the progress that you made on the flu vaccine.
Yeah.
You know, I think there may be something unique about your construct design. Maybe you can talk a little bit about that. I know there's some specifics, but, you know, how are you looking at, you know, the hemagglutinin versus the HA plus the.
Yeah
NA, combination?
It's a great question. You know, obviously we've just come off a successful milestone, getting achieved for the seasonal flu, shot with our partner CSL. With respect to the specifics of the design, we've just been kindly asked to not share any more details...
Okay.
on that. As you can understand, it's a competitive environment, especially for mRNA and flu. We can't disclose the specific details, but you can assume that with the resources that CSL has, and us as a tool within their toolbox, that they're exploring, you know, options in parallel.
We'll chase CSL for those questions.
Yes.
That's good.
Yeah, absolutely.
All right. let's move to, sort of what the core of Arcturus is really, moving towards now, which is...
Yeah.
.more on the rare disease side, which is, you know, sort of a back to the future...
Yeah
dynamic.
Yeah.
Maybe we can talk a little bit about just the OTC opportunity, you know, and maybe just start with your protein design capabilities.
Yeah.
You know, how that, has really kind of oriented you towards different development candidates.
Yeah. Sometimes investors ask us, "Why did you pursue OTC deficiency first?" The other mRNA companies with huge amounts of resources didn't pursue that program first. It was something that was meaningful to us because it's the number one urea cycle disorder. However, this protein, this enzyme, ornithine transcarbamylase, is found inside the mitochondria of cells, not the cytosol.
Yeah.
When a nanoparticle enters a cell, it releases the messenger RNA into the cytosol and gets expressed, right? You can have it get shuttled into the mitochondria to get expressed. That's an additional learning curve that we put a lot of muscle behind and focus. We didn't have the luxury of screening a gazillion targets in parallel. We didn't raise a lot of money when we were early founders of the company. We worked on that, and that leads into your question, including optimizing the protein. We optimized the construct so that it can improve its uptake into the mitochondria more efficiently. Also the...
once it's expressed and, the mRNA makes the protein, the actual enzyme, that we design the protein to have, to be longer-lasting than the actual, natural ornithine transcarbamylase, and there's a few tricks that we've done. We haven't given those details, but, those are a trade secret or, and maybe patentable, but, yes, we have implemented that into the design.
Great. Then, maybe you can talk to us a little bit about, you know, what's been accomplished so far. I know that you've made a lot of progress in the last, you know, three to four months, in particular, recruiting patients and, I believe, dosing patients as well.
Yeah, correct.
That's an important milestone.
Yeah, it was.
What would we, you know, as we kind of go and move forward into the second half of this year, what are you hoping to see in those data? I think Pad made some comments on the call as well, you know, just love to hear what you're hoping to see out of those data.
Right. The objective of this Phase II trial that we're enrolling for in Europe, is to establish biological proof of concept for systemic messenger RNA, systemically dosed messenger RNA. Biological proof of concept means that we're tracking biomarkers that change. There's ammonia in the blood that can be measured.
Yeah.
This is a urea cycle disorder, OTC deficiency. When that urea cycle is impacted, several biomarkers change in the blood. Ammonia in the blood can be measured. There's other amino acids that are impacted by the urea cycle, like glutamine, and we can easily measure that. There's a carbon-13 acetate assay that's validated that we can use to track urea or ureagenesis.
Okay
assay. In the urine, there's a biomarker called orotic acid that can be easily measured that has direct correlation with urea cycle function. Finally, OTC itself. The enzyme, even though it's made in the liver, we remind folks that the liver is a living, breathing, sloughing organ, and some of those cells slough off and can be measured. The ornithine transcarbamylase that's made in the hepatocytes is then sloughed off and can be measured with a mass spec assay in the blood too. There's a publication on that that shows the correlation between, you know, plasma levels of OTC versus the actual levels of OTC in the liver. That's just five, and there's some others. There's multiple amino acids, like I mentioned, that are impacted by urea cycle disorder.
It's a long way of saying there's no shortage of biomarkers in this disease, and we'll be collecting all that data, and we hope that the comprehensive collective data set will be very meaningful and to regulatory agencies.
Great.
Also gives us encouragement, you know, Seamus, is that we've injected over 30 people intravenously, you know, to date in multiple countries. This is pretty exciting because, you know, if there were any adverse events, we would have had to report them. We're encouraged so far by the safety profile and we're, I think, one of the few company that have been able to intravenously inject mRNA in that many people in that wide of a population. Hopefully we'll be able to share some exciting data with you later this year.
I think that's, it's interesting, you know, you mentioned the dosing of patients. I mean, I know one of the characteristics of some of the LNPs is to have the issue of, you know, sort of accumulation in the liver.
Yeah.
Do you mind talking a little bit about that....
Yeah.
kind of the flexibility to redose intravenously...
Yeah
LNP technology?
I'm not to be melodramatic here, but delivery is everything. This non-accumulating a delivery system is very important for systemically administered applications. If you're regularly dosing these lipid nanoparticles, the last thing you want is man-made lipids accumulating in your liver. That causes idiosyncratic liver tox, very bad. You have to show the regulatory agencies that you clear these lipids, and we have done that in our Phase I study.
Yeah.
We showed the lipids are cleared from the system in 48 hours. That data was prerequisite to allowing us to go into a multiple dose study in Phase II , so it's very meaningful. The reason that is, though, is the LUNAR technology, the lipids are not glycerol-based lipids. They're not lipids that are used in older technologies. We've added, you know, sulfur and oxygen and nitrogen to the cores of these lipids called thiocarbamates that can be clipped and cleared rapidly. It's a key differentiator for us and extremely important for crucially important for liver applications and inhaled applications.
Yep.
You don't want accumulating lipids in your liver or your lung.
Just in terms of the second half of this year, the number of patients that you would hope to? You know, we all want to know what's going to be in the press release, you know, in terms of the number of patients...
Yeah.
realistically, or at least a minimum number of patients that you would hope to reveal as part of that data set, what would be the number in the OTC study that you would be looking to kind of target?
We'll let the data dictate that. I'll remind people that 24 subjects are being recruited in this study.
Okay.
There's two dose levels being evaluated, and there's six administrations per treatment course that are separated by two weeks. You know, through this process, we'll, you know, we aim, the objective here is to observe biomarker changes in these patients. It is placebo controlled three to one, so if you look at 12 in one cohort, you have nine receiving drug, three. receiving placebo.
Yeah.
If there was, like, three subjects, we can't say anything because they might all three be placebo, for example.
Right
If once we have a suitable number, because this is a six-administration study, you know, I think, you know, that's the objective, is just to see at some point, you know. It won't be when we accumulate all 24 subjects. It'll be somewhere in the middle. That's why we guided interim data. It's somewhere between a small number and 24. Somewhere in the middle there probably.
Okay. Got it. Great. That's super helpful. For CF, maybe we can switch along a little bit. Just talk about the product profile that you're looking for as it relates to ARCT-032.
Yeah.
Just how the program is differentiated versus obviously there's been a number of efforts...
Yeah.
here that have kind of missed the mark.
Yep.
Great to hear how this is differentiated.
I think it's helpful to remind, to kind of go through a brief history summary, you know, 20 years of inhaled RNA therapeutics and why they failed.
Maybe not here.
Yeah.
To do all of that, but...
In 30 seconds, there's three reasons. If the RNA is not properly modified, there's undesired immune responses, undesired inflammation to the unmodified mRNA, so that's not good. You need to properly modify it. Purification is extremely important. We used to think modification was most important. It's really purification. The impurities in the manufacturing process that are generated, those little guys there cause the most problems. They wreak havoc, and they cause undesired inflammatory responses, undesired immune responses. You need the proper purification procedure. Finally, a non-accumulating biodegradable delivery technology that's been optimized for bronchial epithelial cells is very important. The previous attempts were just using things that worked in the liver...
Yeah.
and go like this and inhale this, hope it works, and it just doesn't work. You have to optimize it for bronchial epithelial cells and optimize it for biodegradability. Our approach addresses all of those issues that others have experienced. We properly modify the messenger RNA. We apply a proprietary purification process to it that other people do not have, our technique of purifying the molecule. Then also, no one has access to the LUNAR technology for CF or inhaled applications except Arcturus. We are, you know, will hopefully continue to brag about this technology and start beating our chest a little bit more as this technology matures.
Great. Can you talk about the phase I, which obviously just kicked off? We've got a single ascending dose study in healthy volunteers.
Yeah.
Maybe just describe what you're hoping to learn, in a healthy volunteer study and, you know, just give us a...
Yeah.
general sense of...
Yeah.
where you're going with that.
We've successfully launched the Phase I study. We've completed two cohorts already. There's four doses being evaluated. What we want to understand is the safety and tolerability of this technology. I just said that no one else has access to LUNAR.
Yeah.
We're the only ones to evaluate this. We're gonna learn a lot about the safety and tolerability profile of this technology. We were very happy that the regulatory agency allowed us to go straight into healthy volunteers for this purpose. They looked at the safety data from the pre-IND toxicology package, right? They said, "Yes, this is okay to go into healthies," which is great. We can quickly evaluate which dose is going to be more ideal as we pivot to patients. Whether we amend the study after we complete 4 cohorts, whether we amend the study to add patients to the Phase I, or whether we quickly pivot to a Phase II, is yet to be communicated.
You know, we, it's gonna be very valuable for us, for this technology and this platform to understand the safety and tolerability of inhaled, messenger RNA platform.
Great. Andy, maybe you can talk a little bit about just sort of the size of the market opportunities that you see for these two programs in particular, and maybe how you could see them potentially expanding.
Well, I think when you're looking at the CF program, you're looking at, you know, the Class 1 population, which is, you know, roughly 10,000 people.
Yeah.
You know, if we can prove that we can transvect the bronchial epithelial cells and, you know, create the CFTR transporter in these people, the opportunity to eventually use it, you know, for all the other patients certainly has given us encouragement. It's a very lucrative market for us to, you know, go after this first group because they don't really have an alternative right now, and they're, you know, certainly desperately looking for hope here, and we hope we can bring them that opportunity. With respect to the OTC program, there's about 10,000 people globally, roughly 2,000 in Europe, 2,000 in the U.S. We're kind of fortunate that one of our competitors, Horizon Pharma, has kind of established a market for us.
They have a product called RAVICTI, that's an ammonia scavenger, you know, drug, which, you know, reduces the ammonia in these people. The encouraging thing about that opportunity is they're generating around $250 million annually in revenues on 500 patients. That's a low-hanging fruit that we can go after because why would you want to take a Tums tablet to reduce your ammonia when you can cure, you know, the opportunity and give these people hopefully a normal diet and a normal life because they have a very restrictive, you know, diet in which they have to follow even under RAVICTI. It's pretty encouraging. Both programs obviously, you know, are very meaningful to a small company like ours and, you know, hopefully we can help these people out, you know, in the long term.
Just to add to that, I think there's, you know, after we go after type one CF and establish some sort of proof of concept there is a significant number of patients that do not respond to the present standard of care, and there's another significant percentage of CF that would like to reduce the dosing of the present standard of care due to the side effects that are undesired. Whether you want to reduce, you know, the dosing of the present standard of care or address those that don't respond, if you take that as a whole, it's an extraordinary opportunity for us.
Great. Maybe let's talk a little bit about the earlier stage candidates. You know, you've got a liver therapeutics showcase that you're planning...
Right.
a little bit later this year. You've highlighted some development candidates. Maybe you can talk a little bit about those as well as, I guess the burgeoning gene editing efforts that...
Sure.
that you're moving forward as well.
Yeah. Well, let me start with the gene editing one because we do have a presentation in Paris, at the global hepatitis conference there. We're presenting for the first time our LUNAR- HBV data, and this has been going on behind the scenes. It's been funded by partners, we've had the extraordinary opportunity at Arcturus over the last 10 years to evaluate pretty much every gene editing technology. Imagine all these pre-partnering discussions, all these business development discussions funded on their dime.
We've got to evaluate every gene editing technology under the sun, and we were able to bring forward, optimize, and mature one specific approach for hepatitis B that we think is very exciting, and we're going to be sharing that preclinical data set of gene editing data at that hepatitis conference in Paris. This is for HBV. That's going to be interesting data to get feedback from the scientific community because they've never seen our data there. We've never shared it. It'll be interesting to get that feedback and see if they like it or not.
With respect to the other programs, definitely if OTC proves out, there's an enormous commercial white space behind it, other urea cycle disorders and glycogen storage diseases, lysosomal storage diseases, organic acidemias, hemophilias, large patient population diseases. I, you know, I run out of breath whenever I say these sentences. That's how much opportunity there is behind it. Which targets we're specifically going to go after, we've kept those cards close to our chest. We've put out some teasers and filings and stuff like that, we're not going to be able to share the specific targets just for competitive purposes. We don't want to tell people what we're doing. There's other players in the field that have a lot of money.
Right.
We want to be careful there from a competitive perspective.
Sure.
There will be an opportunity later this year if OTC, if and when OTC proves out, then we'll be in a position to to mature some programs behind it for sure.
In terms of just the editing technologies themselves, there's, I guess your team has highlighted CRISPR and TALENs. Any, you know, thoughts with regard to the editing technologies or, you know, will we learn a lot more about that...
Yeah.
when the HBV data are presented?
Here's something that the gene editing companies do not talk about very much, that I'm just going to keep hammering this. It's all about delivery. If they're not talking about that, they should. Why is delivery so very important for gene editing? Because it's a single administration.
Yeah.
That delivery needs to get everywhere in that particular cell type, organ or whatever. You need a delivery system that gets to the highest percentage of cells with one injection. The science for the RNA molecule is already there.
Yeah.
These RNA molecules make a pair of scissors that cut DNA, but if you don't get that technology to as many, the highest percentage of cells as possible with one injection, then you miss the opportunity, and I think that's where we fit. I think it'll be very interesting to see how the scientific community perceives this hepatitis B data. They, they may not like it, they may love it, we're going to find out, and then we'll go from there.
Great. Maybe just to wrap up in terms of business development, opportunities or the sort of optionality that you see going forward for Arcturus? Are you kind of bringing the editing technology, some of the new technologies in that direction? Are any of these programs partnered already? Where are we headed from here with Arcturus? You guys did a pretty good job with the vaccine program, monetizing that...
Yeah.
well to continue funding the company and have real economic opportunity. What do you see going ahead?
We're kind of fortunate that, you know, we're funded for at least three years, as we announced in our previous earnings call, though we do have some flexibility. Having said that, we certainly incurred about the opportunity to present this gene-editing data. The size of the market is pretty significant, for us to go after it would probably not be, you know, responsible for our shareholders. It may not be a bad opportunity to partner that program. You can probably assume that we will make an effort to do that with respect to that specific program. With respect to OTC and CF, you know, right now, we have enough funding for those programs, and we're pretty excited about, you know, hopefully presenting, you know, proof of concept data, you know, later this year. Then we'll, you know, kind of share our strategic options, you know, shortly thereafter.
Great, maybe just to wrap up, Without being overly specific on the timing of the Meiji data, I don't think we necessarily covered this at the beginning...
Yeah.
that all of the patients, all the blood draws have occurred.
Correct.
You're on the cusp of the data. How should we think about the processing of those data before we get too excited saying it's any day?
Well, the next milestone for that program is an NDA filing. You know, once you have the prerequisite one-month immunogenicity data in hand, then that data just needs to be slotted into a filing. That's going to be the next objective for us. The sooner we can get that done, the better. You can look to several examples that have gone through the Japanese regulatory process and you can look there to get an idea of how long this is going to take. We have alluded to the opportunity that we have the potential to get an approval for ARCT-154 in Japan this year.
Yeah.
For us to do that, it means we have to get our NDA out there sooner than later.
Okay. Great. Just to clarify, for the actual top-line data, we likely should be watching Meiji for a public release of that information. Is that correct?
That's potentially, you know, you could see it in one of two fashion just because of the nature of how things are moving rapidly there.
Yeah.
You know, you could see it in the fashion of, "Okay, here are the data," or you may see it in the form of a JMDA filing, right?
Okay.
Those are two things to look for. They're really driving the bus here. They want to move really quickly to... Obviously, you can see how aggressive they were in getting the trial done, you know, as rapidly as possible. You can assume that they're highly motivated to move as quickly as possible. Whatever process for them is expeditious, would certainly be welcomed by us.
Great. Well, looking forward to all the busy days ahead.
Yeah.
Lots of data coming. Lots of catalysts. Definitely a time for investors to be paying attention to Arcturus.
Thank you.
Thanks so much for joining us here.