Arcturus Therapeutics Ltd Stock

Hello, and welcome, everyone, joining today's Arcturus Therapeutics presentation. [Operator Instructions] please note, this call is being recorded, and we are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to Neda Safarzadeh, Vice President, Head of Investor Relations, Public Relations and Marketing. Please go ahead.

Thank you, operator. Good afternoon, and welcome to Arcturus Therapeutics presentation. Today's call will be led by Joe Payne, our President and CEO; Dr. Alan Cohen, our Chief Medical Officer; Dr. Marshall Summar, a recognized expert in rare diseases and OTC deficiency and Dr. Pat Chivukula, our Chief Scientific Officer.

Before we begin, please note that today's call may contain forward-looking statements. Such statements are based on current expectations and assumptions, and actual results may differ. Please refer to our filings made with the SEC, including the risk factors contained therein for more information. We undertake no obligation to update any forward-looking statement. And with that, I will now turn the call over to Joe.

Thank you, Neda. Before we turn to the data, I want to frame the four key messages you will hear today. First, ARCT-810, our mRNA therapeutic candidate to treat OTC deficiency has generated preliminary Phase II clinical evidence that supports our core therapeutic hypothesis. That with generally safe and well-tolerated repeat dosing, we can produce biomarker changes consistent with improved urea cycle function. Second, we introduced LUNAR 2.0, a new standard in mRNA delivery, producing greater than 30-fold higher protein expression in nonhuman primates across two different studies with two different mRNA payloads.

Third, the LUNAR 2.0 delivery platform has been incorporated into our OTC deficiency program. We call this mRNA therapeutic candidate, ARCT-2601. As advised by the FDA during our Type C meeting in June, we plan to integrate ARCT-2601 and into the ongoing ARCT-810 Phase II study this year. LUNAR 2.0 is expected to help us achieve lower, less frequent dosing and shorter infusion times. .

And fourth, our mRNA therapeutics platform, together with engineered mRNA and proprietary AI-enabled computational design capabilities creates opportunities to expand our liver franchise into PKU, gout and additional indications. Today's message is straightforward clinical validation today a compellingly more powerful delivery platform going forward and multiple new opportunities made possible with this new platform to create substantial value. Alan, I will turn the presentation over to you.

Thanks, Joe. Good afternoon, and thank you for joining. Today, I'll walk you through ARCT-810, our LUNAR OTC messenger RNA therapeutic candidate for ornithine transcarbamylase deficiency. The arc is simple. First, the disease and why current standards of care and clinical management options fall short. Then I'll review Arcturus' clinical program to date, including the preliminary findings from our U.S. Phase II study summarize the safety, biomarkers, protein intake and what this means for our recycle function. Let's begin with the disease and the biology that makes messenger RNA a rational approach to consider and develop as a next-generation therapeutic option. Protein metabolism constantly generates ammonia, which is toxic to the brain even at modest levels. .

But through the urea cycle in the liver, ammonia is converted to urea, preventing ammonia buildup in the blood. Ornithine transcarbamylase deficiency or OTC deficiency is the most common recycled disorder affecting roughly 10,000 people across the United States and Europe. With deficient OTC enzyme expression or activity, if individuals consume a normal protein containing diet, ammonia will accumulate in the blood leading to potentially irreversible neurological damage and even coma or death. Today's standard of care asks people suffering with OTC deficiency to adhere to a strict low protein, high fluid diet and use ammonia scavenger medications to keep ammonia levels low. That regimen is demanding, and it still does not reliably prevent life-threatening ammonia spikes or severe patients, liver transplantation unfortunately, remains the only cure.

That is the unmet medical need that Lunar OTC is designed to address. To deliver messenger RNA to the liver, restore expression of the OTC enzyme and reactivate urea cycle activity so ammonia is detoxified in the bloodstream before it causes harm while potentially mitigating or forestalling the need for a liver transplant. With that in mind, let's look at ARCT-810 clinical trial journey. Here's a summary of the clinical development program for ARCT-810 thus far from first-in-human studies through Phase II. We Phase I was first initiated in 24 healthy adult volunteers, where ARCT-810 was observed to be safe and generally well tolerated. We then moved into a Phase Ib single-ascending dose study in 16 adults with OTC deficiency, testing doses from 0.2 to 0.5 milligrams per kilo, again, with a clean safety and tolerability profile.

Phase II moved to repeat dosing. Our placebo-controlled study in the U.K. and Europe enrolled adolescents and adults at 0.3 milligrams per kilo with a total of 6 intravenous infusions every 2 weeks. We observed that ARCT-810 continues to be safe and generally well tolerated across multiple repeated administrations. Limited glutamine measures suggested in early clinical signal via a reduction in the treated group versus placebo and early signal of potential efficacy. With this supportive early clinical data, we then initiated a Phase II study to evaluate 2 doses. 0.3 and 0.5 milligram per kilo over 5 intravenous infusions every 2 weeks. I will now share with you the preliminary data from this recently concluded Phase II study. .

The Phase II program was an open-label U.S.-based study, investigating the safety, PK and efficacy of ARCT-810 at 0.3 and 0.5 milligrams per kilo over 10 weeks with a 4-week observation follow-up period after discontinuation of study drug. Eight adolescents and adults with confirmed OTC deficiency were enrolled, four individuals per dosing cohort. For four weeks prior to dosing, participants were required to be on a stable, protein-restricted diet as well as continue their standard of care medical management, including all of their typical medications. In this Phase 2 study, we observed that ARCT-810 continued to be safe and well-tolerated across repeated dosing at both the 0.3 and 0.5 milligram per kilogram doses. There were no serious adverse events and no adverse events of special interest, and most importantly, no hyperammonemia events observed in either dose and cohort.

Every study participant had at least one treatment-emergent adverse event, but the large majority were mild to moderate, and the most common were headache, transaminitis, and anemia, and infusion-related reactions, each in two of eight participants. Two Grade 3 events occurred, both asymptomatic transaminitis, and both resolved with that intervention after study drug was stopped. One discontinuation was the result of an intravenous infiltration and a subsequent injection site reaction, a procedural event rather than a systemic drug effect. Based on these safety and tolerability findings, we are overall pleased with the safety profile of ARCT-810. Regarding the Phase 2 study measures of efficacy at both the 0.3 and 0.5 milligram per kilogram doses, we measured several relevant biomarkers and clinically meaningful functional measures for people with OTC deficiency.

Defects in the urea cycle impact protein metabolism and lead to a buildup of ammonia in the bloodstream, which also unfortunately can cross the blood-brain barrier and cause transient and more permanent injury to the brain and central nervous system. When the nitrogen load increases, glutamine levels also increase. These two biomarkers of urea cycle function are routinely used in the clinical care of those with OTC deficiency to assess urea cycle activity and serve to direct clinical decision making and management. As such, we measured both ammonia and glutamine levels in the blood. We also measured OTC activity by looking at the formation of urea cycle byproducts in a metric called relative urea function. Since these biomarkers are influenced by the consumption of protein, referred to as the protein load, we additionally examined how dietary protein intake compared in study subjects pre- and post-ARCT-810 administration.

The table on the right shows the baseline characteristics of seven individuals who received more than one dose of ARCT-810. The current Phase 2 study focused on adolescents and adults with OTC deficiency, and given the X-linked recessive genetics pattern of the disease, all of these adult subjects were not unexpectedly female. Nearly all participants were also on nitrogen scavenger medications at baseline, which is typical of most individuals with OTC deficiency. We had all study subjects remain on their usual standards of care, including all of their dietary restrictions and medications. The first biomarker we will examine is ammonia. As mentioned, it is imperative to keep ammonia levels low to prevent neurological damage. To achieve this, many individuals with OTC deficiency are on ammonia scavenger medications, and not unexpectedly, most of our study participants were on these medications as well.

At all reported ammonia measurements illustrated here, participants in both the 0.3 and 0.5 milligram per kilogram cohorts were on the same amount of ammonia scavenger medications. We would anticipate stability or a flat line in ammonia levels across the study period. At 0.3 and 0.5 milligrams per kilogram, we observed that mean first morning fasting ammonia levels were generally similar or lower than baseline values. Of clinical importance, after either the 0.3 or 0.5 milligram per kilogram dose of ARCT-810, all individuals were able to achieve and maintain normal plasma ammonia levels. Glutamine is a physiologic repository of excess nitrogen. But like ammonia, too much glutamine can be toxic. Like ammonia, glutamine is an important measurement of urea cycle activity, often being used in clinical practice to direct diet and medication adjustments.

In OTC deficiency, plasma glutamine can be elevated even when ammonia levels are normal, indicating persistent nitrogen excess and impaired urea cycle activity. Thus, glutamine can be a very useful and highly sensitive indicator of nitrogen burden and urea cycle activity. All study participants had elevated glutamine levels at baseline, even though most had normal ammonia levels. Following ARCT-810 treatment, all participants experienced a reduction in glutamine levels, with mean glutamine levels falling below baseline at both 0.3 and 0.5 mg per kg dose levels roughly 15 to as much as 25% less than prior to ARCT-810 treatment. Following the introduction of ARCT-810, we not only observed a significant reduction of glutamine levels across all individuals, but during the one-month post-discontinuation of ARCT-810, we observed a reversal of this reduction, with glutamine levels at the end of the follow-up period being similar to those observed prior to initiating ARCT-810 study drug.

These two graphics compare the cumulative changes in ammonia as well as glutamine observed for both 0.3 and 0.5 milligram per kilogram ARCT-810 doses studied. Additionally, it is worth noting the tighter error bars observed for both the ammonia and glutamine measures at the higher of the two administered doses of ARCT-810 at the 0.5 milligram per kilogram dose. Our preliminary conclusions are that we have observed what appears to be drug-specific changes in glutamine, a sensitive indicator of urea cycle function, following initiation of ARCT-810 at both administered doses. Since changes in protein intake can impact glutamine levels, we examine the change in average protein intake per kilogram body weight per day for ARCT-810 treatment compared to baseline protein intake to verify the observed reductions in glutamine were not due to reductions in protein intake.

The guidance given to study subjects was to keep their protein intake stable throughout the study. However, we found that participants generally took in more protein while on ARCT-810 as evidenced by the columns pointing upward. In fact, the majority of individuals in our study took in more than 25% of their baseline protein intake at some point during the treatment period. This data suggests that individuals who normally restrict their protein intake due to not only adverse biochemical effects, but also because of the adverse symptoms they feel, such as nausea, headache, and GI upset, were likely experiencing greater protein tolerance on ARCT-810, allowing them to take in more protein. Further evidence is the observed decreased trend in protein intake back to near baseline levels after discontinuation of ARCT-810 at the end of the dosing period.

In the context of increased protein intake, ammonia levels were stable or lower, and we also observed decreased glutamine levels. Both changes in these biomarkers support increased urea cycle activity following administration of ARCT-810. To summarize, in this recently completed U.S. Phase 2 OTC deficiency study, ARCT-810 was generally safe and well-tolerated across 5 repeat infusions at both dose levels with no serious adverse events. Ammonia normalized in all participants and glutamine declined in all participants. And all of this occurred despite protein intake rising above baseline. Together, these findings support the core hypothesis that with administration of ARCT-810 in adults with OTC deficiency, restoring OTC enzyme expression in the liver can restore urea cycle activity in people living with OTC deficiency. That's the foundation for the next stage of development.

It is now my honor and privilege to introduce Dr. Marshall Summar, who is an internationally renowned expert in the urea cycle disorders and who in the balance of his illustrious career, has contributed significant clinical and scientific advances in our understanding of the genotypic nature as well as the clinical and metabolic phenotypes of OTC deficiency. Dr. Marshall Summar, thank you for joining us today to share your thoughts on the current management of OTC deficiency and to share your thoughts on our development program and our progress thus far.

Thanks, Alan. You've just seen the Phase 2 data, so let me tell you what a metabolic physician takes from it. The result that persuades me is glutamine. Every participant entered the study with an elevated glutamine despite a normal ammonia, which is precisely the profile of the patient we call well-controlled. Glutamine fell in every participant on drug, and it returned toward baseline when dosing stopped. I remind you that glutamine levels are what we track long term to determine patient stability. That on and off pattern appears to be drug effect, not variability. The ammonia decline was a genuine surprise. These were stable patients on unchanged scavenger doses where a flat line is the expected result and the half milligram cohort in particular moved.

My conclusion is that ARCT-810 is safe, it's tolerated, and it works. And I would expect a quarter or more of eligible patients to be early adopters. And I'm now turning this call back over to Dr. Pad Chivukula.

Thank you, Dr. Summar. I'm the Chief Scientific Officer at Arcturus Therapeutics. You've just heard a metabolic physician say there's three things about ARCT-810. That it's safe, that it's tolerated, and it works. The question is no longer whether an mRNA medicine can treat OTC deficiency. The question is how much better can we make it. And that's what I'm here to show you. For 13 years, my team has been tackling one problem. How do you get this fragile strand of RNA from a vial into human liver cells, keep it stable for long enough, and have it survive to be effective. Today, I want to tell you about the biggest step forward we've made in that problem. We call it LUNAR 2.0.

I'm going to show you data but first I want to start with the problem itself because you can't appreciate the answer until you see what we've been losing. Every IV mRNA medicine in the world, ours, anyone's, starts as a nanoparticle containing four lipids. An ionizable lipid is the one that does the real work, a structural lipid called DSPC, cholesterol, and a PEG lipid coat that's on the outside that keeps the particles from sticking to each other. Wrapped inside is mRNA, the instructions for the protein we want the liver to make. Within minutes of the infusion, the PEG coat sheds and something rather elegant happens. A protein already circulating in your blood, ApoE, apolipoprotein E, lands on the surface of our particles.

The body then uses ApoE containing nanoparticles to bind to the LDL receptors on hepatocytes and the cell internalizes the whole particle into a membrane called the endosome. Up to this point, we're winning. We've made it to the right cell in the right organ. And this is where the story turns. The endosome is a sorting room. As it acidifies, the ionizable lipids pick up positive charge, disrupts the membrane, and the mRNA slips into the cytoplasm where the ribosomes are waiting. Well, that's the theory. Here's the reality. Only 2 to 5% of that enters the cell ever gets out. The rest is shuttled to the lysosome and is degraded. Think about that. 95% of the delivered dose is thrown away by the cell after we've done all of the hard work of getting it to the right cell type and the right organ.

That's the rate limiting step. That's the step that we've been trying to optimize for a decade. So, LUNAR 2.0 is at the heart of a new ionizable lipid, a next-generation ATX lipid. And I want to show you the experiment that we've done. And set it up properly, because the design is what makes the numbers believable. We took non-human primates, three animals per group, and gave each a single one-hour IV infusion at 0.3 milligrams per kilogram. And that's a clinically relevant dose. The mRNA encoded human erythropoietin. Why EPO? Well, EPO is a secreted protein and the liver makes it. It appears in the blood and we can measure it simply with a blood draw. And 48 hours later, we can do that. No biopsy, no interpretation. It's the cleanest yardstick in the field.

Everything on this chart is relative to our own first-generation LUNAR lipid, the ATX-2. That's the baseline of 1. We also ran two clinically approved lipids as a benchmark. The ALC-315, the lipid in an approved mRNA vaccine. And it comes in at 2.2-fold over ATX-2. And the ATX-126, the lipid in Kostaive, our own approved self-amplifying mRNA vaccine that comes in at 14. And then LUNAR 2.0, roughly 40-fold. Same mRNA, same dose, same infusion. The only thing that's changed is the ionizable lipid. The liver made 40 times more protein. Now there's two ways to think about a 40-fold enhancement. You can make 40 times more protein at the same dose, or you can make the same protein from a fraction of the dose. Just hold on to that second one, and I'll come back to it.

Dr. Summar already told you what OTC deficiency is and what it does to the families. So let me show you what an extra potency does in an animal that actually has the disease. This is an spf-ash mouse model, an animal with only a trace of working OTC on a high protein diet, which is a stress state. Weekly IV administrations. Untreated, every animal dies within a month. On the left is where we start from, the ARCT-810, our current drug. At 1 milligram per kilogram, it protects them, and that's the bar. And now, the same OTC mRNA delivered with LUNAR 2.0. That's the ARCT-2601. At 0.3 milligrams per kilogram, a third of that dose. Every animal is alive and at day 63. 80% are still alive at day 70 and when the study ends. Look at where the dosing stops. 5 doses finished around day 28.

Everything after that line is the drug no longer being there. And at 0.3 milligrams per kilogram, every animal is still alive four weeks later. That's not just more protein. That is protection that outlasts the dosing. At 0.1, a tenth of that dose, they hold for 42 days. And then, of course, they decline. That's what a 40-fold buys us in an animal model with the disease. So that was the mouse. Now let me show you the same question asked in a primate with the actual human enzyme. Same design as the EPO study, three animals per group, one hour infusion, 0.3 milligrams per kilogram. But this time the payload is the real thing, the human OTC mRNA. And because OTC is an intracellular enzyme, it's not a secreted one, we couldn't just draw blood. We took liver biopsies at 48 hours and measured the human OTC protein directly by mass spectrometry.

The comparator here is ATX-95, the lipid in ARCT-810. And we just showed you the Phase 2 data on that. That's the baseline of 1. The SM-102, the lipid in another approved mRNA vaccine, comes in at 2.5. The ALC-315 at 5.3. And LUNAR 2.0, the lipid in ARCT-2601, at 38-fold in non-human primates. Two different proteins, one secreted, one in the blood, and one locked inside the cell. Two different ways to measure, a simple blood draw and a liver biopsy. Two different baselines, and the answer comes back the same, roughly 40-fold more proteins. That's why it tells me that this lipid is really what's doing the work and it's not just a quirk of the LNP. A new lipid, of course, raises new questions, and it's really one of the first ones all of us would ask. Is it safe?

We have three clinical studies so far, each run head-to-head against ARCT-810, a rodent safety study, a non-human primate tolerability study, and biodistribution. Here's the headline. Nothing in this package separates the ARCT-2601 from ARCT-810. No new findings in the rodent study, no new findings in the primate study. And one difference we did see in the biodistribution, that LUNAR 2.0 lipids clear faster from tissue than the other one. That runs in our favor. I want to be careful with my words. Again, all of these are non-GLP studies. They're supportive, not definitive. The pivotal GLP study is on its way, and ultimately we'll rest on that. And that reads out in November.

So here's the practical question. How do you take a new lipid into patients without resetting the clinical clock to zero? And that was the conversation we had with the FDA. In June, we had a Type C meeting on ARCT-2601. The question we put to them was whether we could leverage the platform, the CMC package, the non-clinical data, and the clinical experience we have already with ARCT-810? And the answer was yes. And it went further than that. The FDA agreed that ARCT-2601 can be added as an arm to the ARCT-810 study that's already running. And again, we just presented on that. We will evaluate safety, PK, biomarkers in a small subset of patients. And if the initial data are favorable, we will proceed to an adequate, well-controlled pivotal trial.

In practical terms, three to six patients age 12 and up with elevated baseline ammonia dosing inside the existing study. And then, in the second half of '27, the patients, this is what the drug has always been for, a Phase 2/3 pediatric study, age 0 to 6, neonatal onset, severe late onset disease. The whole point of the extra potency is lower dose given less often and this is the plan to prove that it works in people. Again, every mRNA LNP therapy targeting the liver has to be infused, and that's the real bottleneck for patients, for families, or the clinic that has to find the chair. Today, our drug is 0.5 milligrams per kilogram diluted into 250 mL bag, run over 3 hours. For a child with urea cycle disorder on a repeat schedule, that's a morning out of school every single time and a parent's morning out of work with it.

Near-term, our objective with the potency, it should allow us to go to 0.3 milligrams per kilogram in about 40 mL, roughly an hour. That's the case we're building and that's closest to our hands. With LUNAR 2.0, of course, we're also trying to target the 0.15 milligrams per kilogram in 5 mL with a syringe pump under 5 minutes, ready to use right out of the vial. My team is working on the formulation now. But the logic is pretty simple. It's the same in both columns. The lipid lets us drop the dose. A more concentrated product lets us drop the volume. You multiply the two, and an afternoon in an infusion chair, becomes a few minutes at the end of a routine appointment. And that's the direction the product potency really opens up. How far can we get and how fast is what we're working on now.

So that was delivery that I spent quite a bit of time on. But delivery is only half of the mRNA medicine. The other half is the payload, the sequence itself. We've always designed our own sequence, and we've always screened our payloads. What's changed is that this work can now be done computationally at scale, at speeds that wasn't available to anyone a few years ago. So we're bringing that capability in-house. We just announced we're acquiring myNEO, computational immunologic company that's based out of Ghent. What comes with them is two published peer review algorithms, neoMS, which predicts which peptide gets presented on MHCs across HLA types, and neoIM, which predicts T cells and how it reacts to them. A platform of 10 AI modules already running with pharma partners. A production workflow, not just a demo. And the myNEO team itself, a capability we would have spent years hiring into San Diego.

And this goes straight into construct design for both LUNAR and STAR. Codon choices, UTRs, and parts of the sequence that describe how much protein you need for how long. All of this will get incorporated. And it lets us screen express proteins for immunological hotspots computationally before we pick candidates rather than after. Now, this brings us to the next two programs I want to show you, PKU and Gout. Both are enzyme replacement. So the rule becomes screen before you select, better candidates, design faster, with fewer wasted cycles at the bench. So where do we go from here? We've taken the two capabilities I've just described, the AI-guided mRNA design and the LUNAR 2.0 delivery platform and asked, which liver disease do they open up?

The answer we've landed on is PKU. There is roughly 1 in every 10 to 15,000 babies born with it. The liver enzyme that converts phenylalanine into tyrosine is missing. Without a working PAH, phenylalanine builds up, crosses into the brain, and untreated, can cause severe irreversible intellectual disability. We catch it at birth on newborn screening, and we manage it with diet and a handful of approved drugs. None of them are perfect. Patients still live on protein restriction, and many of them can stay on it. Our approach, the same logic as OTC, an IV mRNA that has the liver make the working PAH. The enzyme activity, these patients don't have in the cell. But here is where this has been hard and difficult to do with mRNA. PKU is not like OTC. In OTC deficiency, you're fighting an acute crisis, and even partial enzyme activity keeps a patient out of the hospital.

PKU, you're managing a metabolite every single day for a lifetime in a patient who's otherwise well. To replace that diet, you don't need a little enzyme, you need a lot of enzyme, and you need it to last. That's the potency problem. Until now, the LNPs simply weren't potent enough to get there at the dose and a schedule a person would accept. LUNAR 2.0 is changing that equation, and I'm going to show you the data on the next slide. This is the slide where it comes together and it comes together in two stages because mRNA and the lipids are two separate problems and we had to solve them both. Stage one is the mRNA itself. These are PKU mice, a single dose, 1 milligram per kilogram, and we followed plasma phenylalanine for a week. The shaded band is the range we're trying to get to in patients.

The dashed pink line is the published PAH sequence. That's our benchmark. It drops phenylalanine into the range, and by day three, it climbs back up. Then watch our own generations. Gen 1, the black line, it's out by day two. Gen 2 holds onto it for four days. Gen 3, five. And Gen 5, the light purple line holds on to phenylalanine in the range for six to seven days from a single dose. This is the sequence working. Same delivery, same dose, same animals, expression, and durability engineered directly into the mRNA itself. Stage two is putting that optimized mRNA into LUNAR 2.0 and asking what happens in the primate liver. A single IV administration at 0.5 milligrams per kilogram and we measure PAH protein in the liver. At day two, the liver is producing human PAH at 44% the level of endogenous human PAH. That's the dotted line at the top.

And the number I care about most is day seven, 16% still. That dashed green line is the therapeutic threshold. Roughly 10% of the endogenous is where you'd expect clinical benefit. A week after one dose, we're still above it. So a sequence that holds for a week in a lipid that reaches the liver 40 times better than the one before it, this is what I mean by coordinated optimization. You don't get it by just fixing one of them. And a week in a mouse is not a week in a patient. Metabolic rates scale with body size and the larger animal clears these enzymes more slowly. So allometrically scaling, the same construct should last considerably longer in a human than it does in a mouse. Dosing every two weeks is what we're confident this gets us to. We are striving for monthly, and that's the goal. We think for further optimization, think we can reach it.

The second program is Gout. I like this one, but it's because it's something every person in this room is missing. Every other mammal on the planet makes an enzyme called uricase. It breaks down uric acid into something soluble and is simply excreted. We don't. Humans and great apes lost it. Somewhere around 15 million years ago, that gene was switched off. We still carry it as a pseudogene. So uric acid becomes our terminal metabolite, and it runs several times higher in us than in a dog or a mouse. Most mammals sit between 0.5 and 2 milligrams per deciliter. A healthy human, 3.5 to 7. And above 6.8, that red line, uric acid stops dissolving and it comes out of solution. It crystallizes in the joints and that is gout. 9.2 million patients in the United States. 200,000 of them fail every oral drug we have.

The therapeutic rationale is straightforward. Deliver an mRNA encoding uricase to the liver and restore enzyme activity with a human enzyme that's no longer there. We are introducing not a novel biology, we're just reconstituting a pathway that mammals already use. It is expressing an enzyme delivered directly into hepatocytes, which is exactly the kind of payload LUNAR 2.0 was built for. This is exactly kind of payload that's where myNEO works and earns its place. Uricase is a foreign sequence to the human immune system that has been central challenge for every uricase therapy that has come before. So this is the program where we are screening the construct computationally before we select a candidate rather than discovering the answer clinically. That's the platform working the way it's meant to be. The delivery, the sequence design, and the immunological screening pointed all at same problem.

So now, let me leave you with four things. Potency. LUNAR 2.0 makes roughly 40 times more protein in primates' liver than the lipid it replaces. It did it twice with two different proteins measured two different ways. The ARCT-2601, highly potent, no new safety signals, and an FDA-agreed path into a study that's already running, integrated into our ongoing Phase 2 by end of this year. Lower dose means faster infusion, 3 hours today, an hour within reach, and a single syringe pump as the goal. And PKU and Gout again uses the same platform, engineered mRNA, potent delivery, using our computational screening expertise, opens the set of new liver indications. If you remember one line, this is one. More protein from less mRNA. Lower dose, shorter infusions, new indications.

13 years ago, we started Arcturus to solve the delivery. LUNAR 2.0 was a result that changed the way we thought what could be achieved. And once you see that, you start asking which diseases we can go after. I think this is where delivery stops being a bottleneck. Thank you. Now I'll turn the time over to Dr. Summar for his comments.

Thank you, Pad. The next-generation platform is the part of the program I would pay closest attention to. Greater than 30-fold improvement in potency is a change in kind rather than degree. It moves the objective from supporting the urea cycle to correcting it, and it buys headroom that can be spent on elevated enzyme expression, duration of efficacy, or extending the dosing interval. Once monthly dosing is the variable that determines real-world benefit. These families already manage protein at every meal and scavengers several times a day. Interval drives enzyme persistence and persistence is what changes outcomes. If close to full correction is obtained, diet becomes normal and scavengers should not be needed. Multiple benefits from that in growth and development.

So, I will state my expectation plainly. I believe ARCT-2601 has the potential to become the standard of care, particularly in severe OTC deficiency. And I expect this platform to read through to a long list of liver-based rare diseases where roughly 70% of patients are children. Thank you for your attention. We'll now pass the call to the operator for Q&A.

[Operator Instructions] And we will take our first question from Myles Minter with William Blair. Please go ahead. Your line is now open.

You've been talking with regulators and it seems like you've got alignment here with amending this Phase 2 to include 2601, and the actual GLP studies look clean. I'm wondering whether you talked about endpoints, particularly as it relates to maybe a potential accelerated approval for the program. I think previously your focus being on glutamine reductions, but there's obviously some interesting sort of protein exposure data that you're generating here, which might increase importance of dietary relaxation as an endpoint. Just wondering whether you've got any more regulatory feedback about the pathway moving forward here from an endpoints perspective.

Hey, thanks, Myles. And this is Joe. We definitely did get some additional regulatory feedback through a pair of Type C meetings earlier this year and elevated the importance of ammonia as an endpoint, especially in pediatrics, and definitely open to glutamine as an endpoint in adults. But I'd like to turn the time over to Al to comment further.

Sure. So let me just add to what Joe pointed out. If you look historically at what were the measures, the biomarkers and the endpoints that have resonated and are important to the FDA, as Joe mentioned, durable suppression of ammonia, durable reduction in glutamine, and also as we are starting to see evidence of here, an ability to maintain metabolic stability and perhaps evidence of improved protein tolerance and consistency over many dosing cycles. So these earlier studies were really fairly brief and they were not intended to modify protein intake or have any impact at all on standards of care such as ammonia stabilizers. However, the possibility of wanting to look at those over longer periods of time in a patient population that's stable and where we have sufficient time to introduce our new construct, I think is exactly the kinds of endpoints that will be not only meaningful but will resonate with the regulators and they're the sorts of measures that are going to be necessary. Thanks, Myles.

Thank you. And we'll now move to Pete Stavropoulos with Cantor Fitzgerald. Please go ahead. Your line is now open.

In the slide deck for regulatory and clinical plan, it says advance the Phase 2 into pediatric study in the second half of next year, ages 0 to 6. Is this the population you're going to focus on solely, or will you do studies around those greater than 6 years and adults? How should we be thinking about this and what needs to be done to sort of move into that younger population, and how prevalent is it?

Yes, a couple things. 2601 is intended to service the entire population. However, the initial focus is on the largest unmet need, which is pediatrics. Alan, maybe you could comment further.

Yes, sure. You know, it's quite possible that it would make sense from our enrollment criteria perspective to include 6 to 11-year-olds. As you know, in the study that we currently did, we studied 12 to 18 in the adolescent age group and then 18 and above for adults. Metabolically, the kids that are at highest risk and the ones that are requiring liver transplants or unfortunately sustain neurological damage and succumb to their disease before school age are obviously those most severe from birth to six years. That's really going to be our focus, but it's quite possible that it may make sense to include 6 to 11-year-olds, and that'll be some of the further discussions we'll be having as we finish designing our trial and move it forward into the clinics in the second half of next year.

Thank you. And we'll move next to Lili Nsongo with Leerink Partners. Please go ahead. Your line is now open.

Coming back to the Phase 2 data from the U.S. study, could you provide a bit more color on how the baseline was assessed for both glutamine and ammonia? How many times were the baseline measured and at what time interval? And also, how should we think about the magnitude of change that will be considered clinically relevant in terms of both change in glutamine and ammonia? And how are those changes that we are seeing comparing to natural history for patients in restricted diet and ammonia scavengers?

There's a lot there, but with respect to baseline assessment, Alan, why don't you start.

Yes, sure. There was a lot loaded into that question. We did a screening at a baseline of glutamine and ammonia, as well as a baseline dietary assessment and counseling by our dietitian to make sure that over a period of time coming into the study, the patients were in fact maintaining their protein intake and they were following the regimen that had been prescribed and recommended by their physicians, as well as continuing to stay on their baseline meds. And then around the times of the infusions, we had patients come back in and we were measuring glutamine, ammonia levels, et cetera, throughout the course of the 5-dose study.

So we think we got enough points on the curve and enough individual measures that we were able to follow the patients adequately, but obviously in a longer study with a slightly larger patient population, we have the latitude to get, I think, a greater breadth of information, particularly if we're going to want to do the things that I spoke about just a few moments ago, getting patients to, in a more controlled way, liberalize their protein intake over time. So we give them a greater protein challenge, which speaks directly to ureagenesis. And then also the possibility of working with their physicians and having them decide if it was appropriate to back off on some of the ammonia scavengers if the patients are on them to see if they're even necessary anymore. The goals for this would be to show that patients have a stable, refunctioning urea cycle, and those are really the best ways to measure these. Hopefully that answers your question.

Thank you. And we'll move next to Yanan Zhu with Wells Fargo. Please go ahead. Your line is now open.

I was wondering, LUNAR 2.0 seems to have a much higher potency, 40x. I was wondering, A, whether that's due to delivery to the liver or purely due to endosomal escape. And then, but the dose that you showed in NHP seems to be only 3 times lower than the older LNP. So I was wondering, could we or should we expect even further reduction in dose given the 40x or 38x potency increase? And then lastly, once you put the 2601 into patients, how soon can we see data and how do we appreciate the improved potency in the data? Is that going to reflect in even deeper glutamine reduction or some other aspect that you aspire to?

Great. A lot there. I'll unpack it and then I'll allow Pad to comment as well. Yes, Pad implied and communicated on the recent presentation that endosomolytic disruption or endosomal escape was the area where there was the most opportunity to optimize the technology. And that's where we feel we got a lot of traction with LUNAR 2.0. With respect to the target product profile of 810 was looking like a 0.5 mgs per kg every two weeks, as we expected. The TPP for 2601 has not been disclosed yet, but you can imagine that with a 40-fold improvement in primates, or 38 to give the exact number, you can target 0.3 milligrams per kilogram or less and once a month or less and less time in chair, right?

So there'll be an appropriate time to provide more granularity on the TPP or the target profile for 2601. But I want to focus most of my answer on how soon the data. I want to remind everyone that what we're doing here with 2601 is simply integrating it into the present 810 study, and this is per advice by the FDA, in a handful of patients. This isn't expected to change the budget or the timeline. If anything, with respect to the timeline to approval, we've always learned, especially in OTC deficiency, that Phase 3 enrollment cadence is key and we believe and make sense that a better product will accelerate that cadence. And so that's the objective of 2601 is to simply integrate it into the path that's already established per the advice of the FDA and evaluated in a small handful of patients that can get people excited and help accelerate our Phase 3 enrollment. Now I'm going to turn the time over to Pad to address.

Yes, I think one part of your question was about the biodistribution of LUNAR 2.0 versus the previous generation. Both of the biodistributions are similar, so both get into the liver using the ApoE mechanism. So because of that, the distribution is the same. The only thing we're changing is the endosomolytic activity. So hopefully that helps. So both go to the liver, about the same percentage. One is just better at getting out in a nutshell.

Joe, can I comment on one thing? This is Marshall. Yes, you asked if the glutamine levels would go even lower. Actually, the glutamine levels achieved in the current study actually return to normal levels. The body has sort of a homeostasis there. So you wouldn't expect to see the glutamines to go lower. You'd just expect them to stay in that nice normal range right there. Sorry, that's all I needed to add.

Thank you for the comment.

Thank you. And we'll move next to Seamus Fernandez with Guggenheim Securities. Please go ahead.

Hi, this is Evan Lang. I'm from Janus. I had a follow-up in terms of the ARCT-2601 program and just the dose selection there. Just curious if I'm understanding it correctly that the planned Phase 2 dose is that 0.3 mgs per kg over 1 hour. That's highlighted in the slide. Curious what's informed that dose level and if there's an equivalent 810 dose level there. And then I did have one follow-up, and just in terms of the speed of onset benefit we're seeing here, it does look like we're seeing some degree of ammonia benefit each visit. Glutamine, I see, really seems to have a benefit at day 35-ish, but wasn't sure if that was the first measure or if there was some multi-dose time course of seeing benefit.

Sure. And it's a reasonable question, Evan. Whenever you see a 40-fold improvement, at least in the primates, in the specific example of OTC is a 38-fold improvement. We can apply that to efficacy, safety, or convenience, but we've already showcased the efficacy and safety of the platform. So we're emphasizing initially convenience, meaning less frequent dosing, less time in chair, and a potential in-home administration. We believe that this will help provide a more patient-centric product and accelerate enrollment in Phase 3, especially in pediatrics. So that's the initial focus. We haven't provided a specific TPP, is what you're inquiring. There'll be an appropriate time to do that, likely after the formality of getting this approved and fully integrated by year-end. It'll be an appropriate time to give more granularity on the specifics of the protocol and the TPP.

Thank you. And we'll move next to Yigal Nochomovitz with Citigroup. Please go ahead.

Could you speak a little bit more about the new formulation because you're moving from 250 mL, you know, at 0.5 migs per kg to 40 mL at 0.3 migs per kg, which seems just by rough calculation, a step up of about maybe 3x concentration for the average individual. So is there something additional, in addition to the better properties on the endosomal escape you referenced, is there something else going on that gives you advantages in terms of having a higher concentration in the infusion to give you the shorter time? And then what's going to happen with 810? As you say, you're folding in the new 2601 into the existing study. So is 810 still going to feature as a path potentially or not?

Right. So the plan forward is to simply integrate 2601 into the ARCT-810 pathway. So it's like passing the baton to something that will carry this forward, a better product. I remind people that the mRNA sequence is the same in 810 and 2601. So we're simply modifying a portion of the formulation and proceeding. And it's a meaningful difference because of what you've seen in the primate comparative data. And it's also important for us to leverage the convenience element. So if there's room for improvement beyond dose selection and size of administration, we can always look at the duration, you know, like how frequent the administration. Pad, did you?

Yeah, and then the other point is the infusion time. Of course, we've been working on optimizing the formulation for all of these many years as well. We've learned a lot with our Kostaive commercialization and how to concentrate the drugs. So there's two levers we can pull. Obviously, reducing the dose reduces the ultimate amount we need to infuse. And then the second lever is the excipient and the stability of the LNP, which can determine the ultimate concentration that we need to infuse. So we've done both of those, and ultimately we're going to adapt that into this project. Hopefully that makes sense.

Thank you. And we'll move next to Adam Walsh with Roth Capital Partners. Please go ahead.

The FDA agreed you can proceed to an adequate and well-controlled pivotal if the 2601 data are favorable based on the preliminary safety, PK, and biomarker data. How is favorable defined across all three in your mind? And then what can you say about the size, duration, and whether one pediatric study would support a filing?

Well, favorable is a subjective term. We definitely want to evaluate what 38x in primates means functionally and practically in terms of real-world benefit. But with respect to the meat of your question, I'll pass it on to Alan.

Yeah, so at the end of the day, I think what's going to inform us the most as to the size and the nature of what patients to best focus on initially in the study is going to be this next cohort of patients that we're going to start enrolling into the first part of next year using the new construct. And if I understood your question correctly, the goal here would be to consider a new construct ideally a single, if you think about the patient population, let me go back just for a minute. You know, we're talking about a universe of about anywhere from 8 to 10,000 total patients living in Europe and the U.S. with this disease. Of those, upwards to almost 6,000, 7,000 of them are 18 and over. Adolescents are averaging about 1,000. And then after that, it's the balance of the rest of the patients, which is about maybe 1,500 to 1,700 patients.

So right now, based on the question that we had earlier, it may be advantageous for us to include a small subset of pre-adolescent, adolescent children just to get the enrollment up. But by and large, as long as we can continue to work with the agency, and there's a general understanding that what we're observing in adults is relevant for what's going on metabolically in children. And we established pediatric safety exposure, PKPD, using ammonia and glutamine and ureagenesis measures, I think really then we should be able to negotiate a program size and scope and ideally a single study that will be supportive based on the FDA's most recent pediatric extrapolation guidelines, which really encourage modeling smaller pediatric study numbers when disease and treatment response are thought to be sufficiently similar. And we believe that the medical literature and the evidence supports that the disease that's observed in young children, adolescents and adults is no different. It's just a level of severity and an inability to maintain ammonia control as sufficiently in the youngest children.

So hopefully that answers your question. Obviously, all of this will be driven by the additional data that we engender with the 2601 construct in this first population, and then reexamining it and sitting down with the agency and getting final agreement on what constitutes a sufficient study. But I think we have a sense also based on what Ultragenyx's work for their DTX301 study required, and that was exposure of about 18 stable adult patients to get approval of their OTC deficiency therapy for stable adults. So we think that the size and scope and nature of what we're anticipating will fall within the range of what's been the most recent precedent established for that program.

Thank you. We'll move next to Whitney Ijem with Canaccord. Please go ahead. Your line is now open.

Just one, can you remind us what's known about the, or whether or not the endosomal escape pathways are the same in hepatocytes versus bronchial epithelial cells? Just curious if there's read-through for LUNAR 2.0 to the CF program and if we should be thinking about potential for kind of like an optimized product switch there as well.

No, it's a great question. You know, Pad and his team has done an exceptional job optimizing hepatocyte delivery and improving on endosomal disruption or endosome escape. And you are smart to acknowledge or identify that the biochemical process to break out of the endosome of a bronchial epithelial cell is considerably or even dramatically different. Normally in a hepatocyte, the endosome escape process involves the acidification or the process that occurs as the endosome ages. The additional protons will protonate the lipids and make it active to break out. But in bronchial epithelial cells it's a different biochemistry. It's trade secret to Arcturus. We've already optimized through that optimal process for the CF program. So it's a long way of saying the optimization process that we've applied to LUNAR 2.0 for the liver is not relevant to what we're seeing in the bronchial epithelial cells. We've already had, we went through that optimization process already for that program.

Thank you. And we will move next to Mayank Mamtani with B. Riley Securities. Please go ahead.

This is [ Amin Onn ] for Mayank. On ammonia, has the FDA given you any guidance on what they want to see for durable suppression between doses? And what are you expecting there? And then just a follow-up, if you can comment also on the pivotal trial start timeline here.

Yes, we're definitely anticipating lower and less frequent dosing with 2601. We have to prove that here relatively shortly, but that's the expectation. Whether how meaningful this is, I actually wouldn't mind to hear from Dr. Summar on this, how meaningful is periodic versus sustained ammonia suppression.

Sure, thanks for asking, Joe. So here's what I would say about this, couple of things. For the types of patients that we're studying, particularly in the adolescent and adult patients, ammonia tracking is really not where we make a lot of our clinical decisions. We actually do it more off of glutamine because these patients are essentially pretty stable. So, you know, whether the ammonia is 30, 40, 50, somewhere in that range, that's not something we clinically react to. However, the glutamine level, which is sort of the buffer pool for nitrogen before you get to elevated ammonia. If that is actually staying stable, then that is actually a great signal that you have room to work with diet, you know, reducing scavengers, different things like that.

So, historically everyone's kind of focused on ammonia. And what we've discovered, I've been in the urea cycle field now for gosh, over 40 years, is that ammonia is a fickle measure. One thing we do, though, is when we do measure it, we do first morning fasting ammonia levels. That's shown to far and away be the most reliable. And obviously it's something we'll be tracking and looking at. But I would expect to see more signal around glutamine that's actually going to be clinically relevant. Did that answer your question?

Yes, it does. Thank you.

Thank you. And we will take our last question from Yale Jen with Laidlaw and Company. Please go ahead. Your line is now open.

The first one is in terms of from 810 of 3 hours to 1 hour in the 2601 in terms of infusion time. Does the frequency of infusion also change as well for the subsequent part of the study? And also in terms of 2601 data, would that be available in the first half of next year and what might be the context of data possibly to be presented?

Yes, with respect to guidance, we've indicated by or at near year-end that we'll fully integrate this 2601 program into the Phase 2 track that's presently housing ARCT-810. So the integration process will be completed by year-end as the guidance. With respect to the scientific question, Pad?

Again, when we go to the first-in-human studies, we'll be dosing at a dose we know is going to be effective. Ultimately, we'll be looking at all the biomarkers that we also tracked with the 810 product. So I think we're going to be comparing similar doses and looking at the biomarkers and looking at the trend and the durability. And all that data will inform us the frequency, and ultimately we decide to go with lower dose or maybe dose sparing for longer durations. And all that will be informed after the first few patients that we have.

And Pad, this is Alan. If I can just add one more element. It's sort of understood, but it should be said, the goal here is to try to optimize convenience for families and for patients. So if we're able to widen the dosing interval to something more than just the dosing interval, more along the lines of monthly or greater, that would certainly be welcomed by the patient population and that's the feedback that we've gotten from the patient community, from experts like Dr. Summar and others.

Great. Thank you.

Thank you. This concludes our question and answer session. I will now turn the meeting back to Joe for closing remarks.

Hey, thanks everyone for participating on the call. There was a lot today on this call. I'm sure we'll have the opportunity to catch up with investors and go forward, and don't hesitate to reach out to our team for any remaining questions and we'll get back to you as soon as we can.

This concludes today's meeting. We appreciate your time and participation. You may now disconnect. Thank you.

Day 1 of the Back to School Biopharma Conference, Citi is hosting here in New York. I'm Yigal Nochomovitz, biotech analyst. We're on our third session of the morning, which is my great pleasure to introduce Arcturus Therapeutics. We have both the CEO, Joe Payne; and Alan is the CMO, new CMO, relatively new CMO. So welcome, both of you. Appreciate it.

Thank you. It's good to be with you.

So Joe, lots happened in the last couple of years with the company, both on the OCT (sic) [ OTC ] front and then also on the CF front. So it would be great if we could just start with the high level, kind of introduce the company, what are the key programs? And we'll have a plenty to talk about on both of those programs.

Sure. So Arcturus is a messenger RNA medicines company that we have next-generation technologies that differentiate us from the field and within the mRNA community. We do have a self-amplifying mRNA technology to support the vaccines division. But we utilize the self-amplifying mRNA platform, which includes infectious disease vaccines and potential cancer applications. We utilize that division to fund -- non-dilutively fund the value-creating portion of the organization, and that's our therapeutics pipeline.

We have a pair of messenger RNA therapeutics that are deep in Phase II with some meaningful milestones and readouts this year. So our liver platform has a flagship asset that's for an indication called ornithine transcarbamylase deficiency or OTC deficiency. It's the #1 urea cycle disorder. And we have a Phase II readout for that later this month. So it's a very near-term milestone for us, along with some regulatory clarity associated with that program, that flagship program for the liver platform. And then we also have an inhaled messenger RNA platform that's led by our CF product or cystic fibrosis indication. And we have a key decision for that program in Q4, a go/no-go decision to whether we proceed into Phase III.

So that's where we are. So again, just to reiterate, we have an advanced vaccine platform, self-amplifying mRNA that's approved in 32 countries. And we're looking to that to help generate cash or fuel for the value-creating therapeutics pipeline franchise.

Okay. So let's start with OTC. So you mentioned that there's going to be some data coming up. Maybe kind of help us understand what we're going to learn at that data readout. I believe that's later this year?

This month.

This month. Okay. Very good. So what are we going to learn? What will you learn in terms of feedback from the FDA in terms of the path forward? And given you're studying both the pediatrics and the adults, are there differences in terms of what you need to see there?

Yes. So we've had a pair or 2 Type C meetings this year that we -- so we've engaged the regulatory agency to discuss the path forward for this program. And you're right, there's 2 general populations that we've segregated the OTC deficiency community into. You have stable adults and then you have pediatrics where there's a larger commercial opportunity and higher unmet need with respect to pediatrics. So, as we've talked to them, we've already indicated that both of these Type C meetings were positive and productive. But the details around those meetings will be provided in more granularity at our communication later this month. So it's not just data that we'll be providing, but it's also the regulatory path forward and more granular feedback from those 2 Type C meetings.

In terms of what data to expect, you mentioned this is a Phase II dataset that includes Europe and the U.S. We have completed all our dosing and enrollment. We've already communicated that. So it's just about compiling the data and presenting it. But why it's a unique dataset is not only because it's additional data from our interim communications, but it's in a format and additional data that was recommended through advice from the regulatory agency, so -- from these Type C meetings. So we'll be able to communicate not just biomarker data, but additional data that we had to go back retroactively and dig up and provide that for Wall Street as well.

So it sounds like some of those details in terms of what biomarkers you're going to show are not ready for prime time today. Is that something you're later or illuminate a little bit?

Well, we can discuss this a little bit. The biomarkers for OTC deficiency are well established. Ammonia is a bad actor. And that's always been a surrogate biomarker or it's something that you don't want ammonia, systemic ammonia. It crosses the blood-brain barrier and does bad things. So we don't -- we need to control that and show the regulatory agency that we can control ammonia. So ammonia is a key biomarker, but so is glutamine and something that's helpful for people listening to the call today is that a lot of the patients that we're treating are already on ammonia scavengers, and they're doing their best to control ammonia because that's what's very problematic.

So what they do is they take all these pills and they drink a lot of water. And these pills are ammonia scavengers that sequester the ammonia and then they drink a lot of water and they urinate all the ammonia out. And it's an exhaustive process, but that's how they're trying to manage ammonia. But what people don't realize is that these OTC patients, these subjects still do not feel well. Now why is that, if they're controlling their ammonia and doing their best. It's because of glutamine. So ammonia gets converted to glutamine in the body before it is scavenged. And so what we found and what the community well understands is that you have high levels of glutamine.

Now why is this a problem? Because glutamine crosses the blood-brain barrier as well, and it converts back to ammonia. So even if you're doing everything right, you can still have foghead, headaches and just complications associated with the glutamine biomarker. So in addition to ammonia, which is a well understood and surrogate biomarker, there's glutamine. And we're just finding that these biomarkers are both of interest to not only the community, but the regulatory agency. We -- and the other comment that I can provide is in stable adults, there's an increased emphasis on glutamine because they've been managing at least to the best of their ability, the ammonia levels already. So they're more interested in getting that ammonia down so they feel better or the glutamine down so they can feel better.

But in the pediatric population, there's elevated interest in ammonia because that's the population that is having severe disease and fatality occurs in severe hospitalization and hyperammonemic attacks and stuff like that in the children. So there's more of an emphasis on ammonia in the kids and an increased emphasis on glutamine in the adults.

Okay. That makes sense. So it sounds like there may be different metrics for the different populations for larger -- for the next set of studies. So we're going to get more longer duration of data, those endpoints for those populations. And then you're going to move into a Phase III basically after you disclose this? What's the game plan there? How much...

In terms of the regulatory path forward, we're intentionally going to be communicating that with clarity concurrent with the data readout later this month. So people don't have to wait very long. But that's one of the potential value inflections for this program is not just the data, but providing what our proposed path forward is for pediatrics and adults.

Okay. By the way, I remember in our -- long time ago, there was another biomarker that was it orotic acid or something like that. Did that one not feature heavily anymore?

It's still there, but yes, that's right. There's orotic acid in the urine. There's -- the urea cycle impacts a lot of biology. There's a lot of amino acids that are indirectly and directly impacted by this cycle that occurs in the liver in the periportal portion of the liver. So yes, orotic acid is a byproduct that can be measured. However, it's quite variable. So I don't know how helpful it can be supportive in nature. But we're also looking at the 15N-ureagenesis...

Yes, I wanted to ask about that, too. Okay. Let's skip over there. So tell us about that. This is this, I guess, a radio-labeled nitrogen, heavy nitrogen.

Yes. We talked about multiple biomarkers already, ammonia, which is the bad actor, glutamine, which is also complicating and annoying. People want to control and normalize that. But this is a urea cycle disorder. So you can track urea itself. And there's different ways to do so. But there's a relatively new assay, this N15 assay that's very clever. It's an academic status right now. But yes, we have been collecting that data. We consider that data to be supportive in nature. It's still an early technology. So it's unlikely that it will be a validated primary endpoint or something like that. But is it cool technology? Is it potentially supportive? Absolutely. So we'll be collecting that data as well.

Is that something the FDA has heard of or understands or that's there in a sort of a learning mode there as far as since it's so new.

Combination of both. Do you want to comment on that?

Yes, this is. So this is Alan Cohen. So, yes, a ureagenesis cycle is really an exploratory endpoint. It's another way of validating, as Joe said, the fact that we're normalizing the urea cycle function. I think the things that the agency is going to be continuing to be interested in wanting to see are all the things that he just highlighted. The challenge is that when we only dosed -- we only gave 5 doses in these patients over what is a relatively short period of time, 12 weeks.

So being able to liberalize patients urea-binding medications, getting that dose down so that we can show that we've either stabilized it or normalized it is not something that's easy and feasible to do in such a short period of time. But what you would like to see is that it's stable. Patients are feeling better. They're reporting that they're not foggy, perhaps they're gaining weight, perhaps they're acting and they're liberalizing their protein intake. Even though we told these patients to remain on a stable diet, some of the things that we look forward to sharing in the near future are going to be those kinds of measures and those kinds of important observations.

Okay. All right. So we're looking forward to a lot. It sounds like there's going to be a very significant update then with a lot more detail on that...

And not just ARCT-810, but also the -- and the regulatory feedback. But the platform in general, we're also going to use this as an opportunity to update folks on our intravenously dosed mRNA therapeutics platform for the liver. So it will be a comprehensive update. It's not going to be an average update. So stay tuned, and I hope people.

So there's something beyond the OTC in terms of another indication potentially...

You have to...

We'll wait. Okay. All right. So maybe we could switch over talking about CF for a little bit, another very important program. So maybe just, first of all, just give us a snapshot of what you've shown. You've done some dosing work. You had several updates last year. Just kind of summarize where we are.

Yes. So a lot has happened in the CF program for Arcturus, but also within the CF community. Inhaled RNA therapeutics in general has been extraordinarily difficult for the field, whether it's antisense or siRNA, circular RNA, gene editing RNA and mRNA, and everything in between. Humans just don't like to inhale lipids and RNA. That's just -- it's been a challenge for decades. But we've now overcome that challenge through a lot of work over this past decade and a lot of investment from the CF Foundation and other strategic partners.

But we're now in a place where we feel very good about the safety and tolerability profile -- we've completed 5, 10 milligrams and 15 milligrams of daily dosing over 28 days. And just to put a frame of reference on that, that is much, much, much higher and much more consistent than any other program that's out there for. So it's a very differentiated profile. And those differentiations of much more generous dosing of mRNA for a consistent period of time. The reason we're able to do this is because of our next-generation technology is differentiated.

So we have a chemically different lipid nanoparticle that differentiates us from the field. We have a purification process for the RNA molecule itself that helps with safety and tolerability by removing these problematic impurities. These small RNA impurities can be very problematic for immune responses.

And finally, our nebulization process. We took an off-the-shelf nebulizer and converted it and customized it to something that's more efficient at aerosolizing these types of therapeutics to prevent aggregates and macro particles and discombobulated particles, right? We need to retain the integrity of the particle, prevent aggregation, forming these macro particles that can be toxic as well.

So if you combine that all together, a chemically different lipid nanoparticle that's biodegradable and non-accumulating, and then you have this more pure construct and optimized nebulizer, you pull that all together, you have a logarithmically different technology platform. And that's what we're seeing so far with respect to safety and tolerability. And the reason I'm emphasizing that is that is what has plagued the entire field of inhaled RNA therapeutics has been safety and tolerability. And thankfully, we're -- we believe that we've addressed that challenge. We're presently in a 3-month study that started back in March. And so we're deep into this open-label study. We're not just evaluating this technology over 28 days, but now 3 months or 12 weeks of consecutive daily dosing.

And we're in a position to share or provide a decision for this program in Phase III. And now if it's okay, I'd like to discuss why we've guided a decision. I'll just take a moment to do that. So normally, a CEO guides data or guides for completion of enrollment, but we're guiding a decision to proceed. Now why is that? It's because we signed a Thermo Fisher agreement in July. And this is a very meaningful agreement for Arcturus because if we -- if Arcturus makes the decision to proceed into a Phase III study, then this triggers up to a $40 million contribution from Thermo Fisher to support our Phase III budget. That's a lot of money for a company of our size. So the decision to proceed is what triggers it. So that's the guidance. We're guiding this decision to proceed because it's associated with up to $40 million commitment or contribution from Thermo Fisher to support our Phase III budget for the CF program. That's why we have that unique guidance in place.

Maybe -- go ahead, Alan.

Yes. So for some of your listeners and people in the room here that may not be as familiar with our program, let me just give you some nuts and bolts, so you'll at least know what's coming. Joe mentioned that we did dose ranging over 4 weeks at 5, 10 and 15 milligrams. When we did that early safety tolerability study, it's certainly not long enough to give us a clinical signal of any meaning. We did make an observation which we took forward selecting the 10-milligram, the middle dose because we saw changes, improvements in radiographic findings in the lung. So that was the dose we took forward for the 12-week study.

What we're dosing right now is upwards to 20 patients over a 3-month period of time at 10 milligrams. We've gone outside of the United States to go into places like Turkey and Israel, which have a very high preponderance of people with null mutations or the kinds of patients that have the highest unmet medical need. And we're looking at not 1, not 2, but 5 potential endpoints that have clinical meaning, 2 pulmonary function measures, including spirometry, looking at percent predicted FEV1, which is the most traditional endpoint that's been used for approvals for pulmonary diseases, including cystic fibrosis.

Lung clearance index, which, by the way, the CF Foundation will be reporting out their natural history study, the REACH study next month in October. And they're doing that study to help sponsors like us have a normative database for this adult population, 2 quality of life measures and the radiographic high-resolution CT scanning data that we use to help select our dose for this Phase II study.

So at the end of this fourth quarter or sometime during this fourth quarter, what Joe was mentioning is we're going to be reporting out based on this open-label study, what our intentions are with respect to moving the program forward. And then we hope to share substantive data sometime in the early part of next year.

Okay. All right. So a lot of kind of follow-ups on this important stuff. So I guess, first of all, can we just -- on the Thermo arrangement, can you just clarify? So that's -- what's the way -- what's the structure there? Because it's not -- it doesn't sound like -- it sounds like they're going to help fund this study, but is there a royalty or it's not like.

Yes, yes. So this is a very unique agreement. It's one of a kind. There's never been a deal like this ever in the pharmaceutical industry. That's how unique this is. So there's more legal costs associated with putting this agreement because there was no template for it. But usually, a CEO like myself wants to get money in the bank. That's what we're paid to do, and we do it by either selling stock or diluting the company or we sell a royalty, dilute the asset. This was neither. So the reason they're supporting this program is in exchange for a few years of commercial manufacturing exclusivity. So that's a unique deal. So no royalty, no equity, just a commercial manufacturing exclusivity.

So why are they doing that for the CF program? Well, Arcturus, we haven't touched on it today, but we do have a product in 32 countries that's dosed 5 micrograms once a year. It's a COVID vaccine called Kostaive. That's 5 micrograms once a year. The CF program is 10,000 micrograms every day. So this is a significant commercial manufacturing contract. So large commercial manufacturers were approaching myself personally, the company and building a relationship in order to close and get this commercial manufacturing exclusivity. And what we ended up doing is this unique situation where a company of our size entering Phase III, we said, hey, how about if you support us with some contributions in Phase III in exchange for commercial manufacturing exclusivity and it worked.

So it's a great relationship with Thermo Fisher. We're very pleased to be working with them with respect to our manufacturing strategy going forward, which is significant for the CF program.

Okay. So then sort of the intersecting question, Alan, you mentioned all the different, the HRCT, high-resolution CT, and then the lung clearance index, and then, of course, FEV1, which is the classic endpoint. So like how do all these things intersect in terms of determining what's a good enough profile to trigger the decision to go into Phase III. What do you need to see there? What do you want to see there? Everyone is very familiar with FEV1, but perhaps the others are not obvious.

Yes. So I'd say 2 years ago, there was several competitors with us in the inhaled therapeutic space for Class I CF. And now and to a large extent, it feels like it's just us, especially with respect to transient mRNA inhaled therapeutics. So and the outlook is different. There is not a threshold like Wall Street, and I -- trust me, I get it, Wall Street likes to see a number or a threshold that needs to be achieved in order to define success.

But because we are first movers in this space, we are creating that threshold. That is the objective. What is success, and that's what we're defining. And we're not the first person to do this in CF. Vertex was heroic a couple of decades ago with ORKAMBI. It was the first modulator, and they had to create the threshold. And back then, they only had the FEV lung function. That is it. It was 2-point-something percent. They did not have lung clearance index. They did not have quality of life measures. They did not have high-res CT scan and AI tech and all this stuff.

And they didn't have a REACH study, a normative natural history-like study from the CF Foundation to support it. They did it with just FEV. And so what they did was truly heroic. We don't need to do that, thankfully. We don't need to be heroic. We have FEV, we have LCI, multiple quality of life measures that are understood and validated to a large extent with the regulatory agencies. And then also, we have a normative study to compare to and the high-res CT scan pictures before and after treatment that can all support this.

So what we are in the business of doing is establishing what success looks like. So the follow-up question is like, well, what does success look like because you got to make a decision on something, right? And I don't want to mislead people that we're in the business of pushing some therapeutic forward if it isn't working. I know that Thermo Fisher may be supporting approximately half of the Phase III budget, but Arcturus has to pay the other half. And we're not going to do this if it's not -- if we don't deem it feasible or reasonable. But I want people here to understand the, I would say, the immense and good pressure to get this over the finish line. The CF community, the Class I CF community, they need a drug. They need to address this huge unmet need, very similar to what Vertex was experiencing a couple of decades ago with ORKAMBI.

And so it's kind of like resetting it, but this time, we have a set of tools to help us establish what success looks like. And as a scientist, Yigal, you know what success looks like. If the collective data is generally positive, I think it will be easy to negotiate, convince, share and get alignment with not just the CF community, the regulatory agency, the PIs involved, our partners and of course, the senior management team and our Board to know what success looks like. But that's the long answer to your question.

Let me just add one additional piece of color. I think over 4 weeks, simply safety and tolerability was really what we were looking for in dose selection. Twelve weeks, what we would like to see is some measure and indication that patients aren't just stable, but there's a modicum of improvement across at least one or more of the measures. So spirometry or lung clearance index or both.

A Phase III study would certainly need to be longer. And in many ways, these patients remind me of the idiopathic pulmonary fibrosis patient population, a different disease, of course, it's a restrictive lung disease. But when I was involved with getting pirfenidone and nintedanib, both approved therapies through to the finish line and launch. What we were able to do there was show that we could stabilize and reduce the slope of the curve of reduction in lung function over time. And eventually, that had implications on survival.

I think in many ways, this is a population given that they really only get supportive care that if we can just flatten the curve of decline and they're averaging about 1% to 2.5% of lung function loss annually. If we could stabilize those patients, I think that would be a huge step forward. And I think that's what Joe is referring to.

So for purposes of the current study, we would certainly like to see across the 5 measures that we're looking at indications that we're not just stabilizing a subset of patients, but also that there are measures of improvement. And then for the longer-term study for a Phase III, I think stability as well as some measures of improvement would be what would be necessary to get a therapy like this approved for particularly the null population.

Which ones would be more likely to be in the gaining function versus stability amongst these endpoints? Is there...

Yes. And I think that's -- the agency has consistently looked for functional measures. And right now, I think among the 5 that we have, both pulmonary functions looking at mid-airways with spirometry, smaller airways with lung clearance index. And what's interesting about the high-resolution CT scan, which has never really been used as a primary endpoint for the agency across all sorts of diseases, including alpha-1 and others, although, in my opinion, it should be. There's demonstration in the literature that, that could actually serve as a surrogate for stability or improvement in LCI, high-resolution CT scan changes. So we would certainly be having conversations with the agency talking about the value, the importance and the translational literature that would support using LCI, not just in a supportive capacity. So...

Sorry, just clarify how are you getting -- you have HRCT, LCI, FEV1. What are the other 2?

And 2 quality of life measures. So CFQRR and EQ50 (sic) [ CFQ-R and EQ-5D ].

Are detailed surveys that are not just Q&A sessions. These are validated surveys that are respected and appreciated and considered meaningful.

Right. So -- and what the agency, as you know, granted, this is an open-label trial. So patients going in, particularly a group like this that has very little to offer want to feel better. So an open-label study trying to ascertain whether or not the reported quality of life measures that we're getting back are genuine or, in fact, just people feeling -- wanting to feel better in a blinded study, which would certainly also be required for a Phase III, we would be looking for demonstration of not just how patient functions, but how they feel. So both of those actually carry enormous weight at the agency.

Okay. So the -- you mentioned the REACH study, which I wanted to ask about. So right now, we're still waiting for the full data. Is that right? Or do you guys know that data yet and you really can start to make comparisons in terms of slopes?

We don't. So the CF Foundation, who we partner with, they provide us with our safety monitoring committee, for example. They've supported us financially in terms of our development. Joe mentioned earlier the aerosolization device. A lot of that work was paid for by the foundation. There's an October meeting in Atlanta, where we understand that they will be sharing more data about the REACH study. My understanding is that it's largely, if not completely, enrolled. So that data should be made available in the near future, but it's not our dataset. It's an independent dataset...

I guess what I'm driving at is you want to see that data in the Class 1s and get the slopes and then sort of say like...

And now we can compare our dataset.

Yes. So that's going to be your normative comparison, right?

That would be correct. We would need to have access to that data or subsets of that data sufficiently so that we could power our Phase III study.

Yes. But also -- I mean, also determine if it's a viable thing to do in the first place, right? I mean correctly.

Yes. You can appreciate there's degradation of the lung and lung function in these subjects over years and hundreds of them are being evaluated in the study.

So if you had that like -- just hypothetically, if you had the REACH data today, you would be -- you'd be able to make a decision on.

It increases the likelihood of success of the program, and it gives us more confidence on this decision that this is something we want to proceed with in Phase III. And I just want to remind everyone that our preclinical efficacy data is really strong. We've shown that we were superior to positive controls in a genetically engineered ferret model. And we already have seen in Phase II in a majority of subjects that received the 10-milligram dose, which is what we're utilizing now in 12 weeks, a majority of them -- we've already seen improvements in mucus plug reduction in a majority of these people.

So we've already seen some human indications of positive clinical signals. And then we -- we've already seen some strong preclinical data. And the final reminder is please always remember that the reason, the primary reason that all of these RNA companies have failed over decades has been safety and tolerability, not efficacy. It's because you just -- in order to get this nest of disease dealt with, you need to pound it every day and resolve it. And that's really difficult to do to reach a threshold of safety and tolerability that's reasonable enough to just keep hitting it every day until it resolves.

Once it's resolved, then it opens up the opportunity for a lot of CF therapeutics because the lung will now be available for gene editing, for example. But it's our view that we need to resolve the disease and the nest with a daily treatment or at least a regularly dosed treatment.

Okay. But since it's open label, this current 12-week study, you have some degree of insight into what's going on with these patients. You have some flavor for the trend, the direction of travel of things, yes...

Well, it's been going since March, and it's a 12-week study. So I'll let people imply what that means from a safety and tolerability perspective but...

I mean, you haven't reported any safety, right?

We're still actively enrolling. Drug Safety Monitoring Committee hasn't had any impact on our ability to continue to freely enroll patients. And we announced and shared earlier this year that we -- as I mentioned earlier, we went in addition to the sites in the United States, which we expanded, we went into places like Turkey and Israel, where there is a very high preponderance of patients with null mutations to the tune of -- it's about 5% to 10% in most typical centers in the United States. It's closer to 35%, 40% in places like Turkey and Israel. So we're actively still enrolling the study, and we will be able to report out, as Joe mentioned earlier, our intentions and plans moving forward sometime in Q4.

Yes. So it's kind of going to be one in Q4, you'll have one update where it will be -- I assume you'll show us this data or...

The only thing we're guiding in Q4 is the decision, but it is an open-label study. So it's likely that the decision will happen before the study is complete and ready to share like the data. There's usually a time before the senior management team and the Board will be confident in the data -- confident, sufficiently confident to proceed prior to it being ready for communication. Now whether is it 1 day after the decision, 1 week, 1 quarter, we haven't guided. All we've guided is the decision, the go/no-go decision to be in Q4. And then shortly after that decision will be an opportunity to communicate the data. Right.

And I think there's been keen interest from yourself and others regarding real interest in wanting to see the data set and understanding what's been accomplished, what endpoints we've achieved believable important findings, which ones may have been less helpful, just like we would expect to see that from others, like the Vertex program, as Joe alluded to earlier, shut down earlier this year. We would hope to see some of that data in a peer-reviewed setting.

There's no like intermediate case where you get us a good degree of confidence, but you feel you need -- like, for example, I mean, you see this and you see something good and you see something trending nicely versus natural history, but then you say, okay, maybe we need a little bit higher dose or not necessarily that, but anything where there's an intermediate case. This is just a go/no-go black and white.

Just a go/no-go. We believe we've got the right dose and the right dosing regimen and the decision...

And Thermo is not playing a role in the decision. They are just...

That's right. We negotiated that we'll have control of that decision. They know that $40 million is more to us than it is to them. So they trust that if we're proceeding that there's reason to do so.

Right. Okay. That makes sense. Okay. We're just about out of time, but I wanted to ask very quickly, we're asking all the companies this just 30 seconds on the use of AI in your company. How do you...

Yes, let me jump on that one...

Just very quickly.

So it's had a much more significant impact on our organization than I have imagined. I'll just say that. On every aspect of the company, it's really been impactful to a company at our stage with this type of platform. You can imagine that AI is used to design mRNA, designing antigens, help us with target selection, help us with impacting protein design, longer-lasting proteins, more benign, less immunogenic proteins. We've been -- there will be an appropriate time for us to communicate our AI infrastructure, but it's not today, but we look forward to sharing some more details there later this year. That could be very interesting.

But the short answer is yes, it's been I would say, very impactful and very pleased how the AI infrastructure development at Arcturus and its direct and meaningful impact on multiple programs.

Okay. We look forward to hearing more about that. And then, of course, the data, OTC and then the decision on CF. So, yes. Thank you so much. Great. Great stuff.

Thanks for the time.

Thank you. Great talking to you.

Hello and welcome everyone joining today's Arcturus Therapeutics Second Quarter 2026 Earnings Call. [Operator Instructions] Please note this call is being recorded and we are standing by should you need any assistance. It is now my pleasure to turn the meeting over to Neda Safarzadeh, Vice President, Head of Investor Relations.

Thank you, operator. Good afternoon and welcome to Arcturus Therapeutics quarterly financial update and pipeline progress call. Today's call will be led by Joe Payne, our President and CEO; Dr. Alan Cohen, our Chief Medical Officer; and Dennis Mulroy, our Chief Financial Officer. Dr. Pad Chivukula, our CSO and COO, will join them for the Q&A session.

Before we begin, I would like to remind everyone that the statements made during this call regarding matters that are not historical facts are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties, and assumptions that may cause actual results, performance, and achievements to differ materially from those expressed or implied by the statement.

Please see the forward-looking statement disclaimer on the company's press release issued earlier today, as well as the risk factor section in our most recent Form 10-K and in subsequent filings with the SEC. In addition, any forward-looking statements represent our views only as of the date such statements are made. Arcturus specifically disclaims any obligation to update such statements. And with that, I will now turn the call over to Joe.

Thank you, Neda, and it's good to be with you again, everybody. The second quarter of 2026 was marked by continued execution across our rare disease pipeline and important strategic developments for Arcturus' vaccine franchise. Today, I'll provide updates on our rare disease programs, ARCT-032 and ARCT-810, and summarize today's good news regarding our vaccine enterprise. I will then turn the call over to Alan for additional clinical updates and to Dennis to review our financial results.

Starting with ARCT-032, our inhaled mRNA therapeutic candidate for CF. During the quarter, our Phase II study continued to advance on schedule with active screening and enrollment ongoing across sites in the United States, Israel, and Turkey. These international sites are important for our recruitment strategy, given the higher prevalence of individuals living with Class I CF in Israel and Turkey. As a reminder, cohort 4 is evaluating 10 milligrams of ARCT-032 administered daily by inhalation over a 12-week treatment period.

The study is monitoring for safety and evidence of early clinical benefit, including pulmonary function measures such as percent predicted FEV1 and lung clearance index, or LCI. In addition, quality of life measures and high-resolution CT imaging data are being collected. The decision to advance our CF program into Phase III is expected in the fourth quarter, or Q4 2026. If Arcturus decides to proceed into a Phase III trial, this decision triggers additional and very meaningful contributions from Thermo Fisher, including manufacturing support, clinical research, and related services.

Turning to ARCT-810, this is our mRNA therapeutic candidate for ornithine transcarbamylase deficiency or OTC deficiency. We are pleased to update the market today that we've completed enrollment in our ongoing Phase II study, and all enrolled subjects have completed study drug dosing. This represents an important operational milestone for our OTC program. And with the dosing phase of the study completed, our team is now evaluating the Phase II clinical data, along with the supplementary data requested by the FDA in the Type C meeting earlier this year.

These data will inform upcoming regulatory discussions across both adult and pediatric development. We expect to communicate the Phase II clinical study data later this year in Q3 2026. Concurrent with the data readout, we will provide additional details regarding the regulatory path forward for our OTC deficiency program.

Now on to our vaccine division. Today we announced the conclusion of our sa-mRNA collaboration with CSL Seqirus. And on behalf of Arcturus, I wanted to express sincere gratitude to the outstanding team at CSL. They've been a great partner to help shepherd this first-in-class next-generation sa-mRNA technology to where it is today, a validated platform with approvals in over 30 countries. We are pleased to regain global rights to our commercial COVID vaccine product, KOSTAIVE, and to our self-amplifying mRNA platform.

Having strategic control of this validated vaccine platform is an exciting opportunity for our company. The Arcturus sa-mRNA platform is validated. It's proven to be efficacious with an immune response that is durable and superior in comparative studies. It's been reviewed by several regulatory agencies to be safe and well-tolerated. The manufacturing process is commercial-ready, scalable, fast, with lower COGS attributed to a significantly lower dose level.

Several global regulatory agencies have reviewed and approved Arcturus' sa-mRNA vaccine platform as represented by KOSTAIVE, which has been approved for licensure in Europe, Japan, and more recently the United Kingdom, with the regulatory path forward into the United States also clearly understood. The Arcturus vaccine platform is pandemic-ready. The U.S. government is keenly aware of this next-generation sa-mRNA platform. It is likely not a matter of if, but rather a matter of when this platform will be called upon to address future epidemics of infectious disease.

Under the agreement, Arcturus regained global rights to KOSTAIVE and the broader infectious disease vaccine portfolio, including seasonal influenza, pandemic influenza, RSV, and EBV vaccine programs. The agreement also resolves the arbitration related to European regulatory approval milestone payment. CSL Seqirus wired a one-time cash payment of $12 million to Arcturus, and Arcturus is released from liabilities, including those associated with an R&D credit, with an aggregate value of approximately $16 million.

With strategic control of the portfolio returned to Arcturus, we are evaluating opportunities to maximize its future value, including further commercialization and partnering pathways. With that, I'll turn the call over to Alan for a more detailed update on our clinical programs.

Thank you, Joe, and good afternoon, everyone. From a clinical development perspective, the second quarter represented meaningful progress for both ARCT-032 and ARCT-810. Beginning with our CF program, ARCT-032, our ongoing Phase II study continues to enroll people living with cystic fibrosis who have Class I mutations. Enrollment remains on schedule. With active screening and enrollment underway across sites in the United States, Israel, and Turkey.

The study is designed to evaluate daily inhaled dosing of 10 milligrams over a 12-week treatment period. It continues to assess safety as well as evidence of early clinical benefit, including pulmonary function measures such as changes in percent predicted FEV1 and lung clearance index, quality of life measures, and high-resolution CT scan imaging. One important development this quarter was the expansion of screening and enrollment activities beyond the United States into the Eastern Mediterranean region.

Israel and Turkey are geographies with a high prevalence of individuals with CF Class I or null mutations, which will meaningfully support our recruitment efforts and efficiencies for this study. Unlike the United States, where up to 10% of people with CF are ineligible for modulators due to null mutations, up to 30% to 40% of people with CF have null mutations and are eligible for consideration of enrollment in our ARCT-032 study from Turkey and Israel, respectively. Clinical execution remains on schedule, and we are laser focused on generating the data needed to support the Phase III decision expected in Q4 2026.

Turning to our OTC deficiency program, ARCT-810. Within the quarter, we completed enrollment of the ongoing Phase II study, and all enrolled subjects completed study drug dosing. This is an important operational milestone and allows us to now focus on evaluating the supplementary data generated from the enrolled study population. We remain grateful for the continuing support, ongoing encouragement, and strong engagement on behalf of our ARCT-810 OTC deficiency study by the patients, their families, and the rare disease care community.

Thank you for your collective help and interest in our development program. Our current efforts are focused on data review, preparation for upcoming regulatory interactions, and planning for an End-of-Phase II meeting regarding the path forward across both adult and pediatric development. We expect to communicate both the data and regulatory plan for the OTC deficiency program in Q3 2026. Across both our rare disease programs, our focus remains on disciplined clinical execution, quality data generation, and productive regulatory engagement to support efficient development decisions. With that, I will turn the call over to Dennis.

Thanks, Alan, and good afternoon, everyone. Our press release issued earlier today includes financial statements for the 3 and 6 months ended June 30, 2026, and provides a summary and analysis of year-over-year performance. Please also reference our Form 10-Q for more details on our financial performance. Cash and cash equivalents were $191.5 million as of June 30, 2026, and $230.8 million on December 31, 2025, for a decrease of $39.3 (sic) [ $39.4 million ] million over the first half of 2026.

Revenue was $3 million and $5 million for the 3 and 6 months ended June 30, 2026, compared to $28.3 million and $57.7 million in the comparable periods last year. Lower revenue was recognized under the CSL collaboration as Arcturus progressed towards termination of the agreement and regaining rights to KOSTAIVE and its broader infectious disease vaccine portfolio.

Research and development expenses were $17.5 million and $39 million for the 3 and 6 months ended June 30, 2026, compared with $29.6 million and $64.5 million for the corresponding periods in 2025. The decreases were primarily driven by lower research and development spending, including reduced salaries, wages, benefits, and facilities costs as the Company continues to advance its CF and OTC programs while maintaining its disciplined approach to capital allocation.

General and administrative expenses were $11 million and $20.5 million for the 3 and 6 months ended June 30, 2026, compared with $10.3 million and $21.7 million in the comparable periods last year. Overall, general and administrative expenses remained relatively consistent across periods with a slight quarter-to-quarter increase due to legal fees partially offset by reduced spending in salaries, wages, benefits, and facilities costs.

We remain focused on disciplined execution and capital allocation as we advance our rare disease programs. The CSL Seqirus termination and settlement agreement strengthens our financial position as we regain control of those assets, and the Thermo Fisher collaboration funds and supports execution of late-stage development of our CF program. We continue to maintain a strong balance sheet and cash runway of over 2.5 years through year-end 2028, allowing the company to reach important clinical and regulatory milestones for its rare disease pipeline. With that, I'll pass the call back to Joe.

Thank you, Dennis. Arcturus continues to execute across our rare disease therapeutics portfolio while strengthening the long-term strategic position of the company. With enrollment progressing in our Phase II ARCT-032 study and completion of enrollment and dosing of ARCT-810 and the return of strategic control of our vaccine portfolios, we remain focused on advancing important clinical, regulatory, and corporate milestones through the remainder of 2026. And with that, let's turn the call over to the operator for questions.

[Operator Instructions] We'll take our first question from Lili Nsongo with Leerink Partners. Please go ahead.

Hi, good afternoon. Thank you for the update on the quarter. Just thinking about the OTC program, could you maybe provide us a little bit of detail and an overview of the data we should expect at the upcoming readout later this quarter? Would it be solely the U.S. pediatric or U.S. adolescent and adult patient or would we also see a longer-term update from the European patients?

Hi, Lili. Thanks for the question. Yes, with dosing completed, you're right. We are preparing for this data disclosure later this quarter. We're evaluating the Phase II clinical data, which includes the U.S. and European dataset. The new data, of course, will be the most recent patients that have added and completed dosing here in the United States. But it will also include supplementary data that was requested by the FDA in the Type C meeting earlier this year.

And so we just intend to share a fulsome update on the OTC program that includes not only the Phase II data, but the requested Type C data, and providing additional detail with respect to the regulatory path forward. I'll leave it at that.

Great, thank you. Maybe as a follow-up, still staying with OTC, do you view diet liberalization as the bar for success, or should we be looking maybe at the biomarker level?

With respect to biomarker levels, yes. Well, I know the biomarkers being evaluated and measured are ammonia and glutamine and, of course, urea itself. But maybe, Alan, you can comment or address the rest of the question.

Yes, great question. I think the two elements that are going to be most important are not just the biomarkers. They're certainly important because it speaks to mode of action, but also how these patients feel as well as function. So it'll be the totality of the data that we've been able to generate up to this point, not only relating to safety and tolerability, but also biomarkers, as Joe just mentioned, most notably ammonia levels and glutamine, but also the additional quality of life and functional measures that we're collecting. So it really will be the totality of all the data is what the agency is interested in wanting to see and which is obviously important to move our program forward.

We'll take our next question from Pete Stavropoulos with Cantor Fitzgerald. Please go ahead.

Thank you very much. Hi, Joe and team. Congrats on the progress. I have a couple questions on the CF program. First one is, how has the cadence of enrollment been? And will you wait for all the patients to complete the study before data disclosure, or is there a possibility of an interim look? And are there plans to adjust the protocol to allow dosing past 12 weeks or 3 months?

Okay, there's a few questions there, but thanks, Pete, for joining the call. With respect to the cadence of enrollment, we touched on that we've expanded our footprint to ex-U.S. sites in Israel and Turkey that are assisting with that challenge. With all rare disease programs, it's all about the cadence of enrollment, and we feel confident. In fact, we've expressed considerable or a high level of confidence with respect to the cadence of enrollment rate now that Israel and Turkey are participating in this trial. With respect to the remainder of the questions, I can turn the time over to Alan.

Sure. I think, Pete, the essence of what you're asking is, when do we know that we can draw a line and total up the cumulative nature of the data we've generated and that we're satisfied that it's sufficient to make a decision. I think the data is going to drive that.

But certainly we believe that at the rate we're currently enrolling and the quality and nature of the data that we're generating, particularly now that we've added Israel and Turkey to the mix, which have such a larger preponderance of the patients we're most interested in identifying and enrolling, we believe that the time should be sufficient through a balance of Q4 to be able to accumulate the necessary data to make an informed decision on what's best for the program and for these patients moving forward.

And just to add to that, if you notice our new guidance is focusing on the decision to proceed rather than a data share or completion of enrollment. And this is simply because the next meaningful event for this program is that decision, which is guided for Q4. The decision to proceed triggers significant and meaningful contributions from Thermo in our recent deal that we announced. And so that's what we're focused on is getting sufficient data for that decision to proceed in Q4.

All right, thank you for that. I do have one question on LCI being used for CF, the Phase II study. Can you just talk a little bit about this test, sort of how sensitive is it, and how variable is one close reading to another?

Yes, LCI is definitely a different lung function measurement. Alan, maybe you can comment on some key differences there with sensitivity, etc.

Yes, sure. I think the biggest unknown and the biggest challenge for using lung clearance index in adults with CF has been the lack, as you know, of normative data among the population that's of most interest. Fortunately, as you're probably aware, the CF Foundation funding the REACH study, and that study is, we're going to get an update on that at the upcoming cystic fibrosis meeting in Atlanta in October. And the foundation has been kind enough to offer to make that data available, especially for companies like ours that are working in this space, so that we can have access to that data and use it as a natural control.

So the short answer is, is that the sicker the patients are performing this test, the more challenging it is. But we're focusing in on a mix of patients within a range that we believe we should be able to get highly reproducible, meaningful data that's not only reproducible, but also is giving us a much more sensitive measure of changes in the smallest airways where the earliest changes of lung disease occur in this population.

So it's adding additional nuanced information that spirometry and pulmonary function testing traditionally doesn't give us. So we think it's actually better for the patient population. It's better for our understanding of the disease itself. And we think it might lead to another pathway forward for showing an ability to stabilize and improve lung function in this very vulnerable patient population.

All right. Thank you very much for that color, and congrats once again on the quarter.

Thanks, Pete.

We'll take our next question from Yanan Zhu with Wells Fargo. Please go ahead.

Hi, thanks for taking our question. This is Kuan-Hung for Yanan, and congrats on the quarter. On the CF program. Can you share by Q4 what kind of dataset do you expect to have collected to help you make a decision? And given that this is an open-label study, are you seeing the data in real time? Any safety update you can give us? Thank you.

Yes, the data we're collecting is FEV1 and LCI data for pulmonary lung function data, and that's supplemented with high-res CT scan data and validated quality of life measures and surveys. So that's going to be the collective data that's going to be under consideration when Arcturus makes its decision to proceed. And then with respect to the open-label nature of the study, absolutely. It's an open-label study. Arcturus and the team will have access to data on an ongoing basis.

Also any safety signal you have observed or any comments on that?

Yes, with respect to CF safety, ARCT-032 is the name of our CF candidate. And this candidate, or ARCT-032, has been in over 50 participants to date, relatively ranging from all the way up to 15 milligrams for 28 days of daily dosing. And we've done so without steroid treatment before, during, or after. And this whole time being permitted by regulatory agencies to self-administer in their home, not necessarily required for these people to do so in a clinic. And we're presently active in a 12-week study.

So this is, I guess, a longer way of saying that we have a high level of confidence in our safety and tolerability of this platform, given the dose levels and the duration we've collected so far. And we hope that continues. But it is a key differentiator for our programs. So thank you for the question. You know, it's been decades of failures of inhaled therapeutics, and it's always been attributed to failures in toxicology and tolerability. Humans just don't like to inhale foreign substances. So we've overcome those challenges over the last decade of R&D.

Got it. And a quick question on OTCD. Has the E-o-P II meeting with FDA been scheduled? And what are the potential outcomes from the meeting? Thank you.

Yes, we've already highlighted and guided that we're going to have a fulsome data and regulatory path update later this quarter, and that will be the opportunity to provide some more details about that End-of-Phase II meeting. And so that will be the appropriate time to do so.

Got it. Thank you for all the color. Thanks for your questions.

We'll take our next question from Yigal Nochomovitz with Citigroup. Please go ahead.

Hi, this is Joohwan Kim on for Yigal. Thanks so much for taking our questions. Just curious, but I'd love to hear a little bit more about the collab with Thermo. Can you tell us a little bit about how that came about and have they seen any interim Phase II data or 15-milligram data ahead of you guys making that deal?

Yes, it's a great question. So there was significant interest from multiple large manufacturers in the CF product because it's a very unique product. Unlike our vaccine, our KOSTAIVE vaccine that we just regained rights and control, that vaccine is dosed at 5 micrograms once a year. It's a very infrequent, long-duration-acting product. Unlike that product, the CF product is 10,000 micrograms daily.

So because it's a significant commercial manufacturing product, a deal, then you can understand the level of competitive interest from large manufacturers. As they came together, we put forward a deal that made sense to all parties involved, and Thermo Fisher ultimately became our exclusive partner for commercial manufacturing of the CF product through that path. Did I address your question?

Yes, and I was just wondering, did they happen to see the interim Phase II data?

Yes, absolutely. Just like in all major deals, and this one was a significant one for us. And they went under CDA. They have access to an e-room and all the clinical data, understanding it's an open-label study. So yes, they had access to all the data.

Got it. Thanks very much.

We'll take our next question from Myles Minter with William Blair. Please go ahead.

Hi, this is Jake on for Myles. Thanks so much for taking our questions. One on OTC, just wanted to get a sense of the baseline hyperammonemic crisis rate in the Phase II study and how that might compare to other OTC trials to date. And then one on KOSTAIVE, you mentioned that the regulatory path for KOSTAIVE approval in the U.S. is clear. Just wanted to maybe get a little bit more color on what that path is. Thanks.

Sure. So, do you want to take that question, Alan?

Yes. So, for our current ongoing OTC program, we're dosing -- we're giving 5 doses over an approximately 12-week period of time. So, the anticipated percent and burden of exacerbations or hyper anemic (sic) [ hyperammonemic ] episodes occurring during that window, and the nature of our inclusion and exclusion criteria are really not looking to capture patients that are unstable enough that we would likely be capturing those events or looking to those events to be helpful and informative during the course of just a simple 5-dose regimen.

What we're really, our goal and objective here was to bring in patients who are on a stable protein intake, who are stable medically and functionally, but who still are burdened with OTC deficiency and are adults. The goal there being that we want to see if we can have an impact on their baseline periods of ureagenesis as related to measurements of blood ammonia and glutamine levels, as well as other trace minerals.

So the short answer is that we aren't actively looking for patients who are labile enough for which to capture those events. But obviously in longer-term studies where we would be treating patients more chronically and in particular in a pediatric population where the burden is much more problematic and the reason for our programs to want to direct towards newborns and young children who are much more vulnerable and sicker, that would clearly be a greater level of interest and focus for subsequent studies that we hope to be getting into in the near future. Does that address your question?

Yes, and then I just wanted to ask about KOSTAIVE and the potential development in the U.S. that you referred to.

Oh, and Jake yes, we already received, you know, we had very regular interactions with the United States FDA for several years since inception of the pandemic. And then under the new administration here in the United States, there was an abrupt change in view of vaccine policy. And however, even under that new administration, we received very clear guidance as to what is needed for us to get this approved in the U.S. So what I'm communicating is that we have a very clear path of what's required, what's remaining to do to get this approved in the U.S.

We'll take our next question from Whitney Ijem with Canaccord Genuity. Please go ahead.

Hey guys, just wanted to quickly on CF, follow up. I appreciate we're not going to necessarily see a data update in the fourth quarter, but as you announce whether or not you're moving forward into a Phase III, can you help us understand how you're thinking about like more quantitatively which endpoints are of importance and what you're looking for? And I guess, is there a scenario where maybe you're not seeing an FEV1 benefit, but you might still move forward based on something you're seeing on LCI, CT, et cetera. Thanks.

Yes, I'll begin and then provide Alan some time here too. So just to refresh, we are collecting FEV, LCI data, high-res CT scan data, and quality of life measures. What is very unique in this process is as we've engaged the FDA, we have come to realize that our technology and our product and the patients that we're pursuing are very, very unique. We're the first to do this. So in terms of what thresholds of success need to be achieved is going to be set and established by us in this process, not by historical or other precedents in the field.

And so what we've heard consistently is anything positive with respect to these, the data that we're collecting would be very well received and a significant win and exciting for the Class I CF community. There will be increased emphasis on lung function measurements, of course, like FEV and LCI. But Alan, anything to add?

Yes, I think Joe got the essence of what I'm thinking and wanted to get across. But just to reframe, remember that this population of Class I mutation patients, particularly those who are adolescent and young adults, are on average experiencing anywhere from 1% to over 2% drops in their percent predicted FEV1, just as a course of surviving annually. So just being around and doing a good job of taking care of themselves, the burden of this disease is remarkable, and it's consistently diminishing their baseline lung function day after day, year after year.

So the goal here is to see if we can stabilize and improve these patients. And it's probably going to be a measure of not just a single spirometric measure or a single change in LCI. Stabilizing this would clearly be a big step forward for these patients, also how they feel and function. So additionally, their quality-of-life measures, how they're able to maintain themselves, and their overall health and well-being will all be in the mix of the elements that we're going to be looking at to help inform us on next steps for the program.

Got it. That's helpful. And then just one follow-up clarification on KOSTAIVE in Japan, given the change in the CSL relationship, how should we think about impact there? Sorry if I missed it. Thanks.

Well, it's a great question. We were splitting the profit share three ways, and now that's no longer. It'll be split two ways. But those conversations are very active right now with Meiji. We have a great relationship with them in Japan. We are definitely preparing for the upcoming fall season. We're supporting them with manufacturing and shipping doses so that they can be prepared to distribute those in the upcoming season. So it's a very active collaboration, but it will -- the profit share will now be split two ways. In terms of the details there, that's in an active conversation. So there'll be an appropriate time to provide more granularity there.

We'll take our next question from Adam Dawoud with B. Riley Securities. Please go ahead.

Hey, guys. This is Adam on for Mayank. Thanks for taking the question. So just curious whether you've given any thought to the fact that since Vertex required, I think it was a 4-week bronchodilator and clinic-supervised dosing, while ARCT-032 is dosed at home, how are you thinking about that tolerability gap as a durable differentiator? And what do you think could apply for the Phase III?

No, I appreciate the question. It gives us the opportunity to provide more detail as to why we're observing more attractive safety and tolerability profile with this platform. So the first point of key differentiation is the lipid nanoparticle is different. It's chemically different. A carbon-based core. It's a thiocarbamate core, which means there's sulfur, oxygen, nitrogen. These heteroatoms provide handles for the body to degrade. And it's also chemically different how it interacts with the biology in the body too. So we have a different lipid nanoparticle that's biodegradable, non-accumulating, and that is very important with respect to safety and tolerability.

The second point of differentiation is that our manufacturing process to purify the mRNA is different. We have trade secret know-how and IP around the process to purify the mRNA molecule itself. And the impurities coming out of the output of this manufacturing process can be very problematic with respect to undesired inflammatory and immune responses. Controlling those is a very important differentiator that uses our technology.

And the third point of differentiation is our nebulizer. This aerosolization of these particles was proven to be very challenging in the early days of this program. We spent a few years and we have to say that we have to do it again, support from the CF Foundation to optimize the nebulizers so that it retains the integrity of the particle through the aerosolization process. And you don't want these particles aggregating and forming macro particles during the inhalation process. So we've optimized against that. So whether it's the lipid nanoparticle or a more pure mRNA or an optimized nebulizer, if you take all that three together, that contributes to the better safety and tolerability profile.

We'll take our next question from Adam Walsh with ROTH Capital Partners. Please go ahead.

Hi, thanks for taking my questions. So you announced Cohort 4 began dosing in March of 2026. And I think by my math, we're about 5 months out. Joe, you've spoken to the safety and tolerability advantages with 032. And I'm just curious, is kind of the lack of any disclosure on tolerability at this point something that we can read into and continue following? Or are we getting over our skis with that?

No, I appreciate the question. It does seem logical. I think it's a safe statement that if there is anything serious or severe that's occurred in our trial or material, we would have to disclose that. But with respect to commenting on details, with respect to safety and tolerability, we will wait for the appropriate time to do so like we've done with the previous cohorts. Alan, anything to add there?

Yes, I think we're trying to be thoughtful in terms of our sharing of information and rather than parse through it because we have the position to have the data present in an open-label manner throughout, it's really going to be the cumulative experience with as many exposures as possible, ideally through 3 months and upwards to 20 patients, that's really going to be the determinant as to next steps.

So we'd rather wait until we have a larger body of data over more patients over a longer period of time to make a point of sharing what we believe is the totality of our experience thus far beyond 28 days. And we look forward to sharing that in the months ahead.

We'll take our next question from Jinnie Kim with BTIG. Please go ahead.

Good afternoon. Thank you for taking my question. This is Jinnie on for Tom Shrader. So, with the global vaccine rights returned to you, you're effectively running a standalone vaccine portfolio on top of two active rare disease programs. How are you thinking about the cost to maintain and monetize KOSTAIVE and the broader infectious disease portfolio, and does retaining these rights change your R&D expense trajectory meaningfully?

Let me restate your question to make sure I get the crux of it. Is it good news that we've regained rights and control? Absolutely. And I think your question is, is like, well, how are you going to pay for all of the exciting applications of this platform? And there's two efforts that we're going to be focusing on now that we have control.

Number one is commercialization. We'd like to continue to mature the product that's already partnered with Meiji as a distributor in Japan and support them in what we can in Japan. And then now we can more proactively with the focused commercial efforts, even as a small company, Arcturus, to see if we can explore opportunities in Europe, especially with the United Kingdom. That's an exciting potential opportunity there. So there's commercial activities that will expand.

And if we're successful in any way there, then those will pay for the other platform activities. And then the other more potentially more obvious one is we now having control of this validated platform from a business development perspective, that opens pathways to partnership. What that looks like and what opportunities there can be. There's a variety of opportunities.

We've talked about KOSTAIVE, but also the vaccine portfolio includes really high-value targets like seasonal flu and pandemic flu. EBV is an interesting target. HMPV, we have RSV. There's a long list of antibacterial vaccine opportunities that can be investigated with this platform, and the list goes on and on. We'll be spending considerable effort in looking at partnering pathways now that we've regained control of the platform.

We'll take our next question from Yale Jen with Laidlaw & Company. Please go ahead.

Thanks for taking the questions and congrats on all the progress. I do want to continue the previous question in terms of this vaccine portfolio. Just curious, besides KOSTAIVE, what the clinical stage of other vaccine has been, both flu as well as RSV and the EBV. Can I have a follow-up?

Most of the data that we've collected has been undisclosed. Many of it has been preclinical. We have completed a Phase I trial for seasonal flu influenza and pandemic flu as well. On that note, since you asked the question, I'm going to refer to my notes that I put together here before the call. But the Phase I clinical study for the pandemic flu program, ARCT-2304, the Phase I clinical study is completed and the grant with BARDA is fully executed. The manuscript with the results of the study with BARDA and the U.S. government has been accepted by Nature Communications. So we look for a publication there shortly.

And Arcturus is planning to pursue scientific advice with EMA regarding a pathway to licensure later this year, probably in Q4. So, you know, those are two more active prominent clinical programs, seasonal flu and pandemic flu. With respect to the other programs, we didn't do any formal disclosures on that. We will likely do those under CDA with potential interested parties later this year.

Okay, great. That's helpful. And maybe just along that line, in terms of Meiji if they choose to develop a COVID vaccine for the next season, not the current season, but potentially next season, would that be something you guys also will get involved? Or how should we see that?

Well, yes, we're always going to support Meiji in any way that we can. And then if we have any future strategic relationships that can complement or help them, that would be something that we'd seriously consider. But the short answer is yes, we will help Meiji in any way possible, especially on the manufacturing and making sure that we're timely with respect to delivery of any materials that they need, etc.

Okay, great. Thanks a lot and congrats on the progress.

Yes, thanks, Yale.

Thank you. At this time we've reached our time for allotted questions, and we will now turn the call back over to Joe Payne for closing remarks.

Hey, thanks, everyone, for participating on the call. Don't hesitate to reach out to our team for any remaining questions, and we'll get back to you as soon as we can. Bye for now.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Good morning, and welcome to the 2026 Annual Meeting of Stockholders of Arcturus Therapeutics Holdings, Inc. We are holding this year's annual meeting as an entirely virtual meeting. Stockholders who require technical assistance during the meeting can call Continental's technical support line at the phone number posted on the meeting log-in page. I'm Joe Payne, President and CEO as well as member of the Board of Directors. It is now 9:00 a.m. on June 5, 2026, and this meeting will please come to order. Also participating in this meeting are Dr. Pad Chivukula, Chief Scientific Officer and Chief Operating Officer of the company, Lance Kurata, the company's Chief Legal Officer and Secretary of the meeting, Alwyn Burton of Continental Stock Transfer & Trust Company, who has been appointed as Inspector of Election and Stockholders votes of the meeting, and KC Freer and [ Devin ] Gibson of Deloitte & Touche, LLP, independent registered accountants of the company. Members of our Board of Directors are also participating in this meeting.

I would now like to proceed with the formal business of the meeting. As a preliminary matter, we note that stockholders may submit questions through the virtual meeting website at any time during the meeting. The company will, at its discretion, provide answers to properly raised and appropriate questions on the Investor Relations section of its website after the meeting. And KC Freer and [ Devin ] Gibson may also respond to properly raised and appropriate questions directed to Deloitte.

I will act as Chairperson of the meeting, and Mr. Kurata will act as Secretary of the meeting. The matters on which the stockholders at today's meeting are voting are: One, to elect Dr. Peter Farrell, Joseph E. Payne, James Barlow, Dr. Edward W. Holmes, Dr. Magda Marquet, Dr. Jing L. Marantz, Dr. John H. Markels, and Dr. Moncef Slaoui to the Board of Directors to serve until our next Annual Meeting of Stockholders. Two, to approve by nonbinding advisory vote the resolution approving named executive officer compensation of the company. Three, to ratify the appointment of Deloitte & Touche, LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2026. And four, to transact other business that may properly come before the meeting.

I present a list of Arcturus' stockholders as of the close of business on April 14, 2026, which is the record date for this meeting. The stockholders on this list are entitled to vote at this meeting, and this list has been certified by Continental Stock Transfer & Trust Company, the transfer agent for the company's common stock.

A list of stockholders is open for inspection by any stockholder participating in this meeting and is available on the virtual meeting website. Continental Stock Transfer & Trust Company has also certified that each stockholder entitled to vote at this meeting has been sent a notice of this meeting. The initial order of business is to determine the presence of a quorum pursuant to action taken by the Board of Directors, only stockholders of the record of our common stock as of April 14, 2026, are entitled to notice and to vote at this meeting.

Alwyn Burton has been appointed as Inspector of Election and stockholders' votes and has executed the required oath.

Mr. Chairman, I wish to report that I have examined the list of stockholders entitled to vote at this meeting, and I have determined that the number of shares outstanding common stock at the record date is 28,423,069, holders of at least 33.333% of the voting power of the company's outstanding common stock entitled to vote at this meeting must be present in person or represented by proxy for us to hold and transact business at this meeting.

On the record date, there were 28,423,069 shares outstanding and entitled to vote. Thus, the holders of at least 9,473,409 shares must be present in person or represented by proxy at this meeting to have a quorum. The number of votes present at this meeting in person or by proxy is 21,435,189, which constitutes approximately 75.4% of the total outstanding shares of common stock entitled to vote as of the record date.

I hereby determine that the number of votes represented at this meeting in person or by proxy constitutes a quorum for the conduct of business at this meeting. The first matter to be voted on today is the election of Dr. Peter Farrell; myself, Joseph E. Payne, James Barlow, Dr. Edward W. Holmes, Dr. Magda Marquet, Dr. Jing L. Marantz, Dr. John Markels, and Dr. Moncef Slaoui to the Board of Directors as set forth more fully in proposal #1 of the proxy statement. A motion to approve proposal #1 is now in order.

I hereby move to approve proposal #1.

I second the emotion and hereby declare this motion duly made.

The second matter to be voted on today is the approval on the advisory basis of the say-on-pay proposal as set forth more fully in proposal #2 of the proxy statement. A motion to approve proposal #2 is now in order.

I hereby move to approve proposal #2.

I second the motion and hereby declare this motion duly made.

The third matter to be voted on today is the ratification of the appointment of Deloitte & Touche, LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2026, as set forth more fully in proposal #3 of the proxy statement. A motion to approve proposal #3 is now in order.

I hereby move to approve proposal #3.

And I second the motion and hereby declare this motion duly made.

It is now ordered that the polls be opened for voting on proposals 1, 2 and 3 with each proposal as described more fully in the proxy statement. Any stockholder who has not yet voted or wishes to change their vote may do so by clicking on the voting button on the web portal and following the instructions there. Stockholders who have sent in proxies or voted via internet and do not want to change their vote, do not need to take any further action. We will declare the polls closed in 1 minute.

[Voting]

The votes are in, and I declare the polls closed. The inspector will now report on the votes properly made prior to the meeting, the inspector will provide the company with a final report tomorrow that reflects any votes properly made at this meeting.

I understand that the inspector is now ready to provide a preliminary report. Mr. Burton, will you please provide the preliminary report.

As given in the proxy statement, the election of each of Dr. Peter Farrell, Dr. Joseph E. Payne, James Barlow, Dr. Edward W. Holmes, Dr. Magda Marquet, Dr. Jing L. Marantz, Dr. John John Markels and Dr. Moncef Slaoui to the Board of Directors pursuant to proposal #1 requires a plurality of votes casted by holders of shares present in person or represented by proxy at the meeting and entitled to vote thereon. As each of the nominees has received more than 1 vote in favor of his or her election, I hereby declare proposal #1 has been approved.

As given in the proxy statement, the approval by nonbinding advisory vote of the resolution approving named executive officers' compensation pursuant to proposal #2 requires the affirmative vote of a majority of the votes cast on the proposal at the meeting. With 15,254,240 votes received in favor of proposal #2, which exceeds the majority of the votes cast on the proposal, I hereby declare that proposal #2 has been approved on an advisory basis.

As given in the proxy statement, the ratification of the appointment of Deloitte & Touche, LLP pursuant to proposal #3 requires the affirmative vote of a majority of votes cast on this proposal at the meeting. With 21,378,017 votes received in favor of proposal #3, which exceeds the majority of the votes cast on the proposal, I hereby declare that proposal #3 has been approved.

Thank you, Mr. Burton. You have heard the preliminary report of the inspector, and I declare that proposals #1, 2 and 3 have passed and been duly approved by the stockholders of the company on a preliminary basis in the case of proposal #2 on an advisory basis only. I hereby request that the preliminary report of the inspector be filed with the minutes of this meeting. The final report of the inspector will be provided to the company by June 8, 2026, and a report on Form 8-K will be filed with the SEC with the results of this meeting no later than June 11, 2026.

This completes the stockholder voting to be conducted at this meeting. Since there are no other matters to come before the meeting, a motion to adjourn the meeting is now in order.

I move that the meeting be adjourned.

The motion has been carried. The meeting is adjourned. Thank you.

Hello, and welcome, everyone, joining today's Arcturus Therapeutics First Quarter 2026 Earnings Call. [Operator Instructions] Please note, this call is being recorded. [Operator Instructions]

It is now my pleasure to turn the meeting over to Neda Safaradev, Vice President, Head of Investor Relations, Public Relations and Marketing. Please go ahead.

Thank you, operator. Good afternoon, and welcome to Arcturus Therapeutics quarterly financial update and pipeline progress call. Today's call will be led by Joe Payne, our President and CEO; Dr. Alan Cohen, our Chief Medical Officer; and Dennis Mulroy, our Chief Financial Officer. Dr. Patrick Beculolo, our CSO and COO, will join them for the Q&A session.

Before we begin, I would like to remind everyone that the statements made during this call regarding matters that are not historical facts are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance and achievements to differ materially from those expressed or implied by the statements. Please see the forward-looking statement disclaimer on the company's press release issued earlier today as well as the Risk Factors section in our most recent Form 10-K and in subsequent filings with the SEC.

In addition, any forward-looking statements represent our views only as of the date such statements are made. Arcturus specifically disclaims any obligation to update such statements. And with that, I will now turn the call over to Joe.

Thank you, Neda. It's good to be with you again, everybody. The first quarter of 2026 was a period of solid execution for Arcturus as we continue to advance our rare disease pipeline and strengthen our leadership team. I'm very pleased to report that our CF program is now in new uncharted territory. Our 12-week Phase II study began enrollment in Q1. We are already well beyond one month of dosing. Continuous dosing beyond a month has never been successfully tolerated in the history of inhaled mRNA therapeutics, but this is a big deal. And why is that? Because Class I CF is a serious disease with serious unmet medical need, and we believe that the nested pulmonary congestion observed in Class I CF disease requires consistent chronic dosing that is reasonably well tolerated to be successful.

There are specific reasons why Arcturus has been able to achieve tolerable dosing beyond one month. Firstly, our inhaled LUNAR particle technology includes key delivery lipids that are chemically different from all other technologies competing in this space. Secondly, our messenger RNA manufacturing process to remove undesired impurities is unique, proprietary and trade secreted.

ARCT-032, this is our inhaled mRNA CF therapeutic candidate, continues to showcase these differences in its growing safety and tolerability profile. The CF community is aware of our safety and tolerability profile, which has contributed to the reason why we were able to initiate enrollment of our 12-week open-label Phase II study earlier than originally anticipated. This study is enrolling Class I CF participants and monitors lung function measures, including percent predicted FEV1 and lung clearance index or LCI.

We believe there is increasing recognition across the field of both the significant unmet medical need in Class I CF and the importance of achieving a well-tolerated repeat dose therapeutic approach to enable durable clinical benefit. Our program is designed with these principles in mind, and we are encouraged by the opportunity to generate meaningful clinical data in a patient population that continues to have no effective treatment options.

We look forward to collecting this clinical data, including lung function measures during and throughout this open-label Phase II study. Arcturus remains committed to advancing our inhaled mRNA therapy for people living with CF Class I mutations who continue to face significant unmet medical needs.

Now moving on to our flagship liver program, ARCT-810. This is our mRNA therapeutic candidate to treat ornithine transcarbamylase or OTC deficiency. We met with the FDA to discuss the pediatric clinical development strategy for ARCT-810. Following this Type C meeting, we're pleased to receive clear regulatory direction on a path toward a pivotal pediatric study.

In line with that direction, we are collecting additional exploratory data and look forward to further alignment with the FDA at the end of Phase II meeting planned for the second half of 2026. Beyond our clinical rare disease programs, our partner, Meiji in Japan is actively manufacturing KOSTAIVE. This is our self-amplifying mRNA COVID vaccine for the upcoming 2026, 2027 season using a 2-dose vial presentation. All commercial guidance for KOSTAIVE in Japan will be provided by Meiji.

We also expanded our executive leadership team with the appointments of Dennis Mulroy as Chief Financial Officer; and Dr. Alan Cohen as Chief Medical Officer. I'm pleased that they are both on the call with us today, and we will get to hear from them shortly. Both bring extensive and relevant experience that will play important roles as we continue executing across clinical, regulatory and corporate priorities. Many of you will have the opportunity to meet with these gentlemen, and I encourage you to do so.

Overall, we believe Arcturus is well positioned to advance our pipeline toward meaningful clinical and regulatory milestones for patients and for our shareholders.

With that, I'll now turn the time over to our Chief Medical Officer, Dr. Cohen.

Thank you, Joe, and good afternoon, everyone. From a clinical development perspective, the first quarter reflected meaningful progress across our key programs. Starting with cystic fibrosis. ARCT-032 is currently enrolling people with CF with Class I mutations in a larger and longer open-label Phase II study over a 12-week period.

The study is designed to monitor safety, tolerability and assess evidence of early clinical benefit, including 2 pulmonary functional measures, including changes in percent predicted FEV1 and lung clearance index. We've intentionally designed this study to generate a more comprehensive understanding of safety and tolerability, along with early signs of clinical efficacy, which are critical to advancing inhaled messenger RNA therapies in the lung.

We are also evaluating 2 validated quality of life outcome measures, along with changes in high-resolution CT imaging to support a comprehensive assessment of potential clinical effects. Taken together, these endpoints are intended to provide a robust data package to inform both the therapeutic potential and the feasibility of repeat dosing. Our goal is to establish not only early evidence of activity, but also the feasibility of repeated dosing, which is fundamental to unlocking durable benefit in this patient population.

Turning to OTC deficiency. Our ARCT-810 program continues to broaden its development strategy to address the unmet medical needs of newborns and young children affected by the most severe forms of the disease. Following our recent Type C meeting, the FDA provided clear direction toward a pivotal pediatric development path. We are actively collecting additional exploratory data to help establish the optimal dose and therapeutic effect as we prepare for the end of Phase II meeting planned later this year.

Across both programs, our focus remains on generating high-quality clinical and regulatory data to support thoughtful decision-making and efficient advancement through development. We believe this disciplined approach is particularly important in emerging modalities where careful characterization of safety, tolerability, delivery and clinical effect is essential to long-term success.

I'm excited to be part of the Arcturus team, look forward to working closely with our investigators, regulatory partners and internal team members as we continue moving these important programs forward.

With that, I'll now pass the call to Dennis.

Thanks, Alan, and good afternoon, everybody. Our press release issued earlier today includes financial statements for the first quarter ending March 31, 2026, and provides a summary and analysis of our year-over-year performance. Please also reference our most recent Form 10-Q for more details on our financial performance.

Cash, cash equivalents and restricted cash totaled $213.4 million on March 31, 2026, and $232.8 million on December 31, 2025. Year-over-year quarterly revenue decreased by $27.3 million. The decline was driven by reductions in revenue from our CSL collaboration as Arcturus refocuses on our rare disease clinical programs.

Quarterly research and development expenses decreased year-over-year by $13.4 million, which was driven primarily by lower manufacturing costs related to LUNAR-COVID and BARDA as well as reduced clinical trial costs associated with the LUNAR-COVID program. Additional decreases were attributable to lower payroll and benefit costs associated with lower stock-based compensation expense and a reduction in headcount. Overall reductions were partially offset by higher manufacturing costs related to LUNAR-OTC.

General and administrative expenses decreased year-over-year by $1.8 million due to reduced share-based compensation expense as well as payroll and benefits associated with reductions in headcount. Through continued execution and strategic refocusing on our existing rare disease clinical programs and therapeutic platform in the first quarter of 2026, Arcturus has maintained a cash runway extending beyond the second quarter of 2028.

The company remains in a strong financial position and has cash runway needed to achieve multiple near-term value-creating milestones in both therapeutic programs.

With that, I'll now pass the call back to Joe.

Thanks, Dennis. Arcturus continues to make steady progress across our rare disease mRNA therapeutic programs while strengthening the foundation of the company. With enrollment now underway in our 12-week open-label Phase II study of ARCT-032 in cystic fibrosis and clear regulatory direction from the FDA on the pediatric development strategy for ARCT-810 in OTC deficiency, we remain focused on advancing toward important clinical and regulatory milestones throughout 2026.

Supported by a strong balance sheet and an expanded experienced leadership team, we believe Arcturus is well positioned to execute on our priorities.

So with that, let's turn the call over to the operator for questions.

[Operator Instructions] And we'll take our first question from Seamus Fernandez with Guggenheim.

This is Evan Wang on for Seamus. Two for me, one on OTC deficiencies and one on cystic fibrosis. Just on -- first on OTC deficiency. Can you share specific FDA feedback on the glutamine and ureagenesis assay specifically? Curious also the discussion between infants and adults since I don't know if I saw you mentioned a path forward in the adult setting.

And second, on cystic fibrosis, just curious, anything you can share in terms of patient enrollment and progress there? And what's the potential for a potential interim there?

Thanks, Evan. I can turn the time over to Alan to address some of the FDA feedback questions pertaining to infants and adults and the biomarker question to him. And then I can -- we'll go to that point. I can address the CF question.

Right. Thanks, Joe. So we've successfully, as you mentioned, completed the first 2 Type C meetings with the FDA. And it's clear that we have greater clarity now as to what we need moving forward. And as you mentioned, the utility of the biomarkers, most notably ammonia and glutamine in particular, have been historically highlighted and were identified as areas of greater focus and attention for us moving forward. So greater clarity on which biomarkers to use.

Ureagenesis is still -- is a biomarker in development, and we're continuing to advance that. But it's -- our dependence upon it, I think, will depend on the additional data that we're currently in the process of generating.

And then with respect to your CF questions and the cadence of enrollment, I think the cadence of enrollment is being determined in the upcoming weeks. We just started the study in the first quarter, but we'll be able to give a more accurate enrollment completion timing later this year.

We do remind people that we enrolled approximately 13 subjects in 2025 over sequential 3 cohorts: first, second and third cohort. And that was limited to the United States. We are expanding enrollment not just in the U.S., but also outside the U.S. or abroad.

Our next question comes from Lili Nsongo with Leerink Partners.

Maybe just a quick question regarding the OTC program. So could you tell us what is the type of exploratory data that the FDA is looking for and also whether it would require for you to initiate studies in the pediatric population?

Go ahead, Alan.

Sure. So great question, and thank you for asking. The first Type C meeting that we had, as you alluded to, focused exclusively on what will it take for us to be able to take the adult data that we're still in the process of generating in our current open Phase II study into pediatrics. The results of that meeting suggested that we have a clear path forward. We're continuing to collect additional enrollment data for the 0.3 and the 0.5 dosing groups. Our plan is to then have an end of Phase II meeting with the FDA. The intent there is to do the sort of the usual necessary tasks, which is to reaffirm and continue to show safety and tolerability.

And of course, if you're going to go into young children and newborns, the goal would be to also show enough evidence of clinical efficacy to justify going into such a young vulnerable population. We have greater clarity now as a result of that meeting. We're in the process of completing that data set, and we should have sufficient data later this year to take that total data set, bring it forward to the FDA and continue our conversations and hopefully get into a pediatric study sometime in the months and years ahead.

We will move next with Yanan Zhu with Wells Fargo.

This is Kwan on for Yanan. So our question is around cystic fibrosis. Since there is no placebo control for the 12-week study, can you talk about the variability of FEV1 and LCI? And how should we prepare to interpret the data without a placebo control?

Yes, that's correct. There's no placebo arm in the present study. And maybe Alan can comment on the REACH study and placebo strategy going forward. With respect to variability of FEV, that's well understood. We are collecting 2 lung function parameters, FEV and LCI. And maybe Alan can comment on the value of doing that.

Sure. Great question and an important question. As you know, the requirements for percent predicted FEV1 and spirometry is active performance characteristics and reproducibility with the person performing the test. The good news about cystic fibrosis patients is that they've been accustomed, unfortunately, to doing spirometry since they're in school. And since most of the adults that we're enrolling are well into their 20s and beyond, they have decades of experience performing spirometry almost daily.

We have set in this Cohort 4 study parameters from screening and baseline to allow for a small variation from the 2 measures, but not an excessive amount so that there is enough consistency between screening and baseline that we feel confident that an individual is producing reproducible, reliable tests throughout the course of the study. That was something we didn't have in place before. I think it's necessary. I believe that it's going to mitigate any concerns that we may have moving forward.

Now in terms of LCI, the challenge with LCI in adults is that there just simply has not been a very large natural history database of people with cystic fibrosis. The good news -- the good news is that the Cystic Fibrosis Foundation, recognizing the sensitivity of that tool, in particular for measuring changes in small airways, which is likely to be the place where early demonstration of clinical efficacy is most likely to be observed.

They are currently completing a large prospective open-label study in exactly the same population that we're targeting for our Cohort 4 and subsequent studies. And that data should be shared later this year going into 2027 by the CF Foundation at the upcoming NACFC meeting. So we're looking forward to seeing that data starting to be presented, and they have assured all sponsors, including us that we will have access to that data moving forward. So we'll have a normative data set, which we hope to use as we bring forward the data we'll be generating on our study drug in the months and years ahead as well.

The only thing I would add is that I just want to remind everyone on the call that the FDA has not defined a threshold of success for FEV or LCI, at least for our program. In the modulator space, they have. But for a new modality like inhaled mRNA for Class I CF, there's no minimum threshold that we must observe. Anything positive would be viewed seriously. And like what Alan mentioned, the REACH study will be very likely to be very helpful as well. Anyway thanks for the question.

We will move next with Myles Minter with William Blair.

This is Jake on for Myles. One of your competitors recently discontinued its inhaled CFTR mRNA trial. We were just wondering if you've seen any of the manifestations that were described there and led to the discontinuation, and whether you've had any discussions with the CF Foundation or regulators regarding patient enrollment of this new cohort now that that trial has been discontinued.

Yes. The short answer is no. There's significant differences between the technology that we use to deliver the RNA molecule then versus our competitors, and we touched that on in the script earlier on today's call. But I would like to also highlight that we have utilized no steroids as a co-treatment before, during or after the dosing period. And that's a point of differentiation, and there's reasons for that, that are safety and tolerability related.

And also, we've been approved by regulators to -- for unsupervised dosing at home, and that's not been the case for some of the other companies in this field. And those are -- that's another point of differentiation. And the reason behind that, again, is all because we're using a different technology. It's a different chemistry, and it also includes a different manufacturing process to purify the mRNA molecule, which could be a contributor to remove the impurities that cause those undesired immunogenicities and immune responses.

But anything else to add, Alan?

No, I think Joe covered the majority of it. The only thing I would add is that it's worth pointing out that at the completion of our Cohort 3 study, which went up from 5 to 10 to 15 milligrams daily for 28 days, that we were given the ability to move forward with a longer study, allowing for either 10 or 15 milligrams daily in Cohort 4.

So our safety monitoring committee saw nothing clinically worrisome and have allowed us to not only go up to 15 milligrams if we choose to daily, but we also have the freedom and ability to take those patients out to 12 weeks, which we are currently embarking on right now, initiating at a 10-milligram dose once daily.

We will move next with Mayank Mamtani with B. Riley Securities.

And good to hear 032 study is progressing ahead of plan. Did I hear that you've had certain patients move past the one-month exposure window?

And just curious if like the Vertex study, there are any go/no-go decisions intra-study on duration of treatment because both studies were kind of comparable on time lines and how further along they were their mechanisms built in your study that informs continuation based primarily on tolerability reasons, but also obviously, efficacy reasons also. And then I have a follow-up.

Yes, it's a good question. With respect to the first, we have initiated the 12-week study in the first quarter. So that means that we are well beyond a month of dosing already in the study. We are continuing to enroll at a pace that's going to be understood in the next -- in the coming weeks. But yes, we're well beyond that one-month study.

With respect to intermediate go/no-go opportunities and decisions that are built into the protocol, I'll have Alan comment on that.

Yes. I mean the good news about an open-label clinical trial is that we're going to be able to, in an active way, monitor patient progress and look for safety signals as well as early signs of efficacy. It's our impression that by the -- before the end of this calendar year, we should have enrolled and have sufficient enough data in hand that we will be able to speak a little bit more clearly to the future longevity of the program as well as the direction of the program moving forward.

Understood. And then on the REACH data that you're looking to learn at NACFC, I was just curious on the LCI, what according to you sort of good looks like and what correlations that you're curious about? [Indiscernible]

Yes, there's several reasons why we've included lung clearance index into this new protocol for the fourth cohort. The first, of course, is to add an additional measure of lung function that is respected, understood and can be a potential endpoint for us in the study.

With respect to the correlation of LCI to other parameters, maybe you can comment on that.

Yes. I mean the interesting thing about LCI is that I mentioned earlier and one of the questions that we got earlier was talking about the variability of the performance characteristics of spirometry. The nice thing about lung clearance index and why it was used almost exclusively in young children who can't perform spirometry is that it's a passive maneuver. It doesn't require active involvement of the patient itself to perform it.

So it's actually very reproducible and highly reliable. So all you really have to do is form a seal around the mouthpiece and then the equipment does the rest. So right now, the only outstanding information we have is what the CF Foundation is generating right now with the REACH study, which is what's the normal rate of decline of lung clearance index within the population that we're studying. So we have a comparative group.

So really, right now, it's not only a more sensitive measure. And by the way, it's also, as you may know, been an approvable endpoint for some of the modulators, in particular, in Europe and rest of world. So we know it's reliable. We know it's reproducible. It has really not been used in adults just simply because it wasn't perceived as necessary. But I think increasingly, it's being appreciated for the sensitive way with which it measures a more distinct, more peripheral, more acutely portion of the airway that may prove to be much more useful for purposes of a study like this in these patients moving forward.

And LCI also has a correlation between mucus plug reduction and in so much that that's the encouraging data we saw in our second cohort that we've shared. We'd like to see that correlate with a lung function measure and lung clearance index has a nice correlation to these reductions of mucus plugs in other studies.

Got it. And lastly, any insight on your plans for combining with a modulator or maybe nonresponder population? Is there anything you could do in the ongoing protocol?

Did you understand the question?

Yes, I think I did. And if I didn't, please correct me. I guess the question as I understood it was, obviously, the highest unmet medical need population are those with null mutations and those who are unable to tolerate or are unable to get access to modulators. That's obviously the patient population that we're focused on now. Is our therapeutic potentially beneficial to a broader population of patients who may be on modulators? Yes, the answer is yes. And that would obviously be the next place we'd want to go. But obviously, we're going to need to generate sufficient data to make that justifiable, and we look forward to hopefully getting that data in the years ahead.

We will move next with Adam Walsh with ROTH Capital Partners.

On the adult Type C meeting timing, when would we expect to hear about that outcome?

Sure. We've shared previously that both of these Type C meetings would be completed in the first half of this year, and we're well on track for that. So the second would be sometime this quarter. That's the near term. It's on the near-term horizon, very soon.

Wonderful. And then how is the team segmenting pediatric versus adolescent versus adult for OTC? And what is the realistic enrolled patient number for the pediatric pivotal given the targeted severity?

Sure. Great questions. I'll take this one. This is Alan. The population that we believe has the highest unmet need are those who tend to be under the age of 6, so preschool age up to early school age. By the time, unfortunately, most of these kids with OTC deficiency who manifested in the birth period, by the time they get to school age, they're either unfortunately having a liver transplant or if they're unable to be stable enough for that, they die.

So the segmentation for the pediatric population would almost exclusively be focused on that exact population, children in the first weeks and months of life up through probably age 6.

Excellent. And then one more, if I may, just on 032 in CF. How is the team approaching interim versus full disclosure given the open-label design? I know this was touched upon on the last call, and you may not be advanced enough to comment on it. But will you be anticipating any disclosure on interim given the open-label study?

Yes. The language we've used on this call today, Adam, is that you're right, it's an open-label study. It's already started. And we're expressing confidence on today's call that later this year, we should have sufficient enrollment and data to inform our next steps. So I think we're going to be in a really good place to understand where we are with this program later this year.

We will move next with Whitney Ijem with Canaccord.

This is Angela Qian on for Whitney. Can you remind us what preclinical data you have of LUNAR-CF to penetrate the mucus? And any data around like endosomal escape or production of functional protein? And then can you also remind us what cells are you reaching within the lung?

Sure, sure. So we have Pad here with us. He can comment on the fair data, et cetera.

Yes. Well, first of all, we worked for many years with the CF Foundation to develop our preclinical package. And we've done quite a bit of work on looking at LNP stability in sputum. And then we've also done a lot of work preclinically in mouse roles and ferrets as well as nonhuman primates. And what we see is in the CF mouse model, for example, that we can get to various bronchial epithelial cells. We have a pretty broad distribution and some of this data was recently published with some of our collaborators. And I think that's available, and we can provide that to you.

Did we address your question?

Great. Yes. If you could send that, that would be great. And then maybe a follow-up is on dosing. Currently, are you doing anything to address kind of the distribution of drug into the lower lobes? Like is there a way you can try to impact the distribution of drugs?

Right now, our anticipation is we won't have to modify the position of the patient or anything like that to access different lobes or parts of the lung. So that's not our anticipation. But...

I can also -- this is Pat again. We can also -- when we did our initial preclinical evaluation of the nebulizer that we were going to use, we've optimized the particle size of the nebulizer so that it does get distributed throughout the lung.

Yes. And this is Alan. Just to add one more piece to that. I think your question is probably coming from the high-resolution CT data that we shared and generated in our last cohort, which showed a preponderance of effect mostly in the lower segments of the thoracic cage and within the lower segments of the lung.

We know that ventilation perfusion and ventilation in general differs with aerosols in particular, in the lower and upper segments of the lung. One of the things that we're hoping to achieve if we're going now from a 4-week dosing strategy to 12-week strategy is a much more thorough application of our therapy throughout the lung, and we hope to see that manifest as the study goes beyond the 4-week period. So we think this is more so a byproduct of time and not necessarily dose.

We will move next with Yigal Nochomovitz with Citigroup.

This is Joohwan Kim on for Yigal. Maybe 2 quick ones from us. Just to confirm, firstly, do you need to enroll more patients at the 0.3 or 0.4, 0.5 mg per kg dose for the exploratory data that needs to be generated? Or is that just from longer follow-up?

The short answer is we just need to complete the scheduled study as dictated and communicated at the Type C meeting. So there's nothing too extraordinary. We just need to complete that data set and also analyze it and then present it in a way that they requested. It was just a reanalysis of the data that they wanted to appreciate. And we said that we'd provide that to them at the OP2 meeting.

Got you. And also on CF, I believe that you noted that you're planning on conducting the HRCT scans in the 12-week study. Can you provide additional detail on how frequently that assessment as well as LCI and FEV1 measurements might be conducted? And are you seeking to enroll a certain number of patients ex-U.S.

Yes. With respect to high-res CT scan, it's before and after. We typically do not propose to take several of these high-res CT scans during a study. It's typically before and after.

With respect to the other lung function measurements and the cadence of that throughout the 12-week study, maybe, Alan, you can comment on that, what you're comfortable sharing.

Yes. We haven't really shared that kind of level of granularity. But I think it's appropriate to just consider that every time a patient comes back to a clinic to get evaluated and to get another scheduled amount of drug, that's a perfect time, particularly at a CF center to repeat testing in a controlled setting. We are not using home monitoring nor home spirometry or lung clearance index equipment in the household or in the home. So we want consistent measures being performed in an appropriate skilled center so that we can have reliable data. So we're collecting that data at every time point that the patient is coming back. So it's at a regular cadence over the course of 12 weeks.

Got it. And are you looking to enroll a certain number of patients ex-U.S.?

Yes, for 20 subjects, up to 20 subjects is what we're -- is what's presently in the protocol. For CF -- for CF? Or were you asking about OTC?

No, I just want -- amongst those 20 patients, is there a specific number that you're looking to get ex-U.S. versus U.S.?

Go ahead and comment on that.

Yes. No, another great question. We added ex-U.S. sites in large part because there are jurisdictions in the world that happen to have higher preponderances of people with no mutations. And we're trying to take advantage of the fact that there are high unmet medical needs in parts of the world where the level of care, the nature of care and the clinical course of the disease is commensurate and consistent with what we observed here in the U.S., Canada and other parts of the world.

So we haven't -- we haven't set a high or low bar in terms of the number of patients to be enrolled in the United States and outside of the United States. It's our anticipation that it's going to be perhaps an equal mix, but it really shouldn't matter at this point.

We will move next with Thomas Shrader with BTIG.

This is Jenny on for Tom Schrader. I had a couple of questions on the OTC program. For OTC, you're now pursuing late onset adult and severe pediatric populations, which is a meaningful broadening. But could you help us understand how you're thinking about resource and capital allocation between these 2 tracks? Is there a scenario where the adult program generates registrational data first and helps derisk the pediatric program? Or do you view these as truly independent developmental paths that need to run in parallel?

And as you think about your end of Phase II meeting in the second half of the year, could you walk us through your best case versus base case outcome and what that looks like from that interaction?

Okay. A lot there, but I think Alan got it. But with respect to pediatric and adult regulatory paths, we can comment on that and then expectations for the EOP2 meeting go ahead. The path for what percentage of the budget is allocated or energies and resources to the pediatric path versus the adult path? Is there more prioritization to the pediatrics?

Well, yes. So okay, understood. So rather than getting into granularity on the budgetary likelihood of expenditure, right now our pediatric program is predicated on the successful completion, sufficient end of Phase II data and a general agreement that we've generated sufficient safety, tolerability and clinical efficacy data to be able to then go into children.

Our expectation and hope is that the pediatric opportunity and unmet medical need is the greatest and the one that we feel we need to be spending our greatest attention to once we're given the opportunity to do so.

Our adult program is almost completed. So right now, we're just finishing up enrollment on a small number of patients to complete the GRID that Joe was just referring to a moment ago. It's 5 doses. And then once we complete 5 doses and have time to analyze the totality of that data and prepare for our end of Phase II meeting, our hope is that we're given the green light to move forward with a pediatric program, and that would be in large part of our focus moving forward.

[Operator Instructions] We will move next with Yale Jen with Laidlaw & Company.

In terms of the pediatric OTC programs, you mentioned that most of those patients need transplantation as the treatment. I just wonder whether you're thinking the drug currently you're developing was mainly for a stop gap for those patients before they can ultimately get transplantation or this is potentially disease modifying the patients can be treated for a long time without the need for transplantation.

Well, first to comment is that the OTC deficiency is definitely a pediatric-centric disease. That's usually when it's diagnosed. And there is a significant unmet need to prevent the undesired liver transplantation that occurs in these young children. So engaging them prior to the severity getting to that point is the timing we're talking about. But is there any other comments?

Yes. No, I think your question is actually a really good one. Our hope and expectation would be that we're not only forestalling the need for a liver transplant, but we should hopefully be able to keep these children from requiring lung -- not lung liver transplants lifelong if we intervene and do so in as pronounced a way as we hope and expect to do as early as possible in the course of their disease.

Thank you. And at this time, there are no further questions in queue. I will now turn the call back to Joe Payne for closing comments.

Just thanks, everyone, for participating on the call. We appreciate everyone's time. Please don't hesitate to reach out to our team for any remaining questions. We will always get back to you as soon as we can. Thanks again.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Hello, and welcome, everyone, joining today's Arcturus Therapeutics Fourth Quarter and Fiscal Year 2025 Earnings Call. [Operator Instructions] Please note this call is being recorded. And it is now my pleasure to turn the meeting over to Neda Safarzadeh, Vice President, Head of Investor Relations, Public Relations and Marketing. Please go ahead.

Thank you, operator. Good afternoon, and welcome to Arcturus Therapeutics Quarterly Financial Update and Pipeline Progress Call. Today's call will be led by Joe Payne, our President and CEO; and Dr. Alan Cohen, our Chief Medical Officer. Dr. Pad Shibkula, our CSO and COO, will join them for the Q&A session. Before we begin, I would like to remind everyone that the statements made during this call regarding matters that are not historical facts are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance and achievements to differ materially from those expressed or implied by the statement.

Please see the forward-looking statement disclaimer on the company's press release issued earlier today as well as the Risk Factors section in our most recent Form 10-K and in subsequent filings with the SEC. In addition, any forward-looking statements represent our views only as of the date such statements are made. Arcturus specifically disclaims any obligation to update such statements. And with that, I will now turn the call over to Joe.

Thank you, Neda. It's good to be with you again, everybody. I will begin today with an update on our ARCT-032 and ARCT-810 programs. These are the messenger RNA therapeutic candidates for cystic fibrosis and ornithine transcarbamylase deficiency, respectively. ARCT-032 Phase II trial is progressing with higher dose testing at 15 milligrams in 4 Class I CF adults, which showed no safety concerns. The upcoming multi-month study will enroll patients in the U.S. and internationally and is designed to evaluate safety as well as look for early signs of clinical benefit, including improvements in lung function and quality of life. We are well on track to initiate dosing for this Phase II 12-week study in the first half of this year and look forward to generating potentially meaningful clinical data for our CF program in 2026. ARCT-810 continues to advance toward pivotal development. We plan to study both adults with late-onset OTC deficiency and young children with the most severe forms.

Type C regulatory meetings are scheduled during the first half of 2026 and are intended to provide clarity regarding our next steps in clinical development for our flagship rare liver disease program. I will now provide regulatory updates to our partnered COVID-19 vaccine program, also known as Costave, where in January 2026, the U.K. Medicines and Healthcare Products Regulatory Agency, or MHRA, granted approval for Costave, a self-amplifying mRNA COVID-19 vaccine for use in individuals aged 18 and older. Moving to ARCT-2304. This is our next-generation STAR vaccine candidate for pandemic A/H5N1 influenza. This program is contracted with and funded by BARDA. We completed a Phase I study in 212 young adults and 80 older adults. Recent 8-month follow-up data after the initial vaccination showed that all 3 dose levels, 1.5, 5 and 12 micrograms generated a durable immune response.

The results also reinforce the STARR® sa-mRNA platform's ability to drive meaningful cell-mediated immunity. Across all tested doses, the vaccine was well tolerated with no safety concerns reported. The data further validates our STARRs mRNA platform. Also briefly, our lawsuit against AbbVie and Capstone Therapeutics filed on September 23, 2025, remains ongoing. With that, I'll now pass the call to Alan.

Thank you, Joe. It's certainly good to be here with all of you today. I'll begin with an update of our ARCT-032 program. This is our messenger RNA therapeutic candidate for cystic fibrosis or CF pulmonary disease. ARCT-032 utilizes Arcturus' LUNAR lipid-mediated aerosolized platform to deliver CFTR messenger RNA to the lungs.

Expression of a functional copy of the CFTR mRNA in the lungs of people with CF has the potential to restore CFTR activity and mitigate the downstream effects responsible for the progressive lung disease and associated morbidity and mortality experienced by people with CF. We remain on track to initiate the dosing phase of our 12-week Phase II clinical study in the first half of 2026. We recently completed once-daily dosing of 15 milligrams of ARCT-032 over 28 days in the third dosing cohort. This cohort included 4 CF adults with Class I MEL mutations. And importantly, we observed no safety or tolerability concerns at this higher dose. Based on these encouraging data, the independent safety review committee permitted us to move forward with a Phase II study that will evaluate ARCT-032 over a 12-week period instead of just 4 weeks. We will include 2 functional pulmonary measures, spirometry as measured by percent predicted FEV1 as well as LCI or lung clearance index as measured by multiple breath washout.

We will also include 2 quality of life measures, the CFQRR and the EQ5D5L as well as serial high-resolution CT testing to examine changes in airway wall thickness, air trapping and mucus plugging scores. The 12-week study intends to enroll up to 20 participants with Class I CF mutations from clinical sites in the U.S. and abroad. The goal of this upcoming 12-week study is to establish a clearer picture of longer-term safety, 12 weeks versus 4 weeks and begin to more comprehensively explore early signals of clinical efficacy, including how the CF participants feel and function. Now moving on to the ARCT-810 program. This is our messenger RNA therapeutic candidate for ornithine transcarbamylase or OTC deficiency. We look forward to aligning with regulators on our clinical development strategy for the OTC deficiency program. We are moving to broaden our development strategy to serve both adults and late onset disease and young children with the most severe forms of OTC deficiency.

These are the patients who typically rely on liver transplantation for survival beyond early childhood. We continue active regulatory engagement to support pivotal trial designs across these 2 distinct populations. Our Type C regulatory meetings with the health authorities, along with their feedback, remain on track for the first half of 2026, and we expect these interactions to help clarify our clinical development strategy for both adult and pediatric indications. Currently, we are very pleased with the momentum across both the CF and OTC deficiency programs and look forward to updating you as we progress throughout the year. I'll now pass the call back to Joe.

Thanks, Alan. We indeed look forward to initiating enrollment in our 12-week CF study and gain clarity and alignment with regulatory agencies for the next stages of development for ARCT-810.

Now with respect to Arcturus' financial position, we issued a press release earlier today, which includes financial statements for the fourth quarter and fiscal year ending December 31, 2025, and provided a summary and analysis of year-over-year performance. Please also refer to our most recent Form 10-K for more details on financial performance. Year-over-year, annual and quarterly revenue decreased $70.3 million and $15.6 million, respectively. These declines were driven by reductions in revenue from our CSL collaboration, reflecting lower supply agreement activity and a reduced number of development-based milestone achievements as Costave was commercialized.

Annual and quarterly research and development expenses also decreased year-over-year by $83.0 million and $19.3 million, respectively, which was primarily driven by lower manufacturing and clinical costs related to the LUNAR-COV19 program, reflecting the program's transition from a development program to the commercial phase. Additional decreases relate to lower manufacturing for our LUNAR-CF and LUNAR-FLU programs as well as lower clinical costs for our LUNAR-OTC program as we wrap up clinical activities. Clinical costs for Phase II of our LUNAR-CF program partially offset these reductions as we remain focused on this clinical study. General and administrative expenses decreased annually year-over-year by $6.7 million due to reduced expenses for payroll and benefits as well as share-based compensation. Quarterly general and administrative expenses increased year-over-year by $1.6 million due to an acceleration of employee stock options.

Overall, we expect general and administrative expenses to continue to decrease during the next 12 months, driven by lower share-based compensation expense. Cash, cash equivalents and restricted cash were $232.8 million as of December 31, 2025. and $293.9 million on December 31, 2024. Through disciplined execution and a strategic refocus on existing rare disease clinical programs in fiscal year 2025, Arcturus has extended our cash runway into the second quarter of 2028. In summary, the company remains in a strong financial position and has the cash runway needed to achieve multiple near-term value-creating milestones for both therapeutic programs. With that, let's turn the time over to the operator for questions.

Operator Instructions] Our first question comes from Yasmeen Rahimi with Piper Sandler.

Would love to understand as you guys are going to be kicking off the 12-week Phase II study, I know you guys spend a lot of time thinking about optimization for the study from dose selection to baseline measurements to patient selection. So maybe help us walk us through some of the optimizations that were included versus the initial study that was conducted in the fall. That would be really helpful to go through. And then also, I know you work with the CF Foundation. Help us understand if you had a chance to work with them to warehouse a number of patients. So as soon as you kick off the study, you could enroll quickly the patients for it. And with that, I'll jump back into the queue.

Yes. Thanks, Yas. I appreciate the questions as always. With respect to how the 12-week study that we're initiating here soon is different from the 4-week study, we have Alan on the line. He'll highlight some of those differences so that the investors out there can understand.

Sure. No problem. Thanks, Joe. Great question. So first things first, one of the main fundamental differences between the study that we've done with dose ranging from Cohorts 1 through 3 is that Cohort 4 is really going to be designed somewhat differently with the intent on it being more reproducible and stable, particularly as it relates to spirometric measures. We're setting parameters. We will not be enrolling a CF patient until they're stable with respect to baseline lung function measures. And this should help us allow us to observe true clinical signals by enhancing the noise to signal ratio. In addition, we are going to be including lung clearance index using MVW, which does not -- which is not subject to variability issues that is sometimes seen in spirometry. And that's why LCI has really been used and preferred in children because of its ability to be reproducible and not patient or performance dependent.

In addition, we're going to be looking over a 12-week period instead of just simply 4 weeks with the general thinking that the longer period of time will allow the drug that we're studying to manifest clinical benefits in the airway. Lastly, we are including not just LCI and using MVW and percent predicted FEV1 spirometry, but 2 additional quality of life measures, the CFQRR and the EQ5D5R. So 2 shots on goal for both pulmonary functions and quality of life in addition to the HRCT studies reproducibly that we have used in the past and shown early signals of success. Hopefully, that should be helpful to you.

Yes. And we do continue to strengthen our relationship with the CF Foundation. They're keenly aware of the modulator nonresponders in their community, both here in the U.S. and abroad. And so we work closely with them -- in fact, the TDN themselves permitted our study to proceed after reviewing the first 3 cohorts of data into this fourth cohort into this 12-week study. So they're closely involved and engaged.

We'll move next to Pete Stavropoulos with Cantor Fitzgerald.

Nice to see the progress. So you mentioned LCI for CF. Can you talk a little bit about this test, sort of how sensitive is it? I think you mentioned it's not variable. Do you expect multiple readings at baseline? And importantly, does it correlate with other endpoints you plan to use? And is it reliable at all stages of disease, say, early versus late or equally sensitive? And if so, how will that impact your enrollment criteria for the Phase II?

No, it's a great question, Pete. LCI is definitely another lung function measurement that we're -- data that we're collecting in this 12-week study. It's definitely more sensitive. Alan, perhaps you can discuss about the multiple readings and how well it correlates and how reliable it is.

Sure. Of course. And a great question. Thank you for asking about this. LCI, as I mentioned, doesn't have the subject variability issues of spirometry. Although as we all know, spirometry has been a more traditional endpoint measure for most pulmonary drugs that have been approved, both in the United States and abroad. And that's really why LCI historically in CF has been used in children who can't always perform spirometry reproducible. It's a much more passive maneuver requiring just normal tidal breathing, so comfortable breathing in and out. And as a result, it [indiscernible] reproducible measure for more importantly, the most early and more subtle changes in the smallest airways. So why we're focusing on LCI in addition to spirometry is not just its ability to be reproducible, but it also is measuring another component of the airway that we believe we can have more discernible benefit for earlier and in a smaller number of subjects.

Spirometry measures can change slightly as well in these larger airways, and these are more central airways, but it does require a more active engagement to be sufficiently reproducible. That's why I was alluding earlier to the controls that we're putting into this study as to making sure that a patient has reproducibility in screening and baseline before going into drug dosing so that we have a more accurate reproducible baseline with which to compare subsequent changes over the 12-week course of the study.

All right. And also just a question on the OTC program. As you're having your discussions with regulatory authorities about a registrational trial, how has their reception been for certain biomarkers and assays like ureogenesis function using the nitrogen 15 isotope or any other biomarker they may be less familiar with? And what's sort of the base case outcome for a study design?

Well, those are all great questions, and that's currently where we are. We're actively engaged in preparing for these Type C meetings in the next few months. We're going to be in a much better position to answer those with granularity and specificity but that's exactly what we're currently engaged with the FDA on is the future study approaches, the design, the size, the scope of the study, understanding what they would like to see before we can proceed further into the clinical development. So we'll have that regulatory clarity shortly. That's our intent. That's our aim. And they're all good questions, but we'll be in a better position to answer those in a few months.

Congrats on the quarter and progress.

We'll move next to Seamus Fernandez with Guggenheim Securities.

This is [indiscernible] on for Seamus Fernandez. Just a few from us. Looking forward to the start of the 12-week CF study. I just wanted to clarify, so it sounds like dosing is proceeding at the 15 mg dose cohort. Just curious what drove the decision to proceed with the 15 mg dose over 10? Was there any evidence of dose response on any of the lung function measures or CT scan? Second, just in terms of the planned enrollment for CF, you mentioned both U.S. and international recruitment. Just curious how you're thinking about maybe the split between U.S. and abroad.

A couple of good questions. First of all, a point of clarification, just so it's not misunderstood. We have achieved safety and tolerability data for the 15-milligram level, but we're actually initiating our fourth cohort at the 10-milligram level. We were fortunate to see early efficacy, some early clinical some early clinical signals in our smaller cohorts at 10 milligrams. So we're going to continue that and see if we can see improvements as we extend the study in larger numbers. With respect to the plan to enroll in the U.S. and we are enrolling internationally, including Europe and the Middle East. But Alan can maybe share some of the strategies as to why we're expanding our enrollment in other countries.

Sure. Thank you, Joe, and a great question. So the plan right now, we've actually expanded our U.S. sites. So we have additional U.S. sites ready to go for the Cohort 4 study, which we will be initiating shortly and have added, as Joe mentioned, European as well as Middle Eastern sites. The intent there is to really go into parts of the world where there is a higher preponderance of null or type 1 CF genetic mutants so that there is a larger percentage within those populations, and it should yield a greater likelihood of identifying, engaging and enrolling patients in a much more timely manner over the course of the calendar year.

Just one follow-up for me then, just between the 15 and 10 mg dose because you mentioned improvements at the 10 mg were anything you can share in terms of the responder rate at the 15 mg relative to the 10 did you see a response on FEV or CT scan there, I guess, in terms of similar benchmark how you presented the earlier data?

No. Yes, we've completed the dosing phase for the third cohort at 15 milligrams, and we've collected sufficient safety and tolerability data to share with the safety review committee to allow us to permit us to proceed into the 12-week study. With respect to the other data, that data collection process is ongoing, and that's where we are. But what was significant was to allow us to proceed into the fourth cohort.

We'll move next to Lili Nsongo with Leerink Partners.

So 2 questions for me. The first one on the CF program. So thinking about, again, moving on to the 12-week study, what was the rationale to stop at 15 milligram given that you haven't seen any safety signal? And would there be enough design flexibility to potentially increase the dosing as you accumulate data? And then I have a follow-up question on the OTC program.

Yes, we definitely have the flexibility to increase dosing, and we're very happy that we already have the ability to increase to 15 milligrams, if necessary. But just to maybe reiterate that 10 milligram showed early signs of working in the second cohort. So we're simply extending the duration of that treatment in a larger cohort. And we're now pleased that we have the flexibility to increase dosing to 15 milligrams if needed. It's unlikely that we will need to increase dosing even further, but we would have flexibility to do so if needed. We did dose up to 27 milligrams in our early trials in human volunteers. So there is some headroom there to expand further, but we feel confident in the dose that we've selected at 10 to start this fourth cohort.

Okay. Maybe just a follow-up. For the OTC program, do you expect a bifurcated regulatory path for both the pediatric and then the more adult patient population?

Yes. I think that's safe to assume that the younger children will be treated differently than the older stable adult population simply because the need is far more severe in younger children, it's a different population. But anything to add to that, Alan?

Yes. I mean, in many ways, I think where we are with the program and important to note that since there are survivors with an OTC deficiency into adulthood, even though it's vastly different in terms of the medical complexity and the ability to be functional without needing a liver transplant, we did -- we were able to show up to this point safety, tolerability, and we believe early signs and signals of efficacy. Now in our discussions with the FDA on looking at a younger population where survival tends to be quite bleak beyond preschool and school age. The intent there is to really see if we can leverage the most recent guidances that the FDA has shared about their willingness to look into ultra-rare populations with severe outcomes and their willingness to be more -- give more latitude and flexibility in terms of how one conducts those studies as long as there's sufficient safety and tolerability and obviously, efficacy.

So we're encouraged by the early conversations that we're having with the agency right now, and we'll continue to pursue those to the benefit of the OTC deficiency community.

We'll move next to Yanan Zhu with Wells Fargo.

Maybe first on the CF program. I think you mentioned one effort in Cohort 4 is to obtain stable baseline. Remind us why that's important? How are you going to go about and do that? And also curious, during the 3-month trial period, could it be possible that patients had a stable baseline, but for some reason, their reading could begin to fluctuate or drift after having had that stable baseline within a 3-month period?

Thanks, Yanan. Yes, Cohort 4 is definitely different with respect to the first 3 cohorts and that we've designed it with a stronger baseline. Alan, maybe you can comment further there.

Yes. So what we've done here, and it's a great question. As best as we can, one should realize that because of the complexity of the lung disease and the impact that it has in the various segments of the lung at any given time, what we're looking for at baseline with these adult patients with CF is at least enough reproducibility and as small a possible variability within the period of time that we screen to baseline to get them enrolled that we believe that we have as accurate representation of where they are at that moment in time as far as their lung diseases advancing and progressing. It's not unexpected in the course of a 3- or 6-month period that many of these patients may have an acute pulmonary exacerbation or an acute illness. And we're prepared to handle that.

But what we wanted to try to mitigate and deal with was the variability that is seen not uncommonly in patients with COPD, cystic fibrosis, asthma, et cetera, particularly those who are vulnerable and chronically infected with pathogens. So we're really tightening up the enrollment criteria. We're setting parameters. And that's why we believe we're just looking to make sure that it's reproducible and stable at baseline. And we're not going to be enrolling CF patients that may be in the early throes of pulmonary exacerbation or an acute illness. And sometimes just even modest changes can be an early signal for that. We want to enhance the noise to signal ratio. And once again, one more thing to think about, unlike lung clearance index, spirometry really does require a consistent study subject performance. It's not a passive maneuver. So anything that we can do to make sure that a patient coming into our study has a representative baseline is really what we're trying to achieve here.

Great. That's super helpful. Two more questions, if I may. On the OTC deficiency regulatory interaction front, could you lay out for us to you and to the principal investigators, what would be considered an exciting outcome with regard to the alignment? And what -- perhaps also what might be the base case scenario for the alignment? And lastly, I wanted to -- wondering if you have any update on the COVID-19 vaccine initiatives between you and CSL.

Yes, I can take those questions, Yanan. So we're definitely working with the FDA to establish clarity, right? That's the main objective. So as investors are looking at what are we trying to achieve with these Type C meetings, it's clarity. We want a clear path forward to helping both the children in need with high unmet medical need, more severe disease and the stable adults, right? So we're presenting our case. We're presenting our data and basically looking to have clarity in the path forward. Anything to add there before I comment on CSL, Alan?

No. And obviously, in these patients, the goals and objectives for the children is quite different because of the severity and nature and lay vial nature of the disease in children as opposed to the much more stable adults. Even with current standards of care, the goals and objectives of a pediatric program would be to try to mitigate as best we can the damaging neurological and developmental issues that they contend and deal with on a daily basis just by having OCT deficiency despite the fact that there are now therapies like ammonia binding agents and abilities to control diet. So success for us would be, as Joe said, a clear path forward with agreed endpoints and goals and objectives that are not only attainable but are potable and acceptable to the families and patients as well as the caregivers and their current standards of care.

Yes, and the details of that, we'll be able to provide that granularity in a couple of months. But I appreciate the question. With respect to your CSL-related question in Costave, yes, we definitely made some progress for the Costave asset and for the platform in the United Kingdom. It was good to see that we advanced Costave to the point of approval and licensure in the United Kingdom. But the present administration here domestically has made it challenging to progress Costave to licensure or approval in the near term here in the U.S. So because of this and understandably, CSL and Arcturus are in active discussions regarding our collaboration, and we're going to be able to provide more color on that in the coming months.

We'll take our next question from Myles Minter with William Blair.

First one is just on the fact that I think you're deciding between the 10 mg and the 15 mg dose for the 032 Phase II trial. I think you're waiting on 15 mg efficacy data. You've got the safety and tolerability, obviously. I'm trying to understand what the puts and takes are for selecting dose moving forward? Like if you did get this efficacy data in for the 15 mg and it looks fine, but you have more data in 10 mg, like which dose or would you take both doses forward? I'm trying to understand your logic between [indiscernible].

So it's relatively straightforward in that 10 milligrams showed early signs of working in the second cohort. So we're simply extending the duration of treatment into a larger cohort and extending that duration. We now have the flexibility to increase the dose. That's what this means. And only if needed, there's many that are suggesting that efficacy is achieved through simple duration by extending the treatment, and we're going to prove that. And at some point, because it's an open-label study, if we feel we need to increase the dose, we can. I also remind folks that it's a fairly pricey product to manufacture. So if we can keep cost of goods down, that's also a good benefit by keeping the dose down around 10 milligrams as well. But it's simply based on data that at 10 milligrams, we saw progress. So we think we're going to extend the duration and the size of the study to see if it works in that context in that new -- in the fourth cohort. And we now have the flexibility to increase the dose if needed.

We'll take our next question from Adam Walsh with ROTH Capital.

The first on 032, the CF product. You've talked about the first week in your clinical trials or 2 of being an onboarding phase where the drug is sort of getting through the congested airways. So in a 12-week study, you'd have roughly 10 productive weeks versus maybe 2 or 3 in the 28-day study. How should we think about that from an extra exposure time as it relates to FEV1 and mucus clearance versus what we maybe saw at 28 days?

Yes. Adam, that's a thoughtful question. And you're absolutely right. We view that in our 28-day study, we observed consistently that there was a 1- to 2-week onboarding phase. And so in reality, there's really only a 2-week healing phase for that 28-day study. So as we go to the 12-weeks study, assuming a similar onboarding rate of 1 to 2 weeks, then you have 10 full weeks of potential healing and efficacy reads. So it's a difference between 2 and 10 weeks. So under that -- from that perspective, it is a significant improvement. But if you look at the study as a whole, we're going from 4 weeks to 12 weeks. It's a threefold difference. That's also a significant bump. And -- but your observation is sound, and we agree with you that it's not only threefolding the time of the study, but increasing the duration of potential healing and efficacy with this 12-week study.

And then if I could, one on 810 for OTC deficiency. Phase II patients fade on standard of care. So to my knowledge, we haven't seen whether patients can actually reduce scavengers or loosen dietary restrictions on 810. Is that something you plan to build into the pivotal? And how important do you think that kind of functional clinical data will be for the approval conversations versus the biomarker package alone?

That exact question is in the agenda of our Type C meetings this year. So for both the children early onset and also with the stable adult population. So it's the right question. We'll be able to provide the answer to that question in more detail in a couple of months after our Type C meetings are completed, and we've received their feedback.

We'll take our next question from Whitney Ijem with Canaccord.

This is Angela on for Whitney. Maybe just a follow up on the CF program again. So I understand you're progressing with the 10 milligram for the 12-week study, but are you still looking at efficacy in the 15-milligram cohort? I guess like what efficacy endpoints are you looking at? And will you be sharing that data at some point either in a PR or at a medical conference? And then second part is, would it be possible that you would run another 12-week study using the 15 milligrams? Or when you talk about the optionality to dose up, with that part of the current 10-milligram study [indiscernible].

Yes, it's unlikely that we'll be sharing any more data from the first 3 cohorts. We are focused on the fourth cohort. This is almost like a Phase IIb type study where we believe that our best shot on goal here is in a 12-week duration end of '20 study, and that's where we're focusing on. So I think that's where the investors should also be focused on. But you've asked, are we collecting data for 15 milligrams? Absolutely. Is there a time and a place to share that data? Yes, very likely. But we remain focused on the 12-week study is the short answer to your question.

Got it. And then will you potentially do dosing up to 15 milligrams in the study? Or would that be a separate study?

Only if needed. It's an open-label study. We have the flexibility to do it based upon what's happened in the third cohort, which is great. And we still haven't collected all the data, of course, and that additional data could sway our minds either direction. But right now, we're initiating the fourth cohort at the 10-milligram dose level, and we have the flexibility now to increase it if needed.

And we'll take our next question from Yigal Nochomovitz with Citi.

This is Joohwan Kim on for Yigal. I kind of have a multipart question, but I believe in the Phase Ib, you had also assessed LCI. But can you remind us what you had seen previously on the LCI? And how should we be thinking about the level of improvement expected in the Phase IIb? And as you were headed into the dose-ranging Phase II, did the FDA get a chance to look at the LCI data by any chance?

Yes. You're correct that we did look at LCI in the early Phase I studies. And those Phase I was in healthy adults, Phase Ib was in CF participants, and we established safety and tolerability that was sufficient to advance it. So LCI was only after a single administration or 2 administrations in Phase Ib. I would -- I'll defer to Alan in terms of that data from Phase Ib. With respect to LCI as an endpoint, I think I'll also defer to Alwyn. He can talk about what the literature shows or the magnitude of changes in LCI to get approval previously in children, et cetera. Go ahead, Alwyn.

Sure. No problem at all, and it's a great question. I wasn't around historically when the early experience with our study drug in those first few cohorts going from healthy to CF adults were ongoing, but I have had a chance to review the data. The challenge of it is, once again, it was small numbers of patients. In the way we're constructing things now, the plan is to benefit from that prior experience and perhaps do it in a more refined way. Right now, we also have the support of the CF Foundation, who is doing a natural history study. So being able to align with the CF Foundation and the Therapeutic Development Network on their prospective study that they're doing right now in patients with no mutations and those who are unable to tolerate current modulators allows us to align a study in a way so that when that natural history study becomes available in the coming months and year, that we can have access to that as a comparator group, which was something that was not available just a few years ago.

The -- the other piece about this, I think, is that there's increasingly a recognition of not only the sensitivity and the value of LCI measures in adults, but an appreciation for what may be the range and magnitude of change one needs to see in order for there to be an appreciation for a significant meaningful change over time. So right now, I think we're doing the study in a manner that should optimize its utility and value, and we're also doing it in an alignment in a way that should be commensurate with current standards and practices, which was certainly done before, but just not done as robustly and as long term. And really, I think in this case, just like with percent predicted FEV1 and spirometry, we will be benefiting from a cohort of upwards to 20 patients and an examination of data not just over a 4-week period, but a 12-week period. So both of those elements in addition to having more normative data to compare to in this exact population should make interpretation and value of this data much greater than it was previously appreciated. Hopefully, that's helpful to you.

We'll move next to Tom Shrader with BTIG.

There have been a lot of questions. I assume you've been looking at a lot of pictures of mucus plugs with your data. Do you have a sense of what fraction of patients show a measurable difference? Is it very all over the place, all over the lung? And do you have any patients where it's possible to calculate that in 12 weeks, the mucus plug should be gone? Do you have that level of data? And I have a quick vaccine follow-up.

Well, we saw 4 out of 6 subjects in the second cohort, that was a 10-milligram cohort that showed a reduction of mucus plugs after just 28 days. So that was definitely encouraging. There was one subject that attributed the increase in mucus plugs to humidity and the sensitivity to humidity. And whether that's an outlier or whether that's simply a nonresponder, we will learn as we collect more data, especially in this extended study that's larger. But it seems that a majority of these subjects respond with a reduction in mucus plugs, and we feel that, that's important to mention, and that's an early sign of some clinical activity. With respect to your other question, maybe you could restate it, and we can turn that over.

You would have had some sense of rates of clearance. Do you have confidence that 12 weeks is enough? Or is that more just the next trial you're allowed to do?

That's the big question. Clearly, we saw something in 28 days. So there's reason to be confident that we'll see it in an extended study -- larger study. And it's not just a larger extended study, but we're looking at a better study, a study that's designed more tightly with respect to numbers and baseline steadiness. But anything to add? Alan?

Yes. Yes. So I was going to say the field of using high-resolution CT scanning as a complementary way of assessing progression of disease has been used for some time. I think the technologies, particularly artificial intelligence and an ability to standardize the reads now is vastly different and in many ways, much better than it was as recently as just a few years ago. So I think the field is emerging. I would be -- I just want to make sure that it's understood that the time constant and the damage that occurs in the lungs of people with cystic fibrosis is really quite patchy. And what's remarkable, I'm a former lung transplant physician from Washington University. And I'm one of the few people that have had the chance to actually examine the lungs of people who underwent a lung transplant and sustained significant bronchiectatic damage to the point of needing a lung transplant to survive.

What's impressive about the disease is the very patchy nature, both in the upper and lower lobes, and you can have a completely bronchiectatic destroyed segment of lung right next to a completely normal appearing functional segment of a lung. So I believe that a drug that's administered by inhalation over long periods of time will eventually have the ability in large part to reach many, if not all, of the segments that we need to. But I have no delusion as to whether or not there will be a consistent almost a vacuuming of the lungs and an ability to remove and diminish mucus plugging. I think the time constant, the ventilation perfusion matching and just the nature of what's going on actively day-to-day with infections will really always make this challenging, even mucolytic drugs like Palzyme, even in patients who are using those drugs one or more times a day, will still be found to have significant mucus plugging in certain segments of the lung in any given time, and it will change from period to period from x-ray to x-ray.

So the goal here is, I think, the long term, it's the totality of what we're able to observe. And the plan is to be able to correlate those improvements with things like lung clearance index, which clearly have, and someone was alluding to this in their question earlier, that's one of the measures that we believe since we've already shown improvements in high-resolution CT scan mucus plug burden, it wouldn't be surprising to see and observe changes in lung clearance index commensurate with that since those 2 measures actually go hand in hand. So hopefully, that's helpful to you.

No, that's great. Very useful. And then just a quick follow-up on your pandemic flu vaccines, you haven't said a lot, but is your safety just qualitatively in line with a protein vaccine? Or does it look more like an mRNA vaccine? Do you have any sense how things are going to look.

Yes, very similar. And with respect to safety and tolerability, the safety and tolerability profile was similar to other vaccine technologies. We are a lower dose technology to conventional mRNA. So what we've seen consistently is any dose-related toxicologies will be beneficial to the self-amplifying mRNA tech from Arcturus. But in general, it's simply -- it's similar to other vaccine technologies from a safety and tolerability.

We'll move next to I-Eh Jen with Laidlaw & Company.

In terms of the CF next 12-week study and you're looking for more stable baseline, would that increase the time and the size for the screening for the study? And also what sort of -- how long duration to define as a stable -- more stable baseline before you -- before the patient will be eligible for the study? And then I have a follow-up.

Yes. We're definitely not enrolling a patient until they are stable with respect to the baseline lung function measures. The duration of that stability time, do you want to comment on that, Alan?

Yes. I mean there's -- and this is a great question, and it's not a simple answer. So let me see if I can give as appropriate an answer as possible. The challenge with CF patients is that there's actively chronically something going on in any given day. And I think the biggest challenge in trying to identify and enroll patients into a study like ours, where you're looking for modest improvements over -- in the case of our studies, first 3 cohorts over a 4-week period to now a much larger group of patients over now a 12-week period. We do want to make sure that we're not just identifying the right patients, but we're also patching them at a time in the course of their disease, where they're at least stable enough so that we can introduce our drug and begin the baseline assessment so that when we get to the end, we at least have a comparator that's stable, reasonable and discernible.

So right now, it's possible based on the way we've constructed this study, and I've done this in other studies as well, where we may delay the enrollment of a patient by a few weeks or a month just simply because there seems to be something acute going on, whether they're getting acutely ill and we just happen to be catching it during the course of the baseline in the screening or they may be in the late stages of resolving their illness, and we're seeing enough of a difference between 2 measures over a relatively short period of time that it may just speak to the unstable nature of what's going on. We really just are looking to get the best patients at the best period of time so that we have an equivalent baseline with which to work from. And that's really the intention. And it may mean a few weeks or a month longer to enroll a given patient, but it shouldn't add much in terms of the time. I think it's really -- the goal here is to really find the best patient at the best time. Hopefully, that helps you.

Absolutely. That's very helpful. Maybe just a quick one on the OTC. I know it's still early a little bit, but was the company intended at least the desire to potentially starting both the adult and pediatric trial relatively concurrently or there's any priority one before the other?

I think the intent is always to get into the children with high unmet medical need as fast as possible. But we're going to adhere to the advice and feedback from the FDA from these Type C meetings. So we'll be able to answer that with more granularity in a few months.

Okay. Maybe the last question. Does CSL intended to launch the Costave in U.K.? Or did we know that?

I would refer to everyone on the call to see what they've said publicly at their recent investor calls and their filings. We don't anticipate anything soon out of the United Kingdom commercially from Costave, but I refer you to their statements that they're saying publicly. We'll see where we are with the CSL agreement and our discussions with them in the coming months.

And this does conclude the question-and-answer portion of today's program. I would now like to hand the call back to Joe Payne for any additional or closing remarks.

Thank you, operator. I'd just like to thank everyone for attending today's call. If we see you in the bank conference seasons ahead, we look forward to catching up with you there. Have a good afternoon, everybody.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Good afternoon, everyone. Welcome to the Arcturus Therapeutics Third Quarter 2025 Earnings Call. [Operator Instructions] Also today's call is being recorded. [Operator Instructions]

Now at this time, I'd like to turn things over to Neda Safarzadeh Vice President, Head of Investor Relations, Public Relations and Marketing. Please go ahead, ma'am.

Thank you, operator. Good afternoon, and welcome to Arcturus Therapeutics Quarterly Financial Update and pipeline progress Call. Today's call will be led by Joe Payne, our President and CEO. And Andy Sassine, our CFO. Dr. Pad Chivukula, our CFO and COO, will join them for the Q&A session.

Before we begin, I would like to remind everyone that the statements made during this call regarding matters that are not historical facts are forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, performance and achievements to differ materially from those expressed or implied by this statement.

Please see the forward-looking statement disclaimer on the company's press release issued earlier today as well as the Risk Factors section in our most recent Form 10-K and in subsequent filings with the SEC. In addition, any forward-looking statements represent our views only as of the date such as statements are made. Arcturus specifically disclaims any obligation to update such statements.

And with that, I will now turn the call over to Joe.

Thank you, Neda. It's good to be with you again, everybody. I will begin today with an update on our ARCT-032 program. This is our messenger RNA therapeutic candidate for Cystic Fibrosis, or CF, ARCT-032 utilizes Arcturu's LUNAR lipid-mediated aerosolize platform to deliver CFTR messenger RNA to the lungs. Expression of a functional copy of the CFTR mRNA in the lungs of people with CF has the potential to restore CFTR activity and mitigate the downstream effects that cause progressive lung disease. In October, the company announced the interim data from its ongoing Phase II clinical trial of ARCT-032. Treatment with inhaled 10-milligram doses daily over 28 days and 6 Class I CF adults was generally safe and well tolerated.

A protocol prespecified analysis of high-resolution computed tomography lung scans or HRCT lung scans using FDA 501(k)-cleared AI technology revealed reductions in mucus burden in 4 of the 6 Class I CF participants in our second cohort. The ongoing third cohort is enrolling up to 6 subjects to assess the safety and tolerability of the 15-milligram dose daily over 28 days and the impact on the efficacy endpoints. The company intends to evaluate daily dosing of ARCT-032 over a 12-week duration in up to 20 CF participants. Safety and preliminary efficacy data will be collected in this study, which is planned to begin in the first half of 2026 after the third cohort top line data is understood.

Two weeks ago, I, along with our team, had the privilege of attending the North American Cystic Fibrosis Conference in Seattle. It was great to meet with the CF Foundation leadership team and share our enthusiasm for the Class I population based on our encouraging data. I met with the physicians and principal investigators involved in our ongoing clinical trials and was very pleased to hear their anecdotes, positivity and encouragement. I enjoy meeting with multiple CT scan experts and and felt their passion as they described the present and future importance of HRCT imaging data in lung disease trials. I affirmed my appreciation of the significant unmet medical need represented by Class I CF and other CFTR modulator nonresponders here in the United States. There's an even higher prevalence of people with Class I CF in countries outside the U.S. especially in Europe, India, the Middle East and Israel. All in all, the conversations with the CF Foundation, people with Class I CF, their physicians, investigators, CT scan experts and global CF representatives. This all reinforced Arcturus' commitment to advance ARCT-032 further into development.

The safety and tolerability profile data along with the perform and after treatment, HRCT scan images showing mucus plug reduction were well received by the CF community. We look forward to collecting additional and potentially meaningful clinical data in 2026 for our CF program. Moving on to the ARCT-810 program. This is our messenger RNA therapeutic candidate for ornithine transcarbamylase deficiency or OTC deficiency. With positive interim Phase II data in hand, the company is diligently preparing for meetings with regulatory agencies in the first half of 2026 and to discuss pivotal trial strategy for both pediatric and adult populations. Understanding what the FDA requires for ARCT-810's path to approval is the next key milestone for this program. We aim to provide more details pertaining to these regulatory alignment meetings in the first half of 2026.

I will now provide regulatory updates for our partnered COVID-19 vaccine program, also known as KOSTAIVE. Our Japanese partner, Meiji Seika Pharma, has launched the 2-dose file of KOSTAIVE updated for the JN I variant XEC in Japan. This is the first time the 2 dose via presentation is being distributed in Japan. Meiji received approval from the Pharmaceuticals and Medical Devices Agency or PMDA in August. Also in August, the -- the company published the Phase III manuscript on the immunogenicity and safety of our self-amplifying mRNA COVID-19 vaccine, ARCT-2303. The study shows that ARCT-2303 induces a robust immune response against SARS-CoV-2 and can be co-administered with licensed influenza vaccines in adults with no impact on safety or immunogenicity of either vaccine. The results were published in eClinical medicine. Moving on to ARCT-2304. This is our next-gen star vaccine candidate for [ Pandemic A/H5N1 ] Influenza Virus. That this is the program contracted with and funded in part by BARDA. We conducted a Phase I study in 132 young adults and 80 older adults ARCT-2304 induced a humoral immune response after a single dose in all tested dose levels. The administration of a second dose of ARCT-2304 further increased immune responses. ARCT-2304 at dose levels of 1.5, 5 and 12 micrograms induced a hemoglutinin-specific immune response similar to or higher than the [ MF59 ] adjuvanted pandemic vaccine in both young and older adults. Though safety or tolerability concerns were raised from available data. These data further validate our STARR SA mRNA platform. The study results support the further development of the self-amplifying mRNA pandemic influenza vaccine candidate.

With that, I'll now pass the call to Andy.

Thank you, Joe, and good afternoon, everyone. The press release issued earlier today includes financial statements for the third quarter of 2025 and provides a summary and analysis of year-over-year performance. Please also reference our most recent Form 10-Q for more details on the financial performance. The KOSTAIVE BLA filing had been delayed indefinitely, due to the sudden regulatory changes by the FDA, combined with uncertain commercial visibility of KOSTAIVE in the United States we have decided to reduce additional expenses to extend the runway for the Cystic Fibrosis and OTC programs. The company expects continued support from CSL to commercialize KOSTAIVE in Asia and Europe and will provide additional detail on our year-end call in March.

Revenues for the 3 and 9 months ended September 30, 2025, was $17.2 million and $74.8 million, respectively, representing a decrease of $24.5 million and $54.7 million compared to the same period in 2024. These declines were primarily driven by reduced revenues from the CSL collaboration reflecting lower supply agreement activity and lower amortization of the upfront payment as KOSTAIVE became a commercial product. Total operating expenses for the 3 months ended September 30, 2025, were $33.7 million compared with $52.4 million for the 3 months ended September 30, 2024. Total operating expenses for the 9 months ended September 30, 2025, were $119.8 million compared with $191.8 million in the prior year.

R&D expenses were $23.3 million for the 3 months ended September 30, 2025, compared with $39.1 million in the prior year. The decrease was primarily driven by lower manufacturing cost for the COVID, flu and CF program as well as reduced clinical trial expenses for COVID and Cystic Fibrosis. Lower payroll and employee benefits further contributed to the decrease. R&D expenses were $87.7 million for the 9 months ended September 30, 2025, compared with $151.4 million in the prior year. The decrease was primarily driven by lower manufacturing and clinical costs related to the COVID program, reflecting the program's transition from a development program to the commercial phase.

Additional decreases were attributable to lower manufacturing costs for the Cystic Fibrosis and flu program. These reductions were partially offset by higher clinical costs for Phase II of the Cystic Fibrosis program. Payroll and benefits expenses also decreased primarily due to lower stock-based compensation expense. G&A expenses were $10.4 million and $32.1 million for the 3 and 9 months ended September 30, 2025. Compared with $13.3 million and $40.4 million in the comparable period last year. The decrease in both periods were primarily due to reduced share-based compensation expense as well as reduced payroll and benefits. We expect general and administrative expenses to continue to decrease slightly in fiscal year '26.

For the 3 months ended September 30, 2025, Arcturus reported a net loss of approximately $13.5 million or $0.49 per diluted share. Compared with a net loss of $6.9 million or $0.26 per diluted share, in the 3 months ended September 30, 2024. Cash, cash equivalents and restricted cash were $237.3 million as of September 30, 2025 and $293.9 million on December 31, 2024. Based on the additional planned cost reductions in Q4, and the delay in the Phase II Cystic Fibrosis clinical trial commencement, the [ cash I ] way remained extended into 2028. More details regarding our cost reduction and runway will be provided on our year-end call in March.

In summary, the company remains in a strong financial position and has the cash runway needed to achieve multiple near-term value-creating milestones for both therapeutic program.

I will now pass the call back to Joe.

Thanks, Andy. Arcturus continues to make progress across our mRNA therapeutics and vaccines pipeline. We look forward to initiating the planned 12-week CF study for ARCT-032 in the first half of 2026. And engaging regulatory agencies regarding the pivotal trial designs for ARCT-810.

With that, let's turn the time over to the operator for questions.

[Operator Instructions] We'll go first this afternoon to Yasmeen Rahimi of Piper Sandler.

I guess the first question is, given this data -- have you been able to do some PK/PD modeling to help us understand sort of expectations as you are initiating the third dose cohort and what you hope to gain and how we should be thinking about that? That's sort of question one. And then question 2 is, as you are preparing for the meeting with the agency discuss your OTC pivotal programs, what are sort of some of the optionalities of sort of base case, best case, both in development for the pediatric population as well as development in the adult population. And thank you so much, and I'll jump back in the queue.

It's good to hear from you. With respect to PK/PD modeling, it's -- well, the third cohort, which is being evaluated at a dose level of 15 milligrams is being conducted in a very similar manner to the first 2 cohorts at 5 and 10 milligrams, respectively. So all of the activities with respect to data collection are going to be in line with the first 2 cohorts. With respect to the fourth cohort or I guess you would say this planned 12-week safety and preliminary efficacy study. This is an expanded study. So in addition from extending the duration of the study from 4 weeks to 12 weeks, we're also increasing the population up to 20, but a large amount of the data that's being collected is very similar to what we're doing in the first 3 cohorts.

There is some noted differences that we're intending to conduct this trial under. First of all, we're going to be adding an extra screening visit which to establish a more stable FEV1 baseline. We're also going to be, of course, looking at the high-res CT scan before the study, but at 12 weeks this time instead of at 4 weeks. So we'll allow those 2 additional months to occur before we take an imaging scan. We're also going to be looking at adding questions to the questionnaire that there's what's called an EQ-5D-5L general health questionnaire, where we're going to be looking at mobility and self-care and usual activities, pain and discomfort, anxiety depression. We're going to be adding this general health questionnaire to the standard validated CFQR questionnaire that people are familiar with, with with CF.

But with respect to PK and PD markers, it would be very similar to the first 3 cohorts. With respect to your second question, you were asking about OTC -- we're looking at 2 separate populations, the adult population and then the more severe disease in children. And these will likely are requiring 2 separate conversations with regulatory agencies to gain alignment on a pivotal study. The adults will likely be involving glutamine as a biomarker because that's where we captured success already, and we've learned -- we've collected some positive data already in our trials to date with respect to glutamine in adults, with respect to children that are suffering of more severe disease, the focus will be more on [ neomenia ] itself. And getting alignment with the FDA on that? And can we do a single-arm study, for example, in children to capture approval? But these sorts of conversations are separate and distinct enough to have separate meetings to address them as our expectation.

The best case scenario, of course, is that we gain alignment with both adults and pediatrics and that would be very exciting for this program to have line of sight in a broader population to get this approved as soon as possible. And any different scenarios would be if one of these were approved to proceed, for example. But anyway, thanks for your question.

We'll go next now to Myles Minter of William Blair.

This is Jake on for Myles. Just reflecting back on the imaging data you showed for CF. Do you expect that improvements you see in mucus over time, especially in that 20-week study will be bronchial or alveoli or specific as you sort of showed in that initial data set? And is -- is that what you saw in the mucus burden from the [ ferret ] model preclinically? And then just wanted to also check in on cost saves and see if you've updated your guidance as to when you're going to start realizing revenue from that program?

Okay. So first -- the first question is with respect to mucus plug reduction, one of the key observations that we've observed and is familiar with the field is mucus plugs form in the smaller airways, right? So as you resolve that, you measure smaller changes in airway improvement. FEV on the other hand, is mainly a measure of larger airways. So they're complementary, but they do not measure the same thing. And given enough time, we believe that both of these will improve. And so that's one of the purposes of the 12-week study. Before I move on to the KOSTAIVE commercial question, did I address your question, Jake?

I guess I wanted to know whether you expect those mucus reductions to occur across the entirety of the lung or whether a specific bronchial or specific alveoli are going to be resolved, given that you sort of boxed specific bronchiales in your presentation. denoting that because potentially LNPs are directed there primarily that that's where you're going to see an effect. I just wanted to know that. And whether you also saw sort of bronchial specific reductions in the lungs of the [ ferret ], when you dose those?

No. Great question. So first of all, with respect to the data that we collected in the images, you do see in the lower register, the lower lobes that they are first to resolve and show a reduction of mucus plugs and that's simply because this is an inhaled therapeutic. We've talked to now several pulmonologists that view this as confirmational that that we see, first, the lower register, the lower lows being addressed simply because this is an inhaled therapeutic. We expect over time that the effect will continue to improve. And that's what one of the primary purposes of the 12-week study is through an extended duration that will continue to address not only the lower lows, but the upper lobes as well. With respect to your question about ferrets, this is a different lung type entirely. They're not a vertical animal. So gravity is not -- and this was an injected process. This wasn't a traditional inhaled therapeutic, like the human experience. So we didn't expect to see a similar data set, and we didn't do CT scans in these ferrets as well. We analyze the data separately through [ mucociliary ] clearance.

Now with respect to the second question on KOSTAIVE guidance. Andy, do you want to provide maybe an answer there.

Yes. Thank you for the question. Typically, we do not provide guidance with respect to KOSTAIVE commercial revenue. And the last comment that came in press release that came from Meiji, they did order about 1 million doses for the fourth quarter, and that was delivered to them in October, November. So they're in the process of selling those doses in Japan. We don't really have an update subsequent to that, but probably look for an update sometime at the end of the year call in next March. Hope that helps.

We'll go next now to Seamus Fernandez with Guggenheim.

This is Ed Lang on for Seamus. Just 2 questions on Cystic Fibrosis with the upcoming 15 mg dose. Can you just talk about the metrics that will drive to know your decision reflect 10 or 15 mg in the subsequent Phase II, whether it's FEV1, CT scan or bode and what stably you may be looking for? And then with the subsequent 12-week study, curious what you define as success then with longer treatment in terms of either FEV1 or high res CT as you think about data relative to the interim even so far?

Yes. Thanks, Evan. With respect to the 15-milligram cohort, we want to gain additional confidence in the dose response we did not see any mucus plug reduction at 5 milligrams, yet we saw 4 out of 6 in the second cohort at 10 milligrams exhibit mucus plug reduction. So one of the things we're looking for at 15 milligrams is -- is there a continued or elevated response? And is that a dose response. But the most important data set that we're collecting from this third cohort is really safety and tolerability. If it's well tolerated, then I think we have our dose that we will select for this 12-week study coming up in the first half of next year. With respect to what we would define as success is if we see continued or further reduction of mucus plugs and that translates into additional benefits that can be either imaged or or experienced in terms of lung function improvements, and that would be fantastic, given that this is a first-in-line therapy for a considerable unmet medical need in Class I subjects and modulator nonresponders.

So anything positive for FEV would be viewed positively if we see an improvement with the extended duration or elevated dosing in this 12-week study with respect to the mucus plug reduction in mucus burden being decreased, that would be also very promising to encourage the Board and our company from to advance this into a Phase III trial.

And if I could ask one follow-up. Just curious in terms of the CT scan and mucus plugs, what commissions you as clinically meaningful? And what in terms of some of the regulatory discussions you've had, especially as an approach to include CT-scan as an exploratory end point, what they might view as a potentially approvable endpoint or whether focus would be on FEV1?

Well, we'll be the first company in CF to establish that. That's one of the key tasks at hand here as a group. As we share this data with the FDA, we need to determine what's clinically meaningful. What do we know now is that the more optimized mature modulators out there after a year of treatment, you can see near complete resolution of mucus plugs. And at an interim time point, you'll see not a complete resolution of mucus plugs. Unfortunately, we're the first -- well, unfortunately, we're the first company in therapeutic to evaluate CT scan measurements after only 28 days of treatment. So the fact that we saw some of these subjects responding 30%, 40% mucus reduction after just 28 days is encouraging. But the question you asked is what is meaningful?

I think we're already in that phase of a meaningful reduction. We just now need to extend treatment to see if that translates into other benefits and lung function improvements over an extended term. But the specific number, we're not prepared to share right now, no one is that, that is something that we can discuss at a later time with the agency.

We'll go next now to Whitney Ijem with Canaccord.

This is Angela on for Whitney. So you're planning to start this 12-week study starting in the first half of next year. Any idea when we should expect to see data from the 15-milligram cohort? And any thoughts on what endpoints you would show for the 15 milligrams?

Well, for the 15-milligram cohort, if you're referring to the third cohort, that's the 28-day study. It's the same data being collected under the same protocol for the first 2 cohorts. And that data is expected likely in the first quarter of next year. And as soon as that top line data is understood, we will be able to quickly then transition to the 12-week study. And focus on that. There -- but the parameters and the efficacy endpoints and safety and tolerability investigations are all identical to what we did for the first 2 cohorts for the 15-milligram third cohort. Did I address your question.

Yes. Yes. Maybe just one quick follow-up. Any chance you would show the analysis of the CT scans for patients who might not have responded and seen the decrease in mucus plugs? Or do you expect it to be similar?

Well, there's going to be a time for us to share the complete data package for the first 3 cohorts, right? We do have a 5-, 10- and 15-milligram cohort, I'm sure that will be a nice presentation or publication at some point. We haven't determined exactly when, but that would be an appropriate time to to just share all the data we've collected to determine if there's a dose response and provide those details. I've already shared on this call already that -- that 5 milligrams, we did not see any mucus plugs reduction. There was not observed. And at 10 milligrams, we saw 4 out of 6. So the 15-milligram cohort, we'll see if that recapitulates or gets better, and we'll have the opportunity to see if there's a dose response. At that time.

We'll go next now to Yanan Zhu with Wells Fargo.

This is Kuan on for Yanan. So our question is also around C. We am wondering, have you seen any data from 15 mg? And if so, any update on the safety and Will you be planning to evaluate any dose higher than that? And I have a quick follow-up.

Yes. 15-milligram will be the highest dose that we're evaluating. We intend to choose either 10 or 15 milligrams or something in between, perhaps, for the 12-week study in next year. When the 15-milligram cohort data is completed in the first quarter of next year, that's when we'll be able to make that decision. In terms of when we share data around that third cohort, that hasn't been guided. We'll first collect it and then make a determination how and when to share it. Did I address your question?

Yes. And I'm wondering, do you need to show a clear correlation between mucus or plug reduction and I'm wondering hypothetically, you only, for example, only mucus or plug reduction data is positive and [ FEV1 ] is not -- would that affect how you view the program and how you make [indiscernible] .

I had great conversations with a lot of the experts here at the NACFC in Seattle last month. And yes, CT imaging has been a primary endpoint in previously. However, that's not our present expectation. The FDA may not yet consider CT imaging as a surrogate endpoint at this time. But I think it's safe to assume that it will be a supportive endpoint. For like a Phase III or a pivotal trial. We first have to collect the data from the 12-week study and then share it with the FDA and have that conversation. If the data is convincing, yes, we'll look at primary or a co-primary endpoint that involves CT scan. But the present expectation is that CT imaging will be a supportive endpoint, very similar to what or can be had to go through where they have their primary being FEV, but the support of data played a key role in getting that approved as the first modulator or one of the early modulators.

We'll go next now to Yigal Nochomovitz of Citi.

This is Joan Kim on for Yigal. Regarding the extra screening visit that you had mentioned for the 12-week study, can you just provide additional clarity on whether you're planning on averaging the screening business together to get a more reliable baseline? And also, are you planning on just doing the one extra measurement? And I guess, why not multiple?

And why not do multiple -- it's a great question. We haven't had that conversation with the FDA yet. But the -- our present thinking around designing the trial is not only increasing the duration from 4 to 12 weeks and increasing the number of participants from 6 to 20, but it's also strengthening the baseline. And whether that's an additional FEV previsit or a second one? And do we average screening and to FEV pretreatments or not. That conversation will be one of the key questions of -- that we'll have with the FDA. Once we have aligned on that, I can provide more clarity. But the present expectation is just an additional pretreatment value that can be averaged and strengthening the baseline twofold.

Got it. And if I could just follow up with one more. I believe you had mentioned previously that the quality of life assessment for the Phase II for the [ CFQRSS ] was also variable and so you have decided not to share that. But I guess, is there a strategy in mind to reduce the variability there? So you could better interpret meaning it implies to the future? Or is the EQ-5D-5L questionnaire just less subject to variability?

Yes. So just to catch everybody up, the validated questionnaire that's used in the modulator space is well validated and quite comprehensive and it addresses multiple organs in the body. Our CFQR is truncated and focused on just the lungs because it's an inhaled therapeutic, so there's questions in the pulmonary section. And because of that and for other reasons and because of the smallness of the nature of our of 6 cohorts. The variability is just -- these questionnaires are more powerful and larger Phase III studies, but it's still variable to address that. In our upcoming 12-week study, we do intend to add additional general health questions, what's called an [ EQ-5D ]. And I touched on this earlier. But -- but when we look at mobility and self-care and pain discomfort anxiety depression. And this general health questionnaire will be coupled with this truncated CFQR that's more validated.

Just to add weight. To the questionnaire, and we'll see what we can glean from that. And to what extent we modify it or keep it for the Phase III trial will also be helpful in this upcoming 12-week study.

We'll go next now to Tom Shrader with BTIG.

I'm wondering in the next cohort, if there's any interest or thoughts about adding slightly less impacted patients where the lungs might be a little cleaner and delivery might be easier -- and then I appreciate your at arm's length on Costa. But can you comment -- are there ongoing discussions? Or has the FDA kind of made a statement and there's no room to discuss anything?

There's definitely room to discuss that they, of course, are interested in this first-in-line therapy for such a huge unmet medical need in the CF space. So there is still flexibility to discuss. With respect to your first question about less impacted individuals. We did you'd have to go to our website, but we enabled the cohort patient 5 Cohort 2 patient 5. This is someone who had more advanced disease and much more numerous plugs and even larger plugs. And we just got considerable positive feedback from the subject even though their mucus plug reduction was only 9%. And because the size of the plugs that were reduced were were meaningful. We're larger. So we found -- we had just a success, I would call it, with one particular more advanced subject. So the short answer to your question is no. We're not we're not refining the list of who's going to be getting the drug for this upcoming 12-week study because we found success in less advanced and more advanced disease.

We'll go next now to Yale Jen with Lade Long Company.

I apologize. I missed the earlier part of the conversation. Just a quick question about CSL in terms of the -- I understand the initial contract or deal with them, there's sort of 4 target infectious disease treatments via treatment. So I wonder any progress on those 2 other than the influenza and COVID. Any comment on that?

Yes, it's a great question. CSL and Seqirus are considering a demerging process, and they've publicly disclosed that. The timing of that is -- it remains uncertain. But if CSL and Seqirus demerge than Seqirus will be focused on the vaccine enterprise going forward, especially the flu enterprise. So -- with respect to the future of the program and the collaboration will come through that arm of the company. As of right now, COVID is, of course, still very active. Any guidance on the flu program will come from them going forward and likely the Seqirus branch if they demerge. With respect to any new programs, we have communicated in the past that those are being considered or active in certain degrees. But we haven't disclosed any of those details that they will be the right time and place to do it and it will likely be coinciding with any updates we hear from a CSL Securis demerger.

And we'll take our next question now from Lili Nsongo of Leerink.

Two questions. First, on the Cystic Fibrosis program. So the program -- the study was initiated in January, about 9 patients were dosed by September. You had mentioned initially that the 3 additional patients for Cohort 3 would be dosed by year-end. How should we think about the enrollment pace is 3 patients a quarter what we should expect moving forward? And does that also apply going into the 12-week study?

Yes. We've expanded the third cohort from 3. At our last quarterly call, we indicated that we -- or estimated that we would have 3 subjects in our third cohort. We've now communicated that, that could be expanded up to 6 and that would take us into the first quarter of next year. With respect to -- did I address that question first?

I mean this wasn't the question, but based on that pattern of having about [indiscernible] enrolled per quarter, should we also think about the pace of enrollment for the 20 patients for the 12-week study to be similar?

Yes. No, we're looking to add a considerable amount of sites in different countries as well to facilitate enrollment for this 12-week study. I alluded to this previously. But when we were at the Seattle conference or at the NACFC, we got to meet with a variety of investigators globally, not just limited to the U.S. So the percentage and prevalence of Class I and modulator nonresponders in other countries is extraordinary and untapped. So in addition to the dozen or so sites that we have opened here in the U.S. I believe that we'll be adding additional sites outside of the U.S. And that will -- is intended to accelerate the enrollment pace to support the end of 20 rather than the end of 6. For this upcoming 12-week study. So the short answer to your question is that we anticipate enrollment rate to increase with these additional sites and additional access to Class I and modulator nonresponders.

To what extent that increases will -- will be the first find out.

And is the global expansion and the additional sites? Is that captured in the current cash runway guidance?

Yes. But Andy, you can confirm that, that's captured in the runway guidance, correct?

Yes, that is all captured in the runway guidance. And the good news is that we had produced additional material for the CF clinical trials and consequently, the additional cost of expanding the trial is pretty much de minimis. So we're in very good shape there financially. Thank you.

Chris, second question regarding the OTC program. So can you give us an age range in terms of what your pediatric population target would be? Because the data we've seen so far is in 12 and older. And I was wondering what would it take to go to the younger patient? Or would you solely focus on pediatric patient that are 12 to -- 12 to 18?

That's one of the agenda related questions that we expect for these Type C type meetings with the regulatory agency with pertaining to pediatrics is what the cutoff age is. Whether it's 5 years old or 8 years old is going to be determined and finalized as part of that meeting. And then adults as well, is it going to be 12 and above or 16 and above or that will be -- that's one of the purposes of these meetings to get aligned with the pivotal trial protocol. And that clarity will be provided in the first half of next year is our anticipation. .

Do you expect to be able to go into pivotal in pediatric patients without an additional study needed to reach between the dynamic team?

Well, if we can accomplish that, that, that would be fantastic. But yes, that's the intent to what extent we can accomplish that, we'll find out. And -- all I know is there's a much more considerable unmet and medical need in these young specially X-linked males or boys. And the younger they are, the more severe the disease and the less the requisite or requirement that we have to to track glutamine as a primary driver, like it is in the adults. Adults is likely going to be more closely associated with glutamine as a biomarker. So there are 2 separate discussions.

And Mr. Payne, it appears we have no further questions this afternoon. Sir, I'd like to turn the conference back to you for any closing comments.

Thanks, everyone, for participating on the call. And if there are remaining questions by those that weren't able to pose them, don't hesitate to reach out to our team, and we'll get back to you as soon as we can. Thanks again.

Thank you very much, Mr. Payne again. Ladies and gentlemen, that will conclude the Arcturus Therapeutics Third Quarter Earnings Conference Call. Again, thanks so much for joining us, everyone, and we wish you all a great afternoon. Goodbye.