Arcturus (ARCT) Q1 2026 Earnings Call Transcript

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DATE

Thursday, May 7, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Joseph Payne
• Chief Medical Officer — Alan Cohen
• Chief Financial Officer — Dennis M. Mulroy
• Chief Scientific Officer and Chief Operating Officer — Padmanabh Chivukula

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TAKEAWAYS

• Cash, Cash Equivalents, and Restricted Cash -- $213.4 million as of March 31, 2026, down from $232.8 million as of December 31, 2025, supporting a self-reported runway beyond Q2 2028.
• Quarterly Revenue -- Decreased year over year by $27.3 million, primarily due to reductions in CSL collaboration revenue as focus shifted to rare disease clinical programs.
• Research and Development Expenses -- Decreased by $13.4 million year over year, largely attributable to lower manufacturing costs for LUNAR-COVID, BARDA, and reduced LUNAR-COVID clinical trial costs, partially offset by higher LUNAR-OTC manufacturing costs.
• General and Administrative Expenses -- Decreased by $1.8 million year over year due to lower share-based compensation and payroll/benefits stemming from headcount reduction.
• CF Program (ARCT-032) Clinical Progress -- Twelve-week, open-label Phase II study in Class I cystic fibrosis began enrollment in Q1; continuous dosing beyond one month achieved and described as unprecedented for inhaled mRNA therapeutics.
• Regulatory Update: ARCT-810 (OTC Deficiency) -- Post-Type C FDA meeting, received "clear regulatory direction on a path toward a pivotal pediatric study" and are preparing for an end of Phase II meeting in the second half of 2026.
• KOSTAIVE Commercialization -- Partner Meiji in Japan is manufacturing KOSTAIVE, the self-amplifying mRNA COVID vaccine, for the 2026-2027 season with commercial guidance provided by Meiji.
• Enrollment Expansion: CF Program -- Enrollment expanded to ex-U.S. sites to access populations with high prevalence of null mutations; study aims for up to 20 subjects in the current cohort.
• ARCT-810 Segment Focus -- Active collection of exploratory data at 0.3 and 0.5 mg/kg dosing groups to inform pediatric study; segmentation for pivotal study will emphasize children under 6 years old with severe OTC deficiency.
• Leadership Changes -- Appointment of Dennis Mulroy as CFO and Dr. Alan Cohen as CMO, both with "extensive and relevant experience" per management statements.
• Endpoints for ARCT-032 -- Study includes monitoring of percent predicted FEV1, lung clearance index (LCI), two validated quality-of-life measures, and high-resolution CT imaging; performance characteristics designed for stringent reproducibility.
• Safety/Tolerability Differentiation -- No use of steroids as co-treatment for ARCT-032 and regulatory approval for unsupervised home dosing differentiate Arcturus from competitors.
• CT and Respiratory Data Collection -- High-resolution CT scans are conducted before and after the dosing period; lung function measures are collected at each site visit during the 12-week period.
• Collaborative Biomarker Approach: ARCT-810 -- FDA has prioritized ammonia and glutamine as key biomarkers; ureagenesis remains in development as an exploratory biomarker.
• Planned Milestones -- Sufficient enrollment and data for ARCT-032 anticipated later in 2026 to inform program direction and potential future expansion to people on or off modulators.

SUMMARY

Management emphasized regulatory advancement for ARCT-810 in OTC deficiency, reporting completion of two Type C FDA meetings and alignment on the pediatric clinical strategy. Recent addition of ex-U.S. trial sites is intended to facilitate more rapid enrollment for the ARCT-032 cystic fibrosis program, targeting up to 20 subjects globally. The company highlighted the successful initiation and ongoing dosing in its first-ever 12-week, open-label Phase II study using inhaled mRNA therapy in Class I CF, with high-frequency data collection of multiple endpoints. KOSTAIVE commercial production for Japan’s 2026-2027 COVID season is underway through partner Meiji, who will provide all commercial guidance in that market. Cash reserves of $213.4 million were reported as sufficient for planned clinical and regulatory milestones through at least mid-2028.

• Alan Cohen stated, "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."
• Joseph Payne noted the "FDA has not defined a threshold of success for FEV or LCI" for the ARCT-032 program, distinguishing it from prior standards set for CF modulators.
• ARCT-032’s approval for home-based unsupervised dosing, alongside the absence of steroid co-treatment, was emphasized as a regulatory and safety distinction compared to competitors.
• Leadership outlined a plan to present a comprehensive data package to the FDA later in 2026 for both clinical evidence and biomarker validation in rare liver and respiratory diseases.

INDUSTRY GLOSSARY

• Type C Meeting: A formal FDA meeting to obtain regulatory guidance on specific drug development questions or pathways outside routine milestones.
• FEV1 (Forced Expiratory Volume in One Second): The volume of air a patient can forcibly exhale in one second, an important measure of lung function in respiratory trials.
• LCI (Lung Clearance Index): A sensitive indicator of small-airway function that detects early changes in lung physiology, often used in cystic fibrosis studies.
• High-Resolution CT (HRCT): Advanced imaging technology for detecting regional changes and mucus plugging in pulmonary diseases.
• Mucus Plug: An airway obstruction resulting from thickened mucus, tracked as an efficacy endpoint in cystic fibrosis trials.
• Null Mutations: Genetic alterations that result in the complete loss of function of the affected gene, relevant to patient selection in cystic fibrosis therapies.

Full Conference Call Transcript

Joseph Payne: 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.

Alan 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.

Dennis M. Mulroy: 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.

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

Boran Wang: 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?

Joseph Payne: 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.

Alan Cohen: 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.

Joseph Payne: 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.

Operator: Our next question comes from Lili Nsongo with Leerink Partners.

Lili Nsongo: 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?

Joseph Payne: Go ahead, Alan.

Alan Cohen: 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.

Operator: We will move next with Yanan Zhu with Wells Fargo.

Unknown Analyst: 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?

Joseph Payne: 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.

Alan Cohen: 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.

Joseph Payne: 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.

Operator: We will move next with Myles Minter with William Blair.

Jake Batchelder: 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 trial has been discontinued.

Joseph Payne: 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?

Alan Cohen: 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.

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

Mayank Mamtani: 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.

Joseph Payne: 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.

Alan Cohen: 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.

Mayank Mamtani: 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]

Joseph Payne: 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.

Alan Cohen: 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.

Joseph Payne: And LCI also has a correlation between mucus plug reduction and in so much 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.

Mayank Mamtani: 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?

Joseph Payne: Did you understand the question?

Alan Cohen: 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.

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

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

Joseph Payne: 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.

Adam Walsh: 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?

Alan Cohen: 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.

Adam Walsh: 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?

Joseph Payne: 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.

Operator: We will move next with Whitney Ijem with Canaccord.

Angela Qian: 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?

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

Padmanabh Chivukula: 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.

Joseph Payne: Did we address your question?

Angela Qian: 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?

Joseph Payne: 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...

Padmanabh Chivukula: 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.

Alan Cohen: 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.

Operator: We will move next with Yigal Nochomovitz with Citigroup.

Joohwan Kim: 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?

Joseph Payne: 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.

Joohwan Kim: 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.

Joseph Payne: 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.

Alan Cohen: 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.

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

Joseph Payne: 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?

Joohwan Kim: 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.?

Joseph Payne: Go ahead and comment on that.

Alan Cohen: 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.

Operator: We will move next with Thomas Shrader with BTIG.

Unknown Analyst: 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?

Joseph Payne: 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?

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

Yale Jen: 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.

Joseph Payne: 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?

Alan Cohen: 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.

Operator: 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.

Joseph Payne: 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.

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

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