Arcturus (ARCT) Q4 2025 Earnings Call Transcript

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DATE

Tuesday, March 3, 2026, at 4:30 p.m. ET

CALL PARTICIPANTS

• President and CEO — Joseph E. Payne
• Chief Medical Officer — Alan Cohen, M.D.
• Chief Financial Officer and COO — Pad Chivukula, Ph.D.

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TAKEAWAYS

• Revenue -- Annual revenue decreased by $70.3 million and quarterly revenue decreased by $15.6 million, both declines attributed to lower CSL collaboration activity, reduced supply agreements, and milestone achievements.
• R&D Expenses -- Annual R&D expenses fell by $83 million and quarterly expenses by $19.3 million due to reduced manufacturing and clinical costs in LUNAR COVID, CF, Flu, and OTC programs.
• G&A Expenses -- Annual general and administrative expenses declined by $6.7 million, mainly from lower payroll, benefits, and share-based compensation, while quarterly expenses grew by $1.6 million from accelerated employee stock options.
• Cash Position -- Cash, cash equivalents, and restricted cash totaled $232.8 million as of December 31, 2025, compared to $293.9 million a year earlier.
• Cash Runway -- Management said the company “has extended our cash runway into 2028," reflecting spending discipline and strategic focus on rare disease programs.
• ARCT-032 (CF) -- No safety concerns observed at the 15 mg dose in the Phase II trial; the next 12-week study (targeting 20 class one CF adults) will start dosing in the first half of 2026 and will collect pulmonary function, quality-of-life, and CT-based endpoints.
• ARCT-810 (OTC Deficiency) -- The program is advancing to pivotal development with planned regulatory meetings in the first half of 2026 aimed at clarifying the clinical path for both adults and young children with severe disease.
• COVID-19 Vaccine (Costave) -- The UK Medicines and Healthcare Products Regulatory Agency granted approval in January 2026 for Costave, a self-amplifying mRNA COVID-19 vaccine, for adults 18 and older.
• STAR Vaccine (A/H5N1 Influenza) -- BARDA-funded ARCT-2304 completed Phase I in 292 subjects with all tested doses generating "durable immune response" over eight months; no safety concerns were reported.
• Clinical Study Design (CF) -- The upcoming 12-week ARCT-032 study implements stricter baseline stability criteria and expands international enrollment to reach higher concentrations of class one mutations.
• Legal Proceedings -- The lawsuit against AbbVie and Kapston Therapeutics, initiated September 23, 2025, remains ongoing.
• Dose Flexibility (CF) -- Management confirmed flexibility to increase Phase II dosing to 15 mg if needed, with historical safety up to 27 mg in human volunteers.

SUMMARY

Management stated that recent financial discipline has been sufficient to support the advancement of both ARCT-032 and ARCT-810 programs. The company’s rare disease platform gained regulatory and operational clarity, particularly with the planned engagement of US and international authorities to define pivotal trial criteria for both CF and OTC deficiency. Arcturus Therapeutics (NASDAQ:ARCT) also secured regulatory approval for its COVID-19 vaccine in the UK and completed early-stage, well-tolerated studies of its BARDA-backed influenza vaccine candidate, while maintaining a legal dispute with AbbVie and Kapston Therapeutics.

• Payne said, "annual and quarterly revenue decreased $70,300,000 and $15,600,000, respectively," directly linking the drop to CSL collaboration and a maturing COVID vaccine program.
• The Phase II ARCT-032 study for cystic fibrosis is designed to detect early efficacy signals via FEV1, LCI, quality-of-life, and high-resolution CT endpoints, providing the first potential evidence of sustained clinical benefit in class one mutation patients.
• Management is leveraging ongoing regulatory discussions in 2026 to clarify endpoints and trial structure for ARCT-810, with parallel paths for adults and children contemplated.
• The UK approval of Costave marks a notable regulatory milestone, but management stated that US market progress is delayed due to challenges with domestic regulatory authorities.
• Strict eligibility screening for the new CF trial, including stable baseline pulmonary function, could extend enrollment timelines but is expected to improve signal reliability.
• The ARCT-2304 pandemic influenza vaccine program demonstrated "durable immune response" and a safety profile "similar to other vaccine technologies," but management emphasized the lower dose requirement for its self-amplifying mRNA platform.
• Company leadership stated, "Arcturus Therapeutics has extended our cash runway into 2028," affirming sufficient liquidity through planned milestones and development phases.

INDUSTRY GLOSSARY

• LCI (Lung Clearance Index): A pulmonary function test assessing ventilation distribution in small airways using multiple-breath washout, considered sensitive and not subject to variability from patient effort.
• sa-mRNA (self-amplifying messenger RNA): A form of mRNA that allows lower-dose vaccine formulations by amplifying the encoded antigen expression inside cells.
• CFQ-RR (Cystic Fibrosis Questionnaire-Revised Respiratory): A disease-specific, quality-of-life instrument tailored for cystic fibrosis patients, focusing on respiratory health.
• TDN (Therapeutic Development Network): A network administered in collaboration with the CF Foundation to facilitate clinical trials in cystic fibrosis.
• Type C Meeting: An FDA regulatory interaction to obtain advice on complex issues in drug development when formal guidance or consensus is required.

Full Conference Call Transcript

Joe Payne, our President and CEO, and Doctor Alan Cohen, our Chief Medical Officer. Doctor Pad Chivukula, our CFO and CEO, 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 statements 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 Therapeutics Holdings Inc. disclaims any obligation to update such statements, and with that, I will now turn the call over to Joe.

Joseph E. Payne: Thank you, Neda. It is 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 mg in four class one CF adults, which showed no safety concerns. The upcoming multi-month study will enroll patients in the US 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 Costive, where in January 2026, the UK 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 eight-month follow-up data after the initial vaccination showed that all three dose levels, 1.5, 5, and 12 micrograms, generated a durable immune response.

The results also reinforced the 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 STAR sa-mRNA platform. Also briefly, our lawsuit against AbbVie and Kapston Therapeutics filed on 09/23/2025 remains ongoing. With that, I will now pass the call to Alan.

Alan Cohen: Thank you, Joe. It is certainly good to be here with all of you today. I will 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 Therapeutics Holdings Inc.’s 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 2026.

We recently completed once-daily dosing of 15 mg of ARCT-032 over 28 days in the third dosing cohort. This cohort included four CF adults with class one null 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 four weeks. We will include two 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 two quality of life measures, the CFQ-RR and the EQ-5D-5L, 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 one CF mutations from clinical sites in the US and abroad. The goal of this upcoming 12-week study is to establish a clearer picture of longer-term safety, 12 weeks versus four 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 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 in 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 two distinct populations. Our type C regulatory meetings with the health authorities, along with their feedback, remain on track for 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 will now pass the call back to Joe.

Joseph E. Payne: Thanks, Alan. We indeed look forward to initiating enrollment in our 12-week CF study and gaining clarity and alignment with regulatory for the next stages of development for ARCT-810. Now with respect to Arcturus Therapeutics Holdings Inc.’s 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 $70,300,000 and $15,600,000, 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 Co was commercialized. Annual and quarterly research and development expenses also decreased year over year by $83,000,000 and $19,300,000, respectively, which was primarily driven by lower manufacturing and clinical costs related to the LUNAR COVID 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.

We remain focused on this clinical study. General and administrative expenses decreased annually year over year by $6,700,000 due to reduced expenses for payroll and benefits, as well as share-based compensation. Quarterly general and administrative expenses increased year over year by $1,600,000 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 $232,800,000 as of 12/31/2025, and $293,900,000 on 12/31/2024. Through disciplined execution and a strategic refocus on existing rare disease clinical programs in fiscal year 2025, Arcturus Therapeutics Holdings Inc. has extended our cash runway into 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, we will now open for questions. Thank you.

Operator: Thank you. Our first question comes from Yasmeen Rahimi with Piper Sandler. Your line is open.

Yasmeen Rahimi: Good afternoon, team. Thank you so much for the prepared Gavaran. Would love to understand, as you guys are going to be taking off the 12-week Phase II study, I think you guys spent 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 the number of patients as soon as you kick off the study, you could enroll quickly the patients for it. With that, I will jump back into the queue.

Joseph E. Payne: Yeah. Thanks, Yaz. Appreciate the questions as always. With respect to how the 12-week study that we are initiating here soon is different from the four-week study, we have Alan on the line. He will highlight some of those differences so that the investors out there can understand.

Alan Cohen: Sure. No problem. Thanks, Joe. Great question. So first things first, one of the main fundamental differences between the study that we have done with dose ranging from cohorts one through three is that cohort four 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 are setting parameters. We will not be enrolling a CF patient until they are stable with respect to baseline lung function measures, and this should help us allow us to observe true clinical signals, enhancing the noise-to-signal ratio.

In addition, we are going to be including lung clearance index using MBW, which is not subject to variability issues that are sometimes seen in spirometry. And that is why LCI has been used and preferred in children because of its ability to be reproducible and not patient- or performance-dependent. In addition, we are going to be looking over a 12-week period instead of just simply four weeks, with the general thinking that the longer period of time will allow the drug that we are studying to manifest clinical benefits in the airway. Lastly, we are including not just LCI using MBW and percent predicted FEV1 spirometry, but two additional quality of life measures, the CFQ-RR and the EQ-5D-5R.

So two 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.

Joseph E. Payne: Yeah. Thank you, Amy. And we do continue to strengthen our relationship with the CF Foundation. They are keenly aware of the modulator nonresponders in their community, both here in the US and abroad. And so we work closely with them. In fact, the TDN themselves permitted our study to proceed after reviewing the first three cohorts of data into this fourth cohort, into this 12-week study. So they are closely involved and engaged. Thank you.

Operator: We will move next to Pete Stavropoulos with Cantor Fitzgerald. Your line is open.

Pete Stavropoulos: Yes. Hi, Joe, Alan, and team. Nice to see the progress. So, you know, you mentioned LCI for CF. Can you talk a little bit about this test, how sensitive is it? I think you mentioned it is 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? If so, how would that impact your enrollment criteria for the Phase II?

Joseph E. Payne: Oh, it is a great question, Pete. LCI is definitely another lung function measurement that we are collecting in this 12-week study. Definitely more sensitive. Alan, perhaps you can discuss about the multiple readings and how well it correlates and how reliable it is.

Alan Cohen: Sure. Of course, and a great question. Thank you for asking about this. LCI, as I mentioned, does not 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 is really why LCI historically in CF has been used in children who cannot always perform spirometry reproducibly. It is a much more passive maneuver requiring just normal tidal breathing, so comfortable breathing in and out, and as a result, usable measure for, more importantly, the most early and more subtle changes in the smallest airways.

So why we are 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 more active engagement to be sufficiently reproducible.

That is why I was alluding earlier to the controls that we are 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.

Pete Stavropoulos: Alright. Thank you for that. And, also, just a question on the OTC program. As you are having your discussions with regulatory authorities about a registrational trial, how has their reception been for certain biomarkers and assays, like ureagenesis function using the nitrogen-15 isotope, or any other biomarker they may be less familiar with? And what is sort of the base case outcome for a study design?

Joseph E. Payne: Well, they are all great questions, and that is currently where we are. We are actively engaged in preparing for these type C meetings, and in the next few months we are going to be in a much better position to answer those with granularity and specificity. But that is exactly what we are currently engaged with the FDA on, 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 clinical development. So we will have that regulatory clarity shortly. That is our intent. That is our aim.

And they are all good questions, but we will be in a better position to answer those in a few months.

Pete Stavropoulos: Alright. Thank you very much, and congrats on the quarter and the progress.

Operator: We will move next to Seamus Fernandez with Guggenheim Securities. Your line is open.

Evan Wang: Hi, guys. This is Evan Wang on for Seamus Fernandez. Just a few from us. Looking forward to the start of the 12 weeks CS study. 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 scans? Second, just concurrent in terms of the planned enrollment for CF, and you mentioned both US and international recruitment. Just curious how you are thinking about maybe the split between US and abroad. Thanks.

Joseph E. Payne: A couple good questions. First of all, a point of clarification just so it is not misunderstood. We have achieved safety and tolerability data for the 15 mg level, but we are actually initiating our fourth cohort at the 10 mg level. We were fortunate to see early efficacy, some early clinical signals in our smaller cohorts at 10 mg. So we are 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 US, and we are enrolling internationally, including Europe and the Middle East, but Alan can maybe share the strategies as to why we are expanding our enrollment in other countries.

Alan Cohen: Sure. Thank you, Joe, and a great question. So the plan right now, we have actually expanded our US sites, so we have additional US sites ready to go for the cohort four 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 one 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.

Evan Wang: 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 responder rate at the 15 mg relative to the 10? Did you see a response on FEV or did you scan there? I guess, in terms of similar benchmarks, how you presented the earlier data? Thanks.

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

Evan Wang: Got it. Thank you.

Operator: We will move next to Lili Nsongo with Leerink Partners. Your line is open.

Lili Nsongo: Hi, good afternoon. Thank you for taking my question. So two 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 mg given that you have not seen any CT signal? And would there be design flexibility to potentially increase the dosing as you accumulate data? And then I have a follow-up question on the OTC program.

Joseph E. Payne: Yes. We definitely have the flexibility to increase dosing, and we are very happy that we already have the ability to increase to 15 mg if necessary. To maybe reiterate that 10 mg showed early signs of working in the second cohort, so we are simply extending the duration of that treatment in the larger cohort. And we are now pleased that we have the flexibility to increase dosing to 15 mg if needed. It is 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 mg in our early trials in human volunteers, so there is some headroom there to expand further, but feel confident in the dose that we selected at 10 to start the fourth cohort.

Lili Nsongo: Okay. Thank you. 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.

Joseph E. Payne: Yeah. I think that is 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. A different population. But anything to add to that, Alan?

Alan Cohen: Yeah. 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 is 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 give more latitude and flexibility in terms of how one conducts those studies, as long as there is sufficient safety and tolerability and, obviously, efficacy. So we are encouraged by the early conversations that we are having with the agency right now, and we will continue to pursue those to the benefit of the OTC deficiency community.

Lili Nsongo: Right. Thank you for the added color.

Joseph E. Payne: Thanks, Lily.

Operator: We will move next to Yanan Zhu with Wells Fargo. Your line is open.

Yanan Zhu: Thanks for taking our questions. Maybe first on the CF program. I think you mentioned one effort in cohort four is to obtain stable baseline. Remind us why that is important. How are you going to go about and do that? And also curious, during the three months trial period, could it be possible that a patient had a stable baseline, but for some reason, their reading could begin to fluctuate or drift after having had that stable baseline within a three-month period. Thank you.

Joseph E. Payne: Thanks, Yanan. Yeah, cohort four is definitely different with respect to the first three cohorts in that we have designed it with a stronger baseline. Alan, maybe you can comment further there.

Alan Cohen: Yeah. So what we have done here, and it is a great question, you know, 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 are looking for at baseline with these adults with CF is at least enough, and as small as possible variability within the period of time that we screen to baseline to get them enrolled, that we believe that we have an as accurate representation of where they are at that moment in time as far as their lung disease is advancing and progressing.

It is not unexpected in the course of a three- or six-month period that many of these patients may have an acute pulmonary exacerbation or an acute illness, and we are 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, etcetera, particularly those who are vulnerable and chronically infected with pathogens. So we are really tightening up the enrollment criteria. We are setting parameters, and that is why we believe we are just looking to make sure that it is reproducible and stable at that baseline.

We are not going to be enrolling CF patients that may be in the early throes of a pulmonary exacerbation or an acute illness. 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 consistent study subject performance. It is 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 are trying to achieve here.

Yanan Zhu: Great. That is 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 perhaps also what might be the base case scenario for the alignment. And lastly, I wanted to wonder if you have any update on the COVID-19 vaccine initiatives between you and CSL. Thank you.

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

Alan Cohen: No. And, you know, obviously, in these patients, the goals and objectives for the children are quite different. Because of the severity and labile 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, 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 palatable and acceptable to the families and patients as well as the caregivers and their current standards of care.

Joseph E. Payne: And the details of that, we will be able to provide that granularity in a couple months. But I appreciate the question. With respect to your CSL-related question and 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 domesticated has made it challenging to progress Costave to licensure or approval in the near term here in the US. So because of this, and understandably, CSL and Arcturus Therapeutics Holdings Inc. are in active discussions regarding our collaboration.

And we are going to be able to provide more color on that in the coming months.

Yanan Zhu: Great. Thanks for all the color.

Joseph E. Payne: Thanks.

Operator: We will take our next question from Myles Minter with William Blair. Your line is open.

Myles Minter: Hi. Thanks, guys, for the questions. First one’s just on the fact that I think you are deciding between the 10 mg and the 15 mg dose for the 32 Phase II trial. Think you are waiting on 15 mg efficacy data. You have got the safety and tolerability, obviously. I am 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, which dose would you take forward? Or would you take both doses forward? I am trying to understand your logic.

Joseph E. Payne: Sure. Sure. So it is relatively straightforward in that 10 mg showed early signs of working in the second cohort. So we are simply extending the duration of treatment into a larger cohort and extending that duration. We now have the flexibility to increase the dose. That is what this means, and only if needed. There are many that are suggesting that efficacy is achieved through simple duration by extending the treatment, and we are going to prove that. And at some point, because it is an open-label study, if we feel we need to increase the dose, we can. I also remind folks that it is a fairly pricey product to manufacture.

So if we can keep cost of goods down, that is also a good benefit by keeping the dose down at around 10 mg as well. But it is simply based on data that at 10 mg we saw progress. So we think we are going to extend the duration and the size of the study to see if it works in that context, in the fourth cohort. And we now have the flexibility to increase the dose if needed.

Myles Minter: Cool. Thanks.

Joseph E. Payne: Thanks, Myles.

Operator: We will take our next question from Adam Walsh with ROTH Capital. Your line is open.

Adam Walsh: Hi, good afternoon. Thanks for taking my questions. The first on 32, the CF product. You have talked about the first week in your clinical trials or two of being an onboarding phase where the drug is sort of getting through the congested airways. So in a 12-week study, you would have roughly 10 productive weeks versus maybe two or three 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? Thank you.

Joseph E. Payne: Yeah. Adam, that is a thoughtful question, and you are absolutely right. We view that in our 28-day study, we observed consistently that there was a one- to two-week onboarding phase, and so in reality, there is really only a two-week healing phase for that 28-day study. So as we go to the 12-week study, assuming a similar onboarding rate of one to two weeks, then you have 10 full weeks of potential healing and efficacy reads. So it is a difference between two and 10 weeks. So from that perspective, it is a significant improvement. But if you look at the study as a whole, we are going from four weeks to 12 weeks. It is a threefold difference.

That is also a significant bump. And your observation is sound, and we agree with you that it is not only threefolding the time of the study, but increasing the duration of potential healing and efficacy with this 12-week study.

Adam Walsh: Thanks. And then if I could, one on 810 for OTC deficiency. Phase II patients paid on standard of care. So to my knowledge, we have not 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. Thank you.

Joseph E. Payne: Hey. That exact question is in the agenda of our type C meetings this year, for both the children early-onset and also with the stable adult population. So it is the right question. We will be able to provide the answer to that question in more detail in a couple months after our type C meetings are completed, and we proceed with their feedback.

Adam Walsh: Thank you.

Joseph E. Payne: Thanks, Adam.

Operator: We will take our next question from Whitney Ijem with Canaccord. Your line is open.

Angela Qian: Hi, guys. Thank you for taking our questions. This is Angela on for Whitney. Maybe just to follow up on the CVS program again. So I understand you are progressing with the 10 mg for the four-week study. But are you still looking at efficacy in the 15 mg cohort? I guess, what efficacy endpoints are you looking at? And will you be sharing that data at some point, either in a PR or in a medical conference?

And then second part is, would it be possible that you would run another 12-week study using the 15 mg, or do you, when you talk about the option, would that be to dose up with that part of the current amyloid brain study? Thank you.

Joseph E. Payne: Yeah. It is unlikely that we will be sharing any more data from the first three cohorts. We are focused on the fourth cohort, this almost took a Phase 2B-type study where we believe that our best shot on goal here is in a 12-week duration study. And that is where we are focusing on. So I think that is where the investors should also be focused on. But you have asked, are we collecting data for 15 mg? Absolutely. Is there a time and place to share that data? Yeah, very likely. But we remain focused on the 12-week study is the short answer to your question.

Angela Qian: Got it. And then will you potentially be dosing up to 15 mg in the 12-week study, or would that be a separate study?

Joseph E. Payne: Only if needed. It is an open-label study. We have the flexibility to do it based upon what has happened in the third cohort, which is great. And we still collected all the data, of course, and that additional data could sway our minds either direction. But right now, we are initiating the fourth cohort at the 10 mg dose level, and we have the flexibility now to increase it if needed.

Angela Qian: Great. Thank you.

Joseph E. Payne: Thank you, Angela.

Operator: And we will take our next question from Yigal Nochomovitz with Citi. Your line is open.

Shuwon Kim: Hi, guys. This is Shuwon Kim on for Yigal. Thanks so much for taking our question. I kind of have a multipart question, but I believe in the Phase Ib you had also assessed LCI. 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 this ranging Phase II, did the FDA get a chance to look at the LCI data by any chance?

Joseph E. Payne: Yeah. You are 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 a single administration or two administrations in Phase Ib. I would defer to Alan in terms of that data from Phase Ib. With respect to LCI as an endpoint, I think defer to Alan. He can talk about what the literature shows or the magnitudes of changes in LCI to get approval previously in children, etcetera. Go ahead,

Alan Cohen: Sure. No problem at all. And it is a great question. I was not 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. You know, the challenge of it is, once again, it was small numbers of patients. In the way we are constructing things now, the plan is to benefit from that prior experience and perhaps do it in a more refined way. Right now, 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 are doing right now in patients with null mutations, 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 other piece about this, I think, is that there is 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 are doing the study in a manner that should optimize its utility and value, and we are also doing it in an alignment and 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 four-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 is helpful to you.

Shuwon Kim: Yes. Thank you very much. Appreciate it.

Operator: We will move next to Tom Shrader with BTIG. Your line is open.

Thomas Shrader: Good afternoon. Thanks for all the updates. There have been a lot of questions. I assume you have 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 have any patients where it is possible to calculate that in 12 weeks the mucus plug should be gone? Did you have that level of data? And I have a quick vaccine follow-up.

Joseph E. Payne: Well, we saw four out of six subjects in the second cohort, that was a 10 mg 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 is an outlier or whether that is simply a nonresponder, we will learn as we collect more data, especially in this extended study that is larger. But it seems that a majority of these subjects respond with a reduction in mucus plugs, and we feel that is important to mention. And that is an early sign of some clinical activity.

With respect to your other question, maybe you could restate it, and we can turn that over to—

Thomas Shrader: But just a sense for rates of clearance. Do you have confidence that 12 weeks is enough, or is that more just the next trial you are allowed to do?

Joseph E. Payne: That is the big question. Clearly, we saw something in 28 days, so there is reason to be confident that we will see it in an extended study, larger study. And it is not just a larger extended study, but we are looking at a better study, a study that is designed more tightly with respect to numbers and baseline steadiness. But anything to add, Alan?

Alan Cohen: Yeah. 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 technology, 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 is understood that the time constants and the damage that occurs in the lungs of people with cystic fibrosis is really quite patchy.

And what is remarkable, I am a former lung transplant physician from Washington University, and I am one of the few people that has 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 is impressive about the disease is the very patchy nature, both in the upper and lower lobes, and you could 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 is 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 constants, the ventilation-perfusion matching, and just the nature of what is going on actively day-to-day with infections, will really always make this challenging.

Even mucolytic drugs like Pulmozyme, 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 at 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 is the totality of what we are able to observe, and the plan is to be able to correlate those improvements with things like lung clearance index, which clearly has—and someone was alluding to this in their question earlier—that is one of the measures that we believe, since we have already shown improvements in high-resolution CT scan mucus plug burden, it would not be surprising to see and observe changes in lung clearance index commensurate with that, since those two measures actually go hand in hand. So hopefully, that is helpful to you.

Thomas Shrader: No. That is great. Very useful. And then just a quick follow-up. On your pandemic flu vaccine, you have not 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 of how things are going to look?

Joseph E. Payne: Yeah. 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 have seen consistently is any dose-related toxicologies will be beneficial to the self-amplifying mRNA tech from Arcturus Therapeutics Holdings Inc. But, in general, it is similar to other vaccine technologies from a safety and tolerability standpoint.

Operator: We will move next to Yale Jen with Laidlaw and Company. Your line is open.

Yale Jen: Good afternoon, and thanks for taking the questions. In terms of the CF next 12-week study, and you are looking for a more stable baseline, would that increase the time and the size for the screening for the study? And also, how long duration to define as a more stable baseline before the patient will be eligible for the study? And then I have a follow-up.

Joseph E. Payne: Yeah. We are 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?

Alan Cohen: Yeah. I mean, this is a great question, and it is 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 is 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 are looking for modest improvements over, in the case of our studies, first three cohorts over a four-week period, to now a much larger group of patients over now a 12-week period, we do want to make sure that we are not just identifying the right patients, but we are also catching them at a time in the course of their disease where they are at least stable enough so that we can introduce our drug and begin the baseline assessment, that when we get to the end, we at least have a comparator that is stable, reasonable, and discernible.

So right now, it is possible, based on the way we have constructed this study—and I have 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 are getting acutely ill and we just happen to be catching it during the course of the baseline and the screening, or they may be in the late stages of resolving their illness, and we are seeing enough of a difference between two measures over a relatively short period of time that it may just speak to the unstable nature of what is 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 is really the intention. And it may mean a few weeks or a month longer to enroll a given patient, but it should not add much in terms of the time. I think the goal here is to really find the best patient at the best time. Hopefully, that helps you.

Yale Jen: Absolutely. That is very helpful. Maybe just a quick one on the OTC. I know it is still early a little bit, but does the company intend, at least the desire, to potentially start both the adult and pediatric trials relatively concurrently, or is there any priority, one before the other?

Joseph E. Payne: I think the intent is always to get into the children with high unmet medical need as fast as possible. But we are going to adhere to the advice and feedback from the FDA from these type C meetings. So we will be able to answer that with more granularity in a few months.

Yale Jen: Okay. Maybe the last question. Does CSL intend to launch Costave in the UK, or do we know that? And thanks.

Joseph E. Payne: I would refer everyone on the call to see what they have said publicly at their recent investor calls and their filings. We do not anticipate anything soon out of the United Kingdom commercially from Costave, but I refer you to their statements that they are saying publicly. We will see where we are with the CSL agreement and our discussions with them in the coming months.

Yale Jen: Okay. Great. Thanks a lot, and congrats on the progress.

Joseph E. Payne: Thanks, Yale.

Operator: 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.

Joseph E. Payne: Thank you, Operator. I would 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.

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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