Arcturus Therapeutics Q1 2024 Earnings Call Transcript

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Provided by Quartr
May 8, 2024

There are 13 speakers on the call.

Operator

Good afternoon, ladies and gentlemen, and welcome to the Arcturus Therapeutics First Quarter 2024 Earnings Call.

Speaker 1

At this time, all lines are

Operator

in listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Wednesday, May 8, 2024. I would now like to turn the conference over to Neda Safarzadeh, Vice President, Head of Investor Relations, Public Relations and Marketing of Arcturus Therapeutics. Please go ahead.

Speaker 1

Thank you, operator. Good afternoon and welcome to Arcturus Therapeutics quarterly financial update and Pipeline Progress Call. Today's call will be led by Joe Paine, our President and CEO and Andy Sassen, our CFO. Doctor. Pat Chibukula, our CSO and COO, will join them for the Q and A session.

Speaker 1

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

Speaker 1

ArcTrust specifically disclaims any obligation to update such statements. And with that, I will now turn the call over to Joe.

Speaker 2

Thank you, Neda. It's good to be with you again, everybody. I will begin my remarks with an update on progress regarding our COVID-nineteen vaccine program. We are excited to initiate the commercial manufacturing effort for COSTAVE to support the upcoming fall and winter vaccination season in Japan. We're pleased to report that we remain on track to deliver the initial 4,000,000 doses to Japan in the Q3 of this year.

Speaker 2

Our partner Meiji intends to then distribute the COSTA vaccine throughout the upcoming fall and winter season. In March, the company along with our partner CSL and their partner Meiji Pharma announced that our bivalent COVID-nineteen vaccine candidate ARCT-two thousand three hundred and one met the primary endpoint of non inferiority in a Phase 3 clinical study in Japan with 9 30 healthy adults who previously received 3 to 5 doses of mRNA COVID-nineteen vaccines. We were pleased to see yet again a superior immunogenicity and neutralizing antibody response of bivalent ARCT-two thousand three hundred and one to a bivalent conventional mRNA comparator. And that this was confirmed for both the Omicron BA. Fourfive and Wuhan strains.

Speaker 2

There were no causally associated serious adverse events with ARCT-two thousand three hundred and one. Arcturus along with CSL also initiated a Phase 3 study with the monovalent ARCT-two thousand three hundred and three candidate vaccine containing the Omicron XBB 1.5 variant. The purpose of this study is to generate additional immunogenicity and safety data for our platform in multiple ethnicities to support product licensure in the United States. The study will also assess the co administration of ARCT-two thousand three hundred and three with the age appropriate seasonal influenza vaccines. Approximately 1680 young and older adults are planned to be recruited in this study throughout multiple countries in the Southern Hemisphere.

Speaker 2

Our ongoing Phase 3 vaccine studies showcase the consistent superiority, breadth and durability of the Arcturus Star vaccine platform. We continue to make progress in expanding the global CoStave franchise. As reported previously, we filed a marketing authorization application for CoStave to the European Medicines Agency or EMA. The iterative regulatory process continues to advance with the European Commission expected to provide an approval decision in the Q3 of this year. Moving to ARCT-two thousand one hundred and thirty eight.

Speaker 2

The ARCT-two thousand one hundred and thirty eight program or the quadrivalent seasonal influenza vaccine program through our partner CSL is progressing well. As of May 1, 2024, 84 healthy young adults were recruited in the Phase 1 dose finding and immunogenicity study and received 1 of 4 dose levels of the study vaccine or a licensed influenza vaccine. The recruitment of older adults is ongoing and the company anticipates Phase 1 top line immunogenicity and safety data in the Q3 of this year. It is important to emphasize that this flu study will also help us understand how high we can eight ten program. This is our messenger RNA therapeutic candidate for ornithine transcarbonylase or OTC deficiency.

Speaker 2

In April, the company presented Phase 1 single ascending dose studies for ARCT810 at the Society For Inherited Metabolic Diseases Annual Conference. The ARCT810 Phase 1 single ascending dose study enrolled 30 adults randomized 2 to 1 to receive 0.1, 0.2, 0.3 or 0.4 mgs per kilogram dose or placebo as an intravenous infusion. A Phase 1b SAD study enrolled 16 adults with mild OTC deficiency And that was randomized 3:one to receive single doses of 0.2, 0.3, 0.4 or 0.5 mgs per kilogram or placebo administered by intravenous infusion. The results showed that ARCT810 was generally well tolerated with no serious or severe adverse events in both studies. The encouraging results from ARCT810 Phase 1 and Phase 1b studies facilitated the initiation of a Phase 2 multiple ascending dose study in adolescents and adults with OTC deficiency, which is ongoing in the United Kingdom and the European Union.

Speaker 2

Subjects are randomized in this study to receive 6 doses every 2 weeks of ARCT810 or placebo randomized 3:one. Moving now to our ARCT-thirty two program. ARCT-thirty two is our flagship inhaled messenger RNA therapeutic candidate for cystic fibrosis and is formulated with Arcturus' Lunar Delivery Technology. The company is presently conducting a Phase 1b clinical study in New Zealand designed to enroll 6 to 8 adults with cystic fibrosis with each participant receiving 2 inhaled administrations of ARCT-thirty two. We will be providing an interim data and progress update for both of our flagship mRNA therapeutic programs, that's ARCT810 for OTC deficiency and ARCT32 for cystic fibrosis on Monday, July 1.

Speaker 2

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

Speaker 3

Thank you, Joe, and good afternoon, everyone. The press release issued earlier today includes financial statements for the Q1 ended March 31, 2024, and provides a summary and analysis of year over year financial results. Please also reference our most recent Form 10 Q for more details on the financial performance. We are very pleased to initiate the commercialization of COSTAV this year. And as Joe mentioned, the initial 4,000,000 doses is planned to be delivered to Japan in the Q3 of this year.

Speaker 3

As a reminder, Meiji Seika Pharma has an agreement with CSL, Securus, whereby Meiji will be responsible for the regulatory approval, marketing, distribution and the sales of COSTAVE in Japan, as well as coordinating the manufacturing of COVID vaccine products with CSL and Arcturus for the Japanese market. The delivery and sales of the vaccine in Japan will trigger our first commercial milestone payment under our CSL collaboration. This is a remarkable achievement since we signed the CSL agreement less than 18 months ago. We will provide more color on the projected initial milestones and impact from the Coast Stave revenues in the Q4 of this year. As a reminder, our projected cash runway does not include any revenues from Coast State or nor commercial milestones from the ESL collaboration.

Speaker 3

I am pleased to announce the engagement of JP Morgan Investment Banking team to help us monetize our investment in our Catalyst, a 38% owned JV in Japan with partner Axaleed. At this point in time, Arcturus is strategically focused on working with a global group of established CDMOs to support our manufacturing efforts across all of our wholly owned pipeline program. Our Catalyst located in a strategic biomedical research and development hub in Japan is poised to become a key player in the global mRNA drug manufacturing landscape. The CDMO is designed to support the production of mRNA vaccine as well as our mRNA based therapeutics and has already completed the construction of a state of the art mRNA drug substance 165,000,000 has been awarded to our Catalyst by the Japanese government. These funds were used to build mRNA drug substance, formulated drug product capabilities and to construct a DNA template manufacturing facility.

Speaker 3

We expect this facility to become a leading manufacturer of mRNA vaccines and therapeutics and the only fully integrated self amplified mRNA facility in the world. I will now summarize our financial results for the Q1 of 2024 compared to the Q4 ended December 31, 2023. Please refer to the press release and our 10 Q for year over year financial comparison analysis. Our primary source of revenues was from license fees, consulting and related technology transfer fees, reservation fees, government grants and collaborative payments received from research and development agreements with pharmaceutical and biotechnology partners. For the 3 months ended March 31, 2024, we reported revenues of $38,000,000 compared with $30,900,000 for the 3 months ended December 31, 2023.

Speaker 3

The sequential increase in revenue was primarily driven by increased activities across all of our CSL program, including preparation for the commercialization of COSTAV. The BARDA grant revenues of $5,400,000 remained relatively consistent sequentially. Total operating expenses for the 3 months ended March 31, 2024 were $68,400,000 compared with $49,100,000 for the 3 months ended December 31, 2023. The sequential increase was primarily related to the increase in R and D expenses. Research and development expenses were 53 point $6,000,000 for the 3 months ended March 31, 2024 compared to $36,600,000 dollars for the December quarter.

Speaker 3

The increase in research and development expenses were primarily driven by the CSL and BARDA program as well as our internal OTC and cystic fibrosis program. Additionally, we have increased investments in early stage and discovery technology. The company initiated preclinical research related to its Lyme disease and gonorrhea vaccine discovery programs. The increase of $17,000,000 in research and development expenses are broken out as follows: $4,300,000 from multiple CSL flu programs, dollars 4,700,000 for the Meiji commercial production expenses and $4,700,000 for the next generation program. The remaining $3,000,000 was related to increased compensation related expenses.

Speaker 3

For the 3 months ended March 31, 2024, Arcturus reported a net loss of approximately $26,800,000 or $1 per diluted share, compared with a net loss of 11,700,000 dollars or $0.44 per diluted share in the 3 months ended December 31, 2023. Cash, cash equivalents and restricted cash were $345,300,000 as of March 31, 2024 $348,900,000 on December 31, 2023. We have achieved a total of approximately $420,100,000 in upfront payments and milestones from CSL as of March 31, 2024. We expect to continue to receive future milestone payments from CSL that will support the ongoing development of the COVID and flu program and 3 additional vaccine programs by CSL. The expected cash runway extends at least 3 years based on the current pipeline and program.

Speaker 3

In summary, we believe the company remains in a strong financial position and has the resources to achieve multiple near term value creating milestones for the vaccine and therapeutic program. Furthermore, with the anticipated delivery of COSTAVE vaccine later this year in Japan, we look forward to beginning to report potential commercial sales in 2024. I will now pass the call back to Joe.

Speaker 2

Thanks, Andy. We've continued to make excellent progress in our pipeline of mRNA vaccines and therapeutics and advanced our proprietary mRNA and LUNAR delivery platform technologies. We're excited indeed about the initiation of our commercialization process for CoStave. And with that, we'd like to turn the time over to the operator for questions.

Operator

Your first question comes from Myles I'm sorry, Evan Wang with Guggenheim Partners. Your line is now open.

Speaker 4

Great. Thanks. 2 from me. First, with the therapeutics update on July 1, with the date set now, hoping you can help set some expectations for number of OTC and CF patients that we'll see and whether you're confident that this will be a sufficient number of patients and time course to really interpret? And second, can you walk us through the rationale for the Mayzhi monetization of Arcalis just given the strong cash position?

Speaker 4

Thanks.

Speaker 2

Hey, thanks Evan for the questions. With respect to the Bain G monetization or the Arcalis monetization question, I'll defer that to Andy. But I can address your first question. It's you've asked for further detail around the July 1 meeting that we've announced. We're going to be providing an interim data readout for Phase 1b for the ARCT-thirty two cystic fibrosis program.

Speaker 2

We anticipate this to be the enrollment for this to be completed by July 1. And also, we'll be sharing some Phase 2 data and a progress update for the OTC program, but this will be on a subset of patients, not a complete set. And this will likely be communicated in the form of a press release. Did I address your question on that one before we go to Andy to address the Arcalis question?

Speaker 4

Yes. I just will we have any data from the additional or the higher dose cohort at that point? Or is it still too early to say?

Speaker 2

We'll be able to disclose more details on July 1. And then Andy, how about if you can address the Arcalis?

Speaker 3

Sure. Thanks Evan for the question. Obviously, we as a management team and the Board made a strategic decision to work very closely with a group of global established CDMOs to help support our manufacturing efforts across our wholly owned pipeline program. So we're kind of in a fortunate position that we were able to attract a lot of very strong investment banks that had expressed an interest in helping us monetize this investment. And we were fortunate to be able to select and work with prestigious bank like JPMorgan to help us look at strategic options.

Speaker 3

And of course, you can assume that it's a very well placed asset for a lot of potential players, especially in Japan with the growth of that market and the approval of the vaccine. And certainly, we're excited about the growth of our callus and we're certainly going to be there to support them in many different facets. But this was a strategic decision on behalf of our company and management team become an asset light and a variable cost operating entity at this point in stage of our development. Does that help answer your question?

Speaker 4

Yes. I'll jump back in the queue. Thanks guys.

Speaker 2

Thanks

Speaker 5

Evan.

Operator

Your next question comes from Yasmeen Rahimi with Piper Sandler. Your line is now open.

Speaker 6

Hi, team. This is Liam Hester on for Yas. Just our first question in relation to like Arcalis and, CoStave. What are your expectations around Japan's order potentially in 2025? And then what are the current manufacturing capabilities of our CALIF of producing both COVID and flu vaccines and how is that expected to change in the future?

Speaker 6

Further moving from there, I think with the OTC and CF programs, do you have any tidbits on potential regulatory path forward in those two programs? And then also with the July 1 data readout, any specific biomarkers that you will be reporting on at that point? Thank you.

Speaker 2

Sure. Andy, do you want to address the outlook for our callus and post date and manufacturing capabilities?

Speaker 3

Yes. No, it's we're excited about the opportunity for our Catalyst to be producing vaccine for the Japan market soon. They're in the process of getting GMP batches approved for commercialization. And we anticipate that that should occur sometime in Q3. And so assuming that is successful, it will be then an opportunity for Meiji to order directly from our callus in terms of manufactured doses.

Speaker 3

With respect to guiding on future orders and potential opportunities, we're going to really have to defer that to our partners CSL and Meiji. They prefer to lead those discussions and those kind of guidance. And so, hopefully, you can respect the request of our partners. And obviously, we're pretty excited about the future opportunity for not only the Japanese market, but for Arcatas to be a dominant player.

Speaker 2

And with respect to your second question, Liam, for both our OTC and CF programs, I think it's safe to assume that we're intending to expand into the U. S. With OTC not only expand into the U. S. At some point, but get access to younger, more advanced OTC deficiency disease so that we can mature that product and the regulatory advancement of that.

Speaker 2

On the CF side, Phase 2 is the Phase 2 of plans are around not only the United States, but other countries as well. And we're going to be working closely and have been with the CF Foundation on the design and implementation of that trial.

Speaker 6

Great. Thank you so much.

Speaker 2

Yes. Thank you, Liam.

Operator

Your next question comes from Myles Minter with William Blair. Your line is now open.

Speaker 7

Hi. You've got Sarah on for Myles. Congrats on another great quarter. So just a couple from us on the 810 program. Can you confirm switching the ARC-eight ten dosing format from a to a 3 hour, 3 step process and then premedicating with acetaminophen and antihistamines in the current Phase 2 MAD study after observations in the Phase 1b?

Speaker 7

And just kind of walk us through the rationale for that switch if it was made? And second, how confident are you that we won't see any febrile reactions in the ongoing MAD portion of the study?

Speaker 2

Yes, great question. We had the opportunity to share some of the details around our learnings from Phase 1 and Phase 1b in OTC at the recent SIMD conference. We learned a lot. We what is very typical and what we've I personally experienced throughout my career and those in the field is you have to understand the rate of these infusion related reactions early in the trial and then you ameliorate these or reduce the frequency and address them through adjustments in pre medication and the dosing regimen itself, and we've successfully done that. I believe that we've identified a more effective optimized pre medication protocol that involves acetaminophen.

Speaker 2

It's also we're happy to utilize a pre medication process that does not have steroids. So it's steroid sparing, which is important to this population. And so that was a nice learning that we captured from our early trials. And also we modified the regimen. So it's a 3 step process for the it's more conservative and subtle in the infusion process.

Speaker 2

Now this is something that this is very typical. So it's not something we brag about that we've removed these infusion related reaction or at least reduce them significantly because this is something that is typical for this type of product. But rest assured, all these learnings that we've learned in the Phase 1 and Phase 1b trial have been applied to the Phase 2 trial. And we'll be able to give an update on that on July 1.

Speaker 7

Great. Thanks so much.

Speaker 2

Thank you.

Operator

Your next question comes from Whitney Lejim with Canaccord Genuity. Your line is now open.

Speaker 8

Hi, thanks for taking the question. This is Juan on for Whitney. Maybe just a quick 2 part question. Assuming you're able to show successful delivery of CFTR to lung cells with your LNP, how are you thinking about expanding the inhaled side of the pipeline, whether it's continuing in a registry setting or potential vaccine or something else? And then maybe thinking towards the Phase 2, are you thinking about targeting null patients or are you more open to broader mutations at that point?

Speaker 8

Thank you.

Speaker 2

With respect to targeting different mutations, I can allow Pat to address that in a moment. But yes, we are you can imagine the energy at Arcturus now that we're coming to a closing of the enrollment of Phase 1b and working with the CF Foundation on Phase 2, we're excited about what opportunities can we do outside of CF. And so those discussions are dynamic and very fun here at Arcturus. But we haven't disclosed what our next steps are, our next targets in the lung, but there will be a time and a place to do that. But we are also excited about initiating and getting on to the Phase II trial, of course, assuming Phase 1b is good and we'll provide an update on that on July 1.

Speaker 2

But with respect to are we going to be going after other mutations, my initial response is we're going to be initially focusing on non modulator responsive patients. This includes the Class I sub patient population of the CF community and also those that do not respond to the presently approved modulators. But in terms of other details of the different types of patients, Pat, anything to add there?

Speaker 5

No. Obviously, I think you've touched the nail on head, Joe. I mean, obviously, our therapeutic using mRNA is mutation agnostic. So we can go after a larger subset of patients. But those some of the other mutations are well served as you well know.

Speaker 5

So I think the biggest need currently is in the now patient population and we'll focus on that initially. But we obviously will look at a broader indication in the future as well. So thank you.

Speaker 2

Thanks, Joanne.

Operator

Your next question comes from Yanan Xu with Wells Fargo. Your line is now open.

Speaker 9

Great. Thanks for taking our questions and congrats on the progress. Maybe first a question on the Japan order. Is this $4,000,000 order an initial order or could there be additional order for this season? Also have Meiji set a price?

Speaker 9

And what is the out of pocket if we if local government subsidy is considered? Thanks.

Speaker 2

All right. That's a good question for Andy.

Speaker 3

Yes. No, thanks, Ian. And as I mentioned a little earlier, I think our callus is in the process of getting 3 GMP batches manufactured and getting it approved so that it could become commercial. And so that timeframe is probably going to be in the Q3. So if they're successful, then that certainly opens the door for our Catalyst to deliver additional vaccines and it'll certainly be up to Meiji to make that decision.

Speaker 3

So that's I think a very important kind of catalyst to be looking for. And we're certainly supporting our catalyst in this endeavor. And hopefully, they'll be successful with the timeline. With respect to the pricing, I think there are a lot of people have asked that question. And if you look at the Ministry of Health website, there's been a few numbers that have been reported as about $100 per dose.

Speaker 3

And we've also learned that the market price for Pfizer and Moderna is higher than that. So we're pretty comfortable and I think Meiji is pretty comfortable with the pricing of the vaccine right now and pretty excited to start to commercialize COSTAV in Japan. With respect to your second part of the question, I apologize, but could you repeat what it was again?

Speaker 9

Yes, out of pocket cost after the local government subsidy.

Speaker 3

Okay, good. Yes, we have learned through numerous sources in Japan that the local government as well as the national government will subsidize about 80% of the vaccine price. So obviously a very encouraging support from the government. And as you know, this is a strategic investment and position on behalf of the Japanese government for the people to protect them in the future because it is one of the only state of the art mRNA manufacturing facility located in Japan. And so Japan and their people will be protected going forward in the event hopefully any future pandemics or breakout.

Speaker 3

So certainly a very important strategic decision on behalf of the government and we were very fortunate to be selected by the government and Meiji to be their partner.

Speaker 9

Great, great. If I may ask a question about the CF program. I was mainly wondering about, is there a biomarker that can guide the dose finding, whether it is in the current Phase Ib or in the next Phase II? What's the plan to identify a dose? Is it going to be the FEV1 like a functional endpoint?

Speaker 9

Or is there a biomarker that can help in that regard? Thanks.

Speaker 2

Yes. Thanks, Ynon. Dosing has been guided largely by safety and tolerability measures in our Phase 1 and Phase 1b trials. With respect to a biomarker, there isn't one that's driving these decisions. We anything else to add there, Pat?

Speaker 5

No, I think yes. For this program specifically, yes, it's not driven through biomarkers. Correct. And it's more harder inputs.

Speaker 2

Yes, yes. In terms of lung volume and FEVs and lung clearance indices, that will be there'll be opportunities to address those questions.

Speaker 9

Got it. Thank you so much.

Speaker 2

Thank you.

Operator

Your next question comes from Yigal Nochomovitz with Citigroup. Your line is now open.

Speaker 10

Hi, this is Amin on for Yigal. Thank you for taking our questions. We had a couple. First, we wanted to know about the mass of this $4,000,000 and how we should calculate it. So basically 100 dollars per dose and then $4,000,000 gets us to $400,000,000 and you have like 30% around 30 percent economics of it.

Speaker 10

Is that the right way to think about your share of the revenue here? And when will this revenue be booked? Is that going to be all in Q3 2024 or is it going to be spread in the next few quarters?

Speaker 2

Yes, go ahead.

Speaker 10

And then I have a follow on.

Speaker 3

Yes, no, those are very good questions. And as I said on the call earlier, we will provide more substance and color in the Q4. And hopefully, you can be a little patient with respect to those questions and answers. With respect to the breakout between MAGE, CSL and Arcturus, we're really not allowed to comment on that at this point, except to say that we're all very pleased with the economic sharing opportunity and certainly are grateful to be able to work with 3 distinguished global partners and especially with their commercial distribution capability, not only within Japan, but globally. So our profit share is sixty-forty split with CSL globally on a gross profit basis.

Speaker 3

So obviously, we can't do that with a 3rd partner. So you'll have to somehow improvise and assume that it will be split somehow in 3 manners, 3 ways. And hopefully that will give you some color that this is a very lucrative opportunity for all 3 players involved. Thank you.

Speaker 10

Okay, great. Thanks. And one more on Artellus. What can you tell us about how much your stake at Arkelos is worth? And is there any good comp for what the manufacturing size with that size with worse?

Speaker 10

Or also what are the timelines you are looking at to monetize this opportunity?

Speaker 2

Are you asking, I just wanted to Oh, you got the question, Andy. You understood. Okay. Go ahead.

Speaker 3

Yes. No, I think you're kind of fortunate that there's a number of publicly traded comps in the United States that should give you a perspective on the valuation of CDMOs that are participating in the mRNA space. And you can also take a look at what Aldebaran was purchased for from Idanahir recently in the last few years and certainly Catalent was acquired as well and there's a few other publicly traded comps that you can evaluate. So it's a market that I think is very attractively valued because of the growth potential for this mRNA therapeutic going forward. And hopefully, the appropriate party that wants to be a part of growing this operations to, we'll help develop it.

Speaker 3

And that is our goal to work closely with them.

Operator

Your next question comes from Ed Arce with H. C. Wainwright and Company. Your line is now

Speaker 11

open. Great. Thanks for taking our questions, Joe and Andy, and congrats on the progress so far this year. A couple of our questions

Speaker 2

around

Speaker 11

cost save and our catalyst and that order coming up later this year have been answered. But I wanted to get back to your therapeutics pipeline, in particular the 2 programs with an update on July 1. I was hoping that you could share some granularity on the data that you expect to present on that Monday as well as what are your data thresholds for success in both of those programs to support further development? Thank you.

Speaker 2

Yes, good question. Yes, it's an important day for us, this July 1 meeting for sure. So I appreciate the question. The interim data set for the Phase 1b ARCT-thirty two CF program primarily focused on safety and tolerability of 2 administrations of this therapeutic. We may be able to give additional granularity or guidance on the dosing and the specific regimen that we are utilizing.

Speaker 2

And it provides another opportunity to give more details or guidance on the subsequent Phase II trial that's getting planned as you can appreciate. But that in terms of data, I think the primary objective is to establish safety and tolerability of 2 inhaled administrations of this product and get people or help people understand the dosing and the regimen that we're pursuing for Phase 2. And then with respect to ARCT810, I mentioned it is on a subset of patients, it won't be the complete enrollment. But we are looking for biomarker changes primarily from a data perspective that unlike the patients in Phase 1 and Phase 1b, these Phase 2 patients are more advanced. There's also adolescents participating in this trial.

Speaker 2

So they're younger as well. So more variability in biomarkers from the onset. So what we'd like to see is some biomarker changes there. And so that's and there's there'll be more information to provide on July 1. Was that helpful, Ed?

Speaker 11

Yes, that's great. Thank you so much.

Speaker 2

Thank you.

Operator

Your next question comes from Yale Jen with Laidlaw and Company. Your line is now open.

Speaker 12

Good afternoon and thanks for taking my questions. Both are related to the Japan part. The first one is that the Japanese government has, I believe, funded the Recalas Construction and Production. So would that number times your share of the company will be a proxy for the potential value of that asset? And then I have a follow-up.

Speaker 3

Andy? You can assume yes, no, good question. Obviously, the money provided by the Japanese government was all in the form of grants. And of course, our partner, Axleve, has worked very closely to construct this factory with our construction partners in Japan. And you can assume that it's a lot more than $165,000,000 to build the state of the art factory that has 3 different facilities located within one premise.

Speaker 3

So it is a part of the investment that was made, but there are substantially more capital that have gone in through the investment made by Axleme and with partners who are the co shareholders and equity partners in this joint venture. So hopefully that gives you some

Speaker 12

Okay, great. That's very helpful to set up some basis to think. And maybe the next question or the last question here is that in terms of 4 million doses that the major potential to deliver in the Q3, what are the targeted COVID strain of that vaccine?

Speaker 2

Yes, that's a great question. The WHO came out and announced that the JN-one variant was going to be the variant of concern or focus for this upcoming fall and winter seasons. The PMDA traditionally listens carefully to that recommendation and aligns with it. So I think it's safe to assume that the JN-one variant is likely the one that we're referring to with respect to the 4,000,000 doses. But the formality of that announcement will likely come from Meiji.

Speaker 12

Okay, great. And maybe just squeezing one more for Andy. So I think starting for the last two quarters, you have the grant revenue from BARDA. So should we anticipate this figure from modeling purpose to continue quarter over quarter or that's more lumpy? Thanks.

Speaker 3

No, that's a very good question. It is we don't provide guidance typically with respect to the quarterly type of milestones that we anticipate because they are dependent on certain variables that need to be achieved and targets that we need to achieve. And sometimes those targets can slip from quarter to quarter. It's not a linear progression model, right? So I prefer to avoid quarter to quarter type of guidance and prefer to focus on our 3 year projections and the ability to be able to determine within a reasonable timeframe how much milestones we should earn within a year or 2 or 3, a lot easier to do that versus quarter to quarter.

Speaker 3

I hope you can appreciate that. I'd love to give you more color and maybe in the Q4 when we begin to ship the Coast Dave revenues and collect the commercial milestones. Hopefully, that will enable us to have a little bit more quarter to quarter type of perspective, but I prefer to remain conservative and guide you when I have a better assessment of what's going to happen in the near term. Hopefully that will help answer your question.

Speaker 12

Absolutely. And again, thanks and congrats on the progress.

Speaker 2

Thanks, Yale.

Operator

There are no further questions at this time. I will now turn the call over to Joe for closing remarks.

Speaker 2

Hey, we appreciate all the participation on the call. If there are remaining questions, please don't hesitate to reach out to our team and we'll get back to you. Okay? Thanks to everyone. Good night.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.

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Key Takeaways

  • We remain on track to deliver 4,000,000 doses of the COSTAVE bivalent COVID-19 vaccine to Japan in Q3, with partner Meiji responsible for fall/winter distribution and this shipment triggering our first commercial milestone.
  • Our bivalent candidate ARCT-2301 met the primary endpoint of non-inferiority in a Phase 3 study and showed superior immunogenicity against both Omicron BA.4/5 and Wuhan strains with no causally related serious adverse events, while a Phase 3 study of the XBB.1.5 monovalent candidate ARCT-2303 is underway.
  • The ARCT810 program for OTC deficiency advanced from Phase 1/1b (well tolerated, no serious adverse events) into a Phase 2 multiple ascending dose study in adolescents and adults, and the inhaled CF candidate ARCT-32 is completing Phase 1b with an interim data update set for July 1.
  • Q1 2024 revenues were $38 million (up from $30.9 million in Q4), driven by CSL collaboration activities, while R&D expenses rose to $53.6 million, resulting in a net loss of $26.8 million and leaving a cash runway of at least three years.
  • We have engaged JPMorgan to explore monetizing our 38% stake in Catalyst CDMO in Japan and are shifting toward an asset-light model by partnering with global CDMOs to support manufacturing across our pipeline.
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Earnings Conference Call
Arcturus Therapeutics Q1 2024
00:00 / 00:00