Okay. Great. Good morning, everyone, and thanks for joining us at Guggenheim's 2026 Emerging Outlook Biotech Summit. I'm Evan Wang, one of our biopharma team's members, and I'm pleased to be joined by Arcturus Therapeutics CEO, Joe Payne. Joe, just to get started, can you spend a few minutes just setting the stage of where Arcturus is today? Well, yeah. Arcturus is a messenger RNA medicines company. We have a pair of rare disease therapeutic products in our advanced pipeline and deep in phase II. We're at a stage of a company where we have some meaningful milestones and data readouts for both of these programs. So we're leaders with respect to inhaled messenger RNA, which is an exciting commercial opportunity, a nice big white space opportunity. No one's been successful with inhaled mRNA. We're looking to be the first there. We also have an injectable and an intravenously dosed mRNA to deliver. The flagship asset there is for the number one Urea Cycle Disorder called Ornithine Transcarbamylase Deficiency. We have some anticipated clarity to be provided by the regulatory agency there that's meaningful this year. In addition to that, we have a vaccine enterprise that's being understood, and we're going to be able to speak to that a little bit throughout the week. Our partner, CSL, is undergoing some transitions there that could impact us positively. So we'll be keeping an eye on that in the near term. But the central focus of today's discussion will likely be on our mRNA rare disease therapeutics that are in phase II. Great. Yeah. Let's start with Cystic Fibrosis and ARCT-032. Highlight some of the data you've shown so far from phase II and what have been the key learnings from the program? Well, the data we've collected so far has been meaningful as that we're now dosing at 15 mg daily. We started at 5 mg, we advanced it to 10, and now we're at 15 mg daily. That is a substantial dose of mRNA to be inhaled. For the last two or three decades, all the failures with respect to inhaled mRNA, inhaled RNA in general, has been attributed to toxicity intolerability. Human beings don't like to inhale stuff. But we're in a place now where we're at a threshold where 15 mg daily is a generous dose of mRNA. People are now looking to see what physiological and pharmaceutical benefits will come from this. In our early trials, we had three cohorts of data at 5 mg, 10 mg, and 15 mg daily for a period of 28 days. We've seen a dose responsive and significant drop in mucus and mucus plugs. This is detected by high-res CT scans. That is definitely an exciting development. But what the street and what investors are looking at now is, will that mucus plug reduction translate into lung function benefits, especially upon extended duration of treatment. So this year, we're planning a phase IIb study. We also call it the fourth cohort in our phase II study, but it is substantially different than what we've done so far. Those are meaningful differences in the design and protocol that will allow us to have some definitive answers sooner than later. We plan to initiate that trial. The guidance is the first half of this year, so it's relatively soon. We look forward to initiating that phase IIb because of the definitive nature of the study to addressing questions that people are asking with respect to this inhaled therapeutic. Great. Can you go into a little bit more detail on the phase IIb design and how that differs from the original phase II? I know there are some changes in terms of the treatment duration, how you're measuring some of the baseline characteristics. Yeah, there's several changes. First of all, in the first three cohorts, they were small. So rather than two, three, five or six subjects, we're doing 20 subjects. So it's a generously larger number. And we're extending the duration from 28 days to 12 weeks. So that's a substantial difference. But in addition to just powering the study in a larger, longer study, we've also learned from the first three cohorts that, especially with lung function parameters, that the baseline can be wobbly and be ambiguous and uncertain. So we've corrected that. We're strengthening the baseline by adding multiple baseline measurements. And we're looking at historical data, one year-two years for every subject that participates in the study. So we'll be able to leverage the historical data, having a stronger baseline. But then the design of the study, it's so that it's more statistically sound. What do I mean by that is if after the baseline, if it's wobbly, like suppose they're getting a cold or RSV or it's flu season, it's humidity, it's summer, whatever the reason that's causing the variability, they don't participate in the study. They withdraw and then they resubmit and reinitiate the study when their baseline has become steady. So because the protocol is statistically sound, we strengthen the baseline, we've captured historical data, and we're looking at a larger, longer study. It's much more meaningful. And then on top of that, we're not just looking at FEV. We're looking at FEV and LCI. So LCI is a Lung Clearance Index, that lung function measurement that is used to approve CF drugs in children. And so we're going to be looking at that in adults as well. Why this is very important to us, Lung Clearance Index, for those that are unfamiliar, how it's measured is you fill the lungs of these patients with 100% oxygen. So right now, we're breathing about 20% oxygen for those that weren't aware of that. And so you measure the time to equilibrate going from 100% oxygen in your lungs to back to normal air. And it takes time for that to happen. And it's very sensitive. It's an excellent assay. And we're going to be measuring that in conjunction with FEV, which is the standard older assay where you blow into a straw. It's got more historical data. But what all the sites are doing now is this LCI because it's more sensitive, it's more accurate, it's easier to administer to all types of patients, including children. So we're going to be collecting that too. So in addition to all the changes that I've highlighted, we're also looking at two types of lung function parameter changes. We're also going to be looking at high-res CT scan before and after. And the reason for that is because that's where we found some happiness in our first three cohorts. We didn't see any lung structural changes at 5 mg. But when we doubled it to 10 mg, we saw a significant decrease in these mucus, these chunks of mucus and overall mucus volume. We saw a reduction of that. And that's very encouraging. That is likely going to translate into lung function improvements. But we got to prove that this year. Got it. I think one of the decision points still is the choice between the 10 mg and 15 mg into the phase IIb. Can you talk about, I guess, what are the key learnings as you've been enrolling the 15 mg cohort in the phase II to decide the go-forward dose? Yeah. At 10 mg, we saw some promising and significant mucus plug reduction. We hope that continues at 15 mg, which is ongoing presently. That's where we are. But as I alluded to or mentioned earlier, we've had 30 years of failures with inhaled RNA therapeutics that are attributed to safety intolerability. So I think first and foremost, we're looking at 15 mg safe and tolerable. And if that's the case, then we'll check the box and make sure that we're also seeing mucus plug reduction. And if we see that, then we'll likely proceed with 15 mg for this fourth cohort, which is upcoming very soon. Great. So you've mentioned a few endpoints that you'll be testing in the phase IIb, FEV, LCI, CT scans. How are you thinking about what would you consider success from the phase IIb? Oh, great. Well, the FDA has communicated anything would be everything. So the group of subjects that we're pursuing in this study are those that do not respond to modulators. It's about 15%-18% of the CF community does not benefit from or qualify for these modulators. So this is significant unmet medical need. There are zero drugs for these people. So there's a huge, I'd say, energy to get something across the finish line for these people. And so something is what we need to see. We just need to see something. So they're working with us very well. They encouraged us to collect high-res CT scan data. Right now, we don't anticipate that being a primary endpoint, but definitely supportive and very clear. It's an image that says that things are happening. But the primary endpoint, whether it's FEV and/or LCI, is I think where this is going to land. And we're just going to collect the data, share it. And so to answer your question, is if we see something, we're going to communicate that and that'll be well received by the FDA as our full anticipation. Got it. And does something mean stabilization or does it? Something measurable. Thankfully, FEV, that's typically in that 3%-4% improvement. For LCI, it's far more sensitive. We look at their historical data that I mentioned now. Just to touch on that, the CF Foundation is spending millions of dollars in collecting natural history data for all of these Class I subjects. They've been tracking them for years. They'll be giving updates periodically. We may be able to tap into that database as a negative control just to show how fast lung function declines in the Class I subject so that when we treat them, we can track the treatment duration and compare it to the natural history study that the CF Foundation is collecting on the collective. That could also be interesting. Got it. So 3%-4% FEV1. Yeah, for FEV. And then. And for LCI. LCI is a more sensitive measurement. Any sort of improvement would be appreciated there. But it's very sensitive. And on that note, it's theoretically and likely to be more sensitive to mucus plug reduction. FEV, you need to in order to see a change in lung FEV lung function, you need to see a big chunk of mucus drop. We had one subject that had chunks of mucus and they went up 3.5% in just 28 days. And we looked at their scan and it's because of larger chunks of mucus were resolved and therefore it's more easily detectable with FEV. But for the smaller, you could resolve small amounts of mucus and that may not be detectable. The subject sure feels it. They feel better. But it's not detectable by FEV. It's not a macro situation. So for micro changes like that, which we saw a lot of that, that's more applicable to LCI. So we're looking forward to collecting the data. It's an and/or type situation with FEV and LCI. And whatever we collect, it should collectively support each other. And then we'll share that with the FDA. Great. And I think, I guess, how should we be thinking about the degree of responders in the study? Would you expect consistent response across the enrollees, some super responders or non-responders? In our experience today, we only had one subject that didn't respond. I talked with that family and the doctor, and they want to stay on the study. They had some challenges with humidity in the August time frame. They said that this is something they're typically used to. Whether it's humidity or they just were a non-responder, we're going to find out with subsequent data. I think I don't know if I'm addressing your specific question, but even non-responders have been very open to continued treatment. For some, it takes one week-two weeks for the treatment to really kick in. For others, it might be a month. It takes 20 years for these lungs. If you think of Class I subjects, it takes them 20 years to get their lungs to the status where they are now, where they're just infused with all these mucus plugs and there's a lot of lung damage in there. And to reverse that in just 28 days was optimistic. But over three months, we think that we should be able to gain some real traction and be able to see some detectable changes. This is a long way of saying we're in the business of healing the lung. And that's not a 24-hour process. It's going to be a periodic process. And we think three months gives us a really decent chance to see something. Great. So phase IIb start in the first half. I guess when could we see data? Is there opportunity for interim looks? Yeah, there likely will be. Having said that, I and the company will be providing more granular guidance once we see the recruitment rate. We're going to initiate the study. We have well over 10 sites here in the U.S. and other sites external that we're bringing on board that have high rates of Class I subjects at those sites in Europe and abroad. So with all that collective, we're going to determine the rate of recruitment. And once I have the good idea, then I can provide a more accurate answer to that question of when recruitment will be completed. But it's only 20 subjects and we have many sites and a very motivated patient population to participate. So we're optimistic that we'll be able to recruit fairly quickly. But the timing of that, I'm hesitant right now. Today is not the day to give that guidance once we start it. But it sounds like preparation is well underway. You have sites certified. Okay. Perfect. Yeah, we're well on track to start the study in the first half of this year. It's relatively near. Great. I think this has been a space also with kind of emerging competitor interest. Just curious, I guess, where do you think 032 fits into the landscape, I guess, of inhaled therapies and just within the CF patient population? Well, in general, I think a transient inhaled messenger RNA therapeutic is ideal for CF because there's a spectrum of disease. There's 1,000s of different types of CF genetically. So whenever you have a spectrum like that of different stages and different types and different gene profiles and phenotypes, it's good to have a transient adjustable therapeutic. The lung itself is a regenerating organ. So we have a strong view at Arcturus. And for me personally, that transient mRNA is ideal for transient organs, whether it's the liver or the lung, these regenerating organs. It's much, much more theoretically, it makes sense to administer a transient therapeutic for a transient organ. I'm a big fan of gene therapy and gene editing for longer lasting tissues and organs like the brain, the back of the eye. I think those are great opportunities there. But for the liver and lung, I think we're in the right place with the type of therapy. Within the community of messenger RNA therapeutics, we used to be well behind the pack. But right now, we are in first place. I would say we're leading. We hope to be the first to cross the finish line and maintain that leadership position. And the reason we've done that, though, is attributed to our delivery technology. One of the take-home principles for people that are first learning about Arcturus is to learn that the key to a successful inhaled mRNA therapeutic is all about delivery. Safety and tolerability has plagued this field for decades. And so we've overcome that hurdle. But it's not just about a safe and tolerated delivery technology. You need one that's also effective. And we've highly optimized this delivery technology for bronchial epithelial cell delivery. We optimized it for nebulizability to survive that process, surviving the sputum, entering the cell, breaking out of the endosome, and delivering the construct in an effective manner. And we've shown that in multiple preclinical models. And we're beginning to see that in human beings with mucus plug reduction. So we're excited to push this product over the finish line. We think we've got a good shot to do that. Great. I guess spend some time on your liver platform, ARCT-810 for OTC deficiency. Can you just walk about the development progress you've made over the last few years and where the program stands today? Yeah, that's a great program. I call it the dark horse of our company. I think this is a multi-multi-billion-dollar asset that we're sitting on. We've already established safety and tolerability. And we've also shown that it works in multiple phase II trials by changing important biomarkers like ammonia, urea itself, and then also glutamine. And we've showed we can normalize glutamine after just a handful of doses. So why is there no value attributed to this program or not substantial value in our company is because the regulatory path is uncertain. So when people say, when is this going to be approved? I can't answer that question today very clearly. We're having those conversations with the regulatory agency very soon. We've indicated that there's a pair of Type C meetings that we're having in the first half of this year that's going to provide a regulatory path that's more certain or certain. And once that's known, I think that's a key value inflection, a very key, because it's already safe, tolerated, and it's working. Once we have a path to approval, then folks and folks in this room and people listening can put it into a spreadsheet and start to speculate when this will be approved and the value of it. But right now, they can't do that because we don't have a clear line of sight as to the regulatory path. And that's happening this quarter in the next few months. So that is going to be a key development there is understanding the path. And what do I mean? One Type C meeting is for the six and under, like six years old and under. These are kids, the pediatrics, where it's the most significant unmet medical need. These are the dying children of the disease. They have no drugs to address this. We're talking with the FDA in a Type C meeting to understand what the path to approval looks like. If we get alignment there, we will be sharing that. That'll be a very, very important and key value creating development for that program because then we can now say how and when we're going to get this approved and also what's the design of the trial in these kids. That's a near term, very near term outcome. I think I expect elevated interest in OTC deficiency, especially in the first half of this year, as that information becomes more available and clarifies our path forward for that program. Great. Why don't we talk about, I guess, the disconnect you see between you guys and investors in terms of the size of opportunity? Maybe you can provide some color in terms of the adult and infant opportunity and. In OTC? Yeah. Yeah. So for OTC deficiency, this is a urea cycle disorder. So if the urea cycle takes place in the periportal portion of your liver, and if that urea cycle is dysfunctional, if it's not working, ammonia levels rise and ammonia crosses the blood-brain barrier and does damage to your brain. This is very bad, obviously. So the present standard of care for this treatment are ammonia scavengers and diet control. And if you take ammonia scavengers and control your diet, you can stabilize your disease pretty nicely. The problem, though, is these adults, even though they're stable and they're on this diet and they're taking these ammonia scavengers, they still go to the doctor and they don't feel well. And the doctor's like, "Hey, are you doing your diet?" And they're like, "Yep." "Are you taking your ammonia scavengers?" "Yep." "Perfectly." "Why do I feel like crap?" "All right." And the reason why is because before that ammonia is scavenged, it's converted to glutamine. The body converts excess ammonia to glutamine before the ammonia is scavenged by the ammonia scavenger. That glutamine crosses the blood-brain barrier, releases ammonia on the brain, and that's the cause of why they feel not so well. So what we've shown in multiple trials, guys, is we've normalized, not reduced, normalized glutamine, not ammonia. Ammonia is just a byproduct of the disease. Glutamine is normalized. So why isn't this exciting to everybody? Because glutamine's never been a biomarker in a trial. This happens in rare disease trials all the time. The value creation in a rare disease trial comes when the regulatory agency buys in and they go there. We'll look at glutamine as a bio. If we can communicate that value, it will be created for this because we've already shown glutamine can be normalized in the clinic. So two Type C meetings or multiple meetings with the FDA going forward, it's about the kids. They're dying. Nothing works for them. So if we have a regulatory path forward to them, that's a significant win for us. And then in the adults as well, if we can get alignment with the FDA on glutamine reduction, that's a big win. And there's no competition. There's challenges with gene therapy and gene editing in that space as well. Why? Because the liver is a transient organ and transient therapies are ideal for transient organs like the liver. We're in the right space. We have no competition whatsoever. Our challenge is the regulatory path, and that's going to be alleviated and clarified with some level of certainty or absolute certainty in a very near term. There's value to be created there. I just want to make sure people are aware of that. Great. Why don't you talk about how it sounds like biomarker discussions will be one of the key discussion points with FDA. I guess if they agree, how quickly could you validate [G10] in, I guess, maybe separate infants, adults? How quickly can we get an answer? That's the question. That's the question. So we have a small number. We've proposed a trial to the FDA in the Type C meeting. If we get alignment on that trial in the kids, for example, in the six and under crowd, it's a small number. And these are very, very motivated parents and families. Their kids dying. Of course, they're extremely motivated. So it won't take long to recruit these subjects. Unlike the stable adults, it's difficult to recruit them quickly. And we've experienced that and other companies have. But the children, six and under, can be recruited quickly. So the short answer to your question, if the Type C meeting is successful, then we'll be able to convey not only the path, but that path should be relatively short to meaningful outcomes and value creation. Great. I guess just to wrap up, can you remind us your cash position, runway, and key catalysts you're excited about? Well, we highlighted we had $237 million plus as of September 30th. Our next update on cash and bank is going to be likely in early March when we do our quarterly call, our annual call in this case. So we have a runway that takes us well into 2028. And we'll give an update on that runway at our next quarterly call. You won't have to wait. It's just a few weeks from now. But our balance sheet is very strong. We haven't raised money in approximately five years, guys. If you just kind of look at the field, right? I had one friend that tracks 450 biotech companies. And he came up to me and said, "You're the only one that hasn't raised money in five years." And we still have years of runway. There's reasons for this. Courage to have more time to talk about it. But we have a strong balance sheet. We know how to manage money well at this company. We really do. Yes. Are there times to raise money when it's opportunistic and benefits everybody? Absolutely. But that's the strength of the company is we have a strong balance sheet and we take care of our cash. We've reduced our headcount from 220 to now under 100 people. We're very lean. We're very mean and very nice people. And we are focused on CF and OTC. We're going to get some progress this year. I've started the company 14 years ago, Evan. I've known Evan for a long time. This is a great time for you to be in.