Thank you so much for joining. I am Whitney, one of the biotech analysts here at Canaccord, and it is my pleasure to be joined by Arcturus Therapeutics and President and CEO, Joseph Payne. Joseph, thank you for being here. I am going to dive right in. We have a lot to cover. Yeah not a lot of time. Let us do it. Just starting with a high-level overview of the company for anybody who is not familiar, who is Arcturus? Where are you today, and what are you trying to do? Yeah. Arcturus is an mRNA medicines company. We are based in San Diego, and we are a next-generation mRNA company with technologies that are differentiated from the other players in the mRNA field. We are very well known for our delivery technology, especially for inhaled messenger RNA delivery to the lung, and also injectable mRNA to the liver. We have a vaccine enterprise. We have an approved COVID vaccine in 32 countries that we have regained strategic control over, which is a new development. We utilize our vaccine enterprise to fund the therapeutics franchise, and we have a flagship lung program for cystic fibrosis. This is an inhaled messenger RNA to treat CF, potentially. We have an injectable mRNA for the liver for a rare liver disease called ornithine transcarbamylase deficiency. We have these two flagship assets that represent the platform, and for the lung and the liver, and that is where we are creating a lot of enterprise value. The fuel for this company comes in part from our vaccine enterprise, where we have an approved product in 32 countries. Perfect. Starting with CF, which is where we spend the most time speaking with investors. I guess you mentioned a little bit, but what is ARCT-032? Can you talk a little bit about the lipid and what it is delivering and how you are getting it there? Yeah. Since we are in Boston, there is a very successful company here in town that treats cystic fibrosis very well. Most of the CF drugs out there are modulating a broken or dysfunctional transporter in the lungs called CFTR. That is not what we do at Arcturus. We are not modulating a broken or dysfunctional transporter. We are building a new one. Arcturus' drug, ARCT-032, is a messenger RNA molecule that expresses or makes a brand-new CFTR protein in the lung. It is delivered with our technology. The registered trademark for our technology is LUNAR. Our lipid nanoparticle, LUNAR, delivers the messenger RNA to the bronchial epithelial cells after inhalation through a nebulizer. We not just access these cells, but get into these cells and release the mRNA to express or make the brand-new CFTR for these folks. The initial target population for this drug is Class I CF because Class I is also described as nulls, meaning they do not have any CFTR in their lungs. There is nothing to modulate. So there are no drugs for these people presently. The standard of care is very limited, and so we are pursuing an area of very high unmet medical need with very limited competition, and that is where we are. Excellent. Okay. You hit the nail on the head here. Sometimes some of the pushback we get on ARCT-032 is, "Well, Vertex, they have got CF handled." But as you alluded to, you are targeting the patients that Vertex does not- Correct. Yeah. does not address. So that kind of has bleed through to the efficacy story here as well. You have talked about having enough data from ARCT-032 by the end of the year to be able to figure out how to move forward. Yeah. How are you thinking about the efficacy bar? What are you focused on? Yeah Why or why not is what we've seen from Vertex there or not? Yeah. This is the number one question we actually get from investors even today and this morning, because we are guiding a decision to proceed to phase III. That decision is in Q4, is what the present guidance is. People are asking, "Well, what's that decision based on? What is good data?" It's a difficult question to answer because we're the first movers in the space. We're the first-in-class therapy for inhaled mRNA to treat Class I CF, so there is no standard to look at. I think it's helpful to understand in the space, Vertex, who's right here in town, did a heroic job of getting the first modulator approved. Back then, the very first modulator, just over 2% FEV was shown. They didn't have any other tools to show or to showcase any sort of improvement. You fast-forward a couple decades later, now Arcturus is trying to be the first again, but this time in Class I CF. We're looking at not only a lung function measure called FEV, but we are also looking at a lung clearance index. That's a second lung function measure. We have validated quality of life surveys and measures that we're applying that weren't there a couple decades ago. We also have high-resolution CT scan technology to take pictures before and after treatment that can be very helpful to look at mucus and mucus plug reduction. We have all these tools that Vertex didn't have, so they were quite heroic actually to get. That precedence had a small couple percent of FEV and nothing else. We feel optimistic, I guess, that we can apply not just FEV, but collect data for lung clearance index and quality-of-life measures and high-resolution CT scan. On top of that, we got to leverage an ongoing or relatively new normative study that is being collected by the CF Foundation. They are doing, it is kind of a natural history-like study. They are tracking Class I subjects over several years, hundreds of these patients. We are going to be able to see what a normative path is for Class I and compare our treatment path to that. Vertex did not have that luxury. We are not just collecting a bunch of data, but we also should be able to compare a potential phase III trial set of data to normative study. It is a long way of saying the short answer is Arcturus is going to be establishing what that threshold is. There is no threshold that we need to achieve. What we are hearing from the regulators and the CF Foundation, and the community, is anything positive will be amazing. What does positive mean? We are collecting the data in real time, and we are going to be able to make a decision based on that. The higher these numbers are, the more impact, of course, the better, but really, we are in the business of establishing what that threshold is because we are the final company remaining in this space, and there is just huge unmet medical need, and we need to get something across the finish line. Perfect. Can you talk a little bit more about what data you will have or you are waiting for? Is it a certain number of patients with a certain amount of follow-up? Sure. Are you waiting for the CF Foundation data that you mentioned? What are the readouts? The data that we are collecting presently is in our fourth cohort in phase II. We are enrolling up to 20 subjects. We are enrolling not just in the U.S., but also in Turkey and Israel. Turkey and Israel have high prevalence rates of Class I CF. Up to 40% of the subjects at these sites are Class I. We have now determined the cadence of screening and enrollment to be encouraging, and that gives us the confidence of the timing of the decision being in Q4 based on that. The data we are collecting, we are just not just enrolling 20 subjects, we are enrolling two lung function measures, which is FEV and LCI. They are two different types of lung function measures that can be very important for regulatory engagement and discussions to get things approved. There is also a lot of supportive data. There are two separate surveys that are validated quality-of-life measures. These people cannot all improve lung function. We have to improve how they feel as well. Do they feel better? That is what the quality-of-life survey indicates or measures. The picture is worth a million words. From my personal experience, when we show a before and after image in a high-resolution CT scan of these lungs, that is going to prove to be very valuable for the community, but also to the regulatory agency. They requested, they asked us to take these images to support this package that we are putting together. Altogether, it is five sets of data that we are collecting throughout this year and up to 20 people. Just to double-check, will all 20 patients be completed in the fourth quarter, or there will be some subset that you will feel comfortable with? Yeah. It is an open-label study. We did not guide the completion of enrollment because we just do not know. It is an open-label study that is presently recruiting. We did feel comfortable that we will have sufficient data to make a decision. The reason we are guiding the decision is very important. Normally, a CEO like myself, we guide for data or guide a completion of enrollment, but we are guiding a decision to proceed because that decision triggers an elevated contribution from our partner, Thermo Fisher, to help address the phase III budget up to $40 million. It is a big material event for us. That is why we are guiding the decision to proceed because it is tied to the Thermo Fisher deal and how we address our phase III budget for the CF program. Okay. I am glad you brought that up because that is another question we get from investors a lot is why would they tell us the decision but not the data? Yeah. Just to confirm, you do plan to share the data Yes at some point of the decision? The decision always comes before the data, especially in an open-label study. The board, once we have that decision to proceed, will proceed. But as soon as that happens, you have the good problem that people were like, "Well, what was that decision based on?" Yes, the short answer, of course, we will be able to share the data. But exactly when, we have not provided that guidance. Okay. On Thermo Fisher, you recently announced that deal. Can you talk a little more about that? What does that bring Yeah both monetarily but also from a manufacturing capacity perspective? Yeah. The CF product is very unique. In order to communicate how unique it is, I need to start with the product that Arcturus already has. Arcturus has a product, and it is approved in 32 countries. It is a COVID vaccine called KOSTAIVE, but that is dosed 5 micrograms once a year. 5 micrograms once a year. The CF program is 10,000 micrograms every day. It is a significant commercial manufacturing opportunity for big players. The large manufacturing players were aware of this, and we had the opportunity to engage them and create a competitive situation where we ultimately ended up selecting to work with Thermo Fisher on this product. Why this deal was very unique is because normally, as a CEO, when I do a deal or get money, I usually sell stock, or I sell a royalty for an asset, and this was neither. This was support for a phase III program in exchange for commercial manufacturing rights. Very unique, one-of-a-kind deal. The reason it was created is because, number one, the CF is a unique product, 10,000 micrograms per day. That is a significant commercial manufacturing opportunity, and because it was just a competitive situation where these manufacturers had to get creative, and so did we, in order to get it in and involved. It checked the boxes for us. We did not want to dilute the company or the asset with this type of deal. So it checked all the boxes. We are very pleased with the Thermo Fisher team. Investors often ask, did Thermo Fisher have access to the data? The answer is yes. Obviously, they not only went under CDA, but they of course had access to the eRoom and got to understand all the data that we've collected so far. Then once it's signed, you should understand that they don't have open access to the open data, that there's periodic updates. I think it's every few months that we give them updates after that. Great. Okay. Just last question on this. What are they doing now? What are they doing at risk, basically? Why is it important that they saw the data before doing the deal? Yes. That's a great point. It's not disclosed. We shared that we wouldn't share the amount of commitment. What is disclosed in the documents with the SEC, the Form 8-K, is that if we make the decision to proceed into a phase III, then they'll provide contributions or commit up to $40 million. If the phase III budget is $80 million, then that would be approximately half, right? Your question is what are they doing between now and that decision? There is an agreed-upon amount. It's meaningful, but we agreed that we wouldn't share the exact number. The larger portion of that $40 million comes up with the decision to proceed, though. Okay. Got it. All right. I could ask more on CF, but I won't. I'll switch over to- Sure ARCT-810. Yes. The liver-targeted program. Can you briefly introduce that compound with what is it, what's it delivering, and the outcome? Yeah. ARCT-810 is a messenger RNA therapeutic to treat ornithine transcarbamylase deficiency. This is the number one urea cycle disorder. It's a very exciting commercial opportunity for a company of our size. In this disease, there's an enzyme in the urea cycle called ornithine transcarbamylase, or OTC, that's dysfunctional. When you have a dysfunctional urea cycle, ammonia levels rise in your blood, and ammonia crosses the blood-brain barrier, and that's not good. We want to normalize ammonia and normalize the urea cycle by, in our case, using a messenger RNA molecule that goes into the cells of the liver and replaces, builds a brand new ornithine transcarbamylase enzyme and satisfies that requirement for the urea cycle to be working normally. Now we're deep in phase II on this program. We've completed the dosing and the enrollment in Europe and U.S., and we're very pleased to report that we'll be sharing data, providing the data readout for that later this quarter, so before September 30th. Concurrent with that data readout, we're also going to be providing granularity on the regulatory path forward. We've had a couple Type C meetings with the regulatory agency, and we've already communicated that those meetings were productive, successful. We're very pleased with the outcome of those studies in terms of direction and clarity, and so we're conducting accordingly. We'll be able to give some more color and definitely more granularity on the regulatory path with the data readout that's coming in here shortly later this quarter. Again, the data readout concurrent with the regulatory plan forward that communicates in detail what we learned from those multiple Type C meetings. That's a big event for us that's, we believe, material. We look forward to that. And just to go back to the opportunity from an investor pushback perspective, sometimes you hear Yeah well, OTC is very competitive. Again, these patients are already well-served. Great. Yeah. So what's the pushback there? Why are you still moving forward? Oh, great question. You're right. There used to be a lot more than six or seven players involved, but in the messenger RNA space, it's just us. That's whittled down. We're the only injectable messenger RNA play remaining. With respect to gene editing, unfortunately, as that program has progressed, it looks like there's some challenges with the younger neonates and babies on that side. On the gene therapy side, there has been some success in approved product that addresses a portion of the stable adult population. The remaining question is how long will that last for? But the lion's share of the commercial opportunity is in pediatrics. The lion's share of the opportunity is in the X-linked boys. This is an X-linked genetic disorder that is potentially fatal for young males, and that's where the unmet medical need is, that's where the commercial opportunity is. But looking outside of that, we could usurp a big chunk or a majority part of the OTC deficient community because of the comments I've just made. I think for the liver, which is a transient organ that regenerates, utilizing a transient mRNA therapeutic strategy may be ideal ultimately for this population. Because there's so many different genetic versions of this disease, having an attenuatable, adjustable therapeutic is also going to be an attractive feature of our platform. The short answer is, I think we're very confident that we'll capture. If this is proven to be successful, it's a good opportunity for us. It's an attractive market. Okay. Can you talk a little bit more about the endpoint and I guess some of the discussions you've been having with regulators around what? Yeah I know we'll learn more about the design later, but I guess what are the endpoints in the orbit that are most? Yep. When you are in the rare disease space and you are doing trials of small numbers, it is very important to have biomarkers, and we have not one but three. We are fortunate to have ammonia as a biomarker, glutamine as a biomarker, and urea itself. This is a urea cycle, so we can measure urea output, so we can measure that. Ammonia is a surrogate biomarker. It is very well understood. The FDA and the medical community know that elevated ammonia is bad. If we can reduce that will be. Especially in children, in severe disease, in the pediatric space, I think there is going to be elevated attention to the ammonia normalization and reduction of ammonia. Glutamine is also of particular interest because most of these OTC deficient subjects are on ammonia scavengers. The ammonia scavengers might suppress the ammonia level. However, they still have high elevated glutamine, and that glutamine crosses the blood-brain barrier and then converts back to ammonia. Even though these people are doing everything the doctors ordered, they are following their diet, their exercise regimen, they are taking their ammonia scavengers, they still feel weary because of glutamine, and they look at their blood levels, and we have seen very consistent high levels of glutamine, even in people that are on ammonia scavengers. Normalizing glutamine is going to be a key part of the story. Ammonia, glutamine, and urea itself. There are other biomarkers. You can imagine all the amino acids impacted by the urea cycle, but those are the primary three that we are collecting data on. Got it. Okay, perfect. Taking a big step back and just thinking high level about the opportunity again. For CF, you mentioned Class I patients. That is roughly what, 10,000 patients, do you believe? Yeah. 10,000. Now, it is not just Class I s. There is a big chunk of the population that does not respond to modulators as well. We will call them modulator non-responders. But yes, the initial target group is Class I folks. 10,000. 10,000 plus. Yep. CF. Then in OTC, the initial patient numbers you're- Is around 10,000 as well in U.S. and Europe. Yes. That's what the published numbers indicate. Okay. USD 20,000 total orphan drug pricing, meaning, you know. Yeah. Yes. Well, the pricing for OTC is USD 1.2 million for RAVICTI, and that doesn't functionally cure the disease. We're in the business of providing that if this is successful. There is nothing for Class I CF right now. So, huge unmet need that we're very motivated to satisfy. Two programs, large unmet need, large TAM in both. Yeah. You have phase II kind of approaching potential phase III for both, which I think some people lose sight of as they think. Yeah about the story. Can you talk about your cash runway maybe, and what are the Yeah milestones that are contemplated in your runway, which I believe is through [SEP] and after 2028? Yes. Yep. How are you thinking about kind of the capital needed to continue to unlock the Yeah. We just came out of an earnings call. We disclosed $191 million, plus a $12 million infusion of cash from a partner. That takes us over $200 million, and that takes us through 2028. That is more than two and a half years of runway. We have a strong balance sheet, and that is attractive in this biotech market that we are in. We intend to keep that. In terms of the ambition to develop both of these rare disease programs independently, that would be ambitious. I do not think it is realistic that our present cash would allow us to complete two phase III studies, so we hope to have the good problem of wanting to do both of these. But if both are successful, we have been public before that it is likely that we will partner the OTC program in order to pay for the CF program, and we have the ambition to take that all the way to completion. There is one caveat, a big asterisk, is we just regained control, 100% control, of our vaccine enterprise. We had that partnered, and those rights have now been returned, and the market appreciated that when that was announced. There are good reasons for that because even though people do not like to talk about COVID vaccines very much, they have to appreciate that it is a large market. I ChatGPT'd this like you guys can as well. RSV is a $2 billion market. Shingles is a $6 billion market, shingles vaccine. You got pneumonia that comes up around $9 billion this year. Flu vaccines, $9.5 billion. But COVID, $10 billion. It is still this year. That is where we are. You may not want to talk about COVID because of the pandemic, but as an investor, you need to appreciate it is a massive market and there are a lot of large vaccine players that may be interested in potentially partnering with us. We are going to explore that opportunity as well as now that we have 100% control of it, expand the commercial opportunity. It is approved in 32 countries. We already have a partner in Japan that is distributing our COVID vaccine this season in Japan. Perfect. All right. With that, we are out of time. Yep. Thank you so much for joining. Thanks all for listening.