Arcturus Therapeutics Holdings Inc.

Greetings. Welcome to the Arcturus Therapeutics fourth quarter and full year 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Dipankar Roy, Senior Director of Investor Relations. You may begin.

thank you kyle good afternoon and welcome to our tourist therapeutic sport quarter and full year 2021 financial results and corporate update call thank you all for joining us today's call will be led by joseph payne president and ceo uh andy sassine our cfo and dr pat chivikula our cso and ceo before we begin i would like to remind everyone that 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, and they involve known and unknown risks, uncertainties, and assumptions that may cause actual results to vary. So performance and achievements differ materially from those expressed or implied by the 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 Form 10-K, filed with the SEC. In addition, any forward-looking statements represent our views only as of the date such statements are made, February 28, 2022. And our tour specifically disclaims any obligation to update such statements to reflect future information, events, or circumstances. With that, I will now turn over the call to Joe. Joe?

Hey. Thank you, Dipankar. Good afternoon to all. Thank you for joining Arcturus' quarterly call today. Before we begin, I would just like to acknowledge that today is National Rare Disease Day, February 28th, and given that two of our pipeline programs are rare diseases, you know, that is OTC deficiency, a rare liver disease, and cystic fibrosis, a rare lung-centric disease, I wanted to publicly express my gratitude to all those working diligently on these programs here at Arcturus, and to the clinicians and patients and families on this National Day of Recognition. Now on to our update about our recent progress. We have continued to make excellent progress advancing our mRNA-based vaccines and therapeutic candidates. I'll begin with a discussion of our vaccine programs targeting COVID-19. So let's begin with ARCT154, our most advanced program and a vaccine that is designed to protect against the SARS-CoV-2 variants of concern. This program is supported by encouraging clinical data including the recent booster data we reported showing that a low dose of only 5 micrograms of ARCT154 boosted or increased neutralizing antibody activity against the SARS-CoV-2 ancestral D614G and Omicron strains by 28 and 54 folds respectively. We are excited to announce today that our collaborator VinBiocare has completed an emergency use authorization filing with the Vietnam Ministry of Health for ARCT 154. This represents a very important milestone for our company as we mature and strive toward becoming an integrated commercial stage global biopharmaceutical company. ARCT 154 is a product of our self-amplifying mRNA technology or the trademarked STAR platform. In addition, this vaccine includes an optimized mRNA sequence with multiple proprietary modifications to improve its stability, half-life and increase its translation. We believe that these modifications and others incorporated into ARCT154 improve the immunogenicity profile of this vaccine candidate and may enable high levels of clinical efficacy, especially as a booster. ARCT154 is designed to extend the duration of antigen expression, and this platform has shown robust T cell responses and high levels of humoral immunity in multiple preclinical models. We've also been efficient in progressing 154 in clinical studies. We designed and developed this vaccine very rapidly based on our understanding of mutations in the clinically relevant variants circulating across the world. And we expeditiously moved this program into the clinic in a combined phase one, two, three study. Earlier in this quarter, we announced highly encouraging immunogenicity phase one slash two booster data from our ARCT 154 program, as well as our alternative ARCT 165 vaccine candidate. These data showed that when administered at low five microgram doses, at least five months following initial vaccination with Comirnaty, we observed robust increases of 54 and 47-fold respectively in neutralizing antibody responses against the Omicron variant for these two booster vaccine candidates in an exploratory microneutralization assay. This is in addition to the data that showed broad coverage and encouraging neutralizing antibody activity of these candidates against the D614G ancestral, beta, delta, and several other variants of concern and variants of interest using validated and exploratory neutralization assays. These results provide us with confidence in the potential for ARCT154 to provide substantial clinical efficacy against a wide range of circulating variants. So, supported by these strong data, our goal is to develop ARCT154 as a broadly immunogenic vaccine that can be used for primary and booster vaccination. We aim to explore its potential use in populations currently seeking vaccination for initiation of or continuation of protection against severe COVID-19 disease. We are working closely with our collaborator, VinBioCare, to operationalize the Phase I, II, III study of ARCT154 in Vietnam. The study objectives include the evaluation of safety, immunogenicity, and efficacy of ARCT154 against SARS-CoV-2 infection. All of the cohorts in this study, meaning Phase I, II, IIIa, IIIb, and IIIc, have all completed two doses of ARCT154 or comparator given 28 days apart. The safety and immunogenicity data from the first 1,000 participants of the phase 1, 2, 3A cohorts are included in the EUA application that was submitted today. Efficacy data from the pivotal trial will be subsequently submitted to the Ministry of Health in application for a potential full approval. In addition, our global manufacturing footprint continues to mature. and our technology transfer to VinBioCare's manufacturing facility in Hanoi, Vietnam, continues to progress toward anticipated production capacity of 200 million doses per year. We remind everyone that this trial and the development of the Hanoi manufacturing facility is fully sponsored and funded by VinBioCare, and we are indeed grateful for their support. I will now turn to ARCT 810, our therapeutic candidate for ornithine transcarbamylase deficiency, or OTC deficiency. OTC is a rare and serious disease with no approved treatments that address the root cause of the disease. Our therapeutic candidate aims to restore expression of the normal ornithine transcarbamylase enzyme in the liver of patients with OTC deficiency. ARCT 810 has the potential to restore urea cycle activity, prevent neurological damage, and prevent the need for liver transplantation. We previously completed a phase one healthy volunteer dose escalation study with ARCT810 and demonstrated that ARCT810 administration was associated with favorable tolerability and an attractive pharmacokinetic profile. Lipid excipients were no longer observed in the plasma after 48 hours. The doses we are now clinically evaluating are within the anticipated therapeutic range that we have estimated based upon our preclinical studies. I'm happy to report that the Phase 1B trial for adults with OTC deficiency is now identifying additional patients for screening after COVID-related delays, and we expect to complete dosing in the first cohort in the second quarter. We have obtained approval from the United Kingdom Health Research Authority, as well as from Belgium and Spain, to initiate a phase two multiple dose clinical trial for ARC-TA10. And we continue to conduct site startup activities while seeking authorization in additional European countries. This is a randomized placebo-controlled double-blind study with a nested single and multiple ascending dose design that would enroll 24 adolescents and adults with OTC deficiency. We anticipate that phase two screening will commence in the second quarter, and we expect to obtain interim data in the second half of 2022 in a subset of participants. Moving now to our cystic fibrosis program. We have continued to progress the necessary preclinical studies to enable ARCT 032, this is our mRNA therapeutic candidate for cystic fibrosis, to move into clinical studies. we anticipate the submission of a clinical trial application for ARCTO32 in the third quarter of 2022. Our flu vaccine program, termed Lunar Flu, also continues to progress toward candidate selection and clinical development. We believe that self-amplifying mRNA vaccines have tremendous promise to address the gaps with the current flu vaccines, which often suffer from suboptimal efficacy and require lengthy manufacturing and release. In addition, mRNA-based vaccines potentially have the advantage of being able to be adapted through much more rapid mRNA manufacturing processes to target currently circulating flu strains. We expect to make a final selection of our lunar flu development candidate this year with a self-amplifying star platform candidate and advanced toward a clinical trial application in 2023. In addition to these internally developed programs, Arcturus has also partnered several of our lunar therapeutic programs with some of the leading biopharmaceutical companies, including Ultragenyx and J&J and Takeda. The most advanced of these programs is a very promising therapeutic candidate for glycogen storage disease, which is currently being evaluated by Ultragenyx in a Phase I-II study. I will now pass the call on to Andy, our CFO.

Thank you, Joe, and good afternoon, everyone. The press release issued earlier today includes financial statement for the fourth quarter and fiscal year 2021 and provides a summary and analysis of the year-over-year and sequential financial performance. Please reference our 10-K for more details on the financial performance. I will go over our financials and present some operating metrics as we continue to transition to a late-stage clinical company with several assets in our pipeline. I will also provide some details regarding our manufacturing strategy as we prepare for the potential of emergency use authorization in Vietnam. Finally, I will provide some insights regarding our cash position and expected run rate. As you heard Joe mention, we had a very productive Q4 in 2021, including the completion of our clinical trial in Vietnam and encouraging human trial results in our ARC-154 booster program in Singapore and the U.S. of A. As you know, we partnered our ARC-154 next-generation Lunar COVID-19 vaccine candidate in Vietnam with VinBioCare. VinBiotech is a part of the VinGroup, which is one of Vietnam's largest corporations. VinBio is sponsoring and funding our Phase 1-2-3 study in Vietnam targeting COVID-19 and variants of concern. This partnership, including the trial and the collaboration around building a vaccine manufacturing facility in Hanoi, resulted in significant cost savings of well over $200 million for our tourists. Our technology transfer activities remain on track for the facility to become operational later this year, with a capacity of over 200 million doses annually. We are also continuing to work with other manufacturing partners to mature our global footprint, including Europe, Japan, and the U.S. of A. Revenues from strategic alliances and collaborations for the fourth quarter of 2021 was $5.8 million, which increased sequentially by $3.4 million. This increase was due to the partial recognition of the $40 million payment we received from VinBioCare for the Manufacturing Technology Transfer Agreement. Total operating expenses for the fourth quarter were about $43 million, which declined approximately $10 million sequentially. This decline was primarily due to a sequential decline of $12.8 million in research and development expenses for the fourth quarter of 2021, which was $32.6 million. This decline was due to the reduction in manufacturing and clinical costs primarily associated with the Lunar Code 19 programs, including CMC requirements necessary for regulatory filings. Net loss for the fourth quarter of 2021 was approximately $39 million or $1.47 per basic and diluted share. For the year, we reported a net loss of approximately $204 million or $7.74 per basic and diluted share. Our cash balance at the end of the fourth quarter was $370.5 million. And based on our current pipeline, our cash position is expected to be sufficient to support operations into late 2023. I will now pass the call back to Joe. Hey, thanks, Andy.

As we can see, we've had another productive quarter advancing our pipeline of messenger RNA vaccines and therapeutics. I guess now is the the right time to turn, I guess, to turn the time over back to you, Kyle, our operator, to field questions.

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone to indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Our first question is from Yasmeen Rahimi with Piper Sandler. Please proceed with your question.

Good afternoon, team, and thank you so much for the update. So congrats on the emergency authorization being filed. So now with that behind you, can you maybe give us some color on when you would have the opportunity to present the data to us? And then have you had a chance to review the data so far with your partner in BioCare?

Hey, great question, Yasmeen. Thanks for calling in. You know, as we realize that the data is owned by VinBioCare, and so we want to acknowledge that. We have had access to some clinical trial blinded data, but we have no access to unblinded data and no access to any data of any kind on the Phase 3B portion of the trial and beyond. So that's where we are. There may be opportunities in the future to share the data publicly, but after we get clearance from VinBioCare and after they share that data with the Vietnam Ministry of Health.

Joe, maybe just to drill down, because this is a question we get, what's the timing process? Now it has been filed. How long does it take for the review process And then how many days or weeks can you wait before releasing it? So just kind of give us an idea of each of these steps before you could share it with us.

Well, now that the EUA has been submitted successfully, there's a period of time, of course, before that gets approved. We are guiding Q1, or this quarter, for the approval of the EUA. At that point of approval, that presents the first opportunity to share additional data pertaining to this program. So I think those would be the near-term order of events.

Just to make sure I understand, so let's say on March 30th you get the UE is accepted. Is it just a matter of a few days as soon as it's accepted that you can disclose the data to us?

It's a fair and appropriate question, but that would be ultimately under the responsibility of VinBioCare. Of course, we'd like to work with them and share what's appropriate.

Got it. Thank you. I'll jump back into queue for questions. Thanks.

Yeah. Thanks, yes.

Thank you. Our next question is from Brian Chang with Cantor Fitzgerald. Please proceed with your question.

Hey, Joe. Hey, Andy. Thanks for taking my question.

For 154 program or any feedback from the regulators. Hey, Brian, you're breaking in and out a little bit.

Can you hear me? Yeah, Brian, we hear you. Please proceed. Please repeat your question.

Yeah, so can you provide some color on whether you have any feedback from other regulatory booster strategies? And I think for you and data from efficient for you to get a green light as a booster. Yeah, thanks.

Sure. So I'm just going to repeat your question because it broke up a little bit, but I believe you're just trying to understand the regulatory approval strategy for boosters. And we're in the process of engaging and aligning multiple regulatory authorities around the globe, frankly, and we're determining trial requirements in real time for that. So once we have that feedback, that information, and we have alignment there, then we'll be able to communicate that.

Okay. Just one quick one on stockpiling. Will the Hanoi facility that's operated by Vingroup be operational by the time your EUA comes through? And can you comment on where you are in terms of stockpiling? Because it seems that your R&D expenses quarter have come down a fair bit. Thanks.

Sure. So, well, Vingroup is definitely funding the manufacturing facility, and I can comment that we – are continuously assisting them in that effort. But the state-of-the-art facility is continuously being built. But with respect to specific updates on timing, it would be inappropriate for us to provide guidance for their facility that they're paying for and building. But I can comment that we're actively helping them and assisting them in the process, and it's progressing. In terms of a specific date of when it'll launch, we'd be looking to them to provide that guidance. It would just be inappropriate for us to do that. Thanks, Joe. And then, Andy, do you have another comment?

No, I did provide some color in my commentary that the facility should be operational sometime later this year. So hopefully that'll help give you some guidance with respect to when they anticipate going into production.

Great. Thanks, Andy.

Thank you. Our next question is from Seamus Fernandez with Guggenheim Securities. Please proceed with your question.

Mr. Fernandez, your line is now open.

It looks like Mr. Fernandez has disconnected, and our next question will come from Nick Abbott with Wells Fargo. Please proceed with your question.

Terrific. Thank you very much, and congratulations to you and your partners on the EUA. So obviously the approval would be for a prime series, and you mentioned, Joe, the global booster strategy, but presumably VinBio has a booster strategy in mind for the local market. Can you talk about their plans for a booster approval strategy in Vietnam as well as perhaps adolescents and others?

Yeah, Vietnam has vaccinated the majority of their population with approximately eight vaccines that have been approved locally. They've, you know, really, it's been a concerted effort, as you can appreciate this past, you know, year or two to do so. But, you know, now it provides an opportunity to boost these folks, right? So we haven't disclosed any details with respect to our booster strategy in Vietnam. But we have shared that we're actively engaged with the Vietnam Ministry of Health in an EUA application process. And we've also disclosed that we're working with VinBioCare on the development of a manufacturing facility. So there's some indirect implications of that. But we haven't provided any direct guidance as to the timing of any sort of boosters being manufactured or distributed.

Okay, thanks, Joe. So is it reasonable to assume that VinBioCare could be conducting a booster trial in Vietnam?

Yes. What we've disclosed is that we are talking with multiple regulatory authorities, including the Vietnam Ministry of Health. We have active trials with 154 in the U.S. and Singapore, and there's other regulatory agencies that we're you know, communicating with, right, and determining trial requirements and trying to harmonize and get alignment there. Once we have that information collected, we'll be better suited to communicate it.

Okay. We plan on providing some more clarity.

Oh, Andy has a comment, too.

Yeah, we plan on providing more clarity for our booster strategy, you know, later on this quarter. So stay tuned. Yeah.

Okay. And then, you know, Joe, you've mentioned the fact that the data is sort of owned by the Phase 3 data is owned by VinBio. What is the process for you to share that data with potential partners outside of VNN?

Well, we haven't seen any of the unblinded or blinded data pertaining to Phase 3B or beyond, but we've had the opportunity to see some of the the blinded data for the earlier clinical trials that remain to be encouraging. And we have the freedom to share that with potential partners, for example. Is that what you're asking?

Yeah, yeah. I mean, you know, with them owning the data, obviously that, you know, you don't perhaps have the free hand that you would otherwise to share the data. So it's encouraging that you can. So can you update us on, you know, perhaps discussions outside of Vietnam with potential partners?

Well, it's challenging always to give specific guidance on that. You know, Arcturus has always been active in its, you know, strategic discussions with potential partners, right? But we don't provide specific guidance on that.

Okay.

Thanks. I'll go back in the queue. Thank you. Thanks, Nick. Appreciate you calling in.

Thank you. Our next question is from Kumar Rajat with Brookline. Please proceed with your question.

Hi, I'm Subindu for Kumar. So with regards to the Omnipine trial, could you provide us some color on the ongoing enrollments in Europe? And also, do you think the current unfortunate war situation that is ongoing there might impact enrollments? And how are you preparing for it?

Are you speaking to the enrollment of our therapeutics programs or rare disease programs or for OTC deficiency? Yes, right. Okay. Yes. Well, what's unique about this phase two trial is that it's a multi-dose trial. So it's because of that, the participants are looking to have something significant happen, right? Potentially or functionally curing their disease because it's a multiple dose trial. So it's easier to recruit people for that reason. At least that's our thinking at this point. We have three, I think it's the United Kingdom and Belgium and Spain. We're looking to add additional countries, as we've mentioned in the guidance. As long as there are no surprising waves of COVID that can interrupt things, we should be okay with respect to recruitment. So that's what we're guiding, and we're still well on track for sharing some interim information. clinical data for our OTC program in the second half of this year.

Okay, great. So we don't think the current war situation will spill over to impacting the recruitment process? No.

Okay, great. So we don't have any recruitment going on in Ukraine or neighboring countries or anything like that. So we're fine there. Excellent. Okay.

Thank you. With regards to the cystic fibrosis program, could you indicate what remains to be done for the CTA applications?

Yeah, so we're in the process of doing all the talk studies, the IND, or in this case, the CTA-enabling studies for that program. And now we have tighter guidance there for Q3 for a CTA to be filed. So we're just in the final steps that we've gone through previously in other programs in terms of just establishing that, you know, the appropriate or the support of toxicology data that's required for these submissions. So we feel very comfortable and confident that we can meet that Q3 guidance for filing the CTA for cystic fibrosis. But there's nothing atypical about the data being collected.

Okay, great. Sounds great. Thank you so much for taking my questions.

Yeah, of course. Thank you for calling in.

Thank you. Our next question is from Seamus Fernandez with Guggenheim. Please proceed with your question.

Hi, guys. This is Evan Wayne for Seamus. Thanks for taking the question, and congrats on the UA submission. Sorry, I got a little disconnected earlier, but, you know, maybe this was already asked, but can you talk about the next event within the ARC 154 Vietnam Trail, you know, and when, I guess, was an emphasis on the phase 3B and 3C programs. When may be, when will those programs or portions be complete and when may be an appropriate time where then BioArcturus may share data? Another question is, I guess, how confident is Arcturus in bringing forward ARC 154 in X Vietnam markets? And I have a follow-up.

Okay. Well, with respect to timing of... What's next milestones in Vietnam? We've just filed an EUA application, right, or VinBioCare did on our behalf. And so, you know, we're looking to have that approved. Our guidance that we're providing is the approval of the EUA in the first quarter of this year, so sometime next month. And then looking beyond that, the Phase 3B data or efficacy data that is expected to be included or anticipated to be included in some sort of full approval application that will be later this year. Once we have that bolted on with an EUA approval, that can be combined for a full approval application. And we haven't provided tight guidance except just later this year, as soon as we can, of course. With respect to what other countries will honor and respect in emergency use approval and or full approval from Vietnam, That's a great question. We're looking into that, of course, whether it's other Southeast Asian countries or developing nations or, you know, Vietnam is well networked with the WHO and all those nations as well. So we're looking into those opportunities. And then we're developing a booster regulatory strategy with multiple regulatory agencies globally, not only with Vietnam, but with, you know, other countries. we're collecting information to try to gain alignment with our regulatory strategy for the booster label as well. Did that address your question, Seamus?

Yeah, that's helpful. And if you talk on the OTC program, I know that Phase 2 has been authorized since, I think, mid-last year. How has patient identification efforts been since authorization and how is the company prioritizing enrollment in the phase one B and the phase two study?

Oh, so this is referring to the OTC deficiency program. And, and so we were starting to, as you can understand now that COVID is being controlled in many of these countries where we're doing trials, we're starting to recapture momentum and success on the recruitment side of things. And so we've provided some guidance there with not only phase one B, We're starting to reinvigorate recruitment efforts and screening efforts on the Phase 1B trial, but also in Phase 2 in Europe, in the United Kingdom, Spain, and Belgium, and some additional countries that we guided towards that we're going to be adding. So I think we're, well, not just I think, we're guiding as a company, as a corporation, that we are going to be having some interim data in the second half of this year I hope that will be biological proof of concept for the OTC program.

Great. Thanks.

Thank you. Thanks. Our next question is from Steve Seedhouse with Raymond James. Please proceed with your question.

Hi there. This is Ryan Deshner on for Steve Seedhouse.

I wanted to ask you guys. Hi there. Is the vaccine efficacy event, event-based study for O21, still feasible or a possibility in Singapore given the high primary vaccination rate there? And would you consider event-based studies in other potential geographies at this point?

No, I think for placebo-controlled vaccine efficacy trials, I think are a trial design of the past going forward. But with respect to You know, that question is a complicated one because it depends on the regulatory agency or the country we're talking to. So, you know, we've completed a vaccine efficacy trial for 154, but with respect to 021, we've partnered that with a global entity that's funding any sort of late-stage clinical trial efforts there, and we'll be looking to them with respect to the phase three trial and the respective design of that trial.

Okay, thank you very much. Yeah.

Thank you. Our next question is from Ed Arcee with HC Wainwright. Please proceed with your question.

Hi, good afternoon, everyone. Congratulations on all the progress this quarter. This is Thomas Yip asking a couple of questions for Ed. So given that data for your 154 vaccine program, it sounds like it's mostly in the hands of Benbio. And as you just pointed out, O21 development is still ongoing with a global entity. Can you discuss what geographical area would this upcoming study be? And then I have one more question.

The geographical area for which study? For 154?

For 021. We know 154 is primarily in Vietnam.

Yeah, the 021 study, that's all sort of future updates with respect to the clinical trial design and location of that study is going to be provided by the global entity. And so we'll be looking to them for that. 154 is more advanced, of course. We announced today an emergency use approval you know, filing in Vietnam. So that one's closer to reaching approval. But, you know, that's where our, you know, preliminary focus is going to be on with respect to our vaccine franchise will be around 154.

Understood. And then perhaps one question about the OTC program. You outlined the interim data in second half this year still on targets. Can you describe what kind of data should we expect? Is it safety data or perhaps some efficacy data?

Yeah, I hope all of the above, right? All we've guided is interim data in a subset of the participants. Of course, we're going to be looking not only at safety in OTC division patients, but there's multiple biomarkers associated with that disease, including ammonia in the plasma and erotic acid in the urine. And urea itself, or ureogenesis, can be tracked. This is a urea cycle disorder. So if any of that data proves out the concept, we'll be excited to share it. But interim data is what we've guided for the second half of this year.

Understood. Thank you so much again for taking our questions, and we look forward to the EUA decision next month.

Yeah, thanks, Thomas. And say hi to Ed.

Thank you. Our next question is from Yasmeen Rahimi with Piper Sandler. Please proceed with your question.

Hey, team. Just thanks for taking my follow-up question. This is directed to Andy. Andy, can you comment on whether then Biocare has scaled up manufacturing now as they have seen the data and filed? Do you see those activities to being ramped up? Thank you for taking my question.

No, thanks for coming back on and asking that question. As we alluded to in our commentary, we had indicated that we needed to get CMC approval in manufacturers of some of these runs. So you would have to assume that we're trying to remain consistent here in the U.S. with the 154 production and also in Europe with our partners. And so hopefully, as we alluded to, we expect the facility in Vietnam to be able to start production later this year. We haven't been able to get specific guidance as to when this year, but they're on that path to hopefully getting it done. And we continue to work very closely with them in sharing the technology transfer

information with their team thank you Andy thanks yes we have reached the end of the question and answer session and I'll now turn the call over to Joseph Payne president and CEO for closing remarks just thanks everyone for calling in and we look forward to reconnecting either at a conference or as always you can reach out to IR and we can address any follow-up questions you have if you couldn't think of it at this time. So it's bye for now. Until we meet again, bye.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.