Yahoo Finance Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) Q1 2024 Earnings Call Transcript
Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) Q1 2024 Earnings Call Transcript May 8, 2024
Arcturus Therapeutics Holdings Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good afternoon, ladies and gentlemen, and welcome to the Arcturus Therapeutics First Quarter 2024 Earnings Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]. 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 & Marketing of Arcturus Therapeutics. Please go ahead.
Neda Safarzadeh: 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 Payne, our President and CEO; and Andy Sassine, our CFO. Dr. Pad Chivukula, our CSO and COO, will join them for the Q&A session. Before we begin, I would like to remind everyone that the statements made during this call regarding matters that are not historical facts are forward-looking statements within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties, and assumptions that may cause actual results, performance, and achievements to differ materially from those expressed or implied by the statements.
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-K and in subsequent filings with the SEC. In addition, any forward-looking statements represent our views only as of the date such statements are made. Arcturus specifically disclaims any obligation to update such statements. And with that, I will now turn the call over to Joe.
Joe Payne: 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-19 vaccine program. We are excited to initiate the commercial manufacturing effort for Kostaive 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 million doses to Japan in the third quarter of this year. Our partner Meiji intends to then distribute the Kostaive vaccine throughout the upcoming fall and winter season. In March, the company along with our partner CSL and their partner Meiji Seika Pharma announced that our bivalent COVID-19 vaccine candidate ARCT-2301 met the primary endpoint of non-inferiority in a Phase 3 clinical study in Japan with 930 healthy adults who previously received three doses to five doses of mRNA COVID-19 vaccines.
We were pleased to see yet again a superior immunogenicity and neutralizing antibody response of bivalent ARCT-2301 to a bivalent conventional mRNA comparator, and that this was confirmed for both the Omicron BA.4/5 and Wuhan strains. There were no causally associated serious adverse events with ARCT-2301. Arcturus along with CSL also initiated a Phase 3 study with the monovalent ARCT-2303 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-2303 with the age-appropriate seasonal influenza vaccines. Approximately 1,680 young and older adults are planned to be recruited in this study throughout multiple countries in the Southern Hemisphere.
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 Kostaive franchise. As reported previously, we filed a marketing authorization application for Kostaive 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 third quarter of this year. Moving to ARCT-2138. The ARCT-2138 program or the Quadrivalent Seasonal Influenza Program through our partner CSL is progressing well. As of May 1, 2024, 84 healthy young and adults were recruited in the Phase 1 dose finding and immunogenicity study and received one of four 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 third quarter of this year. It is important to emphasize that this flu study will also help us understand how high we can successfully dose self-amplifying mRNA in the multivalent vaccine setting. I'll now move on to our ARCT-810 program. This is our messenger RNA therapeutic candidate for ornithine transcarbamylase or OTC deficiency. In April, the company presented Phase 1 single ascending dose studies for ARCT-810 at the Society for Inherited Metabolic Diseases Annual Conference. The ARCT-810 Phase 1 single ascending dose study enrolled 30 adults randomized 2:1 to receive 0.1, 0.2, 0.3 or 0.4 mgs per kilogram dose or placebo as an intravenous infusion.
The Phase 1b SAD study enrolled 16 adults with mild OTC deficiency, and that was randomized 3:1 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 ARCT-810 was generally well tolerated with no serious or severe adverse events in both studies. The encouraging results from ARCT-810 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. Subjects are randomized in this study to receive six doses every two weeks of ARCT-810 or placebo randomized 3:1. Moving now to our ARCT-032 program, ARCT-032 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 six to eight adults with cystic fibrosis with each participant receiving 2 inhaled administrations of ARCT-032. We will be providing an interim data and progress update for both of our flagship mRNA therapeutic programs of ARCT-810 for OTC deficiency and ARCT-032 for cystic fibrosis on Monday July 1st. And with that, I'll now pass the call to Andy.
Andy Sassine: Thank you, Joe, and good afternoon, everyone. The press release issued earlier today includes financial statements for the first quarter 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 Kostaive this year. And as Joe mentioned, the initial 4 million doses is planned to be delivered to Japan in the third quarter of this year. As a reminder, Meiji Seika Pharma has an agreement with CSL Seqirus whereby Meiji will be responsible for the regulatory approval, marketing, distribution and sales of Kostaive 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 Kostaive revenues in the fourth quarter of this year. As a reminder, our projected cash runway does not include any revenues from Kostaive or LUNAR commercial milestones from the CSL collaboration. I am pleased to announce the engagement of JPMorgan Investment Banking team to help us monetize our investment in our catalyst, a 38% owned JV in Japan with partner Axcelead. At this point in time, Arcturus is strategically focused on working with a global group of established CDMO 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 manufacturing facility. To date, $165 million has been awarded to ARCALIS by the Japanese government. These funds were used to build mRNA drug substance, formulated drug product capability and to construct a DNA template manufacturing facility. 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 first quarter of 2024 compared to the fourth quarter 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 three months ended March 31, 2024, we reported revenues of $38 million compared with $30.9 million for the three months ended December 31, 2023. The sequential increase in revenue was primarily driven by increased activities across all of our CSL program, including preparation for the commercialization of Kostaive.
The BARDA grant revenues of $5.4 million remained relatively sequentially. Total operating expenses for the three months ended March 31, 2024, was $68.4 million, compared with $49.1 million for the three months ended December 31, 2023. The sequential increase was primarily related to the increase in R&D expenses. Research and development expenses were $53.6 million for the three months ended March 31, 2024 compared to $36.6 million for the December quarter. 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 technologies. The company initiated preclinical research related to its Lyme disease and Gonorrhea vaccine discovery programs.
The increase of $17 million in research and development expenses are broken out as follows: $4.3 million for multiple CSL flu programs, $4.7 million for the Meiji commercial production expenses and $4.7 million for the next-generation program. The remaining $3 million was related to increased compensation related expenses. For the three months ended March 31, 2024, Arcturus reported a net loss of approximately $26.8 million or $1 per diluted share compared with a net loss of $11.7 million or $0.44 per diluted share in the three months ended December 31, 2023. Cash, cash equivalents and restricted cash were $345.3 million as of March 31, 2024 and $348.9 million on December 31, 2023. We have achieved a total of approximately $420.1 million 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 three additional vaccine programs by CSL. The expected cash runway extends at least three years based on the current pipeline and program. 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 Kostaive 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.
Joe Payne : 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 Kostaive. And with that, we'd like to turn the time over to the operator for questions.
See also
10 Future Dividend Kings in the Next 5 Years or Less and
15 Best Places to Retire in New York.
To continue reading the Q&A session, please click here.
