Arcturus Therapeutics Holdings Inc. Common Stock 2026 Q2 Earnings Call

Thank you, operator. Good afternoon, welcome to Arcturus Therapeutics quarterly financial update and pipeline progress call. Today's call will be led by Joseph Payne, our President and CEO, Dr. Alan Cohen, our Chief Medical Officer, Dennis Mulroy, our Chief Financial Officer. 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 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-K, 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. With that, I will now turn the call over to Joe.

Thank you, Neda, it's good to be with you again, everybody. The second quarter of 2026 was marked by continued execution across our rare disease pipeline and important strategic developments for Arcturus' vaccine franchise. Today, I'll provide updates on our rare disease programs, ARCT-032 and ARCT-810, summarize today's good news regarding our vaccine enterprise. I will then turn the call over to Allan for additional clinical updates and to Dennis to review our financial results. Starting with ARCT-032, our inhaled mRNA therapeutic candidate for CF. During the quarter, our phase II study continued to advance on schedule with active screening and enrollment ongoing across sites in the U.S., Israel, and Turkey. These international sites are important for our recruitment strategy, given the higher prevalence of individuals living with Class I CF in Israel and Turkey.

As a reminder, Cohort Four is evaluating 10 milligrams of ARCT-032 administered daily by inhalation over a 12-week treatment period. The study is monitoring for safety and evidence of early clinical benefit, including pulmonary function measures such as % predicted FEV1 and lung clearance index, or LCI. In addition, quality-of-life measures and high-resolution CT imaging data are being collected. The decision to advance our CF program into phase III is expected in the fourth quarter, or Q4 2026. If Arcturus decides to proceed into a phase III trial, this decision triggers additional and very meaningful contributions from Thermo Fisher, including manufacturing support, clinical research, and related services. Turning to ARCT-810. This is our mRNA therapeutic candidate for ornithine transcarbamylase deficiency, or OTC deficiency. We are pleased to update the market today that we've completed enrollment in our ongoing phase II study, all enrolled subjects have completed study drug dosing.

This represents an important operational milestone for our OTC program. With the dosing phase of the study completed, our team is now evaluating the phase II clinical data along with the supplementary data requested by the FDA in the Type C meeting earlier this year. These data will inform upcoming regulatory discussions across both adult and pediatric development. We expect to communicate the phase II clinical study data later this year in Q3 2026. Concurrent with the data readout, we will provide additional details regarding the regulatory path forward for our OTC deficiency program. On to our vaccine division. Today, we announced the conclusion of our saRNA collaboration with CSL Seqirus. On behalf of Arcturus, I wanted to express sincere gratitude to the outstanding team at CSL.

They've been a great partner to help shepherd this first-in-class, next-generation saRNA technology to where it is today, a validated platform with approvals in over 30 countries. We are pleased to regain global rights to our commercial COVID vaccine product, KOSTAIVE, and to our self-amplifying mRNA platform. Having strategic control of this validated vaccine platform is an exciting opportunity for our company. The Arcturus saRNA platform is validated. It's proven to be efficacious with an immune response that is durable and superior in comparative studies. It's been reviewed by several regulatory agencies to be safe and well-tolerated. The manufacturing process is commercial-ready, scalable, fast, with lower cogs attributed to a significantly lower dose level.

Several global regulatory agencies have reviewed and approved Arcturus' saRNA vaccine platform as represented by KOSTAIVE, which has been approved for licensure in Europe, Japan, and more recently, the United Kingdom, with the regulatory path forward into the United States also clearly understood. The Arcturus vaccine platform is pandemic-ready. The U.S. government is keenly aware of this next-generation saRNA platform. It is likely not a matter of if, but rather a matter of when this platform will be called upon to address future epidemics of infectious disease. Under the agreement, Arcturus regained global rights to KOSTAIVE and the broader infectious disease vaccine portfolio, including seasonal influenza, pandemic influenza, RSV, and EBV vaccine programs. The agreement also resolves the arbitration related to a European regulatory approval milestone payment.

CSL Seqirus wired a one-time cash payment of $12 million to Arcturus, and Arcturus is released from liabilities, including those associated with an R&D credit with an aggregate value of approximately $16 million. With strategic control of the portfolio returned to Arcturus, we are evaluating opportunities to maximize its future value, including further commercialization and partnering pathways. With that, I'll turn the call over to Alan for a more detailed update on our clinical programs.

Thank you, Joe, and good afternoon, everyone. From a clinical development perspective, the second quarter represented meaningful progress for both ARCT-032 and ARCT-810. Beginning with our CF program, ARCT-032, our ongoing phase II study continues to enroll people living with cystic fibrosis who have Class 1 mutations. Enrollment remains on schedule, with active screening and enrollment underway across sites in the U.S., Israel, and Turkey. The study is designed to evaluate daily inhaled dosing of 10 milligrams over a 12-week treatment period. It continues to assess safety as well as evidence of early clinical benefit, including pulmonary function measures such as changes in % predicted FEV1 and lung clearance index, quality of life measures, and high-resolution CT scan imaging. One important development this quarter was the expansion of screening and enrollment activities beyond the U.S. into the Eastern Mediterranean region.

Israel and Turkey are geographies with a high prevalence of individuals with CF Class 1 or null mutations, which will meaningfully support our recruitment efforts and efficiencies for this study. Unlike the U.S., where up to 10% of people with CF are ineligible for modulators due to null mutations, up to 30%-40% of people with CF have null mutations and are eligible for consideration of enrollment in our ARCT-032 study from Turkey and Israel, respectively. Clinical execution remains on schedule, and we are laser-focused on generating the data needed to support the phase III decision expected in Q4 2026. Turning to our OTC deficiency program, ARCT-810. During the quarter, we completed enrollment of the ongoing phase II study, and all enrolled subjects completed studied drug dosing.

This is an important operational milestone and allows us to now focus on evaluating the supplementary data generated from the enrolled study population. We remain grateful for the continuing support, ongoing encouragement, and strong engagement on behalf of our ARCT-810 OTC deficiency study by the patients, their families, and the rare disease care community. Thank you for all your collective help and interest in our development program. Our current efforts are focused on data review, preparation for upcoming regulatory interactions, and planning for an end-of-phase II meeting regarding the path forward across both adult and pediatric development. We expect to communicate both the data and regulatory plan for OTC deficiency program in Q3 2026. Across both our rare disease programs, our focus remains on disciplined clinical execution, high-quality data generation, and productive regulatory engagement to support efficient development decisions. With that, I will turn the call over to Dennis.

Thanks, Alan, and good afternoon, everyone. Our press release issued earlier today includes financial statements for the three and six months ended June 30, 2026 and provides a summary and analysis of year-over-year performance. Please also reference our Form 10-Q for more details on our financial performance. Cash and cash equivalents were $191.5 million as of June 30, 2026, and $230.8 million on December 31, 2025, for a decrease of $39.3 million over the first half of 2026. Revenue was $3 million and $5 million for the three and six months ended June 30, 2026, compared to $28.3 million and $57.7 million in the comparable periods last year. Lower revenue was recognized under the CSL collaboration as Arcturus progressed towards termination of the agreement and regaining rights to KOSTAIVE and its broader infectious disease vaccine portfolio.

Research and development expenses were $17.5 million and $39 million for the three and six months ended June 30, 2026, compared with $29.6 million and $64.5 million for the corresponding periods in 2025. The decreases were primarily driven by lower research and development spending, including reduced salaries, wages, benefits, and facilities cost as the company continues to advance its CF and OTC programs while maintaining its disciplined approach to capital allocation.

General and administrative expenses were $11 million and $20.5 million for the three and six months ended June 30, 2026, compared with $10.3 million and $21.7 million in the comparable periods last year. Overall, general and administrative expenses remained relatively consistent across periods, with a slight quarter-to-quarter increase due to legal fees, partially offset by reduced spending in salaries, wages, benefits, and facilities costs. We remain focused on disciplined execution and capital allocation as we advance our rare disease programs. The CSL Seqirus termination and settlement agreement strengthens our financial position as we regain control of those assets, and the Thermo Fisher collaboration funds and supports the execution of late-stage development of our CF program.