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Operator: Good afternoon, ladies and gentlemen, and welcome to the Arcturus Therapeutics First Quarter 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we’ll conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Tuesday, May 9, 2023. I would now like to turn the conference over to Neda Safarzadeh, Vice President, Head of Investor Relations, Public Relations and Marketing. Please go ahead.

Neda Safarzadeh: Thank you, operator. Good afternoon, and welcome to Arcturus Therapeutics first quarter 2023 financial update and pipeline progress call. Today’s call will be led by Joseph Payne, our President and CEO; and Andy Sassine, our CFO. Dr. Pad Chivukula, our CSO and COO will join in for the Q&A session as well. 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 to reflect future information, events or circumstances. And with that, I’ll now turn the call over to Joe.

Joseph Payne: Thank you, Neda, and good afternoon to all and good evening to our friends on the East Coast. I will begin my remarks by highlighting our ARCT-154 COVID-19 vaccine Phase 3 program. This is our most advanced clinical program. ARCT-154 has the potential to offer effective and longer lasting protection against COVID-19. I’m very pleased to report that last month our collaborator Meiji submitted a new drug application to support potential approval of ARCT-154 as a primary immunization vaccine based on our placebo-controlled Phase 3 study. Study conducted was – the Phase 3 study was conducted during a period of multiple variants of concern and met its primary endpoint of preventing COVID-19 and demonstrated a favorable safety profile.

This study was conducted to assess efficacy against COVID-19 and approximately 16,000 individuals and we’re very pleased with the results. The ARCT-154 Phase 3 comparative study of ARCT-154 as a booster is being conducted by Meiji Seika Pharma and they have completed enrollment of approximately 828 subjects with interim results expected later this quarter. This non-inferiority study is designed to evaluate the safety and immunogenicity of ARCT-154 compared to Comirnaty of Pfizer and BioNTech and administered as a bio – as a booster dose. We expect the interim analysis data to be submitted to the PMDA later this quarter and to seek registration of the ARCT-154 as a primary series and booster later this year, potentially representing our company’s first product approval.

Such a meaningful milestone could be indicative of the broader platform opportunity for our mRNA medicine technologies to result in novel vaccines and therapeutics over the coming years. If approved Japanese sales of ARCT-154 could represent a significant commercial opportunity for Arcturus. I will also remind you that the ARCT-154 Phase 3 Japanese booster study, as well as product manufacturing related to this collaboration are being funded by Meiji Seika Pharma and the Japanese government. In April, Meiji Seika Pharma entered into an agreement with CSL Seqirus whereby Meiji will be responsible for the distribution and sales of ARCT-154 in Japan. We are indeed fortunate to be partnered with competent and experienced commercial partners. In April 2023, we received an advanced payment of $23.6 million for the manufacturing and supply of ARCT-154 from CSL.

The advanced payment is specified – is for specified manufacturing runs of ARCT-154, which includes the drug substance as well as the reservation fees and related manufacturing requirements. So ARCT is different than conventional mRNA vaccines in meaningful and important ways. The dose is very much lower. The product is lyophilized, it’s not a liquid or a frozen liquid. These features bring potential dose-related safety benefits and provide a much better shipping, storage, and supply chain. ARCT-154 has shown and continues to show broad neutralizing capability against multiple variants of concern. ARCT-154 has the potential to offer not only effective, but also longer lasting protection against COVID-19. And on top of this backdrop, we will soon be able to share the Phase 3 safety and immunogenicity booster data with multiple regulators across the globe.

This is indeed an exciting time for our vaccine franchise. I’ll now move on to update on ARCT-810. This is our mRNA therapeutic candidate for OTC deficiency. This investigational medicine is designed to address the deficient OTC enzyme in the liver and thereby restore urea cycle activity and to prevent metabolic crises that cause neurological damage. ARCT-810 could potentially liberalize the strict dietary protein restrictions that OTC patients face today and improve quality of life for those living with this condition. ARCT-810 utilizes Arcturus’ proprietary LUNAR delivery technology, an important attribute of our technology is that the lipids administered are rapidly degraded, which we expect lead to a favorable safety profile. ARCT-810 is being evaluated in two ongoing clinical studies in patients, a Phase 1b study in adults and a multi-dose Phase 2 study in adolescents and adults.

Enrollment has begun in the ARCT-810 Phase 2 study in the UK and Europe. The Phase 2 multiple dose study is designed to enroll up to 24 adolescents and adults with OTC deficiency and Arcturus plans to share interim Phase 2 data on a subset of participants later this year in 2023. Now, I’ll move on to ARCT-032. Our inhaled messenger RNA therapeutic candidate for cystic fibrosis that this program is designed to express fully functional CFTR protein in the lungs of individuals with CF utilizing our LUNAR delivery technology that has been optimized for inhaled lung delivery. Our approach is agnostic to the underlying mutations associated with the disease, and as a result, ARCT-032 could provide clinical benefit across a wide range of those living with CF, including those that are not well served by currently approved CFTR modulators.

The clinical development of ARCT-032 is supported by encouraging preclinical data, demonstrating successful CFTR protein expression in the airway epithelium of the lung and different animal species, and the restoration of the CFTR channel and a CFTR knockout mouse model, and shown functional delivery of mRNA in a CF ferret model. In addition, in vitro administration of ARCT-032 to bronchial epithelial cells from CF patient donors has also demonstrated robust expression of CFTR protein as well as functional restoration of chloride current. The ARCT-032 clinical development program continues to advance according to plan. We’re pleased to report today that we have successfully completed the enrollment and administration of a Phase 1 study with 32 healthy participants, including eight subjects in each of the four doses being tested, and we anticipate reporting study results later this year.

The safety and tolerability data support the study expansion and inclusion of patients with CF, Arcturus is working on a protocol amendment to allow the dosing of CF patients and expects to initiate the enrollment in Q3 of this year. With that, I’ll now pass the call on to Andy.

Andy Sassine: Thank you, Joe, and good afternoon, everyone. The press release issued earlier today includes financial statements for the first quarter of 2023 and provides a summary and analysis of year-over-year and sequential financial performance. Please also reference our Form 10-Q for more details on the financial performance. We are happy to see the progress by Meiji on submitting the new drug application to the PMDA in Japan for ARCT-154. We expect the booster data to be submitted shortly by Meiji once it is completed and quality checked in order to seek registration as a booster dose. This NDA submission is the first for an Arcturus vaccine and will be instrumental in the validation of our self amplifying mRNA vaccine platform.

In April 2023, we received an advanced payment of $23.6 million for the manufacturing and supply of ARCT-154 booster vaccines from CSL. The advanced payment is for specified manufacturing runs of ARCT-154, which includes the drug substance utilized as well as the reservation fees and related manufacturing requirements. We took a number of positive steps to improve our balance sheet this quarter with the elimination of $60 million in long-term debt obligations. By repaying the Singapore loan of $17 million in Unused Principal and interest, we eliminated $34 million in additional principal and accrued interest on the non-recourse loan. Additionally, we paid off our $10 million debt obligation to Bridge Bank. As of March 31, 2023, we have no long-term debt and our balance sheet while current assets increased by $21 million, primarily due to the $90 million in accounts receivable from CSL, which is expected to be collected during the second quarter of 2023.

I am happy to report our cash runway remains extended to the beginning of 2026 based on our current pipeline and assuming no sales based milestones or revenues from any commercial product sales. I will now provide a quick summary of our financial results for the first quarter of 2023. Arcturus primary sources of revenues were from license fees consulting and related technology transfer fees, reservation fees, and collaborative payments received from research and development arrangements with pharmaceutical and biotechnology partners. Total revenues for the three months ended March 31, 2023 was $80.3 million compared with $5.2 million for the three months ended March 31, 2022. The increase in revenue is primarily attributable to an increase in revenue of $78.2 million related to the agreement with CSL, an associated milestones achieved in the first quarter of 2023.

Total operating expense for the three months March 31, 2023 was $65.5 million compared with $38.8 million for the three months ended December 31, 2022. The sequential increase in the three months ended March 31 is primarily attributable to increases in manufacturing costs for various COVID programs related to the CSL collaboration, and to a lesser extent for increases in cost associated with startup activities on the manufacturing and supply agreement with CSL and an increase in clinical trial expenses related to our cystic fibrosis and OTC programs. For the three months ended March 31, 2023, Arcturus reported net income of approximately $50.8 million or $1.87 per diluted shares compared with a net loss of $51.2 million or $1.94 per diluted share in the three months in March 31, 2022 and net income of $117.3 million or $4.33 per diluted share in the three months ended December 31, 2022.

We recorded a one-time gain on debt extinguishment related to the Singapore loan of $34 million during the three month ended March 31, 2023. Additionally, we reported net interest income of $2.5 million for the three months ended March 31, 2023. Our cash position was $330.1 million as of March 31, 2023 compared to $321.8 million on March 31, 2022. As mentioned earlier, we expect to collect $90 million in the second quarter of 2023 associated with the CSL milestones we achieved in the March quarter. And in April, we received $23.6 million related to the manufacturing and supply of ARCT-154 from CSL. In summary, we believe that the company remains on a strong financial position and has the resources needed to achieve multiple near-term value creating milestones for the vaccine and therapeutic programs over the next nine months.

I will now pass the call back to Joe.

Joseph Payne: Thanks, Andy. We have continued to make excellent progress and advanced our proprietary messenger RNA and lunar delivery technologies toward later stages of clinical development and potentially having our first product approval later this year. So this is an exciting time at Arcturus. Our strategic collaboration with CSL, which is focused on the development and commercialization of next generation mRNA vaccines is making strong progress. Our teams are working toward the development and commercialization of next generation mRNA vaccines, including those targeting COVID and influenza, and I look forward to providing more information about our progress and upcoming milestones in the coming quarters. So with that, we’d like to turn the time over to the operator for questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question is from Yasmeen Rahimi from Piper Sandler. Please ask your question.

Operator: Thank you. The next one is from Pete Stavropoulos from Cantor Fitzgerald. Please ask a question.

Operator: Thank you. The next one is from Seamus Fernandez from Guggenheim Securities. Please ask your question.

Operator: Thank you. The next one is from Yigal Nochomovitz from Citi. Please ask your question.

Operator: Thank you. The next one is from Yanan Zhu from Wells Fargo Securities. Please ask your question.

Operator: Thank you. The next question is from Yale Jen from Laidlaw & Company. Please ask your question.

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Operator: Thank you. There are no further questions at this time. I will now hand a call back to Joe.

Joseph Payne: Hey, thanks for participating on the call everyone, and if there’s any remaining questions, of course, reach out to our team and we’ll get back to you right away. Thanks to everyone. Good night.

Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.