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Hello, and welcome everyone joining today's Arcturus Therapeutics first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. Please note, this call is being recorded. It is now my pleasure to turn the meeting over to Neda Safarzadeh, Vice President, Head of Investor Relations, Public Relations and Marketing. Please go ahead.

Thank you, operator. Good afternoon. Welcome to Arcturus Therapeutics' quarterly financial update and pipeline progress call. Today's call will be led by Joe Payne, our President and Chief Executive Officer, Dr. Alan Cohen, our Chief Medical Officer, and Dennis Mulroy, our Chief Financial Officer. Dr. Pad Chivukula, our Chief Scientific Officer and Chief Operating Officer, 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 a 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 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. With that, I will now turn the call over to Joe.

Thank you, Neda. It's good to be with you again, everybody. The first quarter of 2026 was a period of solid execution for Arcturus as we continue to advance our rare disease pipeline and strengthen our leadership team. I'm very pleased to report that our CF program is now in new uncharted territory. Our 12-week phase II study began enrollment in Q1. We are already well beyond one month of dosing. Continuous dosing beyond a month has never been successfully tolerated in the history of inhaled mRNA therapeutics. This is a big deal. Now, why is that? Because Class I CF is a serious disease with serious unmet medical need, and we believe that the nested pulmonary congestion observed in Class I CF disease requires consistent chronic dosing that is reasonably well-tolerated to be successful.

There are specific reasons why Arcturus has been able to achieve tolerable dosing beyond one month. Firstly, our inhaled LUNAR particle technology includes key delivery lipids that are chemically different from all other technologies competing in this space. Secondly, our messenger RNA manufacturing process to remove undesired impurities is unique, proprietary, and trade secreted. ARCT-032, this is our inhaled mRNA CF therapeutic candidate, continues to showcase these differences in its growing safety and tolerability profile. The CF community is aware of our safety and tolerability profile, which has contributed to the reason why we were able to initiate enrollment of our 12-week open label phase II study earlier than originally anticipated. This study is enrolling Class I CF participants and monitors lung function measures, including percent predicted FEV1 and lung clearance index or LCI.

We believe there is increasing recognition across the field of both the significant unmet medical need in Class I CF and the importance of achieving a well-tolerated repeat dose therapeutic approach to enable durable clinical benefit. Our program is designed with these principles in mind, and we are encouraged by the opportunity to generate meaningful clinical data in a patient population that continues to have no effective treatment options. We look forward to collecting this clinical data, including lung function measures during and throughout this open label phase II study. Arcturus remains committed to advancing our inhaled mRNA therapy for people living with CF Class I mutations who continue to face significant unmet medical needs. Now moving on to our flagship liver program, ARCT-810. This is our mRNA therapeutic candidate to treat ornithine transcarbamylase or OTC deficiency.

We met with the FDA to discuss the pediatric clinical development strategy for ARCT-810. Following this Type C meeting, we were pleased to receive clear regulatory direction on a path toward a pivotal pediatric study.

In line with that direction, we are collecting additional exploratory data and look forward to further alignment with the FDA at the end of phase II meeting planned for the second half of 2026. Beyond our clinical rare disease programs, our partner Meiji in Japan is actively manufacturing KOSTAIVE. This is our self-amplifying mRNA COVID vaccine for the upcoming 2026/2027 season using a two-dose file presentation. All commercial guidance for KOSTAIVE in Japan will be provided by Meiji. We also expanded our executive leadership team with the appointments of Dennis Mulroy as Chief Financial Officer and Dr. Alan Cohen as Chief Medical Officer. I'm pleased that they are both on the call with us today, and we will get to hear from them shortly. Both bring extensive and relevant experience that will play important roles as we continue executing across clinical, regulatory, and corporate priorities.

Many of you will have the opportunity to meet with these gentlemen. I encourage you to do so. Overall, we believe Arcturus is well-positioned to advance our pipeline toward meaningful clinical and regulatory milestones for patients and for our shareholders. With that, I'll now turn the time over to our Chief Medical Officer, Dr. Cohen.

Thank you, Joe, and good afternoon, everyone. From a clinical development perspective, the 1st quarter reflected meaningful progress across our key programs. Starting with cystic fibrosis, ARCT-032 is currently enrolling people with CF with Class I mutations in a larger and longer open label phase II study over a 12-week period. The study is designed to monitor safety, tolerability, and assess evidence of early clinical benefit, including two pulmonary functional measures, including changes in percent predicted FEV1 and lung clearance index. We've intentionally designed this study to generate a more comprehensive understanding of safety and tolerability, along with early signs of clinical efficacy, which are critical to advancing inhaled messenger RNA therapies in the lung. We are also evaluating two validated quality-of-life outcome measures along with changes in high-resolution CT imaging to support a comprehensive assessment of potential clinical effects.

Taken together, these endpoints are intended to provide a robust data package to inform both the therapeutic potential and the feasibility of repeat dosing. Our goal is to establish not only early evidence of activity, but also the feasibility of repeated dosing, which is fundamental to unlocking durable benefit in this patient population. Turning to OTC deficiency, our ARCT-810 program continues to broaden its development strategy to address the unmet medical needs of newborns and young children affected by the most severe forms of the disease. Following our recent Type C meeting, the FDA provided clear direction toward a pivotal pediatric development path. We are actively collecting additional exploratory data to help establish the optimal dose and therapeutic effect as we prepare for the end of phase II meeting planned later this year.

Across both programs, our focus remains on generating high-quality clinical and regulatory data to support thoughtful decision-making and efficient advancement through development. We believe this disciplined approach is particularly important in emerging modalities where careful characterization of safety, tolerability, delivery, and clinical effect is essential to long-term success. I'm excited to be part of the Arcturus team. Look forward to working closely with our investigators, regulatory partners, and internal team members as we continue moving these important programs forward. With that, I'll now pass the call to Dennis.

Thanks, Alan, good afternoon everybody? Our press release issued earlier today includes financial statements for the first quarter ending March 31, 2026, and provides a summary and analysis of our year-over-year performance. Please also reference our most recent Form 10-Q for more details on our financial performance. Cash, cash equivalents and restricted cash totaled $213.4 million on March 31, 2026, and $232.8 million on December 31, 2025. Year-over-year quarterly revenue decreased by $27.3 million. The decline was driven by reductions in revenue from our CSL collaboration as Arcturus refocuses on our rare disease clinical programs.

Quarterly research and development expenses decreased year-over-year by $13.4 million, which was driven primarily by lower manufacturing costs related to LUNAR-COV19 and BARDA, as well as reduced clinical trial costs associated with the LUNAR-COV19 program. Additional decreases were attributable to lower payroll and benefit costs associated with lower stock-based compensation expense and a reduction in headcount. Overall reductions were partially offset by higher manufacturing costs related to LUNAR-OTC. General and administrative expenses decreased year-over-year by $1.8 million due to reduced share-based compensation expense, as well as payroll and benefits associated with reductions in headcount. Through continued execution and strategic refocusing on our existing rare disease clinical programs and therapeutic platform in the first quarter of 2026, Arcturus has maintained a cash runway extending beyond the second quarter of 2028.

The company remains in a strong financial position and has cash runway needed to achieve multiple near-term value-creating milestones in both therapeutic programs. With that, I'll now pass the call back to Joe.

Thanks, Dennis. Arcturus continues to make steady progress across our rare disease mRNA therapeutic programs while strengthening the foundation of the company. With enrollment now underway in our 12-week open label phase II study of ARCT-032 in cystic fibrosis and clear regulatory direction from the FDA on the pediatric development strategy for ARCT-810 in OTC deficiency, we remain focused on advancing toward important clinical and regulatory milestones throughout 2026. Supported by a strong balance sheet and an expanded experienced leadership team, we believe Arcturus is well-positioned to execute on our priorities. With that, let's turn the call over to the operator for questions.

Thank you. If you would like to ask a question, please press star one on your keypad. To leave the queue at any time, press star two. Once again, to ask a question, please press star and one on your telephone keypad. We will pause a moment to allow everyone a chance to join the queue. I will take our first question from Seamus Fernandez with Guggenheim. Please go ahead, your line is open.

Hey, guys. Thanks for taking the question. This is Evan laying on for Seamus. Two for me, one on OTC deficiencies and one on cystic fibrosis. First on OTC deficiency, can you share specific FDA feedback on the glutamine and ureagenesis assay specifically? Curious also the discussion between infants and adults since I don't know if I saw you mention a path forward in the adult setting. Second, on cystic fibrosis, just curious, anything you can share in terms of patient enrollment and progress there and, you know, what's the potential for a potential interim there? Thanks.

Hey, thanks, Evan. I can turn the time over to Alan to address some of the FDA feedback questions pertaining to infants and adults on and the biomarker question to him, and then I can we'll go to that point. I can address the CF question.

Right. Thanks, Joe. We've successfully, as you mentioned, completed the first of two type C meetings with the FDA, and it's clear that we have greater clarity now as to what we need moving forward. As you mentioned, the utility of the biomarkers, most notably ammonia and glutamine in particular, have been historically highlighted and were identified as areas of greater focus and attention for us moving forward. Greater clarity on which biomarkers to use. Ureagenesis is still a biomarker in development, and we're continuing to advance that. It's our dependence upon it, I think, will depend on the additional data that we're currently in the process of generating.

Then with respect to your CF questions and the cadence of enrollment, I think the cadence of enrollment is being determined in the upcoming weeks. You know, we just started this study in the first quarter, but we'll be able to give a more accurate enrollment completion timing later this year. We do remind people that we enrolled approximately 13 subjects in 2025 over sequential three cohorts, you know, the first, second and third cohort, and that was limited to the United States. We are expanding enrollment in not just in the U.S. but also outside the U.S. or abroad.

Thank you.

Thanks, Evan.

Our next question comes from Lili Nsongo with Leerink Partners, please go ahead.

Hi. Good afternoon. Thank you for taking our question. Maybe just a quick question regarding the OTC program. Could you tell us what is the type of exploratory data that the FDA is looking for and also whether it would require for you to initiate studies in the pediatric population? Thank you.

Go ahead, Alan.

Sure. Great question, and thank you for asking. The first Type C meeting that we had, as you alluded to, focused exclusively on what will it take for us to be able to take the adult data that we're still in the process of generating in our current open phase II study into pediatrics. The results of that meeting suggested that we have a clear path forward. We're continuing to collect additional enrollment data for the 0.3 mg/kg and the 0.5 mg/kg dosing groups. Our plan is to then have an end of phase II meeting with the FDA. The intent there is to do the sort of the usual necessary tasks, which is to reaffirm and continue to show safety and tolerability.

Of course, if you're gonna go into young children and newborns, the goal would be to also show enough evidence of clinical efficacy to justify going into such a young, vulnerable population. We have greater clarity now as a result of that meeting. We're in the process of completing that data set, and we should have sufficient data later this year to take that total data set, bring it forward to the FDA and continue our conversations and hopefully get into a pediatric study sometime in the months and years ahead.

Thank you.

Thank you. We will move next with Yanan Xu with Wells Fargo, please go ahead.

Hi. Thanks for taking our question. This is Kwan Ng for Yanan. Our question is around cystic fibrosis. Since there is no placebo control for the 12-week study, can you talk about the variability of FEV1 and LCI, and how should we prepare to interpret the data without placebo control? Thank you.

Yeah, that's correct. There is no placebo arm in the present study. Maybe Alan can comment on the Reach study and placebo strategy going forward. With respect to variability of FEV, that's well understood. We are collecting two lung function parameters, FEV and LCI, and then maybe Alan can comment on the value of doing that.

Sure. Great question, an important question. As you know, the requirements for percentage predicted FEV1 and spirometry is active performance characteristics and reproducibility with the person performing the test. The good news about cystic fibrosis patients is that they've been accustomed, unfortunately, to doing spirometry since they're in school. Since most of the adults that we're enrolling are well into their twenties and beyond, they have decades of experience performing spirometry almost daily. We have set in this cohort 4 study parameters from screening and baseline to allow for a small variation from the two measures, not an excessive amount, that there's enough consistency between screening and baseline that we feel confident that an individual is producing reproducible, reliable tests throughout the course of the study. That was something we didn't have in place before.

I think it's necessary. I believe that it's going to mitigate any concerns that we may have moving forward. In terms of LCI, the challenge with LCI in adults is that there just simply has not been a very large natural history database of people with cystic fibrosis. The good news is that the Cystic Fibrosis Foundation, recognizing the sensitivity of that tool, in particular for measuring changes in small airways, which is likely to be the place where early demonstration of clinical efficacy is most likely to be observed. They are currently completing a large prospective open label study in exactly the same population that we're targeting for our cohort 4 and subsequent studies. That data should be shared later this year, going into 2027 by the CF Foundation at the upcoming NACFC meeting.

We're looking forward to seeing that data starting to be presented, and they have assured all sponsors, including us, that we'll have access to that data moving forward. We'll have a normative dataset, which we hope to use as we bring forward the data we'll be generating on our study drug in the months and years ahead as well.

The only thing I would add is that I just wanna remind everyone on the call that the FDA has not defined a threshold of success for FEV or LCI, at least for our program. In the modulator space, they have, for a new modality like inhaled mRNA for Class I CF, there's no minimum threshold that we must observe. Anything positive would be viewed seriously. Like what Alan mentioned, the Reach Study will be very likely to be very helpful as well. Anyway, thanks for the question.

All right. Thank you for all the callers.

Thank you. We will move next with Myles Minter with William Blair, please go ahead.

Hi, this is Jake on for Myles. Thanks for taking our question. One of your competitors recently discontinued its inhaled CFTR mRNA trial. We were just wondering if you've seen any of the manifestations that were described there and led to the discontinuation, and whether you've had any discussions with the CF Foundation or regulators regarding patient enrollment of this new cohort now that that trial has been discontinued. Thank you.

Yeah. The short answer is no. There's significant differences between the technology that we use to deliver the RNA molecule then versus our competitors, and we touched that on in the script earlier on today's call. I would like to also highlight that we have utilized no steroids as a co-treatment before, during, or after the dosing period. That's a point of differentiation, and there's reasons for that are safety and tolerability related. Also we've been approved by regulators to for unsupervised dosing at home, and that's not been the case for some of the other companies in this field. That's another point of differentiation. The reason behind that, again, is all because we're using a different technology.

It's a different chemistry, it also includes a different manufacturing process to purify the mRNA molecule, which could be a contributor to remove the impurities that cause those undesired immunogenicities and immune responses. Anything else to add, Alan, or?

No, I think Joe covered the majority of it. The only thing I would add is that, you know, it's worth pointing out that at the completion of our cohort 3 study, which went up from 5 mg to 10 mg to 15 mg daily for 28 days, that we were given the ability to move forward with a longer study allowing for either 10 mg or 15 mg daily in cohort 4. Our safety monitoring committee saw nothing clinically worrisome and have allowed us to not only go up to 15 mg if we choose to daily, but we also have the freedom and ability to take those patients out to 12 weeks, which we are currently embarking on right now, initiating at a 10-mg dose once daily.

Thank you. We will move next with Mayank Mantani with B. Riley Securities, please go ahead.

Yes, good afternoon, team. Thanks for taking our questions, and good to hear 032 study is progressing ahead of plan. Did I hear that you've had certain patients move past the one-month exposure window? Just curious if, you know, like the Vertex study, there are any go, no-go decisions intra-study on duration of treatment, 'cause those studies were kind of, you know, comparable on timelines and how further along they were. There, you know, mechanisms built in your study that informs continuation based primarily on tolerability reasons but also obviously efficacy reasons also. Then I have a follow-up.

Yeah, it's a good question. With respect to the first, we have initiated the 12-week study in the first quarter, that means that we are well beyond a month of dosing already in the study. We are continuing to enroll at a pace that's gonna be understood in the coming weeks. Yes, we're well beyond that one-month study. With respect to intermediate go, no-go opportunities and decisions that are built into the protocol, I'll have Alan comment on that.

Yeah, I mean, the good news about an open-label clinical trial is that we're gonna be able to, in an active way, monitor patient progress and look for safety signals as well as early signs of efficacy. It's our impression that by the before the end of this calendar year, we should have enrolled and have sufficient enough data in hand that we will be able to speak a little bit more clearly to the future longevity of the program as well as the direction of the program moving forward.

Understood. Thank you. Then on the Reach data that you're looking to learn at NACFC, was just curious, you know, on the LCI, what according to you sort of good looks like and what correlations that, you know, you're curious about.

Yeah. Yeah.

To see one.

There's several reasons why we've included lung clearance index into this new protocol for the fourth cohort. The first, of course, is to add an additional measure of lung function that is respected, understood, and can be a potential endpoint for us in the study. With respect to the correlation of LCI to other parameters, maybe you can comment on that.

Yeah, I mean, the interesting thing about LCI is that I mentioned earlier at one of the questions that we got earlier was talking about the variability of the performance characteristics of spirometry. The nice thing about lung clearance index and why it was used almost exclusively in young children who can't perform spirometry is that it's a passive maneuver. It doesn't require active involvement of the patient itself to perform it. It's actually very reproducible and highly reliable. All you really have to do is form a seal around the mouthpiece, and then the equipment does the rest. Right now, the only outstanding information we have is what the CF Foundation is generating right now with the Reach Study, which is what's the normal rate of decline of lung clearance index within the population that we're studying. We have a comparative group.

Really right now, it's not only a more sensitive measure. By the way, it's also, as you may know, been an approvable endpoint for some of the modulators, in particular in Europe and rest of world. We know it's reliable. We know it's reproducible. It has really not been used in adults just simply because it wasn't perceived as necessary. I think increasingly it's being appreciated for the sensitive way with which it measures a more distinct, more peripheral, more acutely portion of the airway that may prove to be much more useful for purposes of a study like this in these patients moving forward.

LCI also has a correlation between mucus plug reduction, and insomuch that that's the, you know, the encouraging data we saw in our second cohort that we've shared. You know, we'd like to see that correlate with a lung function measure. Lung clearance index has a nice correlation to these reductions of mucus plugs in others' studies.

Got it. Lastly, any insight on your plans for combining with a modulator for maybe your non-responder population? Is there anything you could do in the ongoing protocol? Thanks for taking my questions.

Did you understand the question, Alan?

Yeah, I think I did. If I didn't, please correct me. I guess the question as I understood it was obviously the highest unmet medical need population are those with null mutations and those who are unable to tolerate or are unable to get access to modulators. That's obviously the patient population that we're focused on now. Is our therapeutic potentially beneficial to a broader population of patients who may be on modulators? Yes. The answer is yes. That would obviously be the next place we'd wanna go. Obviously, we're gonna need to generate sufficient data to make that justifiable, and we look forward to hopefully getting that data in the years ahead.

Thank you.

Thanks, Mayank.

Thank you. We will move next with Adam Walsh with Roth Capital Partners, please go ahead.

Hi, good afternoon, and thanks for taking my questions. On the adult Type C meeting timing, when would we expect to hear about that outcome?

Sure. We've shared previously that the both of these Type C meetings would be completed in the first half of this year, and we're well on track for that. The second would be sometime this quarter. That's a near term.

Okay.

-horizon here very, very soon.

Wonderful. Then how is the team segmenting pediatric versus adolescent versus adult for OTC? What is a realistic enrolled patient number for the pediatric pivotal given the targeted severity?

Sure. Great, great questions. I'll take this one. This is Alan. The population that we believe has the highest unmet need are those who tend to be under the age of six, so preschool age up to early school age. By the time, unfortunately, most of these kids with OTC deficiency who manifested in the birth period, by the time they get to school age, they're either unfortunately having a liver transplant or if they're unable to be stable enough for that, they die. The segmentation for the pediatric population would almost exclusively be focused on that exact population, children in the first weeks and months of life up through probably age six.

Excellent. One more, if I may, just on ARCT-032 and CF. How's the team approaching interim versus full disclosure given the open-label design? I know this was touched upon on the last call, and you may not be advanced enough to comment on it, will you be anticipating any disclosure on interim, given the open-label study?

Yeah. The language we've used on this call today, Adam, is that you're right, it's an open-label study. It's already started, and we're expressing confidence on today's call that later this year we should have sufficient enrollment and data to inform our next steps. I think we're gonna be in a really good place to understand where we are with this program later this year.

That's great. Thank you.

Thank you. We will move next with Whitney Ijem with Canaccord, please go ahead.

Hi. Thank you for taking our questions. This is Angela Qian on for Whitney Ijem. Can you remind us what preclinical data you have of LUNAR-CF to penetrate the mucus and any data around endosomal escape or production of functional protein? Can you also remind us what cells are you reaching within the lung?

Sure. Sure. We have Pad here with us. He can comment on, you know, the ferret data, et cetera.

Well, first of all, you know, we worked for many years with the CF Foundation to develop our preclinical package. And we've done quite a bit of work on looking at LNP stability in sputum. And then we've also done a lot of work preclinically in mouse rodents and ferrets as well as non-human primates. And what we see is in the CF mouse model, for example, that we can get to various bronchial epithelial cells. Yeah, we have a pretty broad distribution, and some of this data was recently published with some of our collaborators, and I think that's available. And we can provide that to you.

Did we address your question?

Great. Yeah. If you could send that would be great. Maybe a follow-up is on dosing currently, are you doing anything to address kind of the distribution of drug into the lower lobes? Like, is there a way you can try to impact the distribution of drugs?

Right now our anticipation is we won't have to modify the position of the patient or anything like that to access different lobes or parts of the lung. That's not our anticipation.

I can also. This is Pad again. We can also, when we did our initial preclinical evaluation of the nebulizer that we were going to use, we've optimized the particle size of the nebulizer so that it does get distributed throughout the lung.

Yeah. This is Alan. Just to add one more piece to that. I think your question is probably coming from the high-resolution CT data that we shared and generated in our last cohort, which showed a preponderance of effect mostly in the lower segments of the thoracic cage and within the lower segments of the lung. We know that ventilation perfusion and ventilation in general differs with aerosols, in particular in the lower and upper segments of the lung. One of the things that we're hoping to achieve if we're going now from a four-week dosing strategy to 12-week strategy is a much more thorough application of our therapy throughout the lung. We hope to see that manifest as the four-week period. We think this is more so a byproduct of time and not necessarily dose.

Got it. Thank you so much.

Thank you. We will move next with Yigal Nochomovitz with Citigroup, please go ahead.

Hi, this is Juwon Kim on for Yigal. Thanks for taking our questions. Maybe two quick ones from us. Just to confirm firstly, do you need to enroll more patients at the 0.3 mg/kg or 0.4 mg/kg, 0.5 mg/kg dose for the exploratory data that needs to be generated, or is that just from longer follow-up?

The short answer is we just need to complete the scheduled study as dictated and communicated at the Type C meeting, so there's nothing too extraordinary. We just need to complete that data set and also analyze it and then present it in a way that they requested. It was just a re-analysis of the data that they wanted to appreciate, and we said that we'd provide that to them at the EOP 2 meeting.

Gotcha. Also on CF, I believe that you noted that you're planning on conducting the HRCT scans in the 12-week study. Can you provide additional detail on how frequently that assessment as well as LCI and FEV1 measurements might be conducted? Are you seeking to enroll a certain number of patients ex U.S.? Thank you very much.

With respect to high-res CT scan, it's before and after. We typically do not propose to take several of these high-res CT scans during a study. It's typically before and after. With respect to the other lung function measurements and the cadence of that throughout the 12-week study, maybe, Alan, you can comment on that, what you're comfortable sharing.

Yeah. We haven't really shared that kind of level of granularity, but I think it's appropriate to just consider that every time a patient comes back to a clinic to get evaluated and to get another scheduled amount of drug, that's a perfect time, particularly at a CF center, to repeat testing in a controlled setting. We are not using home monitoring nor home spirometry or lung clearance index equipment in the household or in the home. We want consistent measures being performed in an appropriate skilled center so that we can have reliable data. We're collecting that data at every time point that the patient's coming back, so it's at a regular cadence over the course of 12 weeks.

Got it. Thank you. Are you looking to enroll a certain number of patients ex U.S.?

Yeah. For 20 subjects. Up to 20 subjects is what we're, what's presently in the protocol. For CF, For CF. Were you asking about OTC?

Oh, no, I just meant, amongst those 20 patients, is there a specific number that you're looking to get ex-U.S. versus U.S.?

Oh, go ahead. Comment on.

Yeah. No. Another great question. we added ex-U.S. sites in large part because there are jurisdictions in the world that happen to have higher preponderances of people with no mutations. we're trying to take advantage of the fact that there are high unmet medical needs in parts of the world where the level of care, the nature of care, and the clinical course of the disease is commensurate and consistent with what we observe here in the U.S., Canada, and other parts of the world. we haven't set a high or low bar in terms of the number of patients to be enrolled in the United States and outside of the United States.

It's in our anticipation that it's gonna be, you know, perhaps an equal mix, but it, it really shouldn't matter at this point.

Great. Thank you very much. Appreciate the color.

Thank you.

Thank you. We will move next with Thomas Shrader with BTIG, please go ahead.

Hi. Good afternoon? This is Jenny on for Tom Shrader. Thank you for taking our questions, and thank you for all the updates. I had a couple questions on the OTC program. For OTC, you're now pursuing late-onset adult and severe pediatric populations, which is a meaningful broadening. Could you help us understand how you're thinking about resource and capital allocation between these two tracks? Is there a scenario where the adult program generates registrational data first and helps de-risk the pediatric program, or do you view these as truly independent developmental paths that need to run in parallel? As you think about your end of phase II meeting in second half of the year, could you walk us through your best case versus base case outcome and what that looks like from that interaction? Thank you.

Okay. A lot there. I think Alan got it. With respect to pediatric and adult regulatory paths, we can comment on that. Expectations for the EOP 2 meeting, go ahead. Just the path for, you know, what percentage of the budget is allocated or energies and resources to the pediatric path versus the adult path? Is there more prioritization to the pediatrics?

Yeah. Okay, understood. Rather than getting into granularity on the budgetary likelihood of expenditure, right now our pediatric program is predicated on the successful completion, sufficient end of phase II data, and a general agreement that we've generated sufficient safety tolerability and clinical efficacy data to be able to then go into children. Our expectation and hope is that the pediatric opportunity and unmet medical need is the greatest and the one that we feel we need to be spending our greatest attention to once we're given the opportunity to do so. Our adult program is almost completed. Right now we're just finishing up enrollment on a small number of patients to complete the grid that Joe was just referring to a moment ago. It's five doses.

Once we complete five doses and have time to analyze the totality of that data and prepare it for our end of phase II meeting, our hope is that we're given the green light to move forward with a pediatric program, and that would be in large part our focus moving forward.

Great. Thank you.

Thank you. Once again, that is star and one on your telephone keypad if you would like to join the queue. We will move next with Yale Jen with Laidlaw & Company, please go ahead.

Good afternoon? thanks for taking the questions. In terms of the pediatric OTC programs, you mentioned most of those patients need transplantation as the ultimate treatment. I just wonder whether you're thinking the The drug currently you're developing was mainly for a stopgap for those patients before they can ultimately get transplantation or this is potentially disease modifying. The patient can be treated for a long time without the need for transplantations.

Well, first a comment is that OTC deficiency is definitely a pediatric-centric disease. That's usually when it's diagnosed. There is a significant unmet need to prevent the undesired liver transplantation that occurs in these young children. Engaging them prior to the severity getting to that point is the timing we're talking about. Is there any other comments from-

Yeah, no. I think your question is actually a really good one. Our hope and expectation would be that we're not only forestalling the need for a liver transplant, but we should hopefully be able to keep these children from requiring not lung, liver transplants lifelong if we intervene and do so in as pronounced a way as we hope and expect to do as early as possible in the course of their disease.

Okay, great. This is very helpful, and congrats on the progress.

Great. Thank you. Great question.

Thanks, Yale.

Thank you. At this time, there are no further questions in queue. I will now turn the call back to Joe Payne for closing comments.

Just thanks everyone for participating on the call. We appreciate everyone's time. Please don't hesitate to reach out to our team for any remaining questions. We will always get back to you as soon as we can. Thanks again.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation, you may now disconnect.

Hello, and welcome, everyone, joining today's Arcturus Therapeutics Fourth Quarter and Fiscal Year 2025 Earnings Call. [Operator Instructions] Please note this call is being recorded. And it is now my pleasure to turn the meeting over to Neda Safarzadeh, Vice President, Head of Investor Relations, Public Relations and Marketing. Please go ahead.

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 Dr. Alan Cohen, our Chief Medical Officer. Dr. Pad Shibkula, 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 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 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.

Thank you, Neda. It's good to be with you again, everybody. I will begin today with an update on our ARCT-032 and ARCT-810 programs. These are the messenger RNA therapeutic candidates for cystic fibrosis and ornithine transcarbamylase deficiency, respectively. ARCT-032 Phase II trial is progressing with higher dose testing at 15 milligrams in 4 Class I CF adults, which showed no safety concerns. The upcoming multi-month study will enroll patients in the U.S. and internationally and is designed to evaluate safety as well as look for early signs of clinical benefit, including improvements in lung function and quality of life. We are well on track to initiate dosing for this Phase II 12-week study in the first half of this year and look forward to generating potentially meaningful clinical data for our CF program in 2026. ARCT-810 continues to advance toward pivotal development. We plan to study both adults with late-onset OTC deficiency and young children with the most severe forms. Type C regulatory meetings are scheduled during the first half of 2026 and are intended to provide clarity regarding our next steps in clinical development for our flagship rare liver disease program. I will now provide regulatory updates to our partnered COVID-19 vaccine program, also known as Costave, where in January 2026, the U.K. Medicines and Healthcare Products Regulatory Agency, or MHRA, granted approval for Costave, a self-amplifying mRNA COVID-19 vaccine for use in individuals aged 18 and older. Moving to ARCT-2304. This is our next-generation STAR vaccine candidate for pandemic A/H5N1 influenza. This program is contracted with and funded by BARDA. We completed a Phase I study in 212 young adults and 80 older adults. Recent 8-month follow-up data after the initial vaccination showed that all 3 dose levels, 1.5, 5 and 12 micrograms generated a durable immune response. The results also reinforce the STARR® sa-mRNA platform's ability to drive meaningful cell-mediated immunity. Across all tested doses, the vaccine was well tolerated with no safety concerns reported. The data further validates our STARRs mRNA platform. Also briefly, our lawsuit against AbbVie and Capstone Therapeutics filed on September 23, 2025, remains ongoing. With that, I'll now pass the call to Alan.

Thank you, Joe. It's certainly good to be here with all of you today. I'll begin with an update of our ARCT-032 program. This is our messenger RNA therapeutic candidate for cystic fibrosis or CF pulmonary disease. ARCT-032 utilizes Arcturus' LUNAR lipid-mediated aerosolized platform to deliver CFTR messenger RNA to the lungs. Expression of a functional copy of the CFTR mRNA in the lungs of people with CF has the potential to restore CFTR activity and mitigate the downstream effects responsible for the progressive lung disease and associated morbidity and mortality experienced by people with CF. We remain on track to initiate the dosing phase of our 12-week Phase II clinical study in the first half of 2026. We recently completed once-daily dosing of 15 milligrams of ARCT-032 over 28 days in the third dosing cohort. This cohort included 4 CF adults with Class I MEL mutations. And importantly, we observed no safety or tolerability concerns at this higher dose. Based on these encouraging data, the independent safety review committee permitted us to move forward with a Phase II study that will evaluate ARCT-032 over a 12-week period instead of just 4 weeks. We will include 2 functional pulmonary measures, spirometry as measured by percent predicted FEV1 as well as LCI or lung clearance index as measured by multiple breath washout. We will also include 2 quality of life measures, the CFQRR and the EQ5D5L as well as serial high-resolution CT testing to examine changes in airway wall thickness, air trapping and mucus plugging scores. The 12-week study intends to enroll up to 20 participants with Class I CF mutations from clinical sites in the U.S. and abroad. The goal of this upcoming 12-week study is to establish a clearer picture of longer-term safety, 12 weeks versus 4 weeks and begin to more comprehensively explore early signals of clinical efficacy, including how the CF participants feel and function. Now moving on to the ARCT-810 program. This is our messenger RNA therapeutic candidate for ornithine transcarbamylase or OTC deficiency. We look forward to aligning with regulators on our clinical development strategy for the OTC deficiency program. We are moving to broaden our development strategy to serve both adults and late onset disease and young children with the most severe forms of OTC deficiency. These are the patients who typically rely on liver transplantation for survival beyond early childhood. We continue active regulatory engagement to support pivotal trial designs across these 2 distinct populations. Our Type C regulatory meetings with the health authorities, along with their feedback, remain on track for the first half of 2026, and we expect these interactions to help clarify our clinical development strategy for both adult and pediatric indications. Currently, we are very pleased with the momentum across both the CF and OTC deficiency programs and look forward to updating you as we progress throughout the year. I'll now pass the call back to Joe.

Thanks, Alan. We indeed look forward to initiating enrollment in our 12-week CF study and gain clarity and alignment with regulatory agencies for the next stages of development for ARCT-810. Now with respect to Arcturus' financial position, we issued a press release earlier today, which includes financial statements for the fourth quarter and fiscal year ending December 31, 2025, and provided a summary and analysis of year-over-year performance. Please also refer to our most recent Form 10-K for more details on financial performance. Year-over-year, annual and quarterly revenue decreased $70.3 million and $15.6 million, respectively. These declines were driven by reductions in revenue from our CSL collaboration, reflecting lower supply agreement activity and a reduced number of development-based milestone achievements as Costave was commercialized. Annual and quarterly research and development expenses also decreased year-over-year by $83.0 million and $19.3 million, respectively, which was primarily driven by lower manufacturing and clinical costs related to the LUNAR-COV19 program, reflecting the program's transition from a development program to the commercial phase. Additional decreases relate to lower manufacturing for our LUNAR-CF and LUNAR-FLU programs as well as lower clinical costs for our LUNAR-OTC program as we wrap up clinical activities. Clinical costs for Phase II of our LUNAR-CF program partially offset these reductions as we remain focused on this clinical study. General and administrative expenses decreased annually year-over-year by $6.7 million due to reduced expenses for payroll and benefits as well as share-based compensation. Quarterly general and administrative expenses increased year-over-year by $1.6 million due to an acceleration of employee stock options. Overall, we expect general and administrative expenses to continue to decrease during the next 12 months, driven by lower share-based compensation expense. Cash, cash equivalents and restricted cash were $232.8 million as of December 31, 2025. and $293.9 million on December 31, 2024. Through disciplined execution and a strategic refocus on existing rare disease clinical programs in fiscal year 2025, Arcturus has extended our cash runway into the second quarter of 2028. In summary, the company remains in a strong financial position and has the cash runway needed to achieve multiple near-term value-creating milestones for both therapeutic programs. With that, let's turn the time over to the operator for questions.

Operator Instructions] Our first question comes from Yasmeen Rahimi with Piper Sandler.

Would love to understand as you guys are going to be kicking off the 12-week Phase II study, I know you guys spend a lot of time thinking about optimization for the study from dose selection to baseline measurements to patient selection. So maybe help us walk us through some of the optimizations that were included versus the initial study that was conducted in the fall. That would be really helpful to go through. And then also, I know you work with the CF Foundation. Help us understand if you had a chance to work with them to warehouse a number of patients. So as soon as you kick off the study, you could enroll quickly the patients for it. And with that, I'll jump back into the queue.

Yes. Thanks, Yas. I appreciate the questions as always. With respect to how the 12-week study that we're initiating here soon is different from the 4-week study, we have Alan on the line. He'll highlight some of those differences so that the investors out there can understand.

Sure. No problem. Thanks, Joe. Great question. So first things first, one of the main fundamental differences between the study that we've done with dose ranging from Cohorts 1 through 3 is that Cohort 4 is really going to be designed somewhat differently with the intent on it being more reproducible and stable, particularly as it relates to spirometric measures. We're setting parameters. We will not be enrolling a CF patient until they're stable with respect to baseline lung function measures. And this should help us allow us to observe true clinical signals by enhancing the noise to signal ratio. In addition, we are going to be including lung clearance index using MVW, which does not -- which is not subject to variability issues that is sometimes seen in spirometry. And that's why LCI has really been used and preferred in children because of its ability to be reproducible and not patient or performance dependent. In addition, we're going to be looking over a 12-week period instead of just simply 4 weeks with the general thinking that the longer period of time will allow the drug that we're studying to manifest clinical benefits in the airway. Lastly, we are including not just LCI and using MVW and percent predicted FEV1 spirometry, but 2 additional quality of life measures, the CFQRR and the EQ5D5R. So 2 shots on goal for both pulmonary functions and quality of life in addition to the HRCT studies reproducibly that we have used in the past and shown early signals of success. Hopefully, that should be helpful to you.

Yes. And we do continue to strengthen our relationship with the CF Foundation. They're keenly aware of the modulator nonresponders in their community, both here in the U.S. and abroad. And so we work closely with them -- in fact, the TDN themselves permitted our study to proceed after reviewing the first 3 cohorts of data into this fourth cohort into this 12-week study. So they're closely involved and engaged.

We'll move next to Pete Stavropoulos with Cantor Fitzgerald.

Nice to see the progress. So you mentioned LCI for CF. Can you talk a little bit about this test, sort of how sensitive is it? I think you mentioned it's not variable. Do you expect multiple readings at baseline? And importantly, does it correlate with other endpoints you plan to use? And is it reliable at all stages of disease, say, early versus late or equally sensitive? And if so, how will that impact your enrollment criteria for the Phase II?

No, it's a great question, Pete. LCI is definitely another lung function measurement that we're -- data that we're collecting in this 12-week study. It's definitely more sensitive. Alan, perhaps you can discuss about the multiple readings and how well it correlates and how reliable it is.

Sure. Of course. And a great question. Thank you for asking about this. LCI, as I mentioned, doesn't have the subject variability issues of spirometry. Although as we all know, spirometry has been a more traditional endpoint measure for most pulmonary drugs that have been approved, both in the United States and abroad. And that's really why LCI historically in CF has been used in children who can't always perform spirometry reproducible. It's a much more passive maneuver requiring just normal tidal breathing, so comfortable breathing in and out. And as a result, it [indiscernible] reproducible measure for more importantly, the most early and more subtle changes in the smallest airways. So why we're focusing on LCI in addition to spirometry is not just its ability to be reproducible, but it also is measuring another component of the airway that we believe we can have more discernible benefit for earlier and in a smaller number of subjects. Spirometry measures can change slightly as well in these larger airways, and these are more central airways, but it does require a more active engagement to be sufficiently reproducible. That's why I was alluding earlier to the controls that we're putting into this study as to making sure that a patient has reproducibility in screening and baseline before going into drug dosing so that we have a more accurate reproducible baseline with which to compare subsequent changes over the 12-week course of the study.

All right. And also just a question on the OTC program. As you're having your discussions with regulatory authorities about a registrational trial, how has their reception been for certain biomarkers and assays like ureogenesis function using the nitrogen 15 isotope or any other biomarker they may be less familiar with? And what's sort of the base case outcome for a study design?

Well, those are all great questions, and that's currently where we are. We're actively engaged in preparing for these Type C meetings in the next few months. We're going to be in a much better position to answer those with granularity and specificity but that's exactly what we're currently engaged with the FDA on is the future study approaches, the design, the size, the scope of the study, understanding what they would like to see before we can proceed further into the clinical development. So we'll have that regulatory clarity shortly. That's our intent. That's our aim. And they're all good questions, but we'll be in a better position to answer those in a few months.

Congrats on the quarter and progress.

We'll move next to Seamus Fernandez with Guggenheim Securities.

This is [indiscernible] on for Seamus Fernandez. Just a few from us. Looking forward to the start of the 12-week CF study. I just wanted to clarify, so it sounds like dosing is proceeding at the 15 mg dose cohort. Just curious what drove the decision to proceed with the 15 mg dose over 10? Was there any evidence of dose response on any of the lung function measures or CT scan? Second, just in terms of the planned enrollment for CF, you mentioned both U.S. and international recruitment. Just curious how you're thinking about maybe the split between U.S. and abroad.

A couple of good questions. First of all, a point of clarification, just so it's not misunderstood. We have achieved safety and tolerability data for the 15-milligram level, but we're actually initiating our fourth cohort at the 10-milligram level. We were fortunate to see early efficacy, some early clinical some early clinical signals in our smaller cohorts at 10 milligrams. So we're going to continue that and see if we can see improvements as we extend the study in larger numbers. With respect to the plan to enroll in the U.S. and we are enrolling internationally, including Europe and the Middle East. But Alan can maybe share some of the strategies as to why we're expanding our enrollment in other countries.

Sure. Thank you, Joe, and a great question. So the plan right now, we've actually expanded our U.S. sites. So we have additional U.S. sites ready to go for the Cohort 4 study, which we will be initiating shortly and have added, as Joe mentioned, European as well as Middle Eastern sites. The intent there is to really go into parts of the world where there is a higher preponderance of null or type 1 CF genetic mutants so that there is a larger percentage within those populations, and it should yield a greater likelihood of identifying, engaging and enrolling patients in a much more timely manner over the course of the calendar year.

Just one follow-up for me then, just between the 15 and 10 mg dose because you mentioned improvements at the 10 mg were anything you can share in terms of the responder rate at the 15 mg relative to the 10 did you see a response on FEV or CT scan there, I guess, in terms of similar benchmark how you presented the earlier data?

No. Yes, we've completed the dosing phase for the third cohort at 15 milligrams, and we've collected sufficient safety and tolerability data to share with the safety review committee to allow us to permit us to proceed into the 12-week study. With respect to the other data, that data collection process is ongoing, and that's where we are. But what was significant was to allow us to proceed into the fourth cohort.

We'll move next to Lili Nsongo with Leerink Partners.

So 2 questions for me. The first one on the CF program. So thinking about, again, moving on to the 12-week study, what was the rationale to stop at 15 milligram given that you haven't seen any safety signal? And would there be enough design flexibility to potentially increase the dosing as you accumulate data? And then I have a follow-up question on the OTC program.

Yes, we definitely have the flexibility to increase dosing, and we're very happy that we already have the ability to increase to 15 milligrams, if necessary. But just to maybe reiterate that 10 milligram showed early signs of working in the second cohort. So we're simply extending the duration of that treatment in a larger cohort. And we're now pleased that we have the flexibility to increase dosing to 15 milligrams if needed. It's unlikely that we will need to increase dosing even further, but we would have flexibility to do so if needed. We did dose up to 27 milligrams in our early trials in human volunteers. So there is some headroom there to expand further, but we feel confident in the dose that we've selected at 10 to start this fourth cohort.

Okay. Maybe just a follow-up. For the OTC program, do you expect a bifurcated regulatory path for both the pediatric and then the more adult patient population?

Yes. I think that's safe to assume that the younger children will be treated differently than the older stable adult population simply because the need is far more severe in younger children, it's a different population. But anything to add to that, Alan?

Yes. I mean, in many ways, I think where we are with the program and important to note that since there are survivors with an OTC deficiency into adulthood, even though it's vastly different in terms of the medical complexity and the ability to be functional without needing a liver transplant, we did -- we were able to show up to this point safety, tolerability, and we believe early signs and signals of efficacy. Now in our discussions with the FDA on looking at a younger population where survival tends to be quite bleak beyond preschool and school age. The intent there is to really see if we can leverage the most recent guidances that the FDA has shared about their willingness to look into ultra-rare populations with severe outcomes and their willingness to be more -- give more latitude and flexibility in terms of how one conducts those studies as long as there's sufficient safety and tolerability and obviously, efficacy. So we're encouraged by the early conversations that we're having with the agency right now, and we'll continue to pursue those to the benefit of the OTC deficiency community.

We'll move next to Yanan Zhu with Wells Fargo.

Maybe first on the CF program. I think you mentioned one effort in Cohort 4 is to obtain stable baseline. Remind us why that's important? How are you going to go about and do that? And also curious, during the 3-month trial period, could it be possible that patients had a stable baseline, but for some reason, their reading could begin to fluctuate or drift after having had that stable baseline within a 3-month period?

Thanks, Yanan. Yes, Cohort 4 is definitely different with respect to the first 3 cohorts and that we've designed it with a stronger baseline. Alan, maybe you can comment further there.

Yes. So what we've done here, and it's a great question. As best as we can, one should realize that because of the complexity of the lung disease and the impact that it has in the various segments of the lung at any given time, what we're looking for at baseline with these adult patients with CF is at least enough reproducibility and as small a possible variability within the period of time that we screen to baseline to get them enrolled that we believe that we have as accurate representation of where they are at that moment in time as far as their lung diseases advancing and progressing. It's not unexpected in the course of a 3- or 6-month period that many of these patients may have an acute pulmonary exacerbation or an acute illness. And we're prepared to handle that. But what we wanted to try to mitigate and deal with was the variability that is seen not uncommonly in patients with COPD, cystic fibrosis, asthma, et cetera, particularly those who are vulnerable and chronically infected with pathogens. So we're really tightening up the enrollment criteria. We're setting parameters. And that's why we believe we're just looking to make sure that it's reproducible and stable at baseline. And we're not going to be enrolling CF patients that may be in the early throes of pulmonary exacerbation or an acute illness. And sometimes just even modest changes can be an early signal for that. We want to enhance the noise to signal ratio. And once again, one more thing to think about, unlike lung clearance index, spirometry really does require a consistent study subject performance. It's not a passive maneuver. So anything that we can do to make sure that a patient coming into our study has a representative baseline is really what we're trying to achieve here.

Great. That's super helpful. Two more questions, if I may. On the OTC deficiency regulatory interaction front, could you lay out for us to you and to the principal investigators, what would be considered an exciting outcome with regard to the alignment? And what -- perhaps also what might be the base case scenario for the alignment? And lastly, I wanted to -- wondering if you have any update on the COVID-19 vaccine initiatives between you and CSL.

Yes, I can take those questions, Yanan. So we're definitely working with the FDA to establish clarity, right? That's the main objective. So as investors are looking at what are we trying to achieve with these Type C meetings, it's clarity. We want a clear path forward to helping both the children in need with high unmet medical need, more severe disease and the stable adults, right? So we're presenting our case. We're presenting our data and basically looking to have clarity in the path forward. Anything to add there before I comment on CSL, Alan?

No. And obviously, in these patients, the goals and objectives for the children is quite different because of the severity and nature and lay vial nature of the disease in children as opposed to the much more stable adults. Even with current standards of care, the goals and objectives of a pediatric program would be to try to mitigate as best we can the damaging neurological and developmental issues that they contend and deal with on a daily basis just by having OCT deficiency despite the fact that there are now therapies like ammonia binding agents and abilities to control diet. So success for us would be, as Joe said, a clear path forward with agreed endpoints and goals and objectives that are not only attainable but are potable and acceptable to the families and patients as well as the caregivers and their current standards of care. Yes, and the details of that, we'll be able to provide that granularity in a couple of months. But I appreciate the question. With respect to your CSL-related question in Costave, yes, we definitely made some progress for the Costave asset and for the platform in the United Kingdom. It was good to see that we advanced Costave to the point of approval and licensure in the United Kingdom. But the present administration here domestically has made it challenging to progress Costave to licensure or approval in the near term here in the U.S. So because of this and understandably, CSL and Arcturus are in active discussions regarding our collaboration, and we're going to be able to provide more color on that in the coming months.

We'll take our next question from Myles Minter with William Blair.

First one is just on the fact that I think you're deciding between the 10 mg and the 15 mg dose for the 032 Phase II trial. I think you're waiting on 15 mg efficacy data. You've got the safety and tolerability, obviously. I'm trying to understand what the puts and takes are for selecting dose moving forward? Like if you did get this efficacy data in for the 15 mg and it looks fine, but you have more data in 10 mg, like which dose or would you take both doses forward? I'm trying to understand your logic between [indiscernible].

So it's relatively straightforward in that 10 milligrams showed early signs of working in the second cohort. So we're simply extending the duration of treatment into a larger cohort and extending that duration. We now have the flexibility to increase the dose. That's what this means. And only if needed, there's many that are suggesting that efficacy is achieved through simple duration by extending the treatment, and we're going to prove that. And at some point, because it's an open-label study, if we feel we need to increase the dose, we can. I also remind folks that it's a fairly pricey product to manufacture. So if we can keep cost of goods down, that's also a good benefit by keeping the dose down around 10 milligrams as well. But it's simply based on data that at 10 milligrams, we saw progress. So we think we're going to extend the duration and the size of the study to see if it works in that context in that new -- in the fourth cohort. And we now have the flexibility to increase the dose if needed.

We'll take our next question from Adam Walsh with ROTH Capital.

The first on 032, the CF product. You've talked about the first week in your clinical trials or 2 of being an onboarding phase where the drug is sort of getting through the congested airways. So in a 12-week study, you'd have roughly 10 productive weeks versus maybe 2 or 3 in the 28-day study. How should we think about that from an extra exposure time as it relates to FEV1 and mucus clearance versus what we maybe saw at 28 days?

Yes. Adam, that's a thoughtful question. And you're absolutely right. We view that in our 28-day study, we observed consistently that there was a 1- to 2-week onboarding phase. And so in reality, there's really only a 2-week healing phase for that 28-day study. So as we go to the 12-weeks study, assuming a similar onboarding rate of 1 to 2 weeks, then you have 10 full weeks of potential healing and efficacy reads. So it's a difference between 2 and 10 weeks. So under that -- from that perspective, it is a significant improvement. But if you look at the study as a whole, we're going from 4 weeks to 12 weeks. It's a threefold difference. That's also a significant bump. And -- but your observation is sound, and we agree with you that it's not only threefolding the time of the study, but increasing the duration of potential healing and efficacy with this 12-week study.

And then if I could, one on 810 for OTC deficiency. Phase II patients fade on standard of care. So to my knowledge, we haven't seen whether patients can actually reduce scavengers or loosen dietary restrictions on 810. Is that something you plan to build into the pivotal? And how important do you think that kind of functional clinical data will be for the approval conversations versus the biomarker package alone?

That exact question is in the agenda of our Type C meetings this year. So for both the children early onset and also with the stable adult population. So it's the right question. We'll be able to provide the answer to that question in more detail in a couple of months after our Type C meetings are completed, and we've received their feedback.

We'll take our next question from Whitney Ijem with Canaccord.

This is Angela on for Whitney. Maybe just a follow up on the CF program again. So I understand you're progressing with the 10 milligram for the 12-week study, but are you still looking at efficacy in the 15-milligram cohort? I guess like what efficacy endpoints are you looking at? And will you be sharing that data at some point either in a PR or at a medical conference? And then second part is, would it be possible that you would run another 12-week study using the 15 milligrams? Or when you talk about the optionality to dose up, with that part of the current 10-milligram study [indiscernible].

Yes, it's unlikely that we'll be sharing any more data from the first 3 cohorts. We are focused on the fourth cohort. This is almost like a Phase IIb type study where we believe that our best shot on goal here is in a 12-week duration end of '20 study, and that's where we're focusing on. So I think that's where the investors should also be focused on. But you've asked, are we collecting data for 15 milligrams? Absolutely. Is there a time and a place to share that data? Yes, very likely. But we remain focused on the 12-week study is the short answer to your question.

Got it. And then will you potentially do dosing up to 15 milligrams in the study? Or would that be a separate study?

Only if needed. It's an open-label study. We have the flexibility to do it based upon what's happened in the third cohort, which is great. And we still haven't collected all the data, of course, and that additional data could sway our minds either direction. But right now, we're initiating the fourth cohort at the 10-milligram dose level, and we have the flexibility now to increase it if needed.

And we'll take our next question from Yigal Nochomovitz with Citi.

This is Joohwan Kim on for Yigal. I kind of have a multipart question, but I believe in the Phase Ib, you had also assessed LCI. But can you remind us what you had seen previously on the LCI? And how should we be thinking about the level of improvement expected in the Phase IIb? And as you were headed into the dose-ranging Phase II, did the FDA get a chance to look at the LCI data by any chance?

Yes. You're correct that we did look at LCI in the early Phase I studies. And those Phase I was in healthy adults, Phase Ib was in CF participants, and we established safety and tolerability that was sufficient to advance it. So LCI was only after a single administration or 2 administrations in Phase Ib. I would -- I'll defer to Alan in terms of that data from Phase Ib. With respect to LCI as an endpoint, I think I'll also defer to Alwyn. He can talk about what the literature shows or the magnitude of changes in LCI to get approval previously in children, et cetera. Go ahead, Alwyn.

Sure. No problem at all, and it's a great question. I wasn't around historically when the early experience with our study drug in those first few cohorts going from healthy to CF adults were ongoing, but I have had a chance to review the data. The challenge of it is, once again, it was small numbers of patients. In the way we're constructing things now, the plan is to benefit from that prior experience and perhaps do it in a more refined way. Right now, we also have the support of the CF Foundation, who is doing a natural history study. So being able to align with the CF Foundation and the Therapeutic Development Network on their prospective study that they're doing right now in patients with no mutations and those who are unable to tolerate current modulators allows us to align a study in a way so that when that natural history study becomes available in the coming months and year, that we can have access to that as a comparator group, which was something that was not available just a few years ago. The -- the other piece about this, I think, is that there's increasingly a recognition of not only the sensitivity and the value of LCI measures in adults, but an appreciation for what may be the range and magnitude of change one needs to see in order for there to be an appreciation for a significant meaningful change over time. So right now, I think we're doing the study in a manner that should optimize its utility and value, and we're also doing it in an alignment in a way that should be commensurate with current standards and practices, which was certainly done before, but just not done as robustly and as long term. And really, I think in this case, just like with percent predicted FEV1 and spirometry, we will be benefiting from a cohort of upwards to 20 patients and an examination of data not just over a 4-week period, but a 12-week period. So both of those elements in addition to having more normative data to compare to in this exact population should make interpretation and value of this data much greater than it was previously appreciated. Hopefully, that's helpful to you.

We'll move next to Tom Shrader with BTIG.

There have been a lot of questions. I assume you've been looking at a lot of pictures of mucus plugs with your data. Do you have a sense of what fraction of patients show a measurable difference? Is it very all over the place, all over the lung? And do you have any patients where it's possible to calculate that in 12 weeks, the mucus plug should be gone? Do you have that level of data? And I have a quick vaccine follow-up.

Well, we saw 4 out of 6 subjects in the second cohort, that was a 10-milligram cohort that showed a reduction of mucus plugs after just 28 days. So that was definitely encouraging. There was one subject that attributed the increase in mucus plugs to humidity and the sensitivity to humidity. And whether that's an outlier or whether that's simply a nonresponder, we will learn as we collect more data, especially in this extended study that's larger. But it seems that a majority of these subjects respond with a reduction in mucus plugs, and we feel that, that's important to mention, and that's an early sign of some clinical activity. With respect to your other question, maybe you could restate it, and we can turn that over.

You would have had some sense of rates of clearance. Do you have confidence that 12 weeks is enough? Or is that more just the next trial you're allowed to do?

That's the big question. Clearly, we saw something in 28 days. So there's reason to be confident that we'll see it in an extended study -- larger study. And it's not just a larger extended study, but we're looking at a better study, a study that's designed more tightly with respect to numbers and baseline steadiness. But anything to add? Alan?

Yes. Yes. So I was going to say the field of using high-resolution CT scanning as a complementary way of assessing progression of disease has been used for some time. I think the technologies, particularly artificial intelligence and an ability to standardize the reads now is vastly different and in many ways, much better than it was as recently as just a few years ago. So I think the field is emerging. I would be -- I just want to make sure that it's understood that the time constant and the damage that occurs in the lungs of people with cystic fibrosis is really quite patchy. And what's remarkable, I'm a former lung transplant physician from Washington University. And I'm one of the few people that have had the chance to actually examine the lungs of people who underwent a lung transplant and sustained significant bronchiectatic damage to the point of needing a lung transplant to survive. What's impressive about the disease is the very patchy nature, both in the upper and lower lobes, and you can have a completely bronchiectatic destroyed segment of lung right next to a completely normal appearing functional segment of a lung. So I believe that a drug that's administered by inhalation over long periods of time will eventually have the ability in large part to reach many, if not all, of the segments that we need to. But I have no delusion as to whether or not there will be a consistent almost a vacuuming of the lungs and an ability to remove and diminish mucus plugging. I think the time constant, the ventilation perfusion matching and just the nature of what's going on actively day-to-day with infections will really always make this challenging, even mucolytic drugs like Palzyme, even in patients who are using those drugs one or more times a day, will still be found to have significant mucus plugging in certain segments of the lung in any given time, and it will change from period to period from x-ray to x-ray. So the goal here is, I think, the long term, it's the totality of what we're able to observe. And the plan is to be able to correlate those improvements with things like lung clearance index, which clearly have, and someone was alluding to this in their question earlier, that's one of the measures that we believe since we've already shown improvements in high-resolution CT scan mucus plug burden, it wouldn't be surprising to see and observe changes in lung clearance index commensurate with that since those 2 measures actually go hand in hand. So hopefully, that's helpful to you.

No, that's great. Very useful. And then just a quick follow-up on your pandemic flu vaccines, you haven't said a lot, but is your safety just qualitatively in line with a protein vaccine? Or does it look more like an mRNA vaccine? Do you have any sense how things are going to look.

Yes, very similar. And with respect to safety and tolerability, the safety and tolerability profile was similar to other vaccine technologies. We are a lower dose technology to conventional mRNA. So what we've seen consistently is any dose-related toxicologies will be beneficial to the self-amplifying mRNA tech from Arcturus. But in general, it's simply -- it's similar to other vaccine technologies from a safety and tolerability.

We'll move next to I-Eh Jen with Laidlaw & Company.

In terms of the CF next 12-week study and you're looking for more stable baseline, would that increase the time and the size for the screening for the study? And also what sort of -- how long duration to define as a stable -- more stable baseline before you -- before the patient will be eligible for the study? And then I have a follow-up.

Yes. We're definitely not enrolling a patient until they are stable with respect to the baseline lung function measures. The duration of that stability time, do you want to comment on that, Alan?

Yes. I mean there's -- and this is a great question, and it's not a simple answer. So let me see if I can give as appropriate an answer as possible. The challenge with CF patients is that there's actively chronically something going on in any given day. And I think the biggest challenge in trying to identify and enroll patients into a study like ours, where you're looking for modest improvements over -- in the case of our studies, first 3 cohorts over a 4-week period to now a much larger group of patients over now a 12-week period. We do want to make sure that we're not just identifying the right patients, but we're also patching them at a time in the course of their disease, where they're at least stable enough so that we can introduce our drug and begin the baseline assessment so that when we get to the end, we at least have a comparator that's stable, reasonable and discernible. So right now, it's possible based on the way we've constructed this study, and I've done this in other studies as well, where we may delay the enrollment of a patient by a few weeks or a month just simply because there seems to be something acute going on, whether they're getting acutely ill and we just happen to be catching it during the course of the baseline in the screening or they may be in the late stages of resolving their illness, and we're seeing enough of a difference between 2 measures over a relatively short period of time that it may just speak to the unstable nature of what's going on. We really just are looking to get the best patients at the best period of time so that we have an equivalent baseline with which to work from. And that's really the intention. And it may mean a few weeks or a month longer to enroll a given patient, but it shouldn't add much in terms of the time. I think it's really -- the goal here is to really find the best patient at the best time. Hopefully, that helps you.

Absolutely. That's very helpful. Maybe just a quick one on the OTC. I know it's still early a little bit, but was the company intended at least the desire to potentially starting both the adult and pediatric trial relatively concurrently or there's any priority one before the other?

I think the intent is always to get into the children with high unmet medical need as fast as possible. But we're going to adhere to the advice and feedback from the FDA from these Type C meetings. So we'll be able to answer that with more granularity in a few months.

Okay. Maybe the last question. Does CSL intended to launch the Costave in U.K.? Or did we know that?

I would refer to everyone on the call to see what they've said publicly at their recent investor calls and their filings. We don't anticipate anything soon out of the United Kingdom commercially from Costave, but I refer you to their statements that they're saying publicly. We'll see where we are with the CSL agreement and our discussions with them in the coming months.

And this does conclude the question-and-answer portion of today's program. I would now like to hand the call back to Joe Payne for any additional or closing remarks.

Thank you, operator. I'd just like to thank everyone for attending today's call. If we see you in the bank conference seasons ahead, we look forward to catching up with you there. Have a good afternoon, everybody.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.