Financial Data and Key Metrics Changes - For the year ended December 2020, the company reported revenues of $9.5 million, down from $20.8 million in the prior year, primarily due to a decrease in collaboration revenues [30] - Total revenue for Q4 was $2.2 million, relatively flat compared to $2.3 million in Q3 [30] - Total operating expenses for the year were $81.1 million, compared to $46.3 million in the prior year, driven by increased clinical and manufacturing expenditures related to COVID-19 and OTC programs [31] - Cash balance totaled $463 million as of December 31, 2020, up from $301.1 million on September 30, 2020, mainly due to a public offering [32] Business Line Data and Key Metrics Changes - The company is advancing its lead clinical pipeline candidates, including ARCT-021 for COVID-19 and ARCT-810 for OTC deficiency, with significant progress reported in 2020 [11][24] - ARCT-021 is a self-amplifying mRNA vaccine candidate, with ongoing Phase 2 studies involving over 500 subjects [18][56] - ARCT-810 has completed a Phase 1 dose escalation study in healthy volunteers and has initiated a Phase 1 study in patients with OTC deficiency [26] Market Data and Key Metrics Changes - The COVID-19 pandemic is expected to require vaccination of billions of individuals for years, with a focus on vaccines that can be easily updated to address variants [9][12] - The company is preparing to produce hundreds of millions of doses of ARCT-021 annually, with ongoing manufacturing campaigns [33] Company Strategy and Development Direction - The company aims to develop differentiated mRNA-based medicines, with a focus on vaccines and therapeutics for serious diseases [10] - ARCT-021 is positioned as a single administration vaccine, which could provide a competitive advantage in the market [35] - The company is also advancing ARCT-032 for cystic fibrosis, utilizing aerosolized administration of mRNA technology [27][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the ongoing challenges posed by COVID-19 variants and emphasizes the importance of cellular immunity in providing broader protection [9][42] - The company is optimistic about obtaining emergency use authorization for ARCT-021 in the second half of 2021 [33][35] - Management is focused on rapidly progressing clinical trials and expects to report important milestones from various programs throughout the year [35] Other Important Information - The company received a $46 million loan from Singapore EDB to support the manufacturing of its COVID-19 vaccine program [33] - The company has laid the foundation for high-purity mRNA vaccine manufacturing, which is crucial for its various therapeutic applications [63] Q&A Session Summary Question: Can you comment on T cell responses post day 28? - Management has looked at longer time points for ARCT-021 and observed some contraction of T cells, which is normal as they switch to memory [39][41] Question: Is Arcturus ready to incorporate new constructs for variants in Phase III? - The company is closely monitoring COVID variants and is prepared to update the vaccine if necessary, leveraging its mRNA technology [42][46] Question: Will Phase II data be available before starting Phase III? - Phase II data will be available before Phase III, with interim analyses planned for safety and immunogenicity [44] Question: Can you discuss your solution to variants and Phase 3 trial design? - The company plans a randomized placebo-controlled Phase 3 study with several thousand participants, focusing on high COVID incidence areas [52][60] Question: What is the difference in your technology that allows for lyophilization? - The company has developed specific know-how for lyophilization, which allows for easier distribution compared to liquid formulations [71][72]

Financial Performance - The company has incurred net losses of $72.1 million and $26.0 million for the years ended December 31, 2020 and 2019, respectively, with an accumulated deficit of $143.8 million as of December 31, 2020[141]. - The company has never generated any revenue from product sales and may never achieve profitability[144]. - As of December 31, 2020, the company had unrestricted cash and cash equivalents of $462.9 million, which is expected to be utilized for ongoing clinical trials and administrative costs[149]. - As of December 31, 2020, the company had approximately $463.0 million in cash and cash equivalents, expected to fund operations for at least the next twelve months[152]. - The company has $15.1 million outstanding under a loan agreement with Western Alliance Bank, which bears a variable interest rate of 1.25% above the prime rate[153]. - The company does not intend to pay dividends on common stock, focusing instead on retaining earnings for business development and expansion[260]. - The ability to utilize net operating loss carryforwards may be limited due to potential ownership changes, impacting future tax liabilities[259]. - The company anticipates needing significant additional capital in the future, which may lead to substantial dilution for existing shareholders[270]. Research and Development - The company anticipates significant increases in research and development expenses as it advances product candidates through clinical trials[149]. - The Phase 3 trial of the LUNAR-COV19 vaccine candidate is expected to be primarily funded through cash reserves[149]. - The company needs to secure significant funding to complete Phase 3 studies of its LUNAR-COV19 vaccine candidate, ARCT-021[152]. - The company recently commenced a Phase 2 clinical trial for ARCT-021 and expects to start a Phase 3 trial in Q2 2021, with ongoing monitoring into 2022[161]. - The company has allocated significant resources to the testing and development of LUNAR-COV19 and LUNAR-OTC vaccine candidates, which may not yield commercially viable products[190]. Competition and Market Challenges - The company faces significant competition in the development of COVID-19 vaccines, with competitors having greater resources[131]. - The company faces significant competition in the COVID-19 vaccine market, with competitors like Pfizer and Moderna already commercializing their vaccines[162]. - The rollout of competing COVID-19 vaccines has resulted in slower than expected enrollment for the Phase 2 study of the LUNAR-COV19 vaccine candidate[178]. - The company faces competition from established therapies for OTC deficiency, including sodium benzoate and sodium phenylbutyrate, which may limit demand for its products[226]. - The introduction of new products or technologies by competitors could adversely affect the company's market position and financial performance[263]. Regulatory and Compliance Risks - The company has no products approved for commercial marketing, and all product candidates are in preclinical or clinical development stages[166]. - The success of the company’s product candidates depends on various factors, including successful clinical trial results and obtaining regulatory approvals[167]. - Delays in obtaining marketing approval for product candidates could occur if additional clinical trials are required or if results are not positive[176]. - Regulatory authorities may impose significant restrictions on the indicated uses or marketing of product candidates even after obtaining approval[186]. - Compliance with environmental, health, and safety laws is critical, as violations could lead to fines or penalties that adversely affect business success[191]. - The company is subject to various healthcare fraud and abuse laws, which could result in significant penalties if compliance is not maintained[243]. - The federal False Claims Act (FCA) imposes penalties ranging from $11,665 to $23,331 per false claim or statement, which can significantly impact the healthcare industry[244]. - The Affordable Care Act (ACA) introduced provisions that may reduce drug product profitability, including changes to Medicaid rebate methodologies and annual fees based on market share[252]. - The company anticipates that future healthcare reforms may lead to more rigorous coverage criteria and lower reimbursement rates, impacting revenue from product candidates[250]. Operational Risks - The ongoing COVID-19 pandemic has caused interruptions and delays in the company's business plan, impacting clinical trials and patient enrollment[146]. - The company may need to seek additional funding to support operations, which may not be available on acceptable terms[149]. - The company may incur additional costs or experience delays in product development if clinical trials are not successful[132]. - The company may face challenges in obtaining and protecting intellectual property rights, which are crucial for competitive positioning in the market[209]. - The company may experience difficulties in managing growth as it expands its workforce, which could disrupt operations and affect financial performance[239]. - Employee misconduct poses a risk, potentially leading to regulatory sanctions and reputational harm[241]. Intellectual Property - The company owns over 209 patents and pending patent applications, including 33 U.S. patents and 68 foreign patents[211]. - The company may face significant challenges in protecting its intellectual property rights, particularly in foreign markets where protections may be weaker[213]. - The company is at risk of third-party claims of intellectual property infringement, which could delay or prevent the commercialization of its product candidates[214]. - The company’s patents have a limited lifespan, generally expiring 20 years after filing, which could expose it to competition from generic medications[211]. - The company may incur substantial costs and distractions from litigation related to the enforcement of its patents or defending against infringement claims[217]. Supply Chain and Manufacturing Risks - The company has a single supplier for two critical components of its LUNAR-COV19 drug candidate, located in China, which poses risks to commercialization efforts[205]. - Manufacturing issues could arise during scale-up, potentially increasing costs and delaying regulatory approvals[207]. - The company depends on third-party manufacturers for clinical supplies, which may lead to quality issues and delays in product availability[200]. - Reliance on third-party clinical research organizations (CROs) may result in unsatisfactory performance, impacting the timely conduct of clinical trials[208]. - Disruptions in the supply chain for raw materials could delay the development and commercialization of product candidates[204]. Market Acceptance and Sales - The commercial success of the company's product candidates will depend on their acceptance by the medical community, influenced by clinical safety, efficacy, and ease of administration[227]. - Market acceptance will also be affected by pricing, cost-effectiveness, and the effectiveness of sales and marketing strategies[229]. - The company currently lacks a sales and marketing organization, which may hinder revenue generation if it cannot establish these capabilities or form strategic alliances[232]. - Coverage and adequate reimbursement for the company's product candidates are uncertain, which could impact profitability and market acceptance[235]. Stock and Securities Risks - The common stock is currently listed on Nasdaq, and failure to meet the minimum bid price requirement of $1.00 per share could result in delisting[271]. - The company may face significant volatility in its common stock price due to various factors, including adverse clinical trial results and regulatory delays[261]. - A total of 6,631,712 shares were issued to former shareholders of Arcturus Therapeutics, which may be sold under Rule 144, potentially impacting stock price[269]. - The perception of the pharmaceutical industry by the public and investors may impact the company's stock price and market performance[263]. - Compliance with public company regulations may strain resources and divert management's attention, increasing legal and financial compliance costs[265]. - The company is at risk of securities class action litigation, particularly due to reliance on clinical trial outcomes[268].

Financial Data and Key Metrics Changes - The company reported revenues of $2.3 million for Q3 2020, a decrease from $3.3 million in Q3 2019, primarily due to reduced collaboration revenues related to the Ötzi collaboration that ended in Q3 2019 [18] - Total operating expenses increased to $23.3 million in Q3 2020 from $10.9 million in the same period of 2019, with R&D expenses rising significantly due to clinical and manufacturing costs [18] - The cash balance at the end of Q3 2020 was $307.1 million, up from $71.5 million at the end of 2019, largely due to raising approximately $262 million in net proceeds through public equity offerings [19] Business Line Data and Key Metrics Changes - The company has made substantial progress in its clinical pipeline, particularly with its COVID-19 vaccine candidate, CTO 21, and the therapeutic candidate for Ötzi deficiency [8][10] - Preliminary clinical results from the CTO 21 program showed 100% seroconversion of IgG binding antibodies in younger adults, with geometric mean titers exceeding 15,000 [9][14] - The company has also advanced its lunar OTC program, completing dose escalation in its Phase 1 study and commencing enrollment in the U.S. [10][16] Market Data and Key Metrics Changes - The company has secured supply agreements with Israel and Singapore for its COVID-19 vaccine, considering these agreements as core to their vaccination strategies [10][19] - Discussions are ongoing with additional countries regarding stockpiling and supply agreements, indicating a strong interest in the vaccine [10] Company Strategy and Development Direction - The company aims to rapidly advance its clinical development programs, particularly for CTO 21, as a top corporate priority [20] - There is a focus on scaling up manufacturing capabilities to produce hundreds of millions of doses of the vaccine over the next 18 months [19] - The company is also exploring earlier-stage programs using its proprietary mRNA technology platform [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the potential of their COVID-19 vaccine to play a significant role in the global response to the pandemic [20] - The company is in discussions with regulatory authorities to finalize plans for further clinical development, indicating a proactive approach to navigating the regulatory landscape [20] Other Important Information - The company announced a manufacturing and vaccine supply agreement with the Singapore Economic Development Board, which includes a $45 million limited recourse loan contingent on documentation delivery [19] - The loan will be repaid through royalties on future sales of the vaccine, providing a financial safety net if development does not succeed [19] Q&A Session Summary Question: Can you provide specifics on convalescent plasma levels and patient demographics? - The geometric mean titer for neutralizing antibodies in convalescent plasma was 147, with a range from 10 to several hundreds, including subjects with mild to severe disease [24][25] Question: What percentage of young and older adults exceeded neutralizing antibody titers for convalescent serum? - Data is still maturing, and full results on neutralizing antibody titers are not yet available due to processing times [26] Question: How does the recent Pfizer data influence expectations for single-dose efficacy? - Management believes the likelihood of regulatory approval is high, and they are confident in advancing their therapeutic based on collected data [28] Question: Is there additional data from the Singapore Economic Development Board influencing their decision? - The Singapore regulators are well aware of the company's data, which has positively influenced their decision-making [32] Question: What are the next steps for the AACTA 10 program? - Discussions with regulators are ongoing, and the company is preparing for a Phase 3 program [35] Question: Will both single-dose and prime-boost regimens be advanced? - Both regimens are being advanced into the next stage of clinical development, with a decision to be made based on further data [55]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Common Stock, par value $0.001 per share ARCT The Nasdaq Stock Market LLC FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38942 | --- | --- | |------------------------------ ...

Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) Q2 2020 Earnings Conference Call August 10, 2020 4:30 PM ET Company Participants Neda Safarzadeh - Head of Investor Relations, Public Relations & Marketing Joseph Payne - President & Chief Executive Officer Andy Sassine - Chief Financial Officer Steve Hughes - Chief Development Officer Conference Call Participants Seamus Fernandez - Guggenheim Madhu Kumar - Baird and Company Wangzhi Li - Ladenburg Ryan Deschner - Raymond James Justin Zelin - B. Riley Securit ...