Arcturus Therapeutics Announces Second Quarter 2024 Financial Update and Pipeline Progress IND submitted for Phase 2 trial of ARCT-032 targeting cystic fibrosis (CF) ARCT-810 (OTC deficiency) Phase 2 interim data on track for Q4 Kostaive® on track for Q4 commercial launch in Japan Investor conference call at 4:30 p.m. ET today SAN DIEGO--(BUSINESS WIRE)--August. 5, 2024-- Arcturus Therapeutics Holdings Inc. (the "Company", "Arcturus", Nasdaq: ARCT), a global messenger RNA medicines company focused on the de ...

Core Viewpoint - Arcturus Therapeutics Holdings Inc (ARCT) is positioned as a strong investment opportunity in the biotech sector, with significant stock market performance reflecting bullish sentiment [2][3]. Financial Performance - The stock was rated as a "BUY" at a price of $22.74, with a notable change of 87.34% compared to the S&P 500's 18.70% [3]. - The company reported revenues of approximately $38 million in 1Q24, primarily from the CSL agreement and a BARDA grant [10]. - Total cash-like instruments amounted to $345.3 million at the end of 1Q24, showing a slight decrease from $348.9 million in 4Q23 [10][12]. Revenue Streams - Revenue is derived from research and development partnerships, with expectations for growth due to the upcoming commercial launch of the Kostaive vaccine [6][7]. - The Kostaive vaccine launch is anticipated to trigger milestone payments under the CSL agreement, contributing to revenue expansion [7]. - The company has a quadrivalent seasonal influenza program in collaboration with CSL, further diversifying its revenue sources [7]. Product Pipeline - The ARCT-032 program, an mRNA inhaled therapy for cystic fibrosis, has shown promising interim results, positively impacting stock performance [8]. - The company is at a critical juncture with the Kostaive vaccine launch, which is expected to significantly influence future revenues [13]. Strategic Decisions - Arcturus is monetizing its stake in ARCALIS, a manufacturing joint venture in Japan, to become more asset-light and reduce fixed costs [12]. - The company has a robust cash runway sufficient for three years, excluding revenues from the Kostaive program [12]. Outlook - Revenue estimates for the current fiscal year are projected at $181.84 million, with expectations of reaching $229.34 million in the next fiscal year and $386.60 million two years ahead [13]. - The company is expected to become consistently profitable by 2026, indicating a positive long-term outlook [13]. Valuation - Updated bull and bear scenarios for 2026 suggest potential revenues of $386.6 million in a bullish case and $157.75 million in a bearish case, with corresponding price targets of $135.94 and $16.64 [21].

Core Insights - The world's first self-amplifying (sa-mRNA) COVID-19 vaccine for adults, ARCT-154, has been approved in Japan, demonstrating superior immunogenicity against Omicron variants compared to conventional mRNA vaccines [1][2] - The vaccine showed 100% efficacy against severe COVID-19 in healthy individuals aged 18-59 and over 90% efficacy in at-risk populations [2][6] Company Overview - CSL is a global biotechnology company with a diverse portfolio of lifesaving medicines, including vaccines and therapies for various conditions, employing 32,000 people and operating in over 100 countries [9] - Arcturus Therapeutics, founded in 2013, specializes in mRNA medicines and vaccines, with a focus on self-amplifying mRNA technology and a strong patent portfolio [10] Study Details - The integrated phase 1/2/3a/3b study involved 1,001 participants in the phase 1/2/3a study and 16,100 participants in the phase 3b study, assessing safety, immunogenicity, and efficacy of ARCT-154 [4][5] - The primary endpoints included vaccine efficacy, reactogenicity, safety, and immunogenicity, with results indicating a 94.1% neutralizing antibody seroconversion rate four weeks after the second dose [6][4] Efficacy Results - ARCT-154 demonstrated an absolute efficacy of 56.6% against any COVID-19, 95.3% against severe COVID-19, and 86.5% against death due to COVID-19 [6] - Efficacy against severe COVID-19 was 100% in healthy individuals aged 18-59 and 91.9% in those with underlying co-morbidities [6] Technology Insights - Self-amplifying mRNA vaccines, like ARCT-154, enhance the immune response by instructing the body to produce more mRNA and protein compared to standard mRNA vaccines [8]

Financial Data and Key Metrics Changes - For Q1 2024, the company reported revenues of $38 million, an increase from $30.9 million in Q4 2023, driven by increased activities across all CSL programs, including Kostaive commercialization preparations [18] - Total operating expenses for Q1 2024 were $68.4 million, up from $49.1 million in Q4 2023, primarily due to increased R&D expenses [19] - The net loss for Q1 2024 was approximately $26.8 million, or $1 per diluted share, compared to a net loss of $11.7 million, or $0.44 per diluted share in Q4 2023 [20] - Cash, cash equivalents, and restricted cash were $345.3 million as of March 31, 2024, slightly down from $348.9 million on December 31, 2023 [20] Business Line Data and Key Metrics Changes - The Kostaive COVID-19 vaccine program is set to deliver 4 million doses to Japan in Q3 2024, with Meiji responsible for distribution [7][15] - The ARCT-2138 quadrivalent seasonal influenza program is progressing well, with 84 healthy young adults recruited for the Phase 1 study as of May 1, 2024 [10] - The ARCT-810 program for OTC deficiency has initiated a Phase 2 multiple ascending dose study in the UK and EU, following positive Phase 1 results [12] Market Data and Key Metrics Changes - The company filed a marketing authorization application for Kostaive with the European Medicines Agency, with an expected approval decision in Q3 2024 [10] - The Japanese government is subsidizing approximately 80% of the vaccine price, which is expected to be around $100 per dose [45] Company Strategy and Development Direction - The company is focused on commercializing Kostaive and expanding its global franchise, with a strategic emphasis on working with established CDMOs for manufacturing [16] - The company aims to become an asset-light and variable-cost operating entity, leveraging partnerships for manufacturing and distribution [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong financial position and resources to achieve near-term milestones for vaccine and therapeutic programs [21] - The anticipated delivery of Kostaive in Japan is expected to begin generating commercial sales in 2024 [21] Other Important Information - The company has engaged JPMorgan Investment Banking to help monetize its investment in ARCALIS, a joint venture in Japan [16] - The ARCALIS facility is expected to become a leading manufacturer of mRNA vaccines and therapeutics, with significant government funding received for its construction [17] Q&A Session Summary Question: Expectations for the number of OTC and CF patients for the July 1 update - Management indicated that the July 1 meeting will provide interim data for Phase 1b of the ARCT-032 program and some Phase 2 data for the OTC program, but it will be on a subset of patients [24] Question: Rationale for Meiji monetization of ARCALIS - Management stated that the decision to monetize ARCALIS was strategic, aiming to work with established CDMOs to support manufacturing efforts [26] Question: Expectations around Japan's order for Kostaive in 2025 - Management noted that ARCALIS is in the process of getting GMP batches approved for commercialization, which could lead to additional orders from Meiji [30] Question: Biomarkers for dose finding in the CF program - Management clarified that dosing has been guided by safety and tolerability measures, with no specific biomarker driving these decisions [47] Question: Pricing and government subsidies for Kostaive - Management confirmed that the local government will subsidize about 80% of the vaccine price, making it a strategic investment for public health [45]

cs UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered 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 March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ...

[Executive Summary & Recent Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Recent%20Highlights) Arcturus Therapeutics reported Q1 2024 financial results and significant pipeline advancements, including Kostaive® commercialization, positive Phase 3 data, new study initiations, and strategic financial updates [Q1 2024 Overview](index=1&type=section&id=Q1%202024%20Overview) Arcturus Therapeutics announced its financial results for the first quarter ended March 31, 2024, alongside significant pipeline advancements across its vaccine and therapeutic programs, and strategic corporate updates - Commercial manufacture of Kostaive® is on track for delivery of initial **4 million doses** in Q3[1](index=1&type=chunk) - Kostaive® European Marketing Authorization Application approval decision is expected in Q3[1](index=1&type=chunk) - Topline immunogenicity and safety data for ARCT-2138 (LUNAR-FLU) Phase 1 is anticipated in Q3[1](index=1&type=chunk) - Interim data and updates for ARCT-810 (LUNAR-OTC) Phase 2 and ARCT-032 (LUNAR-CF) Phase 1b will be provided on July 1[1](index=1&type=chunk) - JP Morgan has been engaged to monetize Arcturus' investment in the ARCALIS JV in Japan[1](index=1&type=chunk) [Recent Corporate Highlights](index=1&type=section&id=Recent%20Corporate%20Highlights) The company provided detailed updates on its vaccine and therapeutic pipeline, including progress on Kostaive® commercialization, positive Phase 3 results for ARCT-2301, initiation of new Phase 3 studies, and advancements in its rare disease programs, alongside strategic financial initiatives - Meiji Seika Pharma announced plans to supply Japan with **4 million doses** of Kostaive® for the fall/winter season of 2024, with Arcturus and CDMO partners on track to deliver initial commercial doses in Q3[2](index=2&type=chunk) - The bivalent COVID-19 Vaccine candidate, ARCT-2301, met the primary endpoint (non-inferiority) in a Phase 3 clinical study in Japan, demonstrating non-inferiority and superiority criteria for neutralizing antibodies against SARS-CoV-2 (Omicron BA.4/5) and Wuhan strains, with no causally-associated serious adverse events[2](index=2&type=chunk)[3](index=3&type=chunk) - A Phase 3 pivotal study was initiated for the ARCT-2303 candidate vaccine (Omicron XBB.1.5 variant) to generate immunogenicity and safety data for U.S. licensure and assess co-administration with seasonal influenza vaccines[3](index=3&type=chunk) - A Marketing Authorization Application (MAA) for Kostaive® has been filed with the European Medicines Agency (EMA), with an approval decision expected in Q3[3](index=3&type=chunk) - ARCT-2138 (LUNAR-FLU, Quadrivalent Seasonal Influenza) Phase 1 dose-finding and immunogenicity study is progressing, with **84 healthy young adults** recruited[3](index=3&type=chunk) - ARCT-810 (LUNAR-OTC) Phase 1 single ascending dose (SAD) studies demonstrated general tolerability with no serious or severe adverse events, facilitating the initiation of a Phase 2 multiple ascending dose study (ARCT-810-03) in OTC deficiency adolescents and adults, with a progress update expected July 1, 2024[3](index=3&type=chunk) - ARCT-032, an inhaled mRNA therapeutic for cystic fibrosis, is on track to share Phase 1b interim data on July 1, 2024[3](index=3&type=chunk) - Arcturus will begin to qualify for commercial milestones under its CSL collaboration upon commencement of Kostaive® revenues in Japan this year[2](index=2&type=chunk) - The company's cash runway remains strong for at least **three years** into the first quarter of fiscal year 2027[2](index=2&type=chunk)[9](index=9&type=chunk) [First Quarter 2024 Financial Results](index=2&type=section&id=First%20Quarter%202024%20Financial%20Results) Arcturus Therapeutics' Q1 2024 financial results show a significant year-over-year revenue decrease, increased operating expenses leading to a net loss, yet maintaining a strong cash position with a multi-year runway [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Total revenues for Q1 2024 significantly decreased year-over-year, primarily due to lower revenue recognition from the CSL agreement, partially offset by an increase from the BARDA agreement Revenue Summary (Three Months Ended March 31) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | Change ($M) | Change (%) | | :---------------------- | :----------- | :----------- | :---------- | :--------- | | Total Revenues | 38.0 | 80.3 | (42.3) | (52.7%) | | CSL Agreement Revenue | 32.4 | 78.2 | (45.8) | (58.6%) | | BARDA Agreement Revenue | N/A | N/A | +4.9 (increase) | N/A | [Operating Expenses](index=3&type=section&id=Operating%20Expenses) Total operating expenses saw a slight increase year-over-year, driven by higher research and development costs related to key programs and increased general and administrative expenses Total Operating Expenses (Three Months Ended March 31) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | Change ($M) | Change (%) | | :------------------- | :----------- | :----------- | :---------- | :--------- | | Total Operating Expenses | 68.4 | 65.5 | 2.9 | 4.4% | [Research and Development Expenses](index=3&type=section&id=Research%20and%20Development%20Expenses) R&D expenses increased due to investments in CSL, BARDA, internal OTC, Cystic Fibrosis, and early-stage discovery programs Research and Development Expenses (Three Months Ended March 31) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | Change ($M) | Change (%) | | :------------------- | :----------- | :----------- | :---------- | :--------- | | R&D Expenses | 53.6 | 51.8 | 1.8 | 3.5% | - The increase in R&D expenses was primarily driven by the CSL and BARDA programs, as well as Arcturus' internal OTC and Cystic Fibrosis programs, and investments in early-stage discovery technologies including Lyme Disease and Gonorrhea vaccine programs[6](index=6&type=chunk) [General and Administrative Expenses](index=3&type=section&id=General%20and%20Administrative%20Expenses) G&A expenses rose due to increased personnel, travel, consulting, and facility-related rent expenses General and Administrative Expenses (Three Months Ended March 31) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | Change ($M) | Change (%) | | :------------------- | :----------- | :----------- | :---------- | :--------- | | G&A Expenses | 14.9 | 13.8 | 1.1 | 8.0% | - The increase in G&A expenses resulted primarily from increased personnel expenses due to higher salaries, increased travel and consulting expenses, and escalated rent expense associated with facilities[7](index=7&type=chunk) [Net Loss](index=3&type=section&id=Net%20Loss) The company reported a net loss in Q1 2024, a significant shift from net income in the prior year, primarily due to lower revenues and increased operating expenses Net (Loss) Income and EPS (Three Months Ended March 31) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | Change ($M) | | :---------------- | :----------- | :----------- | :---------- | | Net (Loss) Income | (26.8) | 50.8 | (77.6) | | Diluted EPS | ($1.00) | $1.87 | ($2.87) | [Cash Position and Balance Sheet Highlights](index=3&type=section&id=Cash%20Position%20and%20Balance%20Sheet%20Highlights) Arcturus maintained a strong cash position at the end of Q1 2024, with a projected cash runway extending into Q1 2027, supported by ongoing CSL milestone payments Cash, Cash Equivalents and Restricted Cash | Metric | March 31, 2024 ($M) | December 31, 2023 ($M) | Change ($M) | | :----------------------------------- | :------------------ | :--------------------- | :---------- | | Cash, cash equivalents and restricted cash | 345.3 | 348.9 | (3.6) | - Arcturus achieved approximately **$420.1 million** in upfront payments and milestones from CSL as of March 31, 2024[9](index=9&type=chunk) - The company expects to continue receiving future milestone payments from CSL supporting the ongoing development of COVID and flu programs and three additional vaccine programs[9](index=9&type=chunk) - The expected cash runway extends at least **three years** based on the current pipeline and programs through the first quarter of fiscal year 2027[9](index=9&type=chunk) [Company Information & Disclosures](index=4&type=section&id=Company%20Information%20%26%20Disclosures) This section provides an overview of Arcturus Therapeutics as a global mRNA company, highlighting its technologies and pipeline, alongside important disclaimers regarding forward-looking statements [About Arcturus Therapeutics](index=4&type=section&id=About%20Arcturus%20Therapeutics) Arcturus Therapeutics is a global mRNA medicines and vaccines company, founded in 2013, known for its LUNAR® lipid-mediated delivery and STARR® mRNA Technology, and for developing the first approved self-amplifying mRNA COVID vaccine (Kostaive®). It has extensive collaborations and a broad pipeline - Arcturus Therapeutics Holdings Inc. is a global mRNA medicines and vaccines company, founded in **2013** and based in San Diego, California[10](index=10&type=chunk) - The company's enabling technologies include LUNAR® lipid-mediated delivery, STARR® mRNA Technology (sa-mRNA), and mRNA drug substance along with drug product manufacturing expertise[10](index=10&type=chunk) - Arcturus developed Kostaive®, the world's first approved self-amplifying messenger RNA (sa-mRNA) COVID vaccine[10](index=10&type=chunk) - The company has an ongoing global collaboration for innovative mRNA vaccines with CSL Seqirus and a joint venture in Japan, ARCALIS, focused on mRNA vaccine and therapeutic manufacturing[10](index=10&type=chunk) - Arcturus' pipeline includes RNA therapeutic candidates for ornithine transcarbamylase deficiency and cystic fibrosis, as well as partnered mRNA vaccine programs for SARS-CoV-2 (COVID-19) and influenza[10](index=10&type=chunk) - Arcturus' technologies are covered by an extensive patent portfolio with over **400 patents** and patent applications globally[10](index=10&type=chunk) - The Arcturus logo and trademarks LUNAR® and STARR® are the property of Arcturus[12](index=12&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section outlines the forward-looking nature of statements made in the press release, emphasizing inherent risks and uncertainties that could cause actual results to differ materially from projections, and disclaims any obligation to update such statements - This press release contains forward-looking statements that involve substantial risks and uncertainties, provided for the safe harbor under the Private Securities Litigation Reform Act of 1995[11](index=11&type=chunk) - Forward-looking statements include those regarding strategy, future operations, pipeline success (ARCT-032, ARCT-810), partnered programs (COVID-19, flu with CSL Seqirus), Kostaive delivery and commercialization, European MAA approval, ARCALIS JV monetization, clinical data predictability, timing of clinical study updates, CSL collaboration milestones, cash position, and general business conditions[11](index=11&type=chunk) - Actual results may differ materially from anticipated outcomes due to known and unknown risks, uncertainties, and other factors, including those discussed in Arcturus' most recent Annual Report on Form 10-K and subsequent SEC filings[11](index=11&type=chunk) - Arcturus disclaims any intention or obligation to update or revise any forward-looking statements, which speak only as of the date they were made, unless required by law[11](index=11&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents the unaudited condensed consolidated balance sheets and statements of operations for Q1 2024, detailing the company's financial position and performance [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the unaudited condensed consolidated balance sheets for Arcturus Therapeutics as of March 31, 2024, and December 31, 2023, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (in thousands) | (in thousands) | March 31, 2024 (unaudited) | December 31, 2023 | | :------------- | :------------------------- | :---------------- | | **Assets** | | | | Cash and cash equivalents | $288,396 | $292,005 | | Restricted cash | $55,000 | $55,000 | | Accounts receivable | $27,057 | $32,064 | | Prepaid expenses and other current assets | $5,335 | $7,521 | | Total current assets | $375,788 | $386,590 | | Property and equipment, net | $11,763 | $12,427 | | Operating lease right-of-use asset, net | $29,413 | $28,500 | | Non-current restricted cash | $1,885 | $1,885 | | Total assets | $418,849 | $429,402 | | **Liabilities** | | | | Accounts payable | $9,144 | $5,279 | | Accrued liabilities | $34,770 | $31,881 | | Deferred revenue (current) | $71,516 | $44,829 | | Total current liabilities | $115,430 | $81,989 | | Deferred revenue, net of current portion | $11,795 | $42,496 | | Operating lease liability, net of current portion | $27,652 | $25,907 | | Other non-current liabilities | — | $497 | | Total liabilities | $154,877 | $150,889 | | **Stockholders' Equity** | | | | Common stock | $27 | $27 | | Additional paid-in capital | $658,628 | $646,352 | | Accumulated deficit | $(394,683) | $(367,866) | | Total stockholders' equity | $263,972 | $278,513 | | Total liabilities and stockholders' equity | $418,849 | $429,402 | [Consolidated Statements of Operations and Comprehensive (Loss) Income](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20(Loss)%20Income) Presents the unaudited consolidated statements of operations and comprehensive (loss) income for the three months ended March 31, 2024, and 2023, detailing revenues, operating expenses, net income/loss, and earnings per share Consolidated Statements of Operations and Comprehensive (Loss) Income (in thousands, except per share data) | (in thousands, except per share data) | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | **Revenue:** | | | | Collaboration revenue | $32,598 | $79,729 | | Grant revenue | $5,414 | $556 | | Total revenue | $38,012 | $80,285 | | **Operating expenses:** | | | | Research and development, net | $53,573 | $51,768 | | General and administrative | $14,851 | $13,762 | | Total operating expenses | $68,424 | $65,530 | | **(Loss) income from operations** | $(30,412) | $14,755 | | Loss from foreign currency | $(53) | $(328) | | Gain on debt extinguishment | — | $33,953 | | Finance income, net | $4,016 | $2,477 | | Net (loss) income before income taxes | $(26,449) | $50,857 | | Provision for income taxes | $368 | $103 | | Net (loss) income | $(26,817) | $50,754 | | **(Loss) earnings per share** | | | | Basic | $(1.00) | $1.91 | | Diluted | $(1.00) | $1.87 | | **Weighted-average shares used in calculation of (loss) earnings per share:** | | | | Basic | 26,879 | 26,555 | | Diluted | 26,879 | 27,149 | | **Comprehensive (loss) income:** | | | | Net (loss) income | $(26,817) | $50,754 | | Comprehensive (loss) income | $(26,817) | $50,754 |

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Arcturus Therapeutics, with a focus on how actual results compare to estimates, which could significantly impact stock price [1] Financial Expectations - Arcturus Therapeutics is expected to report a quarterly loss of $1.17 per share, reflecting a year-over-year change of -233% [2] - Revenues are projected to be $22.12 million, down 72.5% from the same quarter last year [2] Estimate Revisions - The consensus EPS estimate has been revised 109.3% lower in the last 30 days, indicating a bearish sentiment among analysts [2] - The Most Accurate Estimate for Arcturus is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -5.43% [5] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likely deviation of actual earnings from the consensus estimate, with predictive power being significant for positive readings only [3][4] - Arcturus currently holds a Zacks Rank of 3, making it challenging to predict an earnings beat conclusively [6] Historical Performance - In the last reported quarter, Arcturus was expected to post a loss of $1.69 per share but actually reported a loss of $0.32, resulting in a surprise of +81.07% [7] - Over the past four quarters, the company has beaten consensus EPS estimates two times [7] Conclusion - An earnings beat or miss may not solely dictate stock movement, as other factors can influence investor sentiment [8] - Arcturus Therapeutics does not appear to be a compelling earnings-beat candidate, and investors should consider additional factors before making decisions [8]

Financial Performance and Position - The company has incurred significant losses since inception, with an accumulated deficit of $367.9 million as of December 31, 2023[185]. - The company has never generated revenue from product sales and relies on limited collaboration and grant revenue, primarily from a partnership with CSL Seqirus[185]. - The company expects to continue incurring substantial expenses and operating losses for the foreseeable future, with significant fluctuations in net losses anticipated from quarter to quarter[185]. - As of December 31, 2023, the company had unrestricted cash and cash equivalents of $292.0 million, expected to fund operations for the near future[188]. - The company anticipates needing to raise additional capital in the future, which may not be available on acceptable terms[188]. - The company has identified material weaknesses in internal control over financial reporting, which could impact the accuracy and timeliness of financial results[189]. - The company has devoted most financial resources to research and development, with ongoing activities expected to significantly increase expenses[185]. - The company may face limitations on its ability to use net operating loss carryforwards due to potential ownership changes, which could increase future tax liabilities[192][193]. - The company’s debt obligations include customary default clauses, which could lead to accelerated repayment if breached, potentially requiring alternative financing[191]. - The company expects to face pricing pressures due to managed healthcare trends and increasing demands for discounts from payors[217]. - If adequate coverage and reimbursement are not available for future products, it may be difficult to sell those products profitably[216]. - The company does not intend to pay dividends on common stock, limiting returns to investors to share value appreciation[246]. - The market price of the company's common stock is expected to remain highly volatile, influenced by various operational and regulatory factors[246]. - The company has incurred significant legal, accounting, and compliance costs due to being publicly traded, which may strain resources and divert management's attention[249]. - The company expects to need significant additional capital in the future, potentially leading to dilution of existing shareholders' ownership[250]. - A total of 6,631,712 shares of common stock were issued to former shareholders of Arcturus Therapeutics, which may be sold in the public market, potentially impacting share price[250]. - The company is subject to Nasdaq's continued listing requirements, including a minimum closing bid price of $1.00 per share, with the risk of delisting if not met[251]. - If the company's common stock is delisted from Nasdaq, liquidity will be reduced, and the trading price is expected to decline immediately[251]. - The company has entered into a Sales Agreement allowing for the sale of up to $200 million in common stock, but has not yet sold any shares under this agreement[250]. - The company faces risks related to securities class action litigation, particularly due to dependence on clinical trial outcomes and regulatory approvals[250]. - Compliance with new regulations may increase legal and financial compliance costs, impacting operational efficiency[249]. Product Development and Regulatory Challenges - The partnered next-generation COVID-19 vaccine candidate, ARCT-154, has only received marketing approval in Japan, with uncertain prospects for approval in other countries[183]. - The company may face challenges in commercializing product candidates due to competition and regulatory hurdles, impacting potential revenue generation[183]. - Regulatory authorities may change their recommendations, complicating the approval process for the company's COVID-19 vaccine candidates and increasing development costs[196]. - The company has no products approved for commercial marketing other than ARCT-154, with all other candidates still in preclinical or clinical development[199]. - The company may experience increased research and development costs when updating COVID-19 vaccines to address new variants, which could impact its financial resources[197]. - Clinical trials are expensive and uncertain, with failures possible at any stage, which could lead to increased costs and delays in obtaining marketing approvals[204]. - Delays in clinical trials could shorten exclusive commercialization periods and allow competitors to enter the market sooner[206]. - The company may face challenges in patient recruitment for clinical studies, particularly for rare genetic diseases, which could delay regulatory approval[207]. - Undesirable side effects from product candidates could lead to halted trials and regulatory restrictions, impacting market acceptance[208]. - Regulatory authorities may impose significant restrictions on approved products, requiring ongoing compliance with extensive regulations[210]. - The company may incur additional costs if required to conduct further clinical trials or testing beyond current plans[205]. - Non-compliance with regulatory requirements post-approval could result in severe penalties, including withdrawal of approval or product recalls[211]. - Manufacturing issues could arise during the scale-up of product candidates, potentially increasing costs and delaying regulatory approvals[213]. - The commercial success of product candidates will depend on acceptance by the medical community, influenced by factors such as clinical safety, efficacy, and pricing[214]. - Strategic alliances are crucial for the clinical development and commercialization of product candidates, and failure of these alliances could delay or terminate development efforts[218]. - The company may need to seek alternative strategic alliances if current partners do not fulfill their responsibilities, which could increase cash expenditures and limit program scope[220]. - The company relies on outside contractors for drug discovery and clinical studies, and any failure by these contractors could delay product development[221]. - The company’s ability to compete effectively depends on obtaining and maintaining intellectual property rights, which may be challenged or invalidated[226]. - The company may face claims of infringement related to mRNA technology, which could block development and commercialization efforts[227]. - The company’s patents have a limited lifespan, generally 20 years from filing, which may expose it to competition from generic medications[227]. - The company may experience increased costs and delays in regulatory approvals if it encounters issues with its CROs or manufacturing partners[225]. - The company’s commercialization prospects could be materially diminished if it cannot secure timely and adequate supply of materials from vendors[224]. Operational and Compliance Risks - The company is highly dependent on collaboration partners, and any failure in these relationships could adversely affect business operations and results[189]. - The company must establish effective sales and marketing capabilities or partnerships to generate revenue from product sales, as competition is strong in the market[215]. - The company owns over 438 patents and pending patent applications, including 46 granted U.S. patents as of February 26, 2024[226]. - The company relies on a limited number of suppliers for raw materials, which may lead to supply shortages and delivery delays impacting clinical trials and commercialization[224]. - The company may face significant disruptions in sales if supply from approved manufacturers is interrupted, requiring qualification of alternative vendors[225]. - The company has established manufacturing relationships with a limited number of suppliers, which poses risks to the timely production of drug candidates[224]. - The company’s reliance on contract research organizations (CROs) for clinical trials may result in delays or increased costs if they fail to perform satisfactorily[225]. - Regulatory compliance and environmental laws may impose significant costs and risks that could adversely affect business success[212]. - The company may face significant costs and distractions due to potential lawsuits related to intellectual property rights, which could adversely affect its business operations[228]. - The U.S. government may exercise "march-in" rights under the Bayh-Dole Act, which could harm the company's business and financial condition if it fails to commercialize inventions developed with government funding[229]. - The company is subject to various federal and state fraud and abuse laws, which could result in civil, criminal, and administrative penalties if not complied with[233]. - The company may incur substantial expenses if claims arise regarding the wrongful use or disclosure of confidential information by its employees or contractors[228]. - The company must comply with the European General Data Protection Regulation (GDPR) as it expands operations in the EU, which may increase regulatory scrutiny[235]. - The company may face penalties and reputational harm if found in violation of healthcare fraud and abuse laws, impacting its future earnings and operational capabilities[234]. - The company’s ability to manage growth effectively is crucial for maintaining operational efficiency and achieving financial performance targets[231]. - The company’s patents may be subject to federal regulations due to their development through government-funded programs, potentially affecting its intellectual property rights[228]. - Cybersecurity risks could lead to reputational damage and financial penalties if the company's data is compromised[239]. - Business interruptions from natural disasters could disrupt product development, and the company lacks sufficient insurance for such events[241]. - A contract with BARDA for developing a pandemic influenza candidate is subject to government audit and termination provisions, posing additional risks[242]. - Material weaknesses in internal controls over financial reporting were identified, which could affect the accuracy and timing of financial results[244].

Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) Q4 2023 Earnings Conference Call March 7, 2024 4:30 PM ET Company Participants Neda Safarzadeh - Vice President, Head of Investor Relations, Public Relations & Marketing. Joe Payne - President & Chief Executive Officer Andy Sassine - Chief Financial Officer Pad Chivukula - Chief Scientific Officer & Chief Operating Officer Conference Call Participants Evan Wang - Guggenheim Securities Whitney Ijem - Canaccord Genuity Myles Minter - William Blair Jan Hughes - ...

Arcturus Therapeutics (ARCT) came out with a quarterly loss of $0.32 per share versus the Zacks Consensus Estimate of a loss of $1.69. This compares to earnings of $4.33 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 81.07%. A quarter ago, it was expected that this pharmaceutical company would post a loss of $1.79 per share when it actually produced a loss of $0.61, delivering a surprise of 65.92%.Over the last four quarters, ...