Arcturus Therapeutics(US:ARCT)2025-08-11 20:14PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements for Arcturus Therapeutics, including balance sheets, statements of operations, and cash flows, along with detailed notes Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for Arcturus Therapeutics as of June 30, 2025, and for the three and six-month periods then ended Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $309.3 million from $344.1 million at December 31, 2024, primarily due to reduced cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $196,467 | $237,028 | | Total current assets | $274,503 | $305,979 | | Total assets | $309,270 | $344,069 | | Liabilities & Equity | | | | Total current liabilities | $46,515 | $65,489 | | Total liabilities | $78,217 | $103,091 | | Total stockholders' equity | $231,053 | $240,978 | Condensed Consolidated Statements of Operations and Comprehensive Loss For Q2 2025, total revenues were $28.3 million with a net loss of $9.2 million, a reduction from the prior year's $49.9 million revenue and $17.2 million net loss Q2 2025 vs Q2 2024 Statement of Operations (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total revenue | $28,301 | $49,859 | | Total operating expenses | $39,917 | $70,985 | | Loss from operations | $(11,616) | $(21,126) | | Net loss | $(9,180) | $(17,216) | | Net loss per share | $(0.34) | $(0.64) | Six Months Ended June 30, 2025 vs 2024 Statement of Operations (in thousands, except per share data) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Total revenue | $57,683 | $87,871 | | Total operating expenses | $86,125 | $139,409 | | Loss from operations | $(28,442) | $(51,538) | | Net loss | $(23,256) | $(44,033) | | Net loss per share | $(0.86) | $(1.64) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $40.9 million for the six months ended June 30, 2025, resulting in a $40.6 million net decrease in cash Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(40,893) | $(35,699) | | Net cash used in investing activities | $(137) | $(568) | | Net cash provided by financing activities | $469 | $4,591 | | Net decrease in cash, cash equivalents and restricted cash | $(40,561) | $(31,676) | Notes to Condensed Consolidated Financial Statements The notes detail significant accounting policies, revenue recognition, balance sheet components, and the impact of new tax laws, including a $20.0 million milestone from CSL Seqirus - The company's COVID-19 vaccine, KOSTAIVE® (ARCT-154), received marketing authorization in Japan in 2023 and became commercially available in September 2024, marking it as the world's first approved self-amplifying RNA (sa-mRNA) vaccine24 - During Q2 2025, the company achieved $20.0 million in development milestones related to the CSL Collaboration Agreement38 Revenue Breakdown by Source (in thousands) | Revenue Source | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | CSL Seqirus | $24,427 | $45,911 | $49,900 | $78,292 | | BARDA | $3,791 | $3,883 | $7,696 | $9,297 | | Total Collaboration Revenue | $24,510 | $45,976 | $49,987 | $78,574 | | Total Grant Revenue | $3,791 | $3,883 | $7,696 | $9,297 | - The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, is expected to impact the company's effective tax rate and deferred tax liability, with changes to be reflected starting in Q3 202567 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's transition to a commercial-stage entity following the Japanese launch of KOSTAIVE®, detailing business updates, financial results, liquidity, and future funding requirements Business Updates The company highlights significant progress across its vaccine and therapeutic programs, including European marketing authorization for KOSTAIVE® and advancements in influenza, OTC, and cystic fibrosis pipelines - KOSTAIVE® (ARCT-154) received marketing authorization from the European Commission in February 2025, valid in all 27 EU member states and 3 EEA countries89 - CSL Seqirus submitted a marketing authorization application for KOSTAIVE® to the UK's MHRA in June 202590 - The pandemic avian influenza (H5N1) vaccine candidate, ARCT-2304, was granted Fast Track Designation by the U.S. FDA in April 2025104 - Positive multiple-dosing data from two Phase 2 studies of ARCT-810 for OTC deficiency were announced on June 30, 2025, showing a significant decrease in glutamine levels and an increase in ureagenesis function111112 Results of Operations Revenue decreased by 43% in Q2 2025 and 34% for the first six months, primarily due to reduced CSL collaboration revenue, while total operating expenses fell significantly due to lower R&D and G&A costs Revenue Comparison (in thousands) | Period | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $28,301 | $49,859 | $(21,558) | -43% | | Six Months Ended June 30 | $57,683 | $87,871 | $(30,188) | -34% | Operating Expense Comparison (in thousands) | Period | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Q2 | Research & Development, net | $29,579 | $58,669 | $(29,090) | -50% | | | General & Administrative | $10,338 | $12,316 | $(1,978) | -16% | | H1 | Research & Development, net | $64,471 | $112,242 | $(47,771) | -43% | | | General & Administrative | $21,654 | $27,167 | $(5,513) | -20% | - The decrease in R&D expenses was primarily driven by lower manufacturing and clinical costs for the LUNAR-COVID program, reflecting its transition from development to commercial phase122123 Liquidity and Capital Resources As of June 30, 2025, the company held $253.4 million in cash, cash equivalents, and restricted cash, with management expecting current funds to cover operations for at least the next twelve months, though additional capital will be required for long-term plans - The company's cash, cash equivalents, and restricted cash balance was $253.4 million as of June 30, 2025132 - The company has achieved a total of approximately $509.7 million in upfront payments and milestones from CSL Seqirus through Q2 2025132 - Management expects current cash to be sufficient for at least the next twelve months, but will need to raise additional capital to fund long-term development151 Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Cash used in Operating activities | $(40,893) | $(35,699) | | Cash used in Investing activities | $(137) | $(568) | | Cash provided by Financing activities | $469 | $4,591 | | Net decrease in cash | $(40,561) | $(31,676) | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its cash and cash equivalents, which management considers not material - The company's main market risk is interest rate changes affecting interest income on its cash and cash equivalents, which is not considered a material risk156 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting related to information technology general controls (ITGCs) - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting157 - The material weakness relates to information technology general controls (ITGCs), including deficiencies in user access controls, program change management, and monitoring of critical IT operations161 - A remediation plan is in progress, involving enhancing IT policies, limiting system access, improving user access reviews, and hiring an internal audit manager, with completion expected in fiscal year 2025162163164 PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, other information, and exhibits Item 1. Legal Proceedings The company initiated arbitration against CSL Seqirus on May 30, 2025, to seek a milestone payment related to KOSTAIVE®'s European marketing authorization, which CSL Seqirus disputes - On May 30, 2025, Arcturus initiated an arbitration against CSL Seqirus to seek payment of a milestone under their collaboration agreement following the European marketing authorization of KOSTAIVE®168 - CSL Seqirus submitted an Answer on July 25, 2025, contending it does not have a current obligation to pay the milestone, and the arbitration is ongoing168 Item 1A. Risk Factors No material changes have occurred from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes have occurred from the risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2024170 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None171 Item 5. Other Information During the three months ended June 30, 2025, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025174 Item 6. Exhibits This section provides an index of all exhibits filed with or incorporated by reference into this Quarterly Report on Form 10-Q, including sales agreements, corporate governance documents, material contracts, and officer certifications