Arcturus Therapeutics(ARCT) - 2024 Q1 - Quarterly Results

Executive Summary & Recent Highlights 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 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] - Kostaive® European Marketing Authorization Application approval decision is expected in Q3[1] - Topline immunogenicity and safety data for ARCT-2138 (LUNAR-FLU) Phase 1 is anticipated in Q3[1] - 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] - JP Morgan has been engaged to monetize Arcturus' investment in the ARCALIS JV in Japan[1] Recent Corporate Highlights 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] - 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][3] - 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] - A Marketing Authorization Application (MAA) for Kostaive® has been filed with the European Medicines Agency (EMA), with an approval decision expected in Q3[3] - ARCT-2138 (LUNAR-FLU, Quadrivalent Seasonal Influenza) Phase 1 dose-finding and immunogenicity study is progressing, with 84 healthy young adults recruited[3] - 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] - ARCT-032, an inhaled mRNA therapeutic for cystic fibrosis, is on track to share Phase 1b interim data on July 1, 2024[3] - Arcturus will begin to qualify for commercial milestones under its CSL collaboration upon commencement of Kostaive® revenues in Japan this year[2] - The company's cash runway remains strong for at least three years into the first quarter of fiscal year 2027[2][9] First Quarter 2024 Financial Results 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 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 ($M) | Change (%) | | :---------------------- | :----------- | :----------- | :---------- | :--------- | | Total Revenues | 38.0 | 80.3 | (42.3) | (52.7%) | | CSL Agreement Revenue | 32.4 | 78.2 | (45.8) | (58.6%) | | BARDA Agreement Revenue | N/A | N/A | +4.9 (increase) | N/A | Operating Expenses Total operating expenses saw a slight increase year-over-year, driven by higher research and development costs related to key programs and increased general and administrative expenses Total Operating Expenses (Three Months Ended March 31) | Metric | Q1 2024 ($M) | Q1 2023 ($M) | Change ($M) | Change (%) | | :------------------- | :----------- | :----------- | :---------- | :--------- | | Total Operating Expenses | 68.4 | 65.5 | 2.9 | 4.4% | Research and Development Expenses 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 ($M) | Change (%) | | :------------------- | :----------- | :----------- | :---------- | :--------- | | R&D Expenses | 53.6 | 51.8 | 1.8 | 3.5% | - The increase in R&D expenses was primarily driven by the CSL and BARDA programs, as well as Arcturus' internal OTC and Cystic Fibrosis programs, and investments in early-stage discovery technologies including Lyme Disease and Gonorrhea vaccine programs[6] General and Administrative Expenses G&A expenses rose due to increased personnel, travel, consulting, and facility-related rent expenses General and Administrative Expenses (Three Months Ended March 31) | Metric | Q1 2024 ($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] Net Loss 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 | ($2.87) | Cash Position and Balance Sheet Highlights Arcturus maintained a strong cash position at the end of Q1 2024, with a projected cash runway extending into Q1 2027, supported by ongoing CSL milestone payments Cash, Cash Equivalents and Restricted Cash | Metric | March 31, 2024 ($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] - 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] - 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] Company Information & Disclosures 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 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] - 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] - Arcturus developed Kostaive®, the world's first approved self-amplifying messenger RNA (sa-mRNA) COVID vaccine[10] - 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] - 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] - Arcturus' technologies are covered by an extensive patent portfolio with over 400 patents and patent applications globally[10] - The Arcturus logo and trademarks LUNAR® and STARR® are the property of Arcturus[12] Forward-Looking Statements 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] - 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] - 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] - 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] Financial Statements 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 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 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 |