Greetings, and welcome to the Arcturus Therapeutics First Quarter Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. As a reminder, this conference is being recorded today, Monday, May 10, 2021. And I’d like to turn the conference over to Neda Safarzadeh, Head of Investor Relations, Public Relations and Marketing of Arcturus. Please go ahead.

Hey, thank you, Neda. Good afternoon to all. Thank you for joining the Arcturus’ quarterly call today. Arcturus is developing a next generation class of mRNA-based medicines and vaccines. We believe that our platform has potential promise to generate new vaccines and other transformative medicines that address the underlying molecular basis of many serious diseases. We have made tremendous progress, advancing our pipeline led by ARCT-021, our vaccine candidate for COVID-19. I'll begin with an overview of our ARCT-021 program.

Thanks, Joe. I'll start with ARCT-021, our COVID-19 vaccine. The Phase 1/2 study conducted in Singapore completed in the first quarter, and we anticipate submitting the full results to a peer-reviewed journal later this quarter. Our ongoing Phase 2 study completed enrollment on the 13th of March with 580 participants that were dosed, and the primary vaccination schedule is now complete. Two interim analyses have been completed and reviewed by the Data and Safety Monitoring Board, and they have recommended that the study can proceed with no amendments required to the protocol. The data includes over 300 ARCT-021 treated participants that have been followed up for at least 28 days after the first dose. Emerging immunogenicity data from this study is consistent with the results from our Phase 1/2 study and shows greater than 90% seroconversion for IgG antibodies binding to the full-length spike protein at day 28 following a single dose of 5 micrograms of ARCT-021. Seroconversion is at the threshold of at least a four-fold increase from baseline values. This is in line with our expectations based upon what we saw in the Phase 1/2 study, where 81% of participants who are converted for the anti-spike IgG by day 14 after a single 5 microgram dose, and 100% had seroconverted by 28 days post single 5 microgram dose. Safety data to-date continues to be favorable and is consistent with what we saw in the Phase 1/2 study. Phase 3 preparations are proceeding well and we are in discussions with multiple regulatory authorities concerning the Phase 3 program. I will turn now to ARCT-810, our therapeutic candidate for Ornithine Transcarbamylase or OTC Deficiency. ARCT-810 utilizes Arcturus’ LUNAR lipid mediated delivery platform to deliver OTC messenger RNA to the liver, the primary target tissue in OTC deficiency. The expression of the normal ornithine transcarbamylase enzyme in the liver of patients with OTC deficiency has the potential to restore UAS cycle activity, preventing neurological damage and the need for liver transplantation. We recently completed a nine-month chronic toxicology study in which 20 doses of ARCT-810 were administered every two weeks in non-human primates. In this study, we observed no adverse histological findings, including at dose levels above those that we're evaluating in our Phase 1b and our Phase 2 clinical studies. These nonhuman primate data bolster the strong ARCT-810 preclinical data package that supported advancement of the program into human studies and provide support for extended dosing in humans. We remain on track to submit the CTA for a multiple dose Phase 2 study in OTC deficiency patients within the coming weeks. And we have already submitted the study protocol for ethics committee approval.

Thank you, Steve and good afternoon everyone. The press release issued earlier today includes financial statements for the first quarter of fiscal year 2021. Arcturus’ primary sources of revenue is currently from licensing fee and collaboration payments received from research and development arrangement with our pharmaceutical and biotech partners. For the three months ended March 31, 2021, the company reported revenues of 2.1 million compared with 2.6 million in the three months ended March 31, 2020. Total operating expenses for the three months ended March 31, 2021 were 59.8 million compared with 12.1 million for the three months ended March 31, 2020 and 33.3 million for the three months ended December 31, 2020. The increase in net expenditures were due primarily to the increased activity in clinical and manufacturing expenditures related to the company's COVID-19 and OTC program, as well as increased personnel costs and other facility costs related to the organizational growth of the company.

Thanks Andy. This has been a productive...

Ladies and gentlemen, please stand by. We appear to have lost the audio. We are going to try to establish the connection.

I'll begin by saying thanks, Andy. I'll start after the transition. This has been a productive quarter and Arcturus has made substantial progress advancing our mRNA based therapeutic and vaccine platform with favorable Phase 3 results. We believe that there is the potential for ARCT-021 to gain Emergency Use Authorization in at least one country before year end, which would of course represent an enormous achievement for our company. We believe that as a single administration lyophilized investigational vaccine with very low dose ARCT-021 could have a differentiated profile positioning the product for potential broad uptake. We're also advancing our broader clinical and preclinical pipeline programs and anticipate reporting important milestones. Later this year, we expect to obtain initial safety and pharmacokinetics data from our ARCT-810 clinical study being conducted in patients with OTC. And look-forward to starting a Phase 2 multiple dose study. For ARCT-032, CF program we're looking forward to a CTA filing later this year. Our goal with our ARCT-032 is to utilize an easily administered aerosolized approach to correct the underlying deficiency seen in cystic fibrosis and to provide a meaningful new treatment option for the tens of thousands of individuals living with this disease. In addition to these advanced programs, our team is also applying our mRNA technology to develop novel vaccines and other medicines for many other life-threatening diseases.

Our first question comes from the line of Yasmeen Rahimi with Piper Sandler. Please go ahead.

Hi team. Thank you so much for taking my questions and all the great progress, few questions for you. Maybe the first one is, you mentioned in the call that you have had two data safety monitoring meetings with the FDA, will look the data safety monitoring committee meetings to cleared and that continue with the protocol. How many more are left to do for the Phase 2 study? And when should we – what's the rate-limiting step for the Phase 3 to get kicked off? And if you could provide some color in terms of the size of the study, that would be helpful. And then I have a follow-up.

Yes, go ahead, Steve.

Okay. Thanks for the question. So the DSMB will be reviewing the data regularly throughout the study. It's not just interim analysis they're reviewing, but at the front end of the study we were doing dose selection for our Phase 3 study. So we had a couple of very quick interim analysis built in right at the front end, have the DSMB reviewed with the main purview really being on the safety data. And it just happened to coincide with when they would be doing the review. There are another two at least interim analysis planned within the study. But that will be a few months away, as I said, the initial interims were quite close together to allow us to confirm the dose selection for the Phase 3 study. In terms of the total number of DSMB meetings, it’s impossible to say in the entire study how many meetings they'll have, because as the data matures, the DSMB may decide that they would like to do meetings less frequently or more frequently, but they will be reviewing all of the data so regularly to the study, which is really a requirement for these COVID studies that you have a DSMB in place. And we'll have the same DSMB for our Phase 3 study as well and through Phase 3 they'll also be regularly reviewing the safety data. Although in Phase 3 we don't have interim analysis plan for that because we're not doing any further dose selection. In terms of the progress with Phase 2a, we were very pleased with the progress that we've made so far. We have a final protocol that's written and where we’ve entered into discussions with a number of different regulatory authorities concerning that protocol and how we most efficiently move it forward in those countries. So in terms of moving to the next step, we need to conclude these discussions with the regulators. And if the protocol is acceptable, then we'll – and/or I should say, once we get agreement on the study design or at least the major elements of the study design, then we'll complete the CTA process that will allow us to move forward to validate and initiate sites in the different countries.

Thank you, Steve. And maybe it was – you noticed that we should be seeing neutralizing in T cell data on sort of second half of this year. In that so far data based on the first 300 patients followed for 28 days, the immunogenicity profile is consistent with what we've seen so far. So can you maybe help us understand how much more we should be expecting to see other than all 580 patients into the second half? But maybe will we have data on a longer treatment beyond day 60? I think it would just be helpful to understand what we will be seeing in immunogenicity data in the second half of this year.

As we move into the second half of this year, we do have some additional interim analysis with later time points. And one of those time points I believe is at around about the six-month mark. And then within this study at six months, people are randomized to either receive a placebo boost or to receive another booster shot so that we can evaluate what the boost response is after a long interval. And so we'll be collecting immunogenicity data immediately prior to that boost, and then again after the boost, and then again at one year. So there were a number of different data cuts that will be performing on the study largely to inform our thinking of how we move the drug forward from the Phase 3 study into the commercial setting and what additional data points we might want to collect in the post-market setting with the vaccine if approved.

Thank you, Steve. That was very helpful.

Thanks, Yasmeen.

Our next question comes from the line of Nick Abbott with Wells Fargo. Please go ahead.

Hi, guys. It's Joe on for Nick. Thanks for taking our questions and congrats on the progress. Two questions from us. Steve, in terms of immunogenicity, do you expect a proportion of those patients who didn't seroconvert to potentially still achieve some degree of T cell immunity? And maybe how does this data presented today provide you additional confidence in success going forward? And then secondly, maybe focused more simply on timing around the Phase 3, are you still anticipate guiding towards initiation in the second quarter? Or have you maybe experienced any delays in conversations with regulators that you could provide more color on?

Yes, go ahead, Steve.

So first of all, talking to the T cell responses for the Phase 2 study, we haven't got the T cell data yet. We're expecting that to come in a little later, but we have no reason to believe that the T cell responses that we see in the Phase 2 study will be any different to what we saw in the Phase 1 study. So we're anticipating very robust T cell responses in the participants. The other piece is that we're not anticipating that people that maybe have lower seroconversion or non-seroconversion on antibodies. That means that they don't have a robust T cell response. The two things as we look at them are all independent and that's certainly what we saw in the Phase 1/2 study. I think the final piece is that you have to remember that this data is day 28 data for seroconversion for the 5 microgram dose cohort. And we do anticipate that because of the radical mechanism with sustained antigen expression, that will continue to see additional seroconversions as we go out further in time. So the 90% seroconversion rate at day 28 isn't the end of the story for seroconversions for these participants. Did that answer your question?

No, that's very helpful. Thank you, Steve. Thanks, Joe.

Our next question comes from the line of Seamus Fernandez with Guggenheim. Please go ahead.

Hi, guys. This is on for Seamus. I have two questions; one on OTC program. First with 021, is there any more data required for the Phase 3? Or is it simply operational and choosing the kind of countries where vaccines aren't probably available? And as a follow-up to that, how is the company thinking about the viability of moving forward with product given just how the market has evolved over the last few months?

Yes, sure. We're definitely in the late stages of operational planning for our Phase 3. Anything else to add Steve on that?

So we're certainly not anticipating problems with the regulators in terms of the data package that we've given them for discussion. It's always possible that regulators come back and ask for more data and it may not be clinical data. They might ask for further clarification on the CMC side or other things. These are just part of the normal regulatory review process. And we just aim for the base with turnaround to address questions that they have when we receive them, but there's nothing at this point that we’re thinking is going to be a wrinkle that's going to cause significant issues.

And with respect to your question about how the market continues to evolve and our level of commitment to moving forward, I can assure you that we're committed to move forward at this time. We have contractual obligations to fulfill. Certain regions of the world may be more amenable to a single-shot vitalized vaccine. And ARCT-021 has value to us not only as a standalone asset, but it represents proof of concept for self-amplifying mRNA vaccine technology. And in addition to that, a safe, effective, and approved ARCT-021 can open the door or at least streamline the path to additional updated variant versions of ARCT-021.

Got it. That's helpful. And on OTC, how is the firm progressing? And when will we see biomarker data from a single ascending dose study? And are there any gating factors in sort of Phase 2?

Go ahead, Steve.

Well, I heard the Phase 1 data and I heard the gating factors for Phase 2. I think you broke up a little bit at the beginning of your question. So what was the first part?

That’s regarding the Phase 1b and when will see biomarker data from that study.

Okay. So the Phase 1b study remains ongoing. We're anticipating that we'll see initial data later on in the year. We really need to complete the cohort, the first cohort enrollment and follow up. And then we'll have a look at the data at that point, and we'll be able to make a disclosure. In terms of the Phase 2 study, there's nothing that particularly escalating on that. We're planning to submit the clinical trial application within the next couple of weeks, and then it will just follow the standard regulatory review cycle. It was already submitted to the ethics committee, as I said earlier, and that again has a standard review time. So we're anticipating that we'll get a timely review and be able to initiate that study a little bit later in the year as well.

Great. Thank you.

Thank you.

Our next question comes from the line of Yigal Nochomovitz with Citigroup. Please go ahead.

Hi. Great. Thank you very much for taking the questions. I had a few. First of all, how quickly do you believe that you could submit the EUA after receiving positive Phase 3 data for 021? Second, what other details that you believe need to be hammered out with the regulatory agencies regarding the Phase 3 trial design? And will there be any notable differences in the way that Arcturus is conducting the Phase 3 as compared with Moderna or Pfizer? Thanks.

Well, it’s a good question. It does vary considerably depending on which regulatory agency we talk to in which country with respect to timing of an emergency use approval request. I'm sure Steve can maybe provide an additional color there. With respect to the trial design, we are conducting our Phase 3 trials in areas where there's a high or an increased prevalence of COVID compared to six, nine months ago. And some countries have much higher prevalence rates and it puts unique pressures on the regulatory agencies to transition the placebo group, for example, over to the vaccinated group sooner than previous trials, but Steve, any additional color?

Yes. So I think that's at a high level, that's the principle thing that we need to build into our study as opposed to the Moderna and Pfizer study. It’s just a plan for how we transition placebos because it's not really ethical to keep them off away from vaccine for long periods of time, particularly as the vaccine becomes available for that age group or that risk group. And that is one of the things that we're in discussion with the regulators about at this time. I guess the other thing is that both Moderna and Pfizer did very, very large clinical trials. We're doing a very large clinical trial, but it's in the order of 15,000 participants not 30,000 to 45,000 participants. I guess the final question was EUA.

Just the time between Phase 3 data and EUA.

So that's something that we're not able to give a clear guidance on at the moment. So we're in discussion with our CLO about how long it's going to take to clean that point later and lock the database and spit out the biostatistics outputs on the efficacy and safety that we need. And also with our medical writing vendor as well, we're just in the process of going through the contracting process for the resources we need to turn around the clinical study report and the CTD sections in a timely fashion. So we'll be able to provide more color on that as we conclude those discussions.

All right. Thank you very much.

Thank you.

I think maybe the last thing is that, in terms of the guidance that we previously given for EUA this year that hasn't changed. So it's still what we're targeting.

Yes.

Our next question comes from the line of Wangzhi Li with Ladenburg. Please go ahead.

Hi, thanks for taking my question. Maybe on 021, first about the immunogenicity profile, in addition to seroconversion rates, any further color on titer or the IgD antibody and at this moment, any color on neutralizing titer or a T-cell response, I understand you may don't have data yet.

Yeah, that's correct. We don't have data yet for neutralizing antibodies and T-cells that is forthcoming. And the binding antibody data was very in line with our expectations with respect to seroconversion rates at day-28.

Yes. The study is – because the study is still blinded to a number to the investigator and all the site staff, et cetera, there's a – we're giving very high level data and not getting too granular on the data because the more unblinded data we get, the more it could compromise the integrity of the study in terms of assessments that are made by study sites are. So at this point we're not disclosing the individual details of the neutralizing of antibody titers.

Got it. Okay. And then for the OTCD program, the monkey study you did a 20 doses, in addition to safety I just wanted, do you have done any like a PD marker or also immunogenicity on the target protein? Maybe clarify this is a human protein on monkey, so maybe not the best for immunogenicity test but any color on that?

Yeah. This is a toxicology study designed to support Phase 2 multiple dose application. There are not many PD markers you can do in a healthy monkey, have got normal OTC enzyme activity. So the PD studies really need to be done in the mouse model of disease where they have – where the immunogenicity – sorry, whether deficiency – mice have OTC deficiency we can see PD for those studies have already been done. So this is where we want to look at the effects of long-term dosing and to make sure that we didn't see any toxicities with long-term dosing that would make us need to revise our dose expectations.

And for those familiar with lipid nanoparticle mRNA therapeutics at 20 dose nine months chronic toxic study in primates is a significant milestone for the science.

Okay, great. Thanks for taking my question.

Thanks Wangzhi.

Our next question comes from the line of Shubhendu Sen Roy with Brookline. Please go ahead.

Hi, I'm Shubhendu on behalf of Kumar from Brookline. I had a couple of questions. So one was so in terms of the side effect profile for the vaccine, do we have molecules like PEG and polysorbate that may have allergic reactions or other side effects?

No we haven't, as you can appreciate our ARCT-021 is a very low dose RNA vaccine it's only 5-micrograms. It's only a single administration. And the theoretical benefits of that are attributed to less stuff being injected, less RNA and less LUNAR ingredients or lipid ingredients, including the PEG-lipid. That's been implicated in some tox discussions. So this could prove to be very fruitful. Steve, with respect to providing color on have we observed any of these serious adverse events that others have observed in their trials, maybe you can provide a little color there.

So to my knowledge, we haven't seen any serious adverse events that are anaphylactic reaction at all. There had been some serious adverse events in the study, but that's normal in any study that you say, and certainly nothing that cause concern for us or cause concern for the DSMB.

Great, just one-follow-up question. So since this is a single-dose vaccine do you anticipate modifying the content with respect to variants say every year annually?

Yes. We definitely are in the process of evaluating all the major variants and we're in a position to move very quickly to update ARCT-021 if needed. I also point out that the ARCT-021 as is because of its robust cellular community or immunogenicity profile maybe good as is with respect to variant coverage. But if we find some challenges or some challenging variants in our Phase 3 studies we'll be able to wait because of the efforts that have been ongoing, pertaining to present evaluation and synthesis of the variants.

Excellent, sounds great. Thank you for taking my questions.

Thank you.

Our next question comes from the line of Steven Seedhouse with Raymond James. Please go ahead.

Hi, thank you. First on the OTC program, you mentioned no adverse histological findings. I'm just curious in the histology data, are you able to look at all that OTC expression are you able to determine if you get periportal delivery in OTC expression in the primates?

Well, that's a great question. We've definitely shown distribution to periportal hepatocytes in rodent models. Steve or Pad, have we seen any periportal hepatocytes data in our primate studies?

No just because of the high background level in nonhuman primate, it's hard to distinguish the two between the human and nonhuman primate. But what we do, at least in preclinical models previously, we have looked at OTC expression in primates, and we do see a dose correlation there.

In periportal hepatocytes.

In general in the liver but not specifically in periportal.

Okay. And then with, again understanding that the histological findings looked good just on safety overall, can you talk about if you saw any adverse events and I guess maybe a more specific question, how many fold above your targeted clinical dose did you test in the primates and did you determine the no observed adverse event level?

We carefully worded that our pressure release to capture that, we evaluated doses above our maximum targeted clinical dose, but we haven't disclosed the specifics.

But we didn't observe and all, then nothing.

Yes, we didn't observe and all.

Okay. That's very helpful. Thank you.

A positive outcome, yes.

Okay. And do you foresee – I mean, are you planning on filing an IND and conducting a multi-dose study at some point in the U.S. do you see any roadblocks there?

Maybe if I take that question?

Yeah.

So the first call is to conduct – is to initiate and start giving multiple doses with the currently planned CTA. And then with that we will definitely be evaluating whether we submit a protocol amendment and file for the IND for a multi-dose study in the United States. But in terms of facilitating that process, I think it would be nice to get a few doses in a couple of patients under the CTA so that we can run back to FDA and say, look we've dosed X number of doses already, and this is fine can we amend the protocol, so that's definitely under discussion at the moment.

Terrific. Thanks. And last question from me, I appreciate you taking all the questions. At least one – this is on the COVID vaccine. There's one recent Phase 3 studies developed in this study, they're using an immunogenicity primary endpoint testing, neutralizing antibodies versus a competitor vaccine. I'm curious, that's the first I've seen of that design, and obviously you're still speaking about an event driven study. So I'm curious if you've been asked at all to run a similar type of immunogenicity study for Phase 3 by any U.S. or European regulator or a specific in those geographies. Are they still good with the event-driven studies? Thank you.

It’s a great question and you're right. There's considerable variability depending on which country and which regulatory agency we're in conversations with. But some regulatory agencies in countries that have early access to the vaccines are definitely requesting more information about the potential of doing a comparison study, but that's not in all of our conversations. Some countries are – do not have the same access to these early vaccines as others. And there's a higher sense of urgency and are more open to a placebo controlled trial. And we are going to add…

Makes sense.

Okay, great. Thanks Steve.

Our next question comes from the line of Yale Jen from Laidlaw & Company. Please go ahead.

Good afternoon. Thanks for taking the questions and congrats on that data so far. Just two quick ones, the first one is in terms of the starting the Phase 3 study, you'll have two additional internal analysis is that is outcome of – from those internal analysis via gating factor to starting the Phase 3 or that's not relevant?

So it is relevant because normally to go into a Phase 3 study, you would have some Phase 2 data that showed that moving from tens of patients in Phase 1 to tens of thousands of patients in Phase 3, that’s a step wise approach where you expose 100 patients first. The question is how long do you follow those several hundred patients up for and traditionally for vaccines 28 days after the doses is the time point at which you determine safety. Certainly for moving to the next phase of development, which is exactly what we've done. We've gone to 28 days after the first dose. We've established that the 5 microgram dose is behaving very nicely, actually the 7.5 microgram dose is behaving very nicely as well, but the 5 microgram dose in terms of immunogenicity, we think is the sweet spot. And now we have sufficient data to put together a compelling regulatory package to submit CTAs.

Okay, great. That's very helpful. Maybe the follow-up question here is that in terms of the Phase 2 study so far have you got measuring whether there's patients infected by variant or mostly by wild type, wild type the original strain in those patients?

Yes. Our Phase 2 is conducted primarily in the U.S. with some of the patients being in Singapore, with respect to the variant profile in these areas is well understood, but Steve, anything to add.

So that the Phase 2 study is only about 600 people, so that's not enough to be looking at COVID cases, we did not anticipating enough COVID cases in the study of that size to be able to make a reasonable assessment of whether there's any particular bias towards one variant or another. In our Phase 3 study we're definitely going to be archiving samples from infected participants so that we can have a look at that.

Yeah.

Okay, great. Thanks a lot and congrats on the progress.

Hey, thanks Yale.

I'll turn the call back over to you Joe.

All right. Well, thanks everyone, it looks like our time is up and we're going to be closing the call. Feel free to reach out to our team as always, if you have any follow-up questions. We will be as efficient as we can in our responses and bye for now.

That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.