Good day. And welcome to the Arcturus Therapeutics First Quarter 2022 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Deepankar Roy, Senior Director of Investor Relations. Please go ahead, sir.

Thank you, James. Good afternoon and welcome to Arcturus Therapeutics First Quarter 2022 Financial Results and Corporate Update Call. Thank you all for joining us. Today's call will be led by Joseph Payne, President and CEO, and Andy Sassine, our CFO. Dr. Pad Chivukula, our CSO and COO, will join for the Q&A session. Before we begin, I would like to remind everyone that statements made during this call regarding matters that are not historical facts are forward-looking statements within the Safe Harbor provisions of the Private Securities Litigation from Act of 1995. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties, and assumptions that may cause actual results, performance and achievements to differ materially from those expressed or implied by the statement. Please see the forward-looking statement disclaimer on the company's press release issued earlier today, as well as the risk factors section in our Forms 10-Q and 10-K filed with the SEC. In addition, any forward-looking statements represent our views only as of the date such statements are made, May 9, 2022. Arcturus specifically disclaims any obligation to update such statements to reflect future information, events or circumstances. With that, I'll now turn the call over to Joe.

Hey. Thank you, Deepankar. Good afternoon to all. Thank you for joining Arcturus' Q1 quarterly call. My comments today initially capture a list of summary points for the quarter and I'll follow that up with additional detail per program before I turn the time over to Andy for financial updates. This quarter has been highlighted by several key achievements. Indeed, we've made significant progress advancing our pipeline of mRNA-based vaccines and therapeutics. So, let's begin with ARCT-154. This is our most advanced COVID vaccine candidate that has shown impressive activity against SARS-CoV-2, both as a primary vaccine and as a booster. We're pleased with the promising results coming from a Phase 1/2 study evaluating ARCT-154 and its potential as a booster in individuals primed with Comirnaty. But the boost with ARCT-154 generated high booster numbers. These are the geometric mean fold rises or GMFRs in neutralizing antibody titers and we'll share more of those results in a moment. Importantly, this quarter, we learned from Vinbiocare that the Phase 1/2/3 study has met its primary endpoint objective of vaccine efficacy and that ARCT-154 demonstrated very strong protection against severe and fatal COVID disease, even when up against the most challenging variants that have escaped other vaccines, like Delta and Omicron. We believe this is a significant milestone for the company and for the field of RNA vaccines. This represents the first time ever that Phase 3 vaccine efficacy endpoint has been achieved with a low dose self-amplifying mRNA vaccine, showing that we can prevent COVID-19 symptomatic disease, severe disease and death. With over 19,000 participants involved in this study and a comparable safety profile in the ARCT-154 vaccinated arm and placebo arms respectively. We view this as important validation of our self-amplifying mRNA technology platform and its applicability towards developing vaccines.…

Thank you, Joe. And good afternoon everyone. Press release issued earlier today includes financial statements for the first quarter of 2022 and provides a summary and analysis of sequential financial performance. Please reference our 10-Q for more details on the financial performance. I will go over our financial and present some operating metrics as we continue to transition to a late stage clinical company, with several assets in our pipeline. I will also provide some details regarding our manufacturing strategy as we prepare for the potential of emergency use authorization in Vietnam. Finally, I will provide some insights regarding our cash position and expected run rate. As you heard Joe mention, we had a very productive first quarter, including highly encouraging efficacy trial and booster durability results for ARCT-154. As you know, we partnered our ARCT-154 next generation LUNAR COVID-19 vaccine candidate in Vietnam within Vinbiocare. Vinbiocare is part of the Vingroup, which is one of Vietnam's largest corporations, and is sponsoring and funding our Phase 1/2/3 study in Vietnam, targeting COVID-19 and the variants of concern. This partnership includes the trial and collaboration around building a vaccine manufacturing facility in Hanoi, resulting in significant cost saving for Arcturus. Our technology transfer activities remain on track for the facility to become operational later this year, with a capacity of over 200 million doses annually. We are also continuing to work with other manufacturing partners to mature our global footprint, including Europe, Japan, and the United States of America. Revenues from strategic alliances and collaboration for the first quarter of 2022 was $5.2 million, which was relatively consistent with the December quarter. Our operating expenses for the first quarter were $55.6 million, which declined quarter-over-quarter and increased from the quarter ended December 2021. This increase was primarily due to one-time manufacturing and CMC quality run for our 154 vaccine program, and an increase in costs associated with the startup activities towards initiation of the booster trial. In January 2022, the company entered into an agreement with a pharmaceutical company, whereby the pharmaceutical company agreed to fund up to $25 million for a clinical trial for LUNAR COVID-19 vaccine candidate as a booster. Net loss for the first quarter of 2022 was approximately $51.2 million or $1.94 per share – basic and diluted share. We reported a net loss of approximately $56.3 million or $2.15 per basic and diluted share in the first quarter of 2021 and a loss of $38.7 million or $1.47 per basic and diluted share in the first quarter of 2021. Our cash balance at the under the first quarter was $319.7 million. And based on our current pipeline, our cash position is expected to be sufficient to support operations until late 2023. I will now pass the call back to Joe.

Hey, thanks, Andy. We're definitely pleased to have another productive quarter, advancing our pipeline of mRNA vaccines and therapeutics, in particular the recent clinical data from ARCT-154 that helps validate our self-amplifying mRNA technology platform, our LUNAR lipid nanoparticle delivery platform, and our proprietary trade secret manufacturing processes, including lyophilization. So I'll now turn the time over back to you, Doug, our operator, to field any questions.

. And we'll take our first question today from Yasmeen Rahimi with Piper Sandler.

A couple for you. Maybe the first one is, I know you made in your prepared remarks, you noted that you're going to be analyzing, in the primary efficacy data, the distribution of how many of the cases were due to Omicron and Delta. Just to kind of give us an idea out of the top line efficacy event rate, those two data points, how soon can we expect that? Like, how long does the process take and in which format will you share it with us? That's one. And then, the second thing is, have you gotten any communication back from Vietnam in the last two-and-a-half weeks after the primary efficacy data shared with them? And then I have a last follow-up.

With respect to the swab data and Delta and Omicron, this data will be collected over a matter of weeks. It's not several months. So, we aim to get that part of the puzzle completed soon. But we did provide references for those that read our press release, and the previous one as well, that provide some guidance as to the prevalence of Delta and Omicron during the period of the study. And we encourage people to refer to that in the meantime, while we collect the hard data for that. The second question, I'll turn the time over to Pad to address that.

I think your question was about the EUA and what was sort of the status in Vietnam. So, I think the review process is still ongoing, but we can share that, over the last few weeks, the clinical section, which is one of the key parts of the EUA process, including the safety, the immunogenicity and the efficacy data was reviewed by the National Committee of Ethics. And during the meeting, it was given positive feedback. So, we're encouraged by that. The larger application is still under review and we hope to hear back from them very shortly.

My last question is in regards to the booster study that you'll be kicking off in 2,400 at all. I just want to confirm, in terms to receive approvability here in the US, is it just the execution of the booster study in conjunction to the large study that was done in Vietnam to support full approvability here in the US and in Europe. So, if you could just kind of reconfirm if there any other rate limiting steps left, that could be helpful.

We have met with the FDA, and consulted with them and received their feedback pertaining to the design elements of this pivotal booster trial with respect to the appropriate size of the trial and to what degree our data collected in Vietnam will be accepted or supportive. And after that feedback, not just from the FDA, but the MHRA and EMA that we felt comfortable to proceed with the pivotal trial. So, that's how we've given specific guidance to. But we've previously said approximately 2400 people will be participating in the trial. So, this is not an extraordinarily large trial. And clearly, that's not going to be an efficacy based trial. Like, you'd see there's no more placebo-controlled randomized vaccine efficacy trials and stuff like that. So, I can confirm that we've received feedback from these major market regulatory agencies and we're proceeding accordingly.

Our next question will come from Seamus Fernandez with Guggenheim.

This is Evan Wang on for Seamus. I have two questions. First on the booster. Any more details you can share in terms of trial design. I know you guys have shared that's 2,400 patients. But in terms of if it's a head to head, whether it's non-inferiority versus superiority, any additional color would be appreciated. And also on timelines for the trial. Second question is, I know you shared some durability data in terms of the booster for non-Omicron variants, but any timelines in terms of when we can see durability data for the Ba1 and Ba2 variants?

Additional color on the trial, of course, we have a tight understanding of our design of our trial, but we have to remain not just coy, but strategically silent on key elements of this. We realize that the endemic booster market is going to be a significant commercial opportunity with competitors, large pharmaceutical competitors, so we want to make sure we hold those cards close to our chest. And because we're first movers in the self-amplifying mRNA space with anticipated competitors in the coming years, we want to keep those cards close to our chest as well. What we feel is important to disclose to our investors is that this is not going to be an astronomically large trial or something that's difficult or time consuming. With respect to the time, we remind people this is a single administration type booster vaccine trial. It's not a two-shot trial. And recruitment times are anticipated to be much faster because the population of people that have already been administered vaccines is plentiful. So, we're not looking for naïve folks or people that have not been exposed to the virus. We're simply looking for people that have already been vaccinated. So, we believe recruitment times will be reasonable or much faster than our first experience. And with respect to the other design elements, we're just holding those cards close to our chest, if that makes sense strategically. With respect to the BA1 and BA2 durability, we've shown 29-day data. So, that kind of gives you an idea that we'll be able to subsequently show durability data for those Omicron variants as well. That, again, won't be several months, but it may be some weeks here ahead of time. But I refer everyone on the call to the relatively substantial amount of variant data that we've already provided against Alpha, Beta, Delta, Gamma and other variants of interest. And very consistently, this vaccine is responsive and durable. And there's something special about self-amplifying mRNA. We're going to continue to learn about it. We just wanted to share three months data at this point. But we're cautiously optimistic that this durability will continue. And that's where we are. But wait some additional – it won't be several months.

We'll now hear from Nick Abbott with Wells Fargo.

The first one, Joe, when I look at the GMT chart here, in the press release, you have one patient, roughly a twofold increase, perhaps it's the same patient, a three-fold increase over Ba1 and Ba2. And, obviously, that's over the mean for day one. So what were those individuals' increase over their own day one values and if it's sort of substantially less than this 40 to 50 fold range? What is it about this individual means they have a poor – possibly a poor response?

Now, we don't want to disclose details for specific individuals, but I think this is an appropriate question to remind that a significant – a large percentage of our participants in our trials were high risk individuals, whether that's due to elderly or comorbidities, immune-suppressed individuals, right? So considering that a significant percentage was at risk individuals, it's likely one of those that gave a lower response than others. But we've provided all the data, if you look at the mean, and clearly, it's highly encouraging.

You mentioned this expression of interest letter to WHO. Could you elaborate on that, Joe? What does it mean? What is the timeline? What happens if they say yes?

The WHO, of course, is a charitable organization at first. So, one of our intent here is to help in any way we can with primary vaccination. I know in the US and Europe, the majority of people have been vaccinated. But in the developing nations, this is still a core issue for the WHO and we want to see if there's potential here for us to help there. I think it's also helpful to remind people that – I don't know the exact number of countries involved in the WHO emergency use listing, but it is a large number of developing nations. So, if we do successfully capture a spot on this EUL or this emergency use listing, it will open up opportunities for not just helping in the near term, but commercial opportunities down the road. So, that's about it. With respect to the timeline of going through the process, we just wanted to make people aware that Vietnam Ministry of Health and the WHO have been engaged and have been sent a letter and have been supportive of this process, and we'll give updates as they arise. But we haven't given any tight guidance on a timeline to an official spot on emergency use list.

Yigal Nochomovitz with Citigroup has our next question.

Just curious on what regulatory work you've done with regulatory consultants or other outside experts to clarify whether FDA would be amenable to approving a fourth vaccine only as a booster, given obviously that's not the paradigm that we've seen for Moderna, Pfizer and J&J?

The only thing that we've learned is, with respect to another approved under emergency use, I think we'd have to see another wave. Like, some biostatisticians are predicting a wave of COVID coming this fall. If that indeed happens, then that likelihood of garnering Emergency Use Authorization would be higher. But I think the expectation is to go through a traditional BLA process in the US to capture a traditional booster. And the justification for that is simply this is a lower dose, longer lasting, potentially, option. So this is a different mechanism of action of expressing the antigen, and it could be beneficial to subpopulations here in the US. So, we believe that the regulatory agencies will be respectful of these key differences of allowing their citizens to have access to a lower dose, next generation mRNA vaccine.

And have you had discussions with the FDA regarding the acceptability of the Vietnam 20,000 patient trial for your application? Where does it stand with that?

Well, we haven't given a tight detailed response to that question. It's a good question. But we've asked this question to these regulatory agencies and they have provided their feedback and have provided a path forward for the Vietnamese data to be supportive. The details as to which – what's specifically required for this data to be supportive has not been shared. However, we felt comfortable enough for us to proceed with this global registrational study based upon the feedback we've received.

And for the global registration study for the booster, you've vetted that design with FDA, correct?

Correct. In detail. That's correct.

Next we'll hear from Kumar Raja with Brookline Capital Markets.

One more on the booster trial. So, some patients – as of now in US, some have received two, some have received three doses, as well as some have received four doses. You have data from patients who have completed two doses. So, how are you thinking about including patients who have received three or four doses in the trial? And also, with regard to the data, what are you thinking in terms of timeline to follow that?

I can refer those on the call to – there is a white paper for – some guidance provided by regulatory agencies with respect to booster trials. Can they include people that have received two shots, three shots? And the answer is generally yes. But I cannot speak on behalf of the FDA or other regulatory agencies, specifically to ARCT-154. But there has been general guidance provided that booster trials can recruit not just people that have received two shots, but people that have received three shots. So, that allows us flexibility and benefits from a recruitment perspective, definitely.

In terms of the timeline, how long do you think you will need to track these patients? And also, your thoughts on including older high risk patients in the trial?

Correct. We've received guidance on all of these details from the regulatory agencies. They were fairly consistent. I can speak to that, with respect to the percentage of the elderly and how long we need to track these folks for. And so, those design elements are implemented into our booster trial design and has definitely taken into consideration the feedback from the regulatory agencies that we asked that specific question to.

I just needed a clarification on something Andy mentioned. So, you have received $25 million from a pharmaceutical company for the booster trial, did I hear that right?

Yeah, we haven't gotten the $25 million. We've gotten an agreement to reimburse us up to $25 million of our Phase 3 booster trial. So, hopefully, that clarifies it for you.

And what do you guys need to do in return for that?

We need to, obviously, spend money on the trial and bill our pharmaceutical company partner and hopefully get reimbursed in a reasonable timeframe.

Our next question will come from Steven Seedhouse with Raymond James.

I wanted to ask about ARCT-810, the Phase 2 study that's getting underway. What in your view would constitute proof of concept emerging from the data in that study? And then, on 154 booster study, I wanted to ask, if you've settled on a dose for that study with the same dose you've been contemplating or if you think about increasing the dose to squeeze out more efficacy potentially.

At this point, 5 micrograms is our dose. We'll continue to monitor that dose level in the booster environment. But, right now, we believe that we'll be keeping the dose at 5 micrograms. With respect to biological proof of concept for the ARCT-810 program, there's multiple biomarkers associated with Ornithine Transcarbamylase deficiency, as you're well aware, including ammonia in the blood or the plasma and orotic acid in the urine. And the urea cycle itself is in ureagenesis, and also levels of OTC itself. So, a lot of biomarkers associated with this disease. So, we're defining proof of concept as biological proof of concept. So, if any or all of these biomarkers are impacted by ARCT-810 treatment, then we would determine that as biological proof of concept.

Our final question will come from Ed Arce with H.C. Wainwright.

This is Thomas here asking a couple of questions for Ed. You mentioned earlier that the Vietnam Ministry of Health is reviewing the data that's been submitted, which includes Phase 1/2 and 3a, I believe. Can you remind us what is their review process regarding timeframe? Do they adhere to a specific guideline that they hope to render in response regarding EUA?

No specific timeline was given. But all those data that we've referred to in this review today have been provided. And they're working hard and diligently at reviewing it. I forget the exact number of papers, but this was an extraordinary amount of data. Usually, regulatory agencies review subsections of data over a decade of time, and this is 38 weeks of data involving 19,000 participants. So, we do recognize the amount of data that needs to be reviewed in this process, but they're working as fast as they can. We've guided the decision as soon. But, Pad, anything to add?

No. And I think we've been clear about the timing for that. We'll have some clear guidance on that by the end of the quarter.

Regarding the data publication, that is to be in the future from how we understand it. Is that driven by Vinbiocare. Can you talk about when should we expect the data package to be published? And what about Phase 3b data? Or when can we expect that?

Oh, the publication of the data? Well, the data is intimately associated with Vinbiocare, our partner as well. But, yes, they understand and we understand. The expectation is that, at some point here, we're going to be publishing this data, for sure. So, at least that's our expectation. But we haven't given any guidance on timing of that data. But, Pad, anything else to add?

Again, we and Vinbiocare understand the importance of sharing the data that you've generated and the positive nature of the data. So, I think we will provide more details around some of the efficacy analysis, as well as a further analysis of some of the subgroups as well.

I know our teams are actively drafting these publications right now. But you're asking the specific timing of the publication of those and we just haven't provided that specific guidance yet.

We're looking forward to their publication.

That will conclude today's question-and-answer session. I will turn the conference over to Mr. Payne for any additional or closing remarks.

Yeah. Thanks to everyone that joined the call. If we didn't get a chance to address your questions, feel free to reach out to us directly. We'll be in touch, guys. Thanks, everyone. Bye-bye.

That will conclude today's conference call. Thank you for your participation. You may now disconnect.