ARCTURUS THERAPEUTICS HOLDINGS INC. (ARCT) - GUGGENHEIM 3RD ANNUAL HEALTHCARE INNOVATION CONFERENCE - ARCTURUS THERAPEUTICS HOLDINGS INC

Thank you for joining us for this fireside chat with Arcturus Therapeutics. I'm Evan Wang, and with me are Joe Payne, President and Chief Executive Officer, and Alan Cohen, Chief Medical Officer. Thank you guys for being with us again. Yeah, thanks, Evan. It's good to be with you. I guess, Joe, just to kick off, can you help us set the stage for 2027 in terms of where Arctursus is today? Last week, you guys provided some nice updates and goalposts around sequence of catalysts, Can you just walk through that with us? Sure. So Arcturus is an mRNA therapeutics company, and we have two exciting assets that have catalysts, database catalysts in 27. We've now guided a data presentation for the complete fourth cohort of phase two data for the second quarter in 27 for our CF program. this is our inhaled messenger RNA therapeutic to replace the CFTR protein and so that's going to be a meaningful data set and a lot of interest in that program and then we have a rare liver disease called ornithine transcarbamylase deficiency that's an intravenously dosed mRNA therapeutic that's gaining a lot of momentum. We have a successful product there that we've, that we are a successful candidate, that we've reformulated. We call this ARCT 2601 and that program is starting its clinical trial, or at least we anticipate it to start early next year, with with some top-line data in the second half of 27. So two different programs that are MRNA therapeutics with utilizing next generation technology from Arcturus that's compellingly differentiated from the field. So a lot there, but a lot of potential value creation in the next 12 months. Great. Maybe you can expand a little bit on the Lunar platform and how that differentiates among MRNA Therapeutics. And then you continue to do more work there with Lunar 2.0. And that's kind of a new issue. Can you just walk through some of the ongoing things still? Yeah, so when we refer to the lunar platform, lunar is related to our lipid nanoparticle technology, and the chemistry that we utilize for this lipid non-particle technology is different from everybody else in very important ways. We've already established safety and tolerability and efficacy of this delivery technology for intramuscular injections. We have an approved product, by the way, a COVID vaccine product in 30 plus countries that uses this technology. But in the liver, we've also shown some, it's safe and tolerated and works well with our Gen 1 product for OTC deficiency. He referred to Lunar 2.0 though. We're really excited about this technology because we've shown that it's 38 times better in primates than Lunar 1.0, which was already safe, tolerated, and working, and it's already incorporated into products globally. So we now have something that's 38 times better. So when you have a technology like this, a lipid nanoparticle technology that's so much more improved in primates, you have options of how do you apply this to your pipeline. Do you want to make things more potent? Do you want to making it more safe or more convenient? And for the OTC asset, it's already been proven to be safe and tolerated and working, so we're going to focus on convenience. So rather than someone coming into the hospital every two weeks at 0.5 mg per kg and sitting in a chair for three hours, we're pivoting to less frequent dosing, maybe once a month, for example, and a lower dose and sitting on a chair with a nurse coming to your home and administering the drug and sitting in the chair for less than an hour. So we're applying it to more convenience. But it's a wonderful technology that we can utilize for multiple therapeutics now in the liver. And it opens the door to new therapeutics like PKU. And we've added that to our pipeline as well. Great. Maybe let's turn to some data or some of your specific programs. Starting with cystic fibrosis. For those unfamiliar, can you remind us of the class one CF opportunity in the unmet need? Yeah, cystic fibrosis is a well-understood rare disease because of very successful companies in the space. But most of the CF community is treated with modulators. And these companies that have modulators are in the business of fixing or modulating a broken transporter. And that's not what we do. Arcturus is completely different. we're in the business of building a brand new transporter using an mRNA molecule that's inhaled that goes inside these lung cells, these bronchial epithelial cells to express and make a brand-new CFTR. So this is very relevant to the class 1 population. These are nulls. They do not have a broken transporter. They have no transporter, so this is an ideal therapeutic for these individuals, and they represent the people that do not respond or benefit from modulators is approximately 15%. So it's a still a significant portion that can be, but about half of that 15% are class one individuals. And we've also seen a high prevalence of these class one subjects in certain countries and certain regions. So there seems to be pockets where it's much higher than 15%. We've seen some regions reach, you know, 35, 40% of the patient population. So it's addressing a very clear unmet need for the most serious form of CF is class one. If you do not have any CFTR, you can imagine that being the most serious unmet medical need. Great. And maybe talk a little bit about the data that you've shown so far. Yeah, we have our CMO. Why don't we walk through the data we've collected for CF? Sure, so Evan, as you already know, we reported earlier this year, we did dose ranging at five, 10 and 15 milligrams by inhalation once daily among this same population. We only dosed it, though, for about a four-week period. So in four weeks, we could certainly ascertain safety and tolerability. But for inhaled therapies in a patient population that has a lot of mucus and debris and chronic irreversible lung dysfunction and damage, not sufficient time to really ascertain clinical signal. We did, however, observe in the high-resolution CT scans at the 10 milligram, the middle dose, improvements in mucus plugging, and reductions in airway obstructive burden, which are correlates to improvements functionally. So we took that dose forward, and the study we're currently doing is a 12-week study with the 10 milligram dose, inhaled once daily, and we're gonna be enrolling and are completing enrollment in up to 20 patients in the United States, and Joe just referenced, we went to parts of the world where there's a high preponderance of these patients. Those are areas like Turkey and Israel where the burden is upwards to 35 to 40%. So we're in the process right now of enrolling that population. We've also added additional functional measures, such as, so in addition to spirometry, which is a traditional functional endpoint of lung function improvement or stability, we're looking at lung clearance index using multiple breath washout, two quality of life measures, and the aforementioned high resolution CT scans. Got it. And I think you've highlighted that you expect complete enrollment before your end. Are the majority of patients enrolled now? Do you have good line of sight and divisibility on enrollment? Go ahead. We're still actively enrolling. So we're now almost not quite two months away from the end of the year. Let's just say it's going to be a busy couple of months continuing to enroll through the end of the calendar year. Great. Then can you talk about sequencing here from completion enrollment to top line data? And I think part of it is that you talked out a full presentation into Q. What can we see at these data updates? Yeah, in September, you know how we have bank conference season. We talked to a lot of investors and they wanted to put some emphasis on timing of a full data set. And so we're now providing guidance there. Very clear Q2 full data Set presentation, but that's not top line data. That's a full Data presentation. So people now are trying to understand when top line Data is available. We're not giving a specific date or time. But all we've said is we're completing enrollment by year end and a full data presentation in Q2. And sometime in between now and that data presentation is top line data. And the answer is we'll share it when we have it. It's an open label study. We are motivated to proceed into phase three or make that decision because it triggers a up to $40 million contribution from our thermal fissure deal to support the phase three trial. So we are motivated to get that decision sooner than later. So we want to give ourselves the flexibility. But we're now letting people know that when that decision is made, that we will concurrently share top line data and the justification for that so that people can understand. And then with the full data presentation in Q2. So now that line of sight to the data and the path towards it should be much more clear. But there's no specific date of top-line data, just in between now and Q2. Got it. Can you help put some context on the patients enrolled here and how they look compared to the prior subjects, I guess maybe on baseline here, and how you'd expect them to perform over 12 weeks? I know we've also gotten some new data on natural history here. Yeah. Well, there's a bolus of patients coming in from Turkey and Israel. Maybe you can comment on their baseline characteristics. Sure. So I wanted to try and optimize the ability to observe a clinical signal. So I lowered the ceiling and I raised the floor. So prior in the phase two study in the earlier cohorts, we were allowing patients up to 100% predicted lung function, which is better than I imagine most of the people's lung function is in this room. But oddly enough, there are patients out there that were motivated and interested in wanting to be in our studies who had functionally normal lungs. So right now we've dropped it down to 85%. That's at a point where they're starting to ascertain and starting to observe limitations in their ability to function. Also, raising the floor to 45% predicted is really important because once you start producing enough destruction of the lung, its ability to reverse or be able to ascertain clinical benefit is really difficult. And by the time you get down to about 35%, I used to run a lung transplant program at WashU in St. Louis. that's a population that's waiting for lung transplants. So the population right now, both in Turkey and Israel, where we have gone now to start enrolling patients in addition to the U.S., the mix of patients there genetically is identical to that that we observe in the United States. They just have a higher burden. So we should have a representative population that is more akin to being able to observe a clinical effect if and when we observe it. Got it. So 45 at the low end, 85 at the high end. Correct. Would you expect those patients to look differently over 12 weeks on your measures? Yeah. And that's a great question. And the goals and objectives for people that are at the lower end of the spectrum, if we could stabilize those patients, you know, on average, this is a population that's losing about one and a half to two and a halve percent predicted FEV1 annually. So that's patient population that if we can just sort of flatten in the curve. And we're collecting historical data on these patients coming into our trial up to two years prior to enrollment, because they go to standard centers of excellence, and that data is currently available, and we made it part of our enrollment criteria. So we'll have two years coming in for the overwhelming majority of patients, and one would hope to see at least stability, if not small inflection up points. And at the higher ranges, where there is a greater likelihood of reversibility and not just stability, one would hope and expect to see a more demonstrable change there. Got it. Can you also remind us how you guys are measuring baseline in these patients? I know there were some changes from the prior study as well. Yeah, and that's a great question, Evan. And there were Some issues that emerged, which you oftentimes will see in these kinds of studies. Spirometry is a patient effort dependent test. So, you know, there are some mornings where you wake up even after a cup of coffee, you're just not feeling great. And if that happens to be the day that you show up to clinic for a clinical trial, it's going to be expressed in your performance characteristics. So a way of dealing with this is to tighten up the delta between a screen and a baseline. So what I've done in this particular cohort is tighten the quality of it so that the level of reproducibility between screening and baseline is tighter, so the variability in the range is less. We're also going out of our way to try to find patients for whom spirometry performance characteristics historically have been very reproducible and consistent. So we're trying to get a population where if there's a signal to be ascertained, it will be easier and more straightforward to do so. And this is significant just to emphasize that the prior challenges we had with small cohorts, these small studies to establishing an FEV number that's reliable is difficult, especially when you have a baseline that's very variable. We had three subjects in a small number of, in a smaller cohort that had a highly variable baseline that destroyed the statistical analysis, frankly. If we could have cherry picked them out, it would have been a different story, but you can't do that. But this next study does it for us. The protocol has been updated to prevent that from happening, and so that's a significant improvement in the fourth cohort. Got it. And I guess there's maybe a range of scenarios that you could envision with the readout in terms of, I guess, how it looks on FEV1 across different patients. But can you help bookend the FEV and other lung functions and how you think about that informing a phase three go-no-go decision? Well, the go-go-no decision is definitely going to be based upon the collective of the data. What we've heard from the regulatory agency, the CF Foundation, and the community is we all know what failure looks like. We know what a dead asset looks like, we know what the normative study is generating from the REACH study. The CF Foundation is tracking hundreds of these Class 1 subjects, watching their lungs degrade over time. It's already published, we have experience with our own cohort, we're tracking them as well. So we know that if the drug isn't working, they're going to continue to degrade. so if we can stabilize or increase then that should be viewed positively but I want to also emphasize that the data will be looked at collectively the pictures the high-risk CT scans the experience the quality of life measures will all be seriously considered this is a disease that has nothing it's the most severe form of CF and there's no drugs for these people the the elevate what I've noticed in the last couple years is other programs have suspended withdrawn and terminated that there's a spotlight on Arcturus that I haven't felt before, at least our team hasn't, as we've engaged the regulatory agency in the community. They really, really want to see something. Now, does this mean we're just going to advance something even if it's not working? No, but if we see a collective set of data that's positive, then there's going to be justification to advance. Yeah, and there's precedent even within the modulators and the correctors. The first generation of those drugs that came through actually resulted in very modest two to two and a half percent improvements, and those were approvable. But I think history has shown us that once there's a class of drug that's been shown to be efficacious, working to improve on it has led to significantly demonstrable improvements for the overwhelming majority of these patients. So one would hope that if we can just open the door and have something to offer for them that would at least stabilize, if not improve their longevity and quality of life, that this would portend the ability for us to continue to advance next generation programs as well. Great. So assuming success here, how quickly can you move to phase three and how are you thinking about this? Yeah, assuming success, that would trigger $40 million contribution for Thermo Fisher. So the funding is cut in half because of that. then we would need to work as efficiently as possible to start the study. We had a really good conversation with the CF Foundation about the REACH study. It's their data, they're gonna be publishing it, but we have insights there and we feel really good about the statistical analysis and the powering of our phase three study now that we've had line of sight to that data. So we have a really idea of what kind of numbers we're talking about and when it's appropriate, we'll share that. That's not today, we'll let them share their data first. But now that we have line of sight of that, I don't think this is gonna be a very expensive or time consuming study. But this is just a long-winded way of saying we're gonna start it as soon as we can. We'll have full support from Thermo Fisher. That's already initiated the process back in July when we started it. They're already taking at-risk steps to prepare so that we can move as efficiently as possible after the decision to proceed is made. But there'll be an appropriate time to provide phase three timing guidance. It's not today. Got it, great. Maybe moving to OTC deficiency with the time left. Can you walk through the data that you presented this September and I guess what stood out to you clinically? I think there's some updates on ammonia and glutamine there that are pretty incredible. Yeah, yeah. So what we've learned that the number one urea cycle disorder or ornithine transcarb amylase deficiency is treated by ammonia scavengers. There's, there's drugs that will sequester the ammonia and they drink a lot of water and excrete it out. They have cost over a million dollars in the past per year, very pricey, but all they do is control ammonia. They don't control the glutamine. So people that are on ammonia scaVENgers can control the ammonia levels, but not the glutamine levels. When, when the body generates ammonia, it converts it to glutamine before the ammonia is scavenged. And the reason I'm emphasizing this is people on ammonia scavengers have elevated glutamine as well that crosses the blood-brain barrier and causes problems. What was really exciting about this trial is we are not only normalizing and reducing ammonia, but we're normalizing reducing glutamine. All of them were normalized at the 0.5 dose, 0.05 mg per kg. So we have a platform that's safe, tolerated, and working for both ammonia and glutamine in stable adults. And then, guys, we made it 38 times better. 38 times bitter in primates. The Lunar 2.0 formulation is 38 times better. We don't have these kind of luxury in our field. Usually improvements, anybody that's worked in this business, it's a little bit better, not 38 times better. So we're very excited about the reformulated ARCT 810. We call it ARCT 2601. And I know 810 was already safe, tolerated, and working. But instead of 0.5 mg per kg every two weeks in a clinic, sitting in a chair for three hours, maybe it can be once a month. Lower dose and sitting in the chair for less than an hour with a nurse administering in their home. If we can do that, then that's new standard of care. This is a multi-billion dollar peak potential opportunity. this you know three months ago we were thinking on maybe 20% of the market now we were thinkin we could be a big player if not number one in in the number one urea cycle disorder so it's a long way of saying I've sat in this chair beside Evan before and I've described the OTC asset as a dark horse it's no longer a dark horse this is a featured program it's exciting as exciting as the CF program and if not more exciting because the likelihood of success is really high the the first gen is already working we're waiting on that really on the edge of our seats for the CF data but we already have that foundational data for OTC so I encourage all investors that are listening to please take a closer look at this and you can see this is very reminiscent of what all Nilem did and s with si RNA in 2012 that was a very exciting period of time for this Boston company right by. In July of 2012, they announced a new formulation. It was 30 times better than D-Lin DMA. They called it Lipid MC3. 18 months after that, there was like $5, $6 billion of enterprise value created. There was no big hurrah when they announced it, but it was an opportunity to create value. And that's where we are now. We're creating value and validating and proving out Lunar 2.0 with this asset. And now, why is this Lunar 2.2 very important? Not only for OTC to make it more convenient and be potentially standard of care for this horrible disease, but it opens the door to opportunities that were unavailable. Like PKU is on this list. I don't know if it's one of the questions, but phenylketonuria is is a company, is a disease that has built some very impressive double-digit billion-dollar companies have been working on PKU. We're not the first one to think to use PKU to replace the enzyme PAH with mRNA. Everyone's thought of this for decades. So why now? Because Lunar 2.0 allows us to do it. Without that technology, it was an untractable target. It has a lot of publications for mRNA where the dosing was just too frequent. It wasn't applicable. But now this Lunar 2.0 opens the door of opportunity to several targets, including PKU as an example that we've highlighted that we're indicating an IND in the second half of next year. So this 2601 is not just a flagship, but it's validating Lunar 3.0, presenting an opportunity of a nest of really cool commercial opportunities in the liver with limited competition so how are you clinically validating this lunar 2.0 versus lunar 1.0 yeah how is the phase well we already shared primate data if you go to our website go go on the website look at the corporate deck and you're going to see the primate data now i know these are non-human primates but non- human primate data translates exceptionally well to human beings there's eight or nine examples of it. I encourage you to chat GPT, whatever you need to get familiar with that. So we're very, we're, we'RE very excited about this, this data. So if, if it, it, but, but the data is only three, five, six primates. It's only six primites. And you see these massive differences between the first formulation and the second formulation. So the FDA has seen this data and that's all we need is a six or less people that, that we can run with the reformulated 810. That's already safe tolerated and working we we reformulate it if we under six subjects we showcase that data and then we will meet with the FDA again and and show the difference between the two formulations we expect it to be notable and with small numbers and then uh we can discuss with them a path forward a pivotal trial path forward with the stable adults or the the pediatric population because OTC deficiency we haven't touched on it but it is really two different diseases It's an X-linked disorder, meaning the females, the stable adults are primarily female, and the dying children are primarily male. So you have two severities of the disease based on the X-Linked disorder. So we'll discuss with the FDA our pivotal path for the stable adults and a pivotal trial path for pediatrics. But that comes after about a half a dozen patients of data. it begins in January the the top line data for this lunar 2.0 formulated 2601 is going to come out in the second half of of 27 so that's a relatively near term horizon and how are you comparing them head to head because I know you've already achieved normal yeah so really cool normal so so uh the liver is a sloughing organ people understand that you know it's a regenerating organ all the time. So any biology that takes place in the liver is sloughed off and readable in the plasma. So we can read levels of OTC in the plasma after we make it. So if we see the level here and then in the new formulation we see OTC level there, a plasma level of OCC could be very convincing. But clearly we're measuring ammonia and glutamine as well and if those are normalized and we're doing at a lower and a less frequent dose, that will be convincing as well. So there's a lot of angles here we can do to showcase how much of a significant difference this new formulation is doing. Great, so it sounds like a lot of data updates in 2027. Yes, a lot a data catalyst, a lot data, data, it's been 12 years in the making, but the fruits of our labor is 27. Great, thank you so much, Joe Allen. Thank you, thanks for your time, Evan.