Greetings and welcome to the Arcturus Therapeutics Fourth Quarter and Full Year 2023 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Neda Safarzadeh, Vice President, Head of Investor Relations, Public Relations and Marketing. Thank you. You may now begin.

Thank you, operator. Good afternoon and welcome to Arcturus Therapeutics’ quarterly financial update and pipeline progress call. Today's call will be led by Joe Payne, our President and CEO; and Andy Sassine, our CFO. Dr. Pad Chivukula, our CSO and COO, will join them for the Q&A session. Before we begin, I would like to remind everyone that the 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 Reform 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 statements. 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 most recent Form 10-K and in subsequent filings with the SEC. In addition, any forward-looking statements represent our views only as of the date such statements are made. Arcturus specifically disclaims any obligation to update such statements. And with that, I will now turn the call over to Joe.

Thank you, Neda. It's good to be with you again, everybody. We look forward to providing our updates today on our quarterly investor call. I will begin my remarks with an update on progress regarding our Kostaive COVID-19 vaccine program. Following favorable clinical results from several Kostaive studies, including a 16,000 subject efficacy study performed in Vietnam, as well as a Phase 3 COVID-19 booster trial in Japan, Japan's Ministry of Health, Labor and Welfare, MHLW, granted approval for Kostaive, a self-amplifying mRNA COVID-19 vaccine for primary vaccination and booster for adults 18 years and older. This approval marks a historic milestone as the first self-amplifying mRNA product in the world to be registered. We are increasingly confident about the future applications of our now proven innovative STARR self-amplifying messenger RNA vaccine platform. We look forward to expanding our vaccine platform alongside our global exclusive partner, CSL, and CSL's partner in Japan, Meiji Seika Pharma. The Kostaive Japan approval is further supported by an active controlled Phase 3 booster vaccine study conducted in 11 sites in Japan. The study included healthy adults initially immunized with two doses of an mRNA vaccine, whether that was Comirnaty or Spikevax, followed by the third dose of Comirnaty. The study was conducted in partnership with CSL's partner, Meiji Seika Pharma, a global health company based in Japan. The new analysis at six months post-vaccination shows that Kostaive induces a broader and more durable immune response compared to Comirnaty for both the original Wuhan strain and the Omicron BA.4/5 variant and an advantage in antibody persistence. Kostaive results were achieved with one-sixth of the dose of Comirnaty. Based on the totality of clinical data collected to date, Arcturus anticipates that the advantages of self-amplifying mRNA should provide superior protective efficacy against COVID-19 disease caused by future emergent variants of SARS-CoV-2. The Kostaive booster study is ongoing and will continue to collect safety data and assess the durability of the immune response in participants up to 12 months post-vaccination. We are very pleased to report that Kostaive remains on track to launch in Japan this year. Meiji Seika Pharma, as the party responsible for distributing the vaccine in Japan, will be providing updates and further details pertaining to the launch of Kostaive in official press releases. In April, the WHO is expected to announce the updated COVID variant. In due course, manufacturing runs and the subsequent distribution of Kostaive in Japan will follow. The commercial case for Kostaive is becoming clear. A significantly stronger and broader immune response is preferred. The ACIP and other regulatory agencies are presently recommending two boosters each year for the approved conventional mRNA vaccines. Thus, it's very apparent that there's a clear need for a more durable once-a-year COVID vaccine, and Kostaive has the potential to address this important global health need. COVID is here to stay, and the longer-lasting Kostaive is also here to stay. So moving on to ARCT-2138, the LUNAR-FLU Program. This is our quadrivalent self-amplifying mRNA vaccine candidate for seasonal influenza. I'm pleased to announce that the company, along with our partner CSL, initiated a Phase 1 dose-finding study in January 2024, intending to assess the dose response of the investigational vaccine and comparing the safety and immunogenicity with the licensed standard of care. Overall, 132 healthy individuals, which includes 84 younger adults and 48 older adults, are planned to be recruited in this Phase 1 clinical study. I'm now excited to announce that Arcturus has initiated new vaccine discovery programs for Lyme Disease and Gonorrhea. This decision is supported by the clinical and regulatory validation of LUNAR and STARR technologies provided by our first regulatory approval of Kostaive. Our technologies are ideally suited for these infectious disease vaccine opportunities. Our validated vaccine platform is now being applied to seven global infectious diseases, five with our partner, CSL Seqirus, and two wholly-owned vaccine discovery programs, Lyme Disease and Gonorrhea. The total estimated global market opportunity for these new vaccine discovery programs exceeds $4 billion. I'll now move on to ARCT-810, our messenger RNA therapeutic candidate for ornithine transcarbamylase or OTC deficiency. This investigational medicine is designed to functionally replace the deficient or missing OTC enzyme in the liver, restoring urea cycle activity and preventing metabolic crises that cause neurological damage. ARCT-810 could reduce the need for ammonia scavengers and ease the rigid dietary protein restrictions that OTC patients face today, thus improving the quality of life for those with this disease. Our Phase 1b single-ascending dose study in the United States has completed enrollment and dosing of all cohorts with 16 patients. The Phase 2 study in the United Kingdom and Europe is enrolling up to 24 adolescents and adults with OTC deficiencies. The ongoing study is evaluating two dose levels and includes up to six biweekly administrations for each participant. The company expects to share Phase 2 interim study data by the end of Q2 2024. Moving now to our ARCT-032 program. ARCT-032 is an inhaled messenger RNA therapeutic candidate for cystic fibrosis, formulated with Arcturus' LUNAR delivery technology. This investigational medicine is designed to functionally replace the deficient or missing CFTR transporter in the lung and thus restore the balance of salt and water. We have now completed the dosing in a Phase 1 study in New Zealand of 32 healthy subjects across four ascending single-dose cohorts. In addition, we have dosed patients in a Phase 1b clinical study in New Zealand. The Phase 1b study is designed to enroll up to eight adults with cystic fibrosis with each participant receiving two administrations of ARCT-032. We remain on track to share interim Phase 1b data in Q2 2024. In November 2023, ARCT-032 received orphan drug designation from the FDA. The designation provides significant incentives to promote the development of the drug, including the potential for market exclusivity for seven years upon FDA approval, eligibility for tax credits for qualified clinical trials, waiver of Prescription Drug User Fee Act application fee, and eligibility to receive regulatory guidance from the FDA in the design of an overall drug development plan. In February 2024, ARCT-032 received orphan medicinal product designation from the European Commission, which will give Arcturus access to protocol assistance, a centralized authorization process, reductions, and 10 years of market exclusivity. And with that, I'll now pass the call to Andy.

Thank you, Joe, and good afternoon, everyone. The press release issued earlier today includes financial statements for the fourth quarter and fiscal year ending December 31st, 2023, and provides a summary and analysis of year-over-year financial results. Please also reference our Form 10-K, which will be filed early next week for more details on the financial performance. Before we begin the financial review, I wanted to give you some highlights from our recent trip to Tokyo where Joe Payne, Pad Chivukula, and I met with the executive teams from Meiji Seika Pharma and Axcelead, our JV partner in our ARCALIS manufacturing venture. I am happy to report that everyone was very excited about the approval of Kostaive in Japan and the opportunity to manufacture the world's first self-amplifying mRNA vaccine in Japan under the Meiji brand. All of our partners are working very closely with the Japanese and local government officials to prepare for the launch of Kostaive in the second half of 2024. We are deeply grateful to the Japanese government for their financial support of Kostaive and our manufacturing partner, ARCALIS. Going forward, officials from Meiji Seika Pharma will provide regular updates on the launch of Kostaive and official press releases this year. I will now provide a quick summary of our financial results. We reported revenues of $169.9 million during 2023 compared to revenues of $206 million during 2022. Revenue recognized from CSL in 2023 was $157.4 million, which slightly increased by $3 million compared to 2022. We also made significant progress with the BARDA pandemic flu vaccine agreement that led to an increase in revenue of $8.8 million. The majority of the decrease in FY 2023 revenue was driven by the discontinuation of our collaboration agreements with Vinbiocare and J&J in 2022. In the fourth quarter of 2023, Arcturus achieved $29.2 million in milestones from CSL. The milestone payments will continue to be used to fund development activities for the LUNAR COVID-19 vaccine and self-amplifying mRNA flu programs with CSL. Total operating expenses for the year ended December 31, 2023, were $245 million, compared with $193.8 million for the year ended December 31, 2022. For the three months ended December 31, 2023, operating expenses were $49.1 million, compared with $38.8 million for the three months ended December 31, 2022. I want to highlight that total operating expenses declined by $15.4 million sequentially from the third fiscal quarter of 2023 due to lower manufacturing expenses. Our research and development expenses consist primarily of external manufacturing costs, in vivo research studies, and clinical trials performed by contract research organizations, clinical and regulatory consultants, personnel-related expenses, facility-related expenses, and laboratory supplies related to conducting R&D activities. Research and development expenses were $192.1 million for the year ended December 31, 2023, compared to $147.8 million for the year ended December 31, 2022. The increase in research and development expenses was attributable to our continued efforts to progress the CSL and BARDA programs, as well as our internal OTC and cystic fibrosis programs. Additionally, we have increased investments in early stage and discovery technology. The company initiated preclinical research related to its Lyme Disease and Gonorrhea vaccine discovery programs. G&A expenses were $52.9 million during 2023 compared with $46.1 million in 2022. The increase resulted primarily from personnel expenses due to increased headcount and salaries, increased travel and consulting expenses, as well as an increased rent expense associated with the new headquarters facility in San Diego. We anticipate total G&A expenses for 2024 will remain consistent with 2023 totals. For the year ended December 31, 2023, Arcturus reported a net loss of approximately $26.6 million or $1 per diluted share, compared with net income of $9.3 million or $0.35 per diluted share in the year ended December 31, 2022. For the three months ended December 31, 2023, we reported a net loss of approximately $8.6 million or $0.32 per diluted share, compared with a net income of $117.4 million or $4.33 per diluted share for the three months ended December 31, 2022, prior year quarter included a $200 million upfront payment from our CSL collaboration. Cash, cash equivalents, and restricted cash were $348.9 million as of December 31, 2023, and $394 million as of December 31, 2022. Since the beginning of our deal with CSL in November 2022, we have achieved approximately $396 million in upfront payments and milestones as of December 31, 2023. We expect to continue to receive future milestone payments from CSL that will support the ongoing development of the COVID and flu program with three additional vaccine programs by CSL. Finally, I'm happy to report the expected cash runway now extends through the first quarter of 2027 based on the current pipeline and programs. I would also like to highlight that total shares outstanding on a fully diluted basis have remained relatively consistent for three years in a row at approximately 26.6 million shares. This demonstrates management's commitment to continually improving shareholder value as we execute our strategic business plan. In summary, we believe the company remains in a strong financial position and has the resources to achieve multiple near-term value-creating milestones for the vaccine and therapeutic programs. Furthermore, with the Kostaive product approval in December in Japan, we look forward to beginning to report potential commercial sales in the next few years. I will now pass the call back to Joe.

Thanks, Andy. We continue to make excellent progress, and we are incredibly excited about our first product approval with Kostaive. This achievement is an important validation of our mRNA technology and delivery platform. So with that, let's turn the time over to the operator for questions.

At this time, we'll be conducting a question-and-answer session. Our first question comes from Evan Wang with Guggenheim Securities. Please proceed with your question.

Great. Thanks for taking the question, guys. Two from me. First, it was encouraging to see the ACIP recommendation on revaccination of the elderly last week. I'm wondering, if we've seen similar recommendations internationally. And additionally, what kind of regulatory feedback you've gotten on how a more durable vaccine may be implemented, if you could talk both FDA and internationally in markets like Japan and Europe? And second, looking forward to some updates in 2Q from OTC and CF. As we're getting closer to data, I'm wondering if you can share how many patients we can expect from each trial? Thanks.

Hey, thanks, Evan. Yes, first I can address the question about the recent recommendations by ACIP. We're very happy to see that they recommended regular COVID vaccination, especially in the elderly, and the fact that they've recommended two boosters annually. We, of course, because we're approved in Japan, wanted to provide some updated and new information to the people on this call that they may not appreciate. But Japan's government has also now communicated that starting April 2024, routine COVID-19 vaccinations for the elderly will be recommended. If you just go to the MHLW website, another new update that they recommend twice a year vaccination for the elderly, but also, and I'll quote from the actual website in Japan, that people aged 65 and older, those with underlying medical conditions and healthcare workers, will be vaccinated twice a year, while all the others will be vaccinated once a year. The vaccinations remain free of charge as well, and that's clearly communicated. So these developments, of course, are very good news for us because we're addressing a need for durability in the field, but also that there's elevated support for the elderly and those with underlying medical conditions and healthcare workers in Japan, and that their vaccinations remain free of charge, which of course is going to be helpful to us commercially. With respect to Europe, there's been no second vaccination recommendation for the elderly there by the European CDC, but those discussions are ongoing, and we'll be looking for those updates shortly. Now, you also asked additional questions about just enrollment processes for the two therapeutic programs, correct, Evan? You know, we remain on track. That's something that we want to clearly communicate, that we're on track to communicate some interim data for Phase 1b in our CF program, and that's recruiting all patients, no placebo in that group. Six to eight patients is what we're estimating. We're still guiding interim data to be shared in the second quarter, so that's a relatively near-term milestone. Likewise, we maintain our guidance on the OTC program for the end of Q2. With respect to specific updates and specific numbers, we haven't provided those details. But thank you for your questions.

Our next question comes from Yasmeen Rahimi with Piper Sandler. Please proceed with your question.

Hey, good afternoon, team. This is Jim on for Yas. Thanks for taking our questions. We have two. First, what do you say is the rate limiting step for orders in Japan and for cystic fibrosis and OTC? What types of data should we expect the top line? And what would you say is like the bar for success?

Sure. I can speak to the data for – the top line data for the therapeutic programs. But the first question, I'll turn the time over to Andy with respect to what's rate limiting on getting orders in Japan, Andy?

Yes. No, I think what we articulated earlier in the call is that we've had some very positive meetings with all the Meiji Seika Pharma officials and executives. I think they're going to be driving the bus here, and they'll be announcing and making press releases as appropriate. So please stay tuned and be patient. The encouragement was kind of articulated by Joe just now that – and this is kind of a recent development that the government is going to continue to financially support this population over 65, which is about 32 million to 36 million people, right. That's not including the people that have compromised immune issues and so forth, so were chronic illnesses. So you're looking at – if you multiply that by two, somewhere in the vicinity of 60-plus million potential doses, right, if everyone gets two shots, two boosters, right, of conventional mRNA. So we're just kind of reiterating what's in the public domain, what's available. And Meiji will certainly give you more concrete information as soon as they can. So stay tuned.

And then pertaining to the top line data for CF and OTC, for OTC, we're looking for biomarkers to change in these patients, specifically ammonia to be adjusted to at or near normal levels. Many of these patients are on ammonia scavengers. So if that is indeed the case, there are other biomarkers that we can evaluate and measure, including orotic acid in the urine. Glutamate is another amino acid impacted by the urea cycle. And then OTC itself can be measured. So plenty of biomarkers to measure in these trials, as in terms of top line data. With respect to the CF program, we're going to be looking primarily at safety for Phase Ib. These are – this is the first time that this therapeutic has been administered as two administrations in actual patients. It will be very meaningful for us to establish some sort of track record of safety and tolerability in a spectrum of CF patients. Anything to add to that, Pad, for either program?

I think for the CF, what we're going to be looking at is mainly safety, you're right, but we're also going to be looking at various respiratory functions and making sure that this dose is well tolerated in a patient population. I think we will be happy to see some of those results. And then with regard to OTC, we just obviously want to reiterate the Phase Ib that we talked about was primarily a safety study. So we will be presenting that data at a conference coming up very soon. So thanks.

Our next question is from Whitney Ijem with Canaccord Genuity. Please proceed with your question.

Hey guys, congrats on all the progress. First one from me is on COVID in Japan. I think you stand to benefit from orders there kind of on two fronts, both from a revenue sharing perspective as well as ARCALIS, so can you help us understand how those two will flow through your P&L or balance sheet when the orders and the manufacturing do start?

So, yes, with respect to revenue sharing and any sort of additional financial elements due to the ARCALIS joint venture, Andy, do you want to address those?

Yes, Whitney, thank you for your question. We generally haven't shared specifics about the revenue-sharing opportunity. However, if you examine the CSL and Arcturus gross profit split, you can envision what a partnership involving three key players might look like. This partnership will clearly be significant and meaningful for us, and we are excited to collaborate with all three partners in Japan, particularly Meiji, which is the leading flu vaccine company in Japan, alongside CSL, the second largest globally. We're privileged to work with such strong commercial entities in their sectors. We're very excited about this development, especially since the production will take place in Japan, which is something the Japanese government and people take pride in, particularly under the Meiji brand name. This will indeed be a Japanese vaccine, which I believe motivates them. We're also grateful for the opportunity to compare our vaccine to Pfizer, which has provided us with valuable data to share globally, along with financial backing from the government for our factory. They made a smart investment, and I believe we have an exciting future ahead. Additionally, we anticipate European approval this year, which adds to our excitement. There's a lot happening, and I hope that gives you some context. Unfortunately, we can't disclose too many details right now, but we hope to reveal more soon.

Our next question comes from Myles Minter with William Blair. Please proceed with your question.

Hey, thanks for taking the questions. How important is it that the strain for your COVID vaccine actually gets adapted to XBB 1.5? I know you have in collaboration with CSL one in a Phase 3 immunogenicity trial, and I think there was some guidance that maybe we might hear about something in the first quarter. So, I just want to make sure that that's on track? And is that also a gate or a gating factor for the first sale in Japan? Thanks.

Well, yes, thanks for bringing those programs up. There's a considerable amount of late-stage clinical data that's being collected for this platform. You touched on a couple of these trials. One was the bivalent Phase 3 trial where we're comparing bivalent Kostaive to bivalent Comirnaty, and that data is forthcoming soon. So, something that will help us be able to communicate how we perform in a multivalent or a bivalent setting to other technologies out there. With respect to the monovalent XBB trial, that one is designed to incorporate the Southern Hemisphere flu season cycle, and we'll be able to share data for that program later this year as well. So you did ask whether these programs are prerequisites for certain regulatory discussions. The answer is no for Japan and Europe, and we'll find out for the United States, but we are collecting it in any case, and CSL, our partners are funding these programs just to strengthen the data packages for each of these programs. Pad, anything to add?

Yes. I'll add that you may know the current circulating strain appears to be JN.1. Therefore, for the fall season, once the platform is approved, we will update it and be prepared to supply any necessary circulating strain.

Correct. Yes. The WHO will be coming out with the updated variant announcement next month in April. Subsequent manufacturing runs and distribution will be forthcoming and communicated through official press releases by Meiji.

Okay. And then secondly, just on the CF program. I know you mentioned you'd be looking at respiratory function data from a safety perspective. I mean, would you obviously look at FEV1 from a safety perspective and then have to report that data anyway?

For CF, yes, we're collecting information, and Pad, why don't you address that?

Yes, we will be collecting various safety signals, and we will also analyze FEV1 and lung clearance indexes. To clarify, we are planning to recruit relatively stable patients, but it's possible that we might not recruit any patients from this population. Nevertheless, this is an inclusive study, and I wanted to make that clear.

Our next question is from Jan Hughes with Wells Fargo. Please proceed with your question.

Great. Thanks for taking our questions. I have a couple for Kostaive and a couple for the CF program. On Kostaive, I was wondering how many booster doses were distributed last year and purchased by the Japanese government? And what percentage of that volume is for the three groups of people that you touched upon earlier on the call? How would you expect that number to change this year?

No, that's a good question. First of all, I can share that in 2022, over 82 million messenger RNA COVID vaccine boosters were distributed in Japan. The exact number for 2023 is not clearly defined, but it was still significant. Looking ahead to 2024, as we mentioned earlier, the Japanese government has clearly recommended that the elderly receive two booster shots each year, and the elderly population in Japan ranges from 32 million to 36 million. This represents a substantial number of individuals. It is promising that the Japanese government will provide these vaccinations to the elderly at no cost. Predicting how this will affect the market is challenging for me, and I believe it's more suitable for the analysts on this call to address that.

Thanks for the information. In prior years in Japan, were the average booster doses per person under two?

Japan is well-known to have a high rate of vaccinations per person. Many would say that they have the highest rate of vaccinations for any country in the world, especially relative to the US and Europe. So they have a high prevalence for getting vaccinated, and the elderly is even higher, so a very high rate of vaccination. How we project this into 2024? I think it's reasonable to expect a very high percentage of these people will fill out these cards that they receive in the mail, set up times to go to the clinic to get their free vaccination. But what number that is, it would be inappropriate for me to guide on.

Sorry, Joe. My question was the prior recommendation was the default number of boosters a person gets per year, is that not twice a year? Was that less?

I don't know what the previous recommendation was. All I can comment on is what's clearly communicated on the MHLW website, which is two boosters annually for everyone over 65 in Japan.

Got it. Okay. Thank you. And on the CF program, the Phase 1b portion, those patients got two administrations of ARCT-032. I was wondering what's the interval between those two administrations? Also, I think you mentioned on the call that FEV1 and lung clearance measures are being collected, perhaps mostly for safety purposes. But the question is, will you be presenting those data at the readout? Thank you.

Well, the first comment was the primary purpose of this Phase 1b data is to ascertain safety and tolerability. We will be looking at severe adverse events and also more specifically side effects associated with the lung as this is a CF program, and there's increased sensitivity to lung related side effects like coughing, etc. So that's where we're going to be more focused on in terms of externally communicating Phase 1b interim data – on severe adverse events and more lung-centric side effects and just summarizing the safety and tolerability in a spectrum, a small spectrum of a relatively small group of CF patients. The other parameters are secondary or even exploratory in nature. We're not expecting in a small cohort like this, where many of these people are already on CFTR modulators that we'll see some efficacy readouts or anything like that. But we definitely will have an opportunity to present that data, the Phase 1b data later this year when we have a better idea, which conference.

Great. And the building interval?

We have not publicly shared the dosing interval. It's a competitive environment, and we've made it clear that there are two administrations. We haven't disclosed the dose levels, whether they are the same or different, or how far apart they are. We learned a lot from the data of 32 subjects and the four cohorts evaluated in Phase 1, and we applied those insights to the design of this Phase 1b trial, which is why we prefer to keep certain details under wraps for now.

Our next question comes from Yigal Nochomovitz with Citi. Please proceed with your question.

Hi. This is Amin on for Yigal. Thank you for taking our questions. I have two related to cystic fibrosis. First, on the upcoming CF readout, should we expect, if you can clarify, should we expect any data from the HALC volunteers there as well? And except lung capacity and lung function, have you taken bronchi biopsy to look at the CFTR expressions there? Also, what have you seen so far in the healthy volunteers that's suggesting a better tolerability of this drug versus the prior mRNA studies?

The CF readout is simply going to be focused on severe adverse events or any sort of adverse events associated with the lung, like I just mentioned. I don't think we're going to be sharing any outside data from that. With respect to samples being directly taken from the lung? Pad, do you have a comment there? There's nothing that we're doing.

No. Again, just to reiterate some of the earlier, we haven't seen any SAEs or severe AEs associated with Phase 1 or Phase 1b to date. And obviously, we're monitoring that closely. And in terms of lung biopsies, we are not currently looking at the actual function in patients. So we're not doing that.

With respect to the phase one data, there is a European CF conference in June that we're preparing to present out.

Okay. Got it. That makes sense. And just one quick follow-up on the OTCD data that you're going to present soon. What do you need to see there to make a go-no-go decision?

A go-no-go decision for the Phase 1b readout?

The OTC data.

Oh, for the OTC readout, sorry. Yes, we'd like to make sure we maintain a safety and tolerability of multiple doses. That's going to be of most importance because that's one of the challenges that many other competitors and people that have tried to do lipid nanoparticle mRNA therapeutics for OTC deficiency have failed in the past due to toxicity. This is going to be a significant hurdle to jump through, but that would be the primary objective. Something that we'd be very encouraged by is to show safety and tolerability of multiple treatments in a spectrum of OTC deficient patients. Having said that, we also want to see some biomarker changes. Absolutely. It is a placebo-controlled trial, so there would be increased confidence in these readouts as long as we have sufficient numbers. We would be looking for that sort of detail as well to give us confidence going to the next step.

Okay. Got it. Great. Thank you very much for taking our questions.

Thank you.

Our next question comes from Pete Stavropoulos with Cantor Fitzgerald. Please proceed with your question.

Hi, Joe, Andy. So just a question about ARCALIS. Can you leverage that facility for other pipeline candidates and perhaps distribution outside of Japan? And if not already, I don't know if you mentioned it or if I missed it, when do you expect the facility to be operational? And what will be the manufacturing capacity?

Andy, do you want to grab that?

Yes, sure. Yes, we've highlighted the timeline for ARCALIS in terms of drug substance. They're currently in production right now in getting GMP qualified. That is pretty exciting. There will be some news coming out of them to update the status of what they're doing and are they going to be participating in the orders from Japan this year. Those are all the things you want to listen for carefully. The drug product is going to be online probably either later this year or early next year. The plasma business should be on within a couple of years. So within 2.5 years, they should be vertically completely integrated. But in the meantime, we can certainly fill the void with our global CDMO partners in terms of Catalent in the United States and Aldevron and Recipharm in Poland and in Europe. We have a really strong core of partners to help us fill a void until ARCALIS is able to get up to speed. Obviously, if they can make up to 1 billion doses, CSL and Meiji have certainly a lot of opportunity to determine whether it's going to be a chance to export the vaccine to other countries. That will be a decision made by certainly CSL and Meiji with respect to Japan. Hopefully, that helps.

Yes, it does. Thank you. And so a question on the CF program. You're having two doses. Just curious on the perspective of how much do two doses actually derisked, I guess, from a safety perspective, drug? That's one question. The other one is, any learnings from the cystic fibrosis program that you can potentially develop an inhaled vaccine for a respiratory virus either alone or in partnership with OCSL?

Yes. Good follow-on questions there, Pete. With respect to the – Pad, do you want to address those questions?

Yes, sure. In terms of CF, the safety, what we really want to see is even with the single or two doses, we want to make sure that there are no respiratory side effects like coughing, chest discomfort, etc. We also want to look at some secondary safety endpoints like fever, for example. I think we can tell all of those things from just two doses. We're looking forward to collecting that data.

The reason why this is significant, too, is our internal team has been doing inhaled therapeutics for decades. They have a lot of experience here. What they've shared with us is that if you do see challenges or problems in toxicology with inhaled therapeutics, it's in the first two administrations. If we get through this trial successfully, the probability of success for this trial has meaningfully moved up. That's why this is important.

And in the second part of your question, if the data is positive, what will it mean for the platform? I mean obviously, if the data is positive and we do get proof of concept, we will be expanding potentially the platform and thinking about other rare diseases or other diseases that need nebulization. This platform, of course, can potentially be applied as a vaccine as well.

Thank you for taking my questions.

Thanks, Pete.

Our next question comes from Ed Arce with H.C. Wainwright. Please proceed with your question.

Hi, good afternoon. This is Thomas Yip asking a couple of questions for Ed. Thank you for taking our questions. So, first question regarding Kostaive or 154. So, with the approval in Japan, and I believe as Andy mentioned that regulatory decision is expected in Europe this year. Are there any plans by either from Arcturus from CSL or Meiji, any other plans to expand into additional territories?

Yes, we plan to obtain approval in Europe this year and shortly thereafter in the United Kingdom. Following that, the next major market will be the United States. CSL will lead the regulatory efforts and will guide us on the timing of the filing and approval. Currently, we expect to receive the first approvals in Europe and the U.K., and then in the United States.

Understood. Thank you. I have a question regarding ARTC-810 and OTC. In the past, we noted that enrollment for the Phase 2 study in Europe was slightly delayed. Can you provide a quick update on how the Phase 2 study is enrolling so far?

Yes. We provided guidance that we remain on track for the end of Q2, and that's the status of that program with respect to some interim data readout is the end of Q2.

Okay, got it. And then perhaps one final question for Andy. Does the cash runway include any projected revenue from Kostaive in Japan or from 154 in Europe as well?

No. Thanks for asking that question. The guidance for the three-year cash runway, at least, does not include any revenue from Kostaive and did not include any commercial milestones from CSL. As soon as we're able to discuss those, we'll update the guidance with respect to the cash runway. At this point in time, we certainly have a long enough runway to achieve a number of milestones this year, which are very critical to the opportunity to expand the pipeline within the company. We're pretty excited and certainly have the resources to be able to address the CF opportunity and the OTC opportunity, and now we're going to be launching two additional vaccines and hopefully be able to see some progress in that in the next few years. So, a pretty exciting year with respect to the number of milestones that are going to be forthcoming and hopefully be able to enhance shareholder value.

Understood. Thank you again for taking the questions.

Thank you.

In terms of Japan's COVID market, is that still mostly government? Or is there also a commercial aspect to evolve maybe in this year or in the future? How do you guys see?

That's a good question. Okay.

Yes, I mean the good news, Yale, is that the government has given kind of a guidance for what they're going to support. If you look at just the population of the people over 65, that's pretty substantial, 32 million to 36 million people. That doesn't include people that are compromised or have chronic illnesses, who certainly will want to be vaccinated as well. When you look at that, that's a pretty significant part of the population, at least something in the 30% to 40%, maybe 50% of 125 million people. That's quite substantial, right? So we're very excited about the opportunity, and it's not trivial. Remember, it's going to be a Meiji vaccine made in Japan. The government and the people in Japan are very proud of this. CSL is certainly excited to be supporting this program and launching it globally now. So there's a lot of good news behind it. In terms of what is going to be a private pay versus government pay? Meiji will make all those announcements when the time is right. We're not really concerned about that at this point.

Yes. Only thing I would add to that is that Meiji has a strong track record of working with the government to help with these subsidized vaccines in the flu space. They've been doing this for years, and we're working with the ideal partner that's done this before.

We have reached the end of the question-and-answer session. I would now like to turn the call back over to Joe Payne for closing comments.

Thanks, everyone, for participating in the call. If there's any remaining questions, don't hesitate, as always, to reach out to the team. We'll get back to you as soon as we can. All right. Thanks, everyone. Good night.

This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.