Arcturus Therapeutics Holdings Inc
NASDAQ:ARCT
Earnings Call Analysis
Q3-2023 Analysis
Arcturus Therapeutics Holdings Inc
As we look at Arcturus Therapeutics after the third quarter of 2023, the company projects confidence in its financial position and the endurance of its resources to hit multiple value-creating milestones in their vaccine and therapeutic programs in the near term. With an anticipated approval of ARCT-154 in Japan by December, commercial sales are expected to commence in the following years, potentially solidifying a new revenue stream.
Arcturus' ARCT-154 vaccine, a monovalent COVID-19 candidate, showed outstanding results against the SARS-CoV-2 Omicron variant. Leveraging next-generation mRNA technology, the vaccine outperformed at a significantly lower dosage than existing mRNA vaccines, suggesting a combination of efficacy, tolerability, and safety benefits. With Japan's NDA review on track, and EMA approval anticipated in 2024, Arcturus is positioning ARCT-154 as a strong competitor in the global vaccine market.
Arcturus is actively enhancing patient recruitment for its trials by improving patient services and increasing study sites. Particularly for their ARCT-810 program targeting OTC deficiency, they are introducing stipends and concierge services aimed at accelerating enrollment and trial success, with interim Phase II data anticipated in the first half of 2024. These efforts reflect the company's dedication to advancing its therapeutic candidates efficiently and empathetically.
Delving into the therapeutic pipeline, Arcturus is not only progressing in trials related to OTC deficiency but is also paving the way in cystic fibrosis treatment with ARCT-032. This inhaled mRNA therapeutic, tailored for bronchial delivery, moves into Phase Ib trials after successfully completing Phase I. Interim data for both therapies are eyed for the first half of 2024, which paves the path for forward-looking clinical development strides.
Revenue has seen an impressive jump owing to licensing and collaborative payments, chiefly from CSL Seqirus, climbing by $31.7 million in the third quarter and by $90.3 million year-over-year for the nine-month period. This financial uplift, however, is not without increased operating costs, particularly in research and development, reflecting the company's investment in advancements and growth. The net loss decreased significantly, showcasing improved financial stewardship and disciplined growth management.
Arcturus is on a pathway marked by developmental milestones, having secured over $1 billion potential payments spread across multiple programs. They remain cautious in forecasting the timing of these milestones, reflecting the unpredictable nature of clinical and regulatory achievements. This strategic approach keeps the focus impact-oriented, emphasizing the operational and financial significance once these milestones are reached.
Arcturus is optimistic about carving out a profitable niche in ornithine transcarbamylase (OTC) deficiency treatment, inspired by comparable market successes. Anticipating their mRNA therapeutic can provide not only effective treatment but also hope for dietary normalcy for patients, the company sees a high-value opportunity despite the slow enrollment process. With the OTC market showing strong revenues for other treatments, Arcturus aims to gain momentum in patient recruitment to capitalize on this lucrative segment in the near future.
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Greetings, and welcome to the Arcturus Therapeutics Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Neda Safarzadeh, Vice President, Head of Investor Relations, Public Relations and Marketing. Thank you. You may proceed.
Thank you, operator. Good afternoon, and welcome to Arcturus Therapeutics Third Quarter 2023 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 CFO 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 these 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 our subsequent filings with the SEC. In addition, any forward-looking statements represent our views only as of the date such as 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. I'm going to begin my remarks with an update on progress regarding our monovalent COVID-19 vaccine, ARCT-154. Following favorable clinical results from the Phase III pivotal studies, the new drug application is currently under review by Japan's Pharmaceuticals and Medical Devices Agency or the PMDA. The ARCT-154 Japan NDA submission is supported by an active controlled Phase III booster vaccine study, which was conducted in Japan and a placebo-controlled Phase III primary vaccination series efficacy and safety study, which was conducted in Vietnam. The ARCT-154 Phase III booster vaccine study achieved its prespecified primary endpoint, demonstrating the noninferiority of an immune response against the SARS-CoV-2 ancestral strain as compared to Comirnaty. In addition, the superiority of ARCT-154 and neutralizing antibody response against the SARS-CoV-2 Omicron [indiscernible] variant was also demonstrated as a key secondary endpoint. Updated preliminary Phase III booster data was recently presented at the 11th International mRNA Health Conference in Berlin. In a heads-up comparison to an FDA-approved monovalent mRNA vaccine, monovalent ARCT-154 showed multifold improvement in durability and multifold superior titers of neutralizing antibodies against Omicron BA 4 and 5, and this was at the 6 months post boost mark. These Phase III boosters were consistent with the Phase I/II booster clinical trial durability data that were collected previously and presented at the ninth ESWI Influenza Conference in Valencia. All of these observed clinical benefits were achieved with the STARR next-generation mRNA technology, which is administered at 5 micrograms. This is an 83% to 92% lower dose level compared to approved mRNA vaccines. This lower dose level highlights the potential safety and tolerability benefits of this next-generation mRNA vaccine platform technology. Based on all the clinical data collected to date, we believe that the next-generation STARR mRNA platform is an effective and differentiated vaccine technology that may offer a longer-lasting immune response relative to the older conventional mRNA platform technologies, supported by the ARCT-154 clinical data, Meiji Seika Pharma, the partner of CSL Seqirus, submitted a Japan NDA to support ARCT-154 as a primary series and booster vaccine for COVID-19. The review of this application remains underway and is on track for approval in December. We filed a marketing authorization application in Europe. And we are seeking approvals for ARCT-154 in other major markets. We continue to mature the value and scope of the STARR next-generation mRNA vaccine platform by collecting meaningful bivalent vaccine clinical data as well. We're pleased to report today that the planned enrollment target of 850 participants has been reached in the ongoing Phase III bivalent COVID vaccine trial comparing immunogenicity to bivalent Comirnaty. The initial top line results of the study are expected in Q1 of 2024, and followed by unanticipated PMDA approval in Q3 2024. In summary, we are delighted with the rapid progress we have achieved this year with our STARR next-generation mRNA vaccine platform. We believe ARCT-154 provides clear validation of the broader opportunity for Arcturus mRNA vaccine and therapeutic programs. Our strategic collaboration with CSL, which is our Arcturu's exclusive global licensee, is focused on developing and commercializing next-generation mRNA vaccines and continues to make substantial progress. Our partnered LUNAR-FLU program, which is also now known as ARCT-2138 continues to progress with funding and operational support from CSL. LUNAR-FLU utilizes Arcturus' next-generation mRNA platform, and we are intending to initiate a Phase I clinical trial, which is expected to begin soon. I'll now move on to ARCT-810. This is our messenger RNA therapeutic candidate for ornithine transcarbamylase or OTC deficiency. This investigational medicine is designed to functionally replace the deficient 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 the disease. ARCT-810 has received both in drug designation and rare pediatric disease designation from the FDA. ARCT-810 is currently being evaluated in 2 ongoing clinical studies in patients. A Phase Ib study in adults and a multi-dose Phase II study in adolescents and adults with OTC deficiencies. The Phase Ib single-ascending dose study is being conducted in the United States and has completed dosing of all planned 4 cohorts in a total of 16 subjects. We expect the final database lock to occur later in this fourth quarter of 2023. The ARCT-810 Phase II study is being conducted in the United Kingdom and Europe and plans to enroll up to 24 adolescents and adults with OTC deficiency. The ongoing study evaluates 2 dose levels and includes up to 6 biweekly administrations for each participant. We remain committed to the development of ARCT-810, and we are taking various actions to address the continued challenging enrollment rate in Europe by adding study sites and patient services to improve screening participation. Updated guidance of interim Phase II data is expected in H1 or the first half of 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, which has been optimized for bronchial epithelial cell delivery. We completed enrollment in dosing in a Phase I study in New Zealand of 32 healthy subjects across 4 ascending single-dose cohorts. We look forward to presenting safety and tolerability study results of this Phase I study at an appropriate conference in the first half of 2024. We're pleased to report that we have initiated enrollment in scheduled dosing of the first patient in a Phase Ib clinical study in New Zealand, which is designed to enroll up to 8 adults with cystic fibrosis with each participant receiving 2 administrations of ARCT-032. We are presently guiding interim data in H1 2024. Arcturus is sincerely grateful for the continued support of the CF Foundation. In September, the organization agreed to increase its financial commitment to $25 million to advance ARCT-032. In October 2023, ARCT-032 received rare pediatric disease designation from the FDA. As such, if ARCT-032 achieves FDA approval for a pediatric indication, Arcturu is eligible to receive a priority review voucher of a subsequent marketing application for a different product. New data was presented at the North American Cystic Fibrosis Conference or the NACFC in November. This new proof of activity in vivo data was collected with a CF ferret model, also known as G551D. The ferrets in the study require continuous treatment with the CFTR modulator KALYDECO to prevent disease progression. A single administration of ARCT-032 showed successful transfection of airway epithelial cells, and restoration of mucociliary clearance above the level maintained with KALYDECO. 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 third quarter ended September 2023 and provides a summary and analysis of year-over-year financial results. Please also reference our most recent 10-Q for more details on the financial performance. Arcturus recently achieved a $35 million milestone from CSL. The milestone payment will be used to fund development activities for the LUNAR COVID-19 vaccine program with CFL. We are very pleased with the ARCT-154 new drug application to the PMDA in Japan, and we believe that this product could represent a highly differentiated vaccine option for patients. Furthermore, the development in manufacturing plan supporting ARCT-154 was carried out in a financially disciplined and efficient manner that leverages multiple external collaboration. The two ARCT-154 Phase III Japanese booster study and the product manufacturing related to this collaboration are being funded by [indiscernible] Pharma and the Japanese government. NejiSeca Pharma has an agreement with CSL Secure, whereby Neji will be responsible for the regulatory approval, marketing, distribution and sales of ARCT-154 in Japan as well as coordinating the manufacturing of coded vaccine products with our [indiscernible] for the Japanese market. Our catalyst located in a strategic biomedical research and development hub in Japan. We're poised to become a key player in the global mRNA drug manufacturing landscape. This CDMO is designed to support the production of mRNA vaccine as well as our mRNA-based therapeutics and has already completed the construction of a state-of-the-art mRNA drug substance manufacturing facility. To date, $165 million has been awarded to our talent by the Japanese government. These funds are being used to build mRNA drug substance formulated drug product capability and to construct a DNA template manufacturing facility. We expect this facility to become a leading manufacturer of mRNA-based vaccines and therapeutics with the ability to manufacture a vaccine within 100 days of an emerging viral strain. We expect this entity to provide meaningful financial dividend to our company over the coming years due to our substantial equity position. We are greatly appreciative of the Japanese government for their financial support. I will now summarize our financial results for the third quarter of 2023. Our primary source of revenue was from license fees, consulting and related technology transfer fee, reservation fees and collaborative payments received from research and development arrangements with pharmaceutical and biotechnology partners. For the 3 months ended September 30, 2023, we reported revenues of $45.1 million compared with $13.4 million for the 3 months ended September 30, 2022. Revenues increased by $31.7 million during the 3 months ended September 30, 2023, as compared to the prior year period. The increase was primarily attributable to revenue recognized from the collaboration agreement with CSL Seqirus and grant revenue recognized from the agreement with BARDA. Revenue increased by $90.3 million during the 9 months ended September 30, 2023 as compared to the 9 months ended September 30, 2022. The increase was attributable to an increase in revenues of $133 million, primarily related to the collaboration agreement with CSL [indiscernible]. This increase was primarily offset by less revenue in 2023 from other COVID program customers. Total operating expenses for the 3 months ended September 30, 2023, were $64.5 million compared with $50.2 million for the 3 months ended September 30, 2022. Our research and development expense consists primarily of external manufacturing costs, in vivo research study and clinical trial performed by contract research organization, clinical and regulatory consultants, personnel-related expenses, facility-related expenses and laboratory supplies related to conducting R&D activity. R&D expenses were $51.1 million for the 3 months ended September 30, 2023, compared with $37.7 million in the comparable period last year, primarily reflecting increased clinical research and manufacturing costs and personnel-related expenses. General and administrative expenses primarily consist of salaries and related benefits of our executive, administrative, legal and accounting function and professional fees for legal and accounting services as well in other general and administrative expenses. G&A expenses were $13.4 million for the 3 months ended September 30, 2023, compared with $12.5 million in the comparable period last year. The increase resulted primarily from personnel expenses due to increased head count and salary, increased travel and consulting expenses as well as an increased rent expense associated with the new headquarters facility. For the 3 months ended September 30, 2023, Arcturus reported a net loss of approximately $16.2 million or $0.61 per diluted share compared with a net loss of $35.3 million or $1.33 per diluted share in the 3 months ended September 30, 2022. Cash, cash equivalents and restricted cash were $369.1 million as of September 30, 2023, and $394 million at December 31, 2022. We have achieved approximately $365 million in upfront payments and milestones from CSL secures as of September 30, 2023. We expect to continue to receive future milestone payments from CSL that will support the ongoing development of the COVID and flu program and pre-additional vaccine programs by CSL. Finally, I'm happy to report the expected cash runway now extends through the end of 2026 based on the current pipeline and programs. 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 program. Furthermore, with the anticipated 154 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 over to Joe.
Thanks, Andy. We've continued to make excellent progress and advance our proprietary messenger RNA and LUNAR delivery platform technologies toward later stages in clinical development and we're excited about the progress toward our first potential product approval in December with ARCT-154. The achievement would definitely mark a critical milestone for the platform and for Arcturus. And so with that, I'd like to turn the time over to the operator for questions.
[Operator Instructions] The first question comes from Yasmeen Rahimi with Piper Sandler.
The first question is directed to the upcoming Japan approval. Many clients are asking us if we should be expecting any update in terms of the commitment of Japan's order for vaccines for 2024 at the time of the approval. That's question one. Question two, I would love to hear your thoughts on given that the bivalent vaccine enrollment is complete, when we you should be expecting data in terms of the next steps with the program? And then third is congrats on the CF program and patient dosing, are you planning to get to 8 patients? Or is there an opportunity to maybe report data on a small cohort in 2024, and I'll jump back into the queue.
With respect to government orders that may be associated with the approval of ARCT-154. [ MEGI ] is primarily responsible for collecting or soliciting those orders, whether that's from the government or from the private sector in Japan. We're unfortunately, we do not have insight into that. So I'm unable to address that. But clearly, in order cannot happen until the platform or a particular asset is approved. So I won't be able to speak to any detail on that. With respect to the patients being recruited to support the Phase Ib trial for cystic fibrosis. We indicated that the first patient is getting dosed here shortly, but we're more than willing to share interim data if required, the guidance we've provided is in the first half of next year, with respect to the safety and tolerability data of those -- of the Phase Ib trial for cystic fibrosis. Now you asked a question about when data for another program, and this is for the bivalent. And so yes, the bivalent booster data, we've guided that the -- I'm just looking at my notes to confirm, yes, enrollment is completing very soon, in fact, later this month. But we are going to be providing data next year. So top line data is expected in Q1 and an anticipated approval or PMDA approval in Q3 of '24.
The next question comes from Myles Minter with William Blair.
Just relevant to what Meji's been saying previously, which was potential approval of monovalent vaccine in October and you've been more conservative, say, in fourth quarter, I think that's panned out nicely. But is there anything else going on there from like a regulatory conversations point of view? I know you've shown us the 6-month durability data now. Did the PMDA request that because you have it. I'm just wondering why there's an optical delay from October to December. And maybe that's just the fault of Meji and not of your own, but any clarity there would be great. And I've got a follow-up.
No. Just the day 29 data was a prerequisite for the primary endpoint. The 6-month data was not. However, this data is aware to the regulatory agency and taking into consideration as they look at regulatory approval going forward. And we've guided again that approval is in December.
Okay. And then maybe just -- sorry, was there a comment there?
No.
Maybe just one on the cystic fibrosis program. Do you have to dose those CF patients in a stepwise fashion. So a single patient would receive 2 administrations be monitored for safety before clearance to dose the next patient? Or can you get these patients in 8 of them at a time and dose them all together?
Yes. We anticipate -- this is Pad, and we anticipate dosing all the cohort altogether. That's correct.
The next question comes from Seamus Fernandez with Guggenheim.
So -- just a couple of quick ones here. In terms of the progression of potential milestones going forward, just hoping that if you guys could help us understand the sort of key steps forward from a milestone perspective, whether it be from the COVID program, the flu program or potentially other programs? And perhaps just in percentage terms, maybe not without absolute numbers, where some of the key sort of catalyst milestones would really lay out as a percentage of the terms of CSL, what's possible in 2024? Obviously, we know what the runway is now through 2026 with the existing cash, but it seems like that could be drawn out quite significantly in 2024 as more of these programs advance. And as we see more of the COVID -- 154 applications move through into other jurisdictions more broadly. So just trying to get a better sense of the breakdown of those potential milestones? And then the second question, just then I'll jump back in the queue. On OTC, is there a consideration just given how excruciating, frankly, the recruitment has been of this patient population? Is there just a view that the demand among patients it's just really not there or that they're just too hard to find, and this indication might be smaller than what we thought previously? It just sort of begs the question, is it worth it to keep pursuing this indication given the very challenging nature of recruiting the trial?
Sure. Thanks, Seamus, for the questions. First, I'll walk through some of the near-term milestones as you've asked. So with our internal programs, starting with our OTC deficiency program, we've indicated that the database is being locked relevant to the Phase I and Phase Ib data for the OTC program. That database lock is going to occur later this quarter. With respect to Phase II interim data, we're guiding the first half of 2024. Now shifting to the CF program. We're...
Joe, let me answer that question. I think he was referring to the financial milestones. And I think what -- is that correct, Seamus, you were referring to the financial trying to understand the programs. And obviously, with the cash runway going to? Okay, that's what I thought. Yes. No, no, that's what I thought the question was pertaining to. So we typically don't guide specifically on the individual milestone because they're frankly very lumpy, right? And we don't know when they're going to start and initiate a certain program and when would the catalyst for that program be achieved, right? So in terms of not disappointing people, I'd rather announced those milestones when we achieve them and to more freely be able to articulate how we were able to accomplish that feat. And what's going to be critical here as we go forward is the guidance that we give you with the amount of cash that we have to give you a perspective of kind of what we're burning outside of the CSL and the BARDA relationships as well as the contribution from the Cystic Fibrosis Foundation. So if you take basically the number of years divided by our cash, you're going to come close to about $120 million in burn. And our goal will be to bring that down even more. So consequently, it's the guidance that's going to be critical to understanding the timing of when the milestones come in. And they're pretty significant. Obviously, there's over $1 billion in development milestones spread out over 3 to 5 programs. So they're pretty meaningful. They're going to have significant impact on our operations. And as we achieve them, we will certainly be able to explain how we earn them and why we did. And hopefully, that will provide you enough comfort that we are well funded into at least for the next 3 years. Without any revenue milestones in our forecast, no commercial milestone or revenues are included in our forecast that would be certainly considered supplemental, and we will update the market, assuming we do have revenues in 2024.
And Seamus, I can give you a little bit more color on the OTC program. As you know, rare disease programs are typically slower to recruit compared to some of the work that we've done with the vaccine. And it's a well-known phenomenon. And specifically, our OTC trial has been conducted in research centers, which can be slower, of course. So we've taken quite a bit of action to potentially speed that up. There are 2 key things that we've done in the near term that's going to help in recruitment and try to speed this up is we've enhanced the patient experience. And we've added a concierge service so that we can pay for all the patients' needs. And then we've also implemented a patient's stipend to recognize for a lot of their efforts to be part of this trial. So I think both of these things and in terms -- and also opening up more sites is going to help in recruitment in the near term.
Great. And I guess just as a follow-up question to that, though, is there any concern around the size of the market opportunity for ARCT for [indiscernible], but just trying to get a better sense of usually, there's also demand for rare conditions where there can be benefits. Obviously, there are other treatment options out there. So I'm just wondering if there's an assessment that would make sense as it relates to this program just because with the CF program advancing as it is, it would seem like resources might be better spent to bring forward other rare disease opportunities. It's just been many, many years pursuing this. So just trying to get a more sense of how you guys are thinking?
No, that's a great question. And I think, Seamus, if we did not see the success that Horizon Pharma was having with RAVICTI, I think we would have had a different perspective. But the fact that they're able to generate over $250 million in revenues annually on only 500 patients is a very encouraging opportunity for us. And assuming that RAVICTI only sequestered ammonia, if our mRNA therapeutics succeed, we can prevent these people from generating ammonia hopefully, right, and so that -- we're at least keeping the loan at a baseline level, and hopefully, having a normal protein diet. So obviously, the opportunity to have a small and select market share is very lucrative financially for a small company like ours. And certainly, we're discounted by the slow uptake in the patients on recruitment, but I believe the steps that we've taken here in the near term should encourage us to accelerate that profit here in the first half of next year.
Yes. We remain committed to the program. it's not just as a valuable asset, but it also represents the flagship asset for the platform for intravenously dosed or systemically administered mRNA and there's value taken into consideration for that.
The next question comes from Yigal Nochomovitz with Citi.
This is Carly on for Yigal. We had a couple on the head-to-head bivalent study. First, I just wanted to clarify was that study requested by regulators in additional geographies outside of Japan? And then second, more generally, I guess, just wondering how you're thinking about the market opportunity in Japan for bivalent versus 154 and how that affects Maje's commercial launch strategy in Japan?
Yes. Thank you for the question. All the regulatory agencies have united in their message for monovalent COVID vaccines. The reason that we're proceeding as a collaboration between AGCL and Arcturus here. The reason we're collecting bivalent data is that we don't have to do it in the future. So if there's ever a reason why the regulatory agency changes their view or opinion and bivalency becomes more important than we will not need to do a trial at that time. We're just taking care of that now. It does strengthen the platform, though, to have monovalent Phase III comparison data and then add to that the bivalent comparative data with bivalent Comirnaty. But that's the reason we're proceeding with collecting the bivalent data, just to strengthen the platform and to prevent us from going back and doing a trial if it's ever requested in the future.
Okay. Got it. That makes sense. And then just as 1 quick follow-up. I think in the past, you and Meji have maybe talked about an [indiscernible] specific vaccine candidate. Just curious if there was an update on the status of the strategy for that program?
Sure, sure. The X-BB, vaccine update is a monovalent update. Some of our partners have started to communicate about this version of the vaccine. It's called ARCT-2303. And again, it's a monovalent updated asset. And so all the monovalent ARCT-154 data that we're collecting is very meaningful and relevant to that asset. With respect to updates on activities around that asset, we haven't disclosed those publicly, but there will be an opportunity for us to provide an update on our next call.
The next question comes from Yanan Zhu with Wells Fargo.
This is [indiscernible] on for Yanan. So 2 questions on COVID. So the first one is on the data you recently presented at mRNA Healthcare Conference. Can you tell us how the data would translate to differentiation and potentially commercial success? And the second question is after the potential approval in December, can you share with -- sorry, with CSL launch based on this like [ monobenregional ] vaccine? Or were they would they wait for the, for example, [indiscernible] update?
Sure. So with respect to the leading commercial or marketing advantages of this platform, as we've touched on them already in this call, but I think clearly, the buyers here will be very interested in our durability data. They want a more durable vaccine technology. The increased antibodies, of course, has not only an improved immune response but an implied efficacy benefit that would be interesting. And then as we go deeper into the endemic COVID market and as that gets established, there's going to be an increased emphasis on safety. So I think the meaningfully the fact that this technology is a much lower dose is going to be emphasized because of the potential safety benefits associated with dose-related toxicology. So durability increased antibodies at a much lower dose with potential safety benefits is going to be the initial strategy. Now with respect to the -- you had another question, could you repeat that for us?
Sure. So after the potential approval in December, would see a launch based on these like original vaccine or will they potentially wait for the X-BB update and launch a vaccine state?
Well, with respect to -- what we want to do strategically is position ourselves with the right approvals and the manufacturing slots and time lines to address what the market desires or wants. So if we have an approval or approvals in place, then we can proceed to provide an updated monovalent vaccine. If the monovalent 154 gets approved, then we'll be in a stronger position to provide an updated monovalent vaccine, if that's the -- if that's where the orders come.
This is Pad. And just one other thing to add is we -- as Joe mentioned on his call earlier that we filed for EMA approval with our partner, CSL. Once we get the approval, I think CSL will be looking at what the commercial launch looks like, right? So I think they're in charge of that. But as Joe mentioned, we're currently focused on getting the approvals in the various jurisdictions now.
The next question comes from Pete Stavropoulos with Cantor Fitzgerald.
Nice to hear all the updates for the quarter. First question I have for 154. What are your expectations of when you may hear back from the EMA, sort of rough time line?
With respect to hearing back on the EMA. This is going to be a considerable process. We haven't provided any tight guidance on when approval is expected. I can refer to our partner CSL has guided that in 2024. We anticipate approval with the EMA.
All right. And then in terms of [indiscernible], just curious if you could just discuss a little bit if you can leverage that venture for manufacturing other pipeline candidates and perhaps distribution of drug outside of Japan, and if not already, when do you expect the facility to be operational and what will be the manufacturing capacity?
I could answer that question for you, Pete. We've kind of guided that the drug substance facility has been completed. And we've kind of given a time line for drug product and [indiscernible] finish is probably going to be next year in that time frame. So in the meantime, we're going to be supplying Japan and any other country through our current CDMO group that we've been working with, which includes Catalent, Aldevron, Recipharm in Europe. So until that plant is up and running, up and running and able to support not only Japan but any other mRNA product that we may be working on or therapeutic we certainly would be delighted to have that diversification of manufacturing opportunity in the Far East like that. So it's going to be a very strategic asset for Meji, for us and for CSL and certainly, we want to be able to utilize it to the best the opportunity to address whatever the demand may be on a global basis. Is that -- hopefully, that will help answer your question.
It does. And just one last question for 032 for cystic fibrosis. For the Phase Ib patients that I know are going to receive 2 doses. Will you be looking at any pharmacodynamic markers or clinical outcomes. Again, it's only 2 doses to sort of gauge 032 activity?
Yes. The primary objective of of the Phase Ib study just to understand safety and tolerability. And in natural CF patients with 2 administrations and to understand further what type of administration regimen will be ideal for a nice proof-of-concept study. That's to follow, assuming success, of course. But that's the -- now are we looking at other potential markers of success, yes. But our expectation at this point the purpose of the study is just to show safety and tolerability in CF patients. We'd be very excited to see if multiple administrations are well tolerated because of the recent data that we shared in [indiscernible] center that are very indicative are important data that we bolt on to the human experience that increases the likelihood of success for this program.
All right. Actually throwing one last question, if you don't mind. So this is an inhaled product. Is there any potential to actually develop some type of inhaled vaccine to respiratory viruses either alone or with partner CSL?
Well, it's a great segue to the opportunity. The overall platform opportunity for our technologies. If we're showing proof of concept in large vaccine trials, and in therapeutics, it does present the opportunity to potentially combine these. We haven't provided any guidance on this, but it does give people some excitement of the platform in general. That there's a lot of opportunity in the future.
The next question comes from Ed Arce with H.C. Wainwright.
This is Thomas Yip asking a couple of questions for Ed. Perhaps first question for A10 and OTC. You mentioned the Phase III data from the study in Europe expected in the first half of 2024. Can you discuss what about the Phase Ib single ascending dose study in the U.S. with 16 patients? When should we expect to see data from that study?
Correct. So the database lock is later this year, once we've gone through that process, we'll then strategically think at the right time to communicate the data because we need to understand the timing of the interim Phase II data. So we may present these at the same time. We may present them separately, but we haven't made that strategic decision yet, but we have informed the market now that the database is getting locked this year for Phase I and Phase Ib.
Understood. And then perhaps switching gears a -- we see that both Phase I studies are ongoing. When should we expect data from these studies then?
For the CF study, Yes. The Phase Ib study -- yes, we've guided some interim Phase Ib data in the first half of next year. With respect to the Phase I study, we've now informed the market that we intend to provide a presentation at an appropriate conference in the first half of next year as well.
Understood. Just one last question from us. This one is probably for Andy. The $35 million milestone received from CSL. Can you discuss what [indiscernible] for the milestone?
Yes. The milestone was related to our COVID in the bivalent program. So hopefully, that will help answer that question. And we've been able to articulate the progress we're having with the bivalent study in Japan, and we're very encouraged by the speed and success of that triumph moving quite rapidly.
The next question comes from I-Eh Jen with Laidlaw & Company.
I just switch gear to the flu vaccine that to be started soon. My question is that given CSL is major player in this space. And recently, some of the other messenger RNA back through vaccine has probably had some issues maybe on the safety or efficacy. So what both you guys and CSL think that how was your [indiscernible] RNA vaccine overcome some of those hurdles and potentially have a better product?
Yes, conventional messenger RNA flu vaccines. -- have potential challenges relating to that are dose-related challenges and also durability challenges. And that's where self-amplifying mRNA. This next-generation technology can prove to be different and in good ways. -- that we could -- because the dose is much lower, there may be some additional flexibilities there with respect to multivalency and including different antigens. But -- and also what we've shown in the recent data in our infectious disease vaccine trials is that this next-generation self-amplifying mRNA technology is more durable. And that is especially important in the flu shot space or the flu vaccine space. So those would be areas of differentiation.
Okay. Great. That's very helpful. And then maybe one more question here, which is for the bivalent COVID vaccine. Once they potentially approved in Japan, what is the commercial strategy outside of Japan was being contemplated. And was that something also in the United States as well?
Well, right now, all the regulatory interested in monovalent vaccines and not necessarily by the change. So if that does, we're in a position to provide whatever the customer wants, whether that's an updated bivalent technology or monovalent.
Thank you. At this time, I would like to turn the call back over to Mr. Payne for closing remarks.
Yes. Thanks, everyone, for participating on the call. If there's any remaining questions, don't hesitate to reach out to the team, and we'll get back to you as soon as we can. Thanks to everyone, and good night.
Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.