Arcturus Therapeutics Holdings Inc
NASDAQ:ARCT
Earnings Call Analysis
Q4-2023 Analysis
Arcturus Therapeutics Holdings Inc
Arcturus Therapeutics' ambitious stride in the biopharmaceutical industry has been marked by the innovation of Kostaive, the world’s first self-amplifying mRNA COVID-19 vaccine, now approved in Japan for adults. This historic milestone underpins Arcturus' confidence in their proprietary STARR vaccine technology platform. The approval of Kostaive was supported by comprehensive clinical trials, including a 16,000-subject efficacy study in Vietnam and a critical Phase III booster trial in Japan.
Come 2023, Kostaive is poised for its commercial launch in Japan, primed to address the pressing need for vaccines with longer durability. Regulatory agencies right now recommend twice-yearly COVID-19 vaccination boosters, showcasing the market for a more infrequent dosing schedule. Arcturus' vaccine could very well fit the bill, promising a once-a-year vaccination cadence. The WHO's impending announcement of the updated COVID variant in April will inform subsequent manufacturing and distribution moves for Kostaive.
Arcturus is expanding its vaccine portfolio with the initiation of a Phase I study for a quadrivalent self-amplifying mRNA vaccine for seasonal influenza, recruiting 132 individuals for the clinical study. Additionally, Arcturus has announced the inception of vaccine discovery programs targeting Lyme disease and gonorrhea, leveraging their proven LUNAR and STARR technologies, with these markets collectively valued over $4 billion globally.
Arcturus is progressing with its Phase Ib study for ARCT-032, an inhaled mRNA therapeutic for cystic fibrosis (CF), and anticipates sharing interim Phase Ib data by Q2 of 2024. ARCT-032 has gained Orphan Drug and Medicinal Product Designations in both the U.S. and Europe, enhancing its development with incentives like market exclusivity and regulatory guidance. There is also ongoing enrollment for a Phase II study in OTC deficiency, with a focus on adjusting critical biomarkers, such as ammonia and orotic acid, in participants.
The year-over-year financials reveal a revenue dip from $206 million in 2022 to $169.9 million in 2023, alongside strategic meetings with Japanese officials to prepare Kostaive's launch in the latter half of 2024. Detailed financial performance will be further disclosed in the upcoming Form 10-K filing.
Enrolled cohorts in Arcturus' OTC program are being evaluated for changes in select biomarkers which may indicate a treatment response. In parallel, the CF program's Phase Ib study emphasizes safety, assessing tolerance and respiratory function in patients, setting the stage for sophisticated safety tracking within the context of CF treatment.
Japan distributed over 82 million mRNA COVID vaccine boosters in 2022, demonstrating a robust vaccination culture. While 2023's exact numbers are yet to be understood, the Japanese government has recommended two COVID vaccine booster shots per year for its considerable elderly population and pledged to provide these vaccinations free of charge - carrying significant implications for the demand curve in future markets.
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Greetings, and welcome to Arcturus Therapeutics Fourth Quarter and Full Year 2023 Conference Call. [Operator Instructions] 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 statement. Please see the forward-looking statement disclaimer on the company's press release issued earlier today as well as the Risk Factors section in our 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 III COVID-19 booster trial in Japan, the 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. And 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 III booster's vaccine study conducted in 11 sites in Japan. The study included healthy adults initially immunized with 2 doses of an mRNA vaccine, whether that was Comirnaty or Spikevax and then the third dose of Comirnaty. The study was conducted in partnership with CSL's partner, Meiji Seika Pharma, this is a global health company based in Japan.
The new analysis at 6 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 1/6th 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 variance of SARS-CoV-2.
The Kostaive booster study is ongoing and will continue to collect safety data and assess 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 detail 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 2 boosters each year for the approved conventional mRNA vaccines. Thus, it's very apparent that there is 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, LUNAR-FLU. 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 I dose-finding study in January 2024 with the intention of assessing 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 I 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 7 global infectious diseases, 5 with our partner, CSL Seqirus, and 2 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 Ib single-ascending dose study in the United States has completed enrollment and dosing of all cohorts with 16 patients.
The Phase II study in the United Kingdom and Europe is enrolling up to 24 adolescents and adults with OTC divisions. The ongoing study is evaluating 2 dose levels and includes up to 6 biweekly administrations for each participant. The company expects to share Phase II 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 transport in the lung and thus restoring the balance of salt and water. We have now completed the dosing in a Phase I study in New Zealand of 32 healthy subjects across 4 ascending single-dose cohorts.
In addition, we have dosed patients in a Phase Ib clinical study in New Zealand. The Phase Ib study is designed to enroll up to 8 adults with cystic fibrosis with each participant receiving 2 administrations of ARCT-032. We remain on track to share interim Phase Ib 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 7 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, centralized authorization process, fee 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 31, 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, official from Meiji Seika Pharma will provide regular updates on the launch of Kostaive in 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 '23 revenue were driven by the discontinuation of our collaboration agreements within 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 3 months ended December 31, 2023, operating expenses were $49.1 million compared with $38.8 million for the 3 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 organization, 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 were attributable to our continued effort to progress the CSL and BARDA program as well as our internal OTC and cystic fibrosis programs. Additionally, we have increased investments in early stage in 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 head count 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 3 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 3 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 and 3 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 3 years in a row at approximately 26.6 million shares. This demonstrates management 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.
[Operator Instructions] Our first question comes from Evan Wang with Guggenheim Security.
Two for me. First, it was encouraging to see the ACIP recommendation on revaccination 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 in Europe?
And second, looking forward to some updates in 2Q from OTC NACFC, as we're getting closer to data, wondering if you can share how many patients we can expect from each trial?
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 2 boosters annually. We, of course, because we're approved in Japan, we wanted to provide some updated and new information to the people on this call that they may not appreciate, but Japan government has also now communicated that starting April 2024 that routine COVID-19 vaccinations for the elderly will be recommended.
And if you just go to the MHLW website, another new update that they recommend twice a year of vaccination for the elderly, but also I'll quote from the actual website in Japan that people aged 65 and older those with underlying medical conditions and health care workers. So each of these 3 sets of people will be vaccinated twice a year, while all of 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 of durability for the field, but also that there's elevated support for the -- for those -- the elderly and those with underlying medical conditions and health care 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 that -- 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 2 therapeutic programs, correct, Evan?
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 Ib in our CF program, and that's recruiting all patients, no placebo in that group. 6 to 8 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.
And 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.
Our next question comes from Yasmeen Rahimi with Piper Sandler.
This is on for Yas. We have two. First, what would 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 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 the -- 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. And 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 that there's certainly -- 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 chronic illnesses.
So you're looking at -- if you multiply that by 2, somewhere in the vicinity of 60-plus million potential doses, right, if everyone gets 2 shots, 2 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's other biomarkers that we can evaluate and measure, including orotic acid in the urine and 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 2 administrations in actual patients. And so it will be very meaningful for us to establish some sort of track record of safety and tolerability and a spectrum of CF patients. Anything to add to that, Pad for either Program?
I think for the CF, I think 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. So I think we would 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.
Congrats on all the progress. First one from me is on COVID in Japan. I think you benefit from orders there kind of on 2 fronts, both from a revenue-sharing perspective as well as ARCALIS, so can you help us understand how those 2 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, certainly, Whitney. Thanks for the question. We typically have not provided details with respect to the revenue-sharing opportunity. But if you look at CSL and Arcturus, 60-40 gross profit split, you can try to extrapolate what would a 3-headed -- 3 musketeer type of partnership look like. So it will obviously be very significant and meaningful for us, and we're excited about the partnership to be working with all 3 people in Japan, especially Meiji, the #1 flu vaccine company in Japan, and CSL who's #2 in the world.
So you're dealing with 2 very strong commercial powerhouses in their respective categories. So we're kind of fortunate with respect to that. And we're pretty excited. And of course, having it being made in Japan is kind of something that the government and the people in Japan are very proud of. And it's going to be under the Meiji brand name. So keep in mind that this is going to be a Japanese vaccine, and that's what I think excites them. And the government -- and we're very fortunate that they gave us this opportunity to compare our vaccine to Pfizer, right?
And if we didn't have that opportunity, we would not have this kind of data to share with the world and the fact that they financially supported the factory. So we bet on the right horse, and I think it's going to be an exciting future. And European approval is coming this year, too. So we're highly excited about that, too, and anticipating it as well. So there's a lot on the plate and hopefully, that gives you some perspective.
But unfortunately, we can't really go into too many details at this point in time. But hopefully, soon, we'll be able to reveal those.
Our next question comes from Myles Minter with William Blair.
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 III 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?
Well, yes, thanks for bringing those programs up. There's a lot of -- 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 III 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 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 prerequisite 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. And Pad, anything to add?
Yes. Just -- I'll just add one other thing is that you might be aware, the current circulating strain that it seems to be JN.1. So ultimately, for the fall season, we will be -- once the platform has been approved, we will update it and be ready to supply whatever circulating strain is needed.
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 message and guided 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 stand- well, Pad, why don't you address that?
Yes. No, we -- of course, we're going to be collecting a lot of the safety signals, and then we're going to be looking at FEV1 and lung clearance index as well. And -- but we -- again, just to reiterate, we are going to be recruiting relatively stable patients. There could potentially be no patients recruited in the population as well. But this is an all-comer study. So just so you're aware.
Our next question is from Kuan-Hung with Wells Fargo.
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 Japan government? And what percentage of that volume is for the 3 groups of people that you touched upon earlier on the call? And how would you expect that number to change this year?
No. That's a good question. First of all, I can speak to what's readily available. In 2022, over 82 million messenger RNA COVID vaccine boosters were distributed in Japan. That number is not tightly understood for 2023, but it was a significant number, as you can appreciate. For 2024, we now -- as we touched on just a moment ago, the Japanese government is -- has indicated and communicated the clear recommendation that the elderly get 2 booster shots a year.
And the elderly population is 32 million to 36 million in Japan. So it's a significant number of people. And it was very good to hear that the government of Japan is going to be providing these vaccinations to the elderly free of charge. So speculating what that -- how that impacts the market is going to be difficult for me to do, more appropriate for analysts on this call to do that.
Thanks for the information. In prior years in Japan, where the average booster doses per person under 2?
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 U.S. 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 received 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 or the default number of boosters a person get per year, is that not twice a year? Was that less a year?
Don't know what the previous recommendation was. All I can comment on is what's clearly communicated on the MHLW website, which is 2 boosters annually for everyone over 65 in Japan.
Got it. Okay. And on the CF program, the Phase Ib portion, those patients got 2 administrations of ARCT-032. I was wondering what's the interval between those 2 administrations? And also, I think you mentioned on the call that FEV1 lung clearance, these measures are being collected perhaps mostly for -- from a safety standpoint. But the question is, will you be presenting those data at the readout?
Well, the first comment was the primary purpose of this Phase Ib 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, the lung related side effects, like coughing, et cetera. So that's where we're going to be more focused on in terms of externally communicating Phase Ib interim data is severe adverse events and more lung centric side effects and just summarizing the safety and tolerability in the 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 Ib data later this year when we have a better idea which conference.
Great. And dosing interval?
Thank you. The dosing interval we have not shared publicly. This is a competitive environment. We've made it very clear that these are 2 administrations they're inhaled. We haven't disclosed the dose levels if they're the same or different and how far apart they are. We had considerable learnings from the 32 subjects of data in the 4 cohorts evaluated in Phase I. So we wanted to -- and we've applied those learnings to the design of this Phase Ib trial, and we just wanted to keep those cards close to our chest at this time.
Our next question comes from Yigal Nochomovitz with Citi.
This is on for Yigal. 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 healthy volunteers there as well? And except a lung capacity and lung function, have you took bronchi biopsy to look at the CFTR expressions there? Also, what have you seen so far in the healthy volunteer that's suggesting a better tolerability of this drug versus the prior mRNA studies?
Yes. Yes, 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, but anything to comment?
No. Again, just to reiterate some of the early we haven't seen any SAEs or severe AEs associated with the Phase I or Phase Ib to date. And obviously, we're monitoring that closely. And in terms of lung biopsies, we are not currently -- or we're looking at the actual function in patients. So we're not doing that.
With respect to the Phase I data, there is a European CF Conference in June that we're preparing to present that.
Okay. Got it. That makes sense. And just one quick follow-up on the OTC data that you're going to present soon. What do you need to see there to make it go no-go decision there?
A go no-go decision for the Phase Ib readout?
For the OTC data.
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 about most importance because that's one of the challenges that many other competitors in people that have tried to do lipid nanoparticle mRNA therapeutics for OTC deficiency have failed in the past due to toxicity. So 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, do 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.
Our next question comes from Pete Stavropoulos with Cantor Fitzgerald.
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. Thanks, Pete. Yes, we've kind of highlighted the time line for ARCALIS in terms of drug substance. They're currently in production right now in getting GMP qualified. So that is pretty exciting. And there'll 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 for this year. So those are all the things you want to listen for carefully. And obviously, the drug product is going to be online probably either later on this year or early next year.
And then the plasma business should be on within a couple of years. So within 2.5 here, 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 and Europe. So we have a really strong core of partners to help us fill the void where until ARCALIS is able to get up to speed.
Obviously, if they can make up to 1 billion doses, they -- 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. And so that will be a decision that will be made by certainly CSL and Meiji with respect to Japan. Hopefully, that helps?
Yes, it does. And so a question on the CF program. So you're having 2 doses. Just curious on the perspective of how much do 2 doses actually derisk, I guess, from a safety perspective when it comes to drug? That's one question. And the other one is any learnings from the cystic fibrosis program that you can potentially develop an inhaled vaccine to a respiratory virus, either alone or in partnership with CSL?
Yes. Good follow-on questions there, Pete. With respect to the -- 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 2 doses, we want to make sure that there's no respiratory side effects, like coughing, chest discomfort, et cetera. We also want to look at some secondary safety end points like fever, for example, right? So I think we can tell all of those things from just 2 doses. So we're looking forward to collecting that data.
And the reason why this is significant, too, is our internal team has been doing inhaled therapeutics for decades. They do have a lot of experience here. And what they've shared with us is that you do see challenges or problems in toxicology with inhaled therapeutics, it's in the first 2 administrations. So if we get through this trial successfully, the probability of success for this trial has meaningfully moved up And so that's why this is important.
And in the second part of your question, what -- if the data is positive, what will it mean for the platform? I mean, obviously, the data is positive and we do get proof-of-concept. We will expanding potentially the -- and thinking about other rare diseases or other diseases that need nebulization. But also this platform, of course, can be applied as potentially a vaccine as well.
Our next question is from Ed Arce with H.C. Wainwright.
This is Thomas Yip asking a couple of questions for So first question regarding Kostaive or So with the approved in Japan, and I believe Andy mentioned that regulatory decision is expected from -- in Europe this year. Are there any plans either from Arcturus or from CSL or Meiji, any other plans to expand into additional territories?
Yes. Yes, Europe is -- we're intending on getting that approved this year and also the United Kingdom shortly thereafter. After that, the next big market, of course, is the United States. CSL will be driving that -- those regulatory efforts. And they'll be providing guidance as to when that's going to be filed and approved. But what we can say at this point is we expect first approvals in Europe and then U.K. and then the United States.
Understood. And then perhaps one question for ARCT-810 and OTC. We recall in the past for the Phase II study in Europe and Roman was slightly delayed. Can you discuss quickly how is the study enrolling so far in the Phase II study?
Yes. That's -- 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. This one is for Andy. Cash run rate. Just wonder, does it include any projected revenue from Kostaive in Japan or now perhaps 154 in Europe as well?
No. Thanks for asking that question. The guidance for the 3 years of cash runway at least did not include any revenue from Kostaive and did not include any commercial milestones from CSL. So as soon as we're able to discuss those, we'll update the guidance with respect to the cash runway.
And so hopefully, we will be able to do that soon. But at this point in time, we certainly have a long enough runway to be able to achieve a number of milestones this year, which are very critical to the opportunity to expand the pipeline within the company.
So 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 2 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 a number of milestones that are going to be forthcoming and hopefully be able to enhance shareholder value.
Our next question is from Yale Jen with Laidlaw & Company.
In terms of Japan's Kostaive market, is that still mostly government? Or is that -- whether there's also a commercial effect to evolve maybe in this year or in the future? How do you guys see?
That's a good question.
Thank you, Yale. Yale, I mean the good news, Yale, is that the government has given kind of a guidance for what they're going to support, right? And so if you look at just the population of the people over 65, that's pretty substantial, 32 million to 36 million people, right? And then that doesn't include people that are compromised or have chronic illnesses, right, that certainly are going to be in a position to want to be vaccinated as well.
So 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. So that's quite substantial, right? And so we're very excited about the opportunity, and it's not trivial. And remember, it's going to be a Meiji vaccine made in Japan. So there's a lot that I think the government is very proud of and Meiji is very proud of. CSL, certainly, is 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. But it's something that we're not really concerned about at this point.
Yes. And the only thing I would add to that is that Meiji has a strong track record with working with the government to help with these subsidized vaccines in the flu space. So 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.
Yes. Thanks, everyone, for participating on the call. And 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.