Arcturus Therapeutics (NASDAQ:ARCT) has announced during their First Quarter 2024 Earnings Call that they are on track with the delivery of their COVID-19 vaccine, Kostaive, and are making strides in their pipeline of mRNA vaccines and therapeutics. Despite reporting a net loss of $26.8 million for the quarter, the company has a strong cash position and expects to receive future milestone payments to support its vaccine programs. With a cash runway extending for at least three years, Arcturus is preparing for commercial sales in Japan and advancing its proprietary technologies.
Key Takeaways
- Arcturus Therapeutics is set to deliver 4 million doses of Kostaive to Japan in Q3.
- Positive Phase 3 results for bivalent COVID-19 vaccine candidate ARCT-2301 in Japan.
- Phase 3 study for monovalent vaccine ARCT-2303 ongoing in the Southern Hemisphere.
- Expectation of Phase 1 data for Quadrivalent Seasonal Influenza Program in Q3.
- Progress in therapeutic programs for OTC deficiency and cystic fibrosis.
- Engagement with JPMorgan for investment monetization in joint venture with Axcelead.
- Q1 revenues of $38 million and a net loss of $26.8 million, with $345.3 million in cash reserves.
- Cash runway of at least three years, supported by payments from CSL (OTC:CSLLY).
- Commercial sales of Kostaive in Japan to commence in 2024.
- A focus on safety, tolerability, and biomarker changes in upcoming data presentations.
Company Outlook
- Arcturus expects to begin commercial sales of Kostaive in Japan in 2024.
- They are advancing their pipeline of mRNA vaccines and therapeutics.
- The company has a cash runway of at least three years based on current operations.
Bearish Highlights
- Arcturus reported a significant net loss of $26.8 million for the first quarter.
- No quarterly revenue guidance from BARDA grants due to dependency on milestones.
Bullish Highlights
- Received upfront payments and milestones totaling approximately $420.1 million from CSL.
- Positive results from Phase 3 clinical studies bolster the company's vaccine portfolio.
- The Japanese government's strategic investment in the vaccine underscores its potential.
Misses
- The company did not disclose the amount of funding received from the Japanese government for ARCALIS construction and production.
Q&A Highlights
- The initial $4 million order in Japan may lead to additional orders.
- Vaccine price set at $100 per dose, with the local government subsidizing 80%.
- Profit share on a 60/40 split with CSL globally on a gross profit basis.
- Data presentations on July 1 to focus on safety, tolerability, and biomarker changes.
Arcturus Therapeutics (ticker: ARCT) continues to navigate the challenging landscape of vaccine development and therapeutic programs with a strategic focus on long-term growth and sustainability. The company's partnership with CSL and the support from the Japanese government for their ARCALIS project demonstrate the collaborative efforts and confidence in their pipeline. As Arcturus prepares for commercial sales and advances its proprietary technologies, investors and stakeholders will be closely monitoring the upcoming data presentations and the impact of their pipeline's progress on future financial performance.
InvestingPro Insights
Arcturus Therapeutics (ticker: ARCT) holds a promising position in the biotechnology field, especially with the progress of its COVID-19 vaccine, Kostaive. As the company prepares for commercial sales in Japan and advances its mRNA vaccine and therapeutic pipeline, here are some key insights from InvestingPro that could be of interest to investors:
InvestingPro Data metrics indicate that Arcturus has a market capitalization of $741.33 million and a high gross profit margin of 91.04% for the last twelve months as of Q4 2023. Despite these strong margins, the company has experienced a revenue decline of 19.03% over the same period, reflecting the challenges faced in the industry. The company's P/E ratio stands at -6.81, with an adjusted P/E ratio of -12.59 for the last twelve months as of Q4 2023, which may suggest that the market is anticipating future growth or profitability challenges.
InvestingPro Tips offer additional insights into the company's financial health and future prospects. Arcturus holds more cash than debt on its balance sheet, which is a positive sign for its financial stability. Moreover, the company has an impressive gross profit margin, which reflects its ability to manage costs effectively relative to its revenue. However, analysts anticipate a sales decline in the current year and expect net income to drop, which may be a point of concern for potential investors.
For those interested in a deeper analysis of Arcturus Therapeutics, there are 13 additional InvestingPro Tips available at https://www.investing.com/pro/ARCT. These tips can provide a more comprehensive understanding of the company's performance and outlook. To access these insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
Full transcript - Alcobra Ltd (ARCT) Q1 2024:
Operator: Good afternoon, ladies and gentlemen, and welcome to the Arcturus Therapeutics First Quarter 2024 Earnings Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]. This call is being recorded on Wednesday, May 8, 2024. I would now like to turn the conference over to Neda Safarzadeh, Vice President, Head of Investor Relations, Public Relations & Marketing of Arcturus Therapeutics. Please go ahead.
Neda Safarzadeh: 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.
Joe Payne: Thank you, Neda. It's good to be with you again, everybody. I will begin my remarks with an update on progress regarding our COVID-19 vaccine program. We are excited to initiate the commercial manufacturing effort for Kostaive to support the upcoming fall and winter vaccination season in Japan. We're pleased to report that we remain on track to deliver the initial 4 million doses to Japan in the third quarter of this year. Our partner Meiji intends to then distribute the Kostaive vaccine throughout the upcoming fall and winter season. In March, the company along with our partner CSL and their partner Meiji Seika Pharma announced that our bivalent COVID-19 vaccine candidate ARCT-2301 met the primary endpoint of non-inferiority in a Phase 3 clinical study in Japan with 930 healthy adults who previously received three doses to five doses of mRNA COVID-19 vaccines. We were pleased to see yet again a superior immunogenicity and neutralizing antibody response of bivalent ARCT-2301 to a bivalent conventional mRNA comparator, and that this was confirmed for both the Omicron BA.4/5 and Wuhan strains. There were no causally associated serious adverse events with ARCT-2301. Arcturus along with CSL also initiated a Phase 3 study with the monovalent ARCT-2303 candidate vaccine containing the Omicron XBB.1.5 variant. The purpose of this study is to generate additional immunogenicity and safety data for our platform in multiple ethnicities to support product licensure in the United States. The study will also assess the co-administration of ARCT-2303 with the age-appropriate seasonal influenza vaccines. Approximately 1,680 young and older adults are planned to be recruited in this study throughout multiple countries in the Southern Hemisphere. Our ongoing Phase 3 vaccine studies showcase the consistent superiority, breadth and durability of the Arcturus star vaccine platform. We continue to make progress in expanding the global Kostaive franchise. As reported previously, we filed a marketing authorization application for Kostaive to the European Medicines Agency or EMA. The iterative regulatory process continues to advance with the European Commission expected to provide an approval decision in the third quarter of this year. Moving to ARCT-2138. The ARCT-2138 program or the Quadrivalent Seasonal Influenza Program through our partner CSL is progressing well. As of May 1, 2024, 84 healthy young and adults were recruited in the Phase 1 dose finding and immunogenicity study and received one of four dose levels of the study vaccine or a licensed influenza vaccine. The recruitment of older adults is ongoing, and the company anticipates Phase 1 top-line immunogenicity and safety data in the third quarter of this year. It is important to emphasize that this flu study will also help us understand how high we can successfully dose self-amplifying mRNA in the multivalent vaccine setting. I'll now move on to our ARCT-810 program. This is our messenger RNA therapeutic candidate for ornithine transcarbamylase or OTC deficiency. In April, the company presented Phase 1 single ascending dose studies for ARCT-810 at the Society for Inherited Metabolic Diseases Annual Conference. The ARCT-810 Phase 1 single ascending dose study enrolled 30 adults randomized 2:1 to receive 0.1, 0.2, 0.3 or 0.4 mgs per kilogram dose or placebo as an intravenous infusion. The Phase 1b SAD study enrolled 16 adults with mild OTC deficiency, and that was randomized 3:1 to receive single doses of 0.2, 0.3, 0.4 or 0.5 mgs per kilogram or placebo administered by intravenous infusion. The results showed that ARCT-810 was generally well tolerated with no serious or severe adverse events in both studies. The encouraging results from ARCT-810 Phase 1 and Phase 1b studies facilitated the initiation of a Phase 2 multiple ascending dose study in adolescents and adults with OTC deficiency, which is ongoing in the United Kingdom and the European Union. Subjects are randomized in this study to receive six doses every two weeks of ARCT-810 or placebo randomized 3:1. Moving now to our ARCT-032 program, ARCT-032 is our flagship inhaled messenger RNA therapeutic candidate for cystic fibrosis and is formulated with Arcturus' LUNAR delivery technology. The company is presently conducting a Phase 1b clinical study in New Zealand designed to enroll six to eight adults with cystic fibrosis with each participant receiving 2 inhaled administrations of ARCT-032. We will be providing an interim data and progress update for both of our flagship mRNA therapeutic programs of ARCT-810 for OTC deficiency and ARCT-032 for cystic fibrosis on Monday July 1st. And with that, I'll now pass the call to Andy.
Andy Sassine: Thank you, Joe, and good afternoon, everyone. The press release issued earlier today includes financial statements for the first quarter ended March 31, 2024, and provides a summary and analysis of year-over-year financial results. Please also reference our most recent Form 10-Q for more details on the financial performance. We are very pleased to initiate the commercialization of Kostaive this year. And as Joe mentioned, the initial 4 million doses is planned to be delivered to Japan in the third quarter of this year. As a reminder, Meiji Seika Pharma has an agreement with CSL Seqirus whereby Meiji will be responsible for the regulatory approval, marketing, distribution and sales of Kostaive in Japan as well as coordinating the manufacturing of COVID vaccine products with CSL and Arcturus for the Japanese market. The delivery and sales of the vaccine in Japan will trigger our first commercial milestone payment under our CSL collaboration. This is a remarkable achievement since we signed the CSL agreement less than 18 months ago. We will provide more color on the projected initial milestones and impact from the Kostaive revenues in the fourth quarter of this year. As a reminder, our projected cash runway does not include any revenues from Kostaive or LUNAR commercial milestones from the CSL collaboration. I am pleased to announce the engagement of JPMorgan Investment Banking team to help us monetize our investment in our catalyst, a 38% owned JV in Japan with partner Axcelead. At this point in time, Arcturus is strategically focused on working with a global group of established CDMO to support our manufacturing efforts across all of our wholly-owned pipeline program. Our catalyst located in a strategic biomedical research and development hub in Japan is poised to become a key player in the global mRNA drug manufacturing landscape. The 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 ARCALIS by the Japanese government. These funds were 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 vaccines and therapeutics and the only fully integrated self-amplified mRNA facility in the world. I will now summarize our financial results for the first quarter of 2024 compared to the fourth quarter ended December 31, 2023. Please refer to the press release and our 10-Q for year-over-year financial comparison analysis. Our primary source of revenues was from license fees, consulting and related technology transfer fees, reservation fees, government grants and collaborative payments received from research and development agreements with pharmaceutical and biotechnology partners. For the three months ended March 31, 2024, we reported revenues of $38 million compared with $30.9 million for the three months ended December 31, 2023. The sequential increase in revenue was primarily driven by increased activities across all of our CSL program, including preparation for the commercialization of Kostaive. The BARDA grant revenues of $5.4 million remained relatively sequentially. Total operating expenses for the three months ended March 31, 2024, was $68.4 million, compared with $49.1 million for the three months ended December 31, 2023. The sequential increase was primarily related to the increase in R&D expenses. Research and development expenses were $53.6 million for the three months ended March 31, 2024 compared to $36.6 million for the December quarter. The increase in research and development expenses were primarily driven by the CSL and BARDA program as well as our internal OTC and cystic fibrosis program. Additionally, we have increased investments in early stage and discovery technologies. The company initiated preclinical research related to its Lyme disease and Gonorrhea vaccine discovery programs. The increase of $17 million in research and development expenses are broken out as follows: $4.3 million for multiple CSL flu programs, $4.7 million for the Meiji commercial production expenses and $4.7 million for the next-generation program. The remaining $3 million was related to increased compensation related expenses. For the three months ended March 31, 2024, Arcturus reported a net loss of approximately $26.8 million or $1 per diluted share compared with a net loss of $11.7 million or $0.44 per diluted share in the three months ended December 31, 2023. Cash, cash equivalents and restricted cash were $345.3 million as of March 31, 2024 and $348.9 million on December 31, 2023. We have achieved a total of approximately $420.1 million in upfront payments and milestones from CSL as of March 31, 2024. We expect to continue to receive future milestone payments from CSL that will support the ongoing development of the COVID and flu program and three additional vaccine programs by CSL. The expected cash runway extends at least three years based on the current pipeline and program. 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 delivery of Kostaive vaccine later this year in Japan, we look forward to beginning to report potential commercial sales in 2024. I will now pass the call back to Joe.
Joe Payne: Thanks, Andy. We've continued to make excellent progress in our pipeline of mRNA vaccines and therapeutics and advanced our proprietary mRNA and LUNAR delivery platform technologies. We're excited indeed about the initiation of our commercialization process for Kostaive. And with that, we'd like to turn the time over to the operator for questions.
Operator: [Operator Instructions]. Your first question comes from Evan Wang with Guggenheim Partners.
Evan Wang: Two for me. First, with the therapeutics update on July 1st, with the date set now, hoping you can help set some expectations for number of OTC and CF patients that we'll see and whether you're confident that this will be sufficient number of patients and time course to really interpret? And second, can you walk us through the rationale for the Meiji monetization of our ARCALIS just given the strong cash position? Thanks.
Joe Payne: With respect to the Meiji monetization or the ARCALIS monetization question, I'll defer that to Andy. But I can address your first question. You've asked for further detail around the July 1st meeting that we've announced. We're going to be providing an interim data readout for Phase 1b for the ARCT-032 cystic fibrosis program. We anticipate this to be the enrollment for this to be completed by July 1st. And also, we'll be sharing some Phase 2 data and a progress update for the OTC program, but this will be on a subset of patients, not a complete set. And this will likely be communicated in the form of a press release. Did I address your question on that one before we go to Andy to address the ARCALIS question?
Evan Wang: We have any data from the additional or the higher dose cohort at that point? Or is it still too early to say?
Joe Payne: We'll be able to disclose more details on July 1st. And then Andy, how about if you can address the ARCALIS?
Andy Sassine: Obviously, we as a management team and the Board made a strategic decision to work very closely with a group of global established CDMO to help support our manufacturing efforts across our wholly-owned pipeline program. So, we're kind of in a fortunate position that we were able to attract a lot of very strong investment banks that had expressed an interest in helping us monetize this investment. And we were fortunate to be able to select and work with a prestigious bank like JPMorgan to help us look at strategic options. And of course, you can assume that it's a very well-placed asset for a lot of potential players, especially in Japan with the growth of that market and the approval of the vaccine. And certainly, we're excited about the growth of ARCALIS and we're certainly going to be there to support them in many different facets. But this was a strategic decision on behalf of our company and management team to become an asset-light and a variable-cost operating entity at this point in stage of our development. Does that help answer your question?
Operator: Your next question comes from Yasmeen Rahimi with Piper Sandler. Your line is now open.
Liam Hiester: This is Liam Hiester on for Yas. Just our first question in relation to, like, ARCALIS and Kostaive. What are your expectations around Japan's order potentially in 2025? And then what are the current manufacturing capabilities of our ARCALIS of producing both COVID and flu vaccines, and how is that expected to change in the future? Further moving from there, I think, with the OTC and CF program, do you have any tidbits on potential regulatory path forward in those 2 programs? And then also with the July 1st data readout, any specific biomarkers that you will be reporting on at that point. Thank you.
Joe Payne: Andy, do you want to address the outlook for ARCALIS and post-data manufacturing capabilities?
Andy Sassine: No, it's we're excited about the opportunity for our ARCALIS to be producing vaccine for the Japan market soon. They're in the process of getting GMP batches approved for commercialization and we anticipate that that should occur sometime in the third quarter. And so, assuming that is successful, it will be then an opportunity for Meiji to order directly from ARCALIS in terms of manufactured doses. With respect to guiding on future orders and potential opportunities, we're going to really have to defer that to our partners, CSL and Meiji. They prefer to lead those discussions and those kinds of guidance. And so, hopefully, you can respect the request of our partners. And obviously, we're pretty excited about the future opportunity for not only the Japanese market, but for ARCALIS to be a dominant player.
Joe Payne: And with respect to your second question, Liam. For both our OTC and CF programs, I think it's safe to assume that we're intending to expand into the U.S. with OTC, not only expand into the U.S. at some point, but get access to younger, more advanced OTC deficiency disease, so that we can mature that product and the regulatory advancement of that. On the CF side, the Phase 2 plans are around not only the United States, but other countries as well. And we're going to be working closely and have been with the CF Foundation on the design and implementation of that trial.
Operator: Your next question comes from Myles Minter with William Blair. Your line is now open.
Unidentified Analyst: It's Sarah on for Myles. Congrats on another great quarter. So just a couple from us on the 810 program. Can you confirm switching the ARC-810 dosing format from two a three-hour, three step process and then pre-medicating with acetaminophen and antihistamine, in the current phase 2 MAD study after observations in the Phase 1b? And just kind of walk us through the rationale for that switch if it was made. And second, how confident are you that we won't see any febrile reactions in the ongoing MAD portion of the study?
Joe Payne: We had the opportunity to share some of the details around our learnings from Phase 1 and Phase 1b and OTC at the recent SIMD conference. We learned a lot. What is very typical and what we've, I personally experienced throughout my career and those in the field is you have to understand the rate of these infusion-related reactions early in the trial and then you ameliorate these or reduce the frequency and address them through adjustments in premedication and the dosing regimen itself. And we've successfully done that. I believe that we've identified a more effective optimized premedication protocol that involves acetaminophen. It's also, we're happy to utilize a premedication process that does not have steroids. So, it's steroid-sparing, which is important to this population. And so that was a nice learning that we captured from our early trials. And also, we modified the regimen. So, it's a 3-step process for the it's more conservative and subtler in the infusion process. Now this is something that I've this is very typical. So, it's not something we brag about that we've removed these infusion related reaction or at least reduced them significantly, because this is something that is typical for this type of product. But rest assured, all these learnings that we've learned in the Phase 1 and Phase 1b trial have been applied to the Phase 2 trial and we'll be able to give an update on that on July 1.
Operator: Your next question comes from Whitney Ijem with Canaccord Genuity. Your line is now open.
Unidentified Analyst: This is Joanne on for Whitney. Maybe just a quick two-part question. Assuming you're able to show successful delivery of CFTR to lung cells with your LNP. how are you thinking about expanding the inhaled side of the pipeline, whether it's continuing in rare disease setting or potential vaccine or something else? And then maybe thinking towards the Phase 2, are you thinking about targeting null patients or are you more open to broader mutations at that point? Thank you.
Joe Payne: With respect to targeting different mutations, I can allow Pad to address that in a moment. But yes, we are you can imagine the energy at Arcturus now that we're coming to a closing of the enrollment of Phase 1b and working with the CF Foundation on Phase 2, we're excited about what opportunities can we do outside of CF. And so those discussions are dynamic and very fun here at Arcturus. But we haven't disclosed what our next steps are, our next targets in the lung. But there will be a time and a place to do that. But we are also excited about initiating and getting on to the Phase 2 trial, of course, assuming Phase 1b is good and we'll provide an update on that on July 1. But with respect to are we going to be going after other mutations, my initial response is we're going to be initially focusing on non-modulator responsive patients. This includes the Class 1 sub patient population of the CF community and also those that do not respond to the presently approved modulators. But in terms of other details of the different types of patients, Pad, anything to add there?
Pad Chivukula: No. Obviously, I think you've touched the nail on head, Joe. I mean, obviously, our therapeutic using mRNA is mutation agnostic. So, we can go after a larger subset of patients, but, those, some of the other mutations are well served as you as you well know. So, I think the biggest need currently is in the null patient population, and we'll focus on that initially. But we obviously will look at a broader indication in the future as well.
Operator: Your next question comes from Yanan Zhu with Wells Fargo. Your line is now open.
Yanan Zhu: Thanks for taking my question. Congrats on the progress. Maybe first a question on the Japan order. Is this 4 million order an initial order, or could there be additional order for this season? Also, have Meiji set a price. And what is the out of pocket, if we, if a local government subsidy is considered? Thanks.
Joe Payne: That's a good question for Andy.
Andy Sassine: As I mentioned a little earlier, I think, ARCALIS is in the process of getting 3 GMP batches manufactured and getting it approved so that it could become commercial. And so that time frame is probably going to be in the third quarter. So, if they're successful, then that certainly opens the door for ARCALIS to deliver additional vaccines, and it'll certainly be up to Meiji to make that decision. So that's, I think, a very important kind of catalyst to be looking for. And we're certainly supporting our catalyst in this endeavor, and hopefully, they'll be successful with the timeline. With respect to the pricing, I think there are a lot of people have asked that question. And if you look at the Ministry of Health website, there's been a few numbers that have been reported as about $100 per dose. And we've also learned that the market price for Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) is higher than that. So, we're pretty comfortable and I think Meiji is pretty comfortable with the pricing of the vaccine right now and pretty excited to start to commercialize Kostaive in Japan. With respect to your second part of the question, I apologize, but could you repeat what it was again?
Yanan Zhu: Out of pocket cost after the local government subsidy.
Andy Sassine: Yes. We have learned through numerous sources in Japan that the local government as well as the national government will subsidize about 80% of the vaccine price. So obviously, a very encouraging support from the government. And as you know, this is a strategic investment and position on behalf of the Japanese government for the people to protect them in the future because it is one of the only state of the art mRNA manufacturing facility located in Japan. And so, Japan and their people will be protected going forward in the event, hopefully, of any future pandemics or breakouts. So certainly, a very important strategic decision on behalf of the government and we were very fortunate to be selected by the government and Meiji to be their partner.
Yanan Zhu: If I may ask a question about the CF program. I was mainly wondering about is there a biomarker that can guide the dose finding, whether it is in the current Phase 1b or in the next Phase 2, what's the plan to identify a dose? Is it going to be the FEV1 like a functional endpoint or is there a biomarker that can help in that regard?
Joe Payne: Dosing has been guided largely by safety and tolerability measures in our Phase 1 and Phase 1b trials. With respect to a biomarker, there isn't one that's driving these decisions. We anything else to add there, Pad?
Pad Chivukula: No, I think yes. For this program specifically, yes, it's not driven through biomarkers. That's correct. And it's more harder inputs.
Joe Payne: Yes. In terms of lung volume and FEVs and lung clearance indices, that will be, there'll be opportunities to address those questions.
Operator: Your next question comes from Yigal Nochomovitz with Citigroup. Your line is now open.
Unidentified Analyst: This is [indiscernible] on for Yigal. Thank you for taking my question. We had a couple. First, we wanted to know about the math of this $4 million and how we should calculate it. So basically $100 per dose and then $4 million gets us to $400 million and you have like 30% around 30% economics of it. Is that the right way to think about your share of the revenue here? And when will this revenue be booked? Is that going to be all in third quarter 2024? Or is it going to be spread in the next few quarters?
Andy Sassine: Yes. No, those are very good questions. And as I said on the call earlier, we will provide more substance and color in the fourth quarter. And hopefully, you can be a little patient with respect to those questions and answers. With respect to the breakout between AGCSL and Arcturus, we're really not allowed to comment on that at this point, except to say that we're all very pleased with the economic sharing opportunity and certainly are grateful to be able to work with 3 distinguished global partners and especially with their commercial distribution capability, not only within Japan, but globally. So, our profit share is 60/40 split with CSL globally on a gross profit basis. So, obviously, we can't do that with a third partner. So, you'll have to somehow improvise and assume that it'll be split somehow in 3 manners, 3 ways. And hopefully, that will give you some color that this is a very lucrative opportunity for all three players involved.
Unidentified Analyst: Okay. Great. Thanks. And one more on Arcturus. What can you tell us about the how much your stake at Arcturus was? And is there any good comp for what the manufacturing size with that size was worse? Or also what are the timelines you are looking at to monetize this opportunity?
Joe Payne: Are you asking, I just want to be, oh, you got the question, Andy. You understood.
Andy Sassine: No, I think, you're kind of fortunate that there's a number of publicly traded comps in the United States that should give you a perspective on the valuation of CDMOs that are participating in the mRNA space. And you can also take a look at what Aldebaran would purchase for from Idanahir recently in the last few years and certainly Catalent (NYSE:CTLT) was acquired as well and there's a few other publicly traded comps that you can evaluate. So, it's a market that I think is very attractively valued because of the growth potential for this mRNA therapeutic going forward. And hopefully, appropriate party that wants to be a part of growing this operation. We'll help develop it and that is our goal to work closely with them.
Operator: Your next question comes from Ed Arce with H.C. Wainwright & Company.
Ed Arce: Great. Thanks for taking my questions. A couple of our questions around cost save and ARCALIS and that order coming up later this year have been answered. But I wanted to get back to your therapeutics pipeline, in particular the 2 programs with an update on July 1. I was hoping that you could share some granularity on the data that you expect to present on that Monday as well as what are your data thresholds for success in both of those programs to support further development?
Joe Payne: It's an important day for us, this July 1 meeting for sure. So, I appreciate the question. The interim data set for the Phase 1b ARCT-032 CF program primarily focused on safety and tolerability of 2 administrations of this therapeutic. We may be able to give additional granularity or guidance on the dosing and the specific regimen that we are utilizing. And it provides another opportunity to give more details or guidance on the subsequent Phase 2 trial that's getting planned as you can appreciate. But in terms of data, I think the primary objective is to establish safety and tolerability of 2 inhaled administrations of this product and get people or help people understand the dosing and the regimen that we're pursuing for Phase 2. And then with respect to ARCT-810, mentioned it is on a subset of patients, it won't be the complete enrollment, but we are looking for biomarker changes primarily from a data perspective that unlike the patients in Phase 1 and Phase 1b, these Phase 2 patients are more advanced. There's also adolescents participating in this trial, so they're younger as well. So, more variability in biomarkers from the onset. So, what we'd like to see is some biomarker changes there. And so that's and there's, there'll be more information to provide on July 1.
Operator: Your next question comes from Yale Jen with Laidlaw & Company. Your line is now open.
Yale Jen: Good afternoon, and thank for taking my question. Both are related to the Japan part. The first one is that the Japanese government has, I believe, funded the ARCALIS construction and production. So, would that number times your share of the company will be a proxy for the potential value of that asset? And then I have a follow-up.
Andy Sassine: Ed, you can assume. No. Good question. Obviously, the money provided by the Japanese government was all in the form of grants. And of course, our partner, Axcelead has worked very closely to construct this factory with our construction partners in Japan. And you can assume that it's a lot more than $165 million to build the state-of-the-art factory that has three different facilities, located within one premise. So, it is a part of the investment that was made, but there are substantially more capital that have gone in through the investment made by Axcelead and with partners, who are the NACO shareholders and equity partners in this joint venture. So hopefully that gives you some perspective of the amount of capital. It is pretty substantial.
Yale Jen: And maybe the next question or the last question here is that. In terms of formula doses that the major potential to deliver in the third quarter. What are the targeted COVID strain of that vaccine?
Joe Payne: The WHO came out and announced that the JN.1 variant was going to be the variant of concern or focus for the upcoming fall and winter seasons. The PMDA traditionally listens carefully to that recommendation and aligns with it. So, I think it's safe to assume that the JN.1 variant is likely the one that we're referring to with respect to the 4 million doses, but the formality of that announcement will likely come from Meiji.
Yale Jen: And maybe just squeezing one more for Andy, starting for the last two quarters, you have the grand revenue from BARDA. So, should we anticipate this figure from modeling purpose to continue quarter-over-quarter or that's more lumpy?
Andy Sassine: No, that's a very good question. It is, we don't provide guidance typically with respect to the quarterly type of milestones that we anticipate because they are dependent on certain variables that need to be achieved and targets that we need to achieve. And sometimes those targets can slip from quarter-to-quarter. It's not a linear progression model, right? So, I prefer to avoid quarter-to-quarter type of guidance and prefer to focus on our three-year projections and the ability to be able to determine within a reasonable time frame how much milestone we should earn within a year or two or three, a lot easier to do that versus quarter to quarter. I hope you can appreciate that. I'd love to give you more color and maybe in the fourth quarter when we begin to ship the Coast Dave revenues and collect the commercial milestones. Hopefully, that will enable us to have a little bit more quarter-to-quarter type of perspective, but I prefer to remain conservative and guide you when I have a better, assessment of what's going to happen in the near term.
Operator: There are no further questions at this time. I will now turn the call over to Joe for closing remarks.
Joe Payne: We appreciate all the participation on the call. If there are remaining questions, please don't hesitate to reach out to our team, and we'll get back to you. Okay? Thanks to everyone. Good night.
Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
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