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Item 1. Business

2024-03-14 compared with 2023-03-29 · 721 added, 629 removed, 1040 unchanged (56% of the section changed)

We are a global late-stage clinical messenger RNA medicines and vaccine company focused on the development of infectious disease vaccines and significant opportunities within liver and respiratory rare diseases.

In addition to our messenger RNA (“mRNA”) platform, our proprietary lipid nanoparticle (“LNP”) delivery system, LUNAR ® , has the potential to enable multiple nucleic acid medicines, and our proprietary self-amplifying mRNA technology (Self-Transcribing and Replicating RNA, or STARR, technology) has the potential to provide longer-lasting RNA and sustained protein expression at lower dose levels as compared to conventional mRNA.

We are a global messenger RNA medicines company focused on the development of infectious disease vaccines and therapeutics for liver and respiratory rare diseases.

In addition to our messenger RNA (“mRNA”) platform, our proprietary lipid nanoparticle (“LNP”) delivery system, LUNAR ® , may enable multiple nucleic acid medicines.

Our proprietary self-amplifying mRNA technology (Self-Transcribing and Replicating RNA, or STARR ® , technology) may provide longer-lasting RNA and sustained protein expression at lower dose levels as compared to conventional mRNA.

We are leveraging our proprietary LUNAR platform and our nucleic acid technologies to develop and advance a pipeline of mRNA-based vaccines and therapeutics for infectious diseases and rare genetic disorders with significant unmet medical needs.

We continue to expand this platform by adding new innovative delivery solutions that allow us to expand our discovery efforts.

We continue to expand this platform by adding new innovative delivery solutions that allow us to expand our efforts.

Our proprietary LUNAR technology is intended to address the major hurdles in RNA drug development, namely the effective and safe delivery of RNA therapeutics to disease-relevant target tissues.

We believe the versatility of our platform to target multiple tissues, its compatibility with various nucleic acid therapeutics, and our expertise in developing scalable manufacturing processes can allow us to deliver on the next generation of nucleic acid medicines.

We were a preclinical company until June 2020, when we initiated our first Phase 1 study for our mRNA-based therapeutic candidate for ornithine transcarbamylase (“OTC”) deficiency.

We launched our COVID-19 vaccine program in March of 2020, and we progressed to a late-stage clinical company in September 2021 with the initiation of the Phase 3 arm of a Phase 1/2/3 study in Vietnam for ARCT-154, our lead self-amplifying mRNA vaccine candidate against COVID-19.

Our vaccines franchise, led by our self-amplifying mRNA based COVID-19 program, made significant strides in 2022.

In April 2022, the Phase 1/2/3 study in Vietnam of ARCT-154, our lead self-amplifying mRNA COVID-19 vaccine candidate, completed dosing of over 19,000 participants and we announced that ARCT-154 met its primary efficacy endpoint in the study.

In November 2022, we entered into a Collaboration and License Agreement (the “CSL Collaboration Agreement”) with Seqirus, Inc.

(“CSL Seqirus”), a part of CSL Limited, and one of the world’s leading influenza vaccine providers, for the global exclusive rights to research, develop, manufacture and commercialize self-amplifying mRNA vaccines against COVID-19, influenza and three other respiratory infectious diseases with non-exclusive rights to pandemic pathogens.

In June 2020, we initiated our first clinical study, a Phase 1 study for our mRNA-based therapeutic candidate for ornithine transcarbamylase (“OTC”) deficiency.

We launched our COVID-19 vaccine program in March 2020, and in November 2023, our self-amplifying mRNA vaccine against COVID-19, ARCT-154, received marketing approval in Japan.

In November 2022, we entered into a Collaboration and License Agreement (the “CSL Collaboration Agreement”) with Seqirus, Inc.

(“CSL Seqirus”), a part of CSL Limited and one of the world’s leading influenza vaccine providers, for the global exclusive rights to research, develop, manufacture and commercialize self-amplifying mRNA vaccines against COVID-19, influenza and three other respiratory infectious diseases and global non-exclusive rights to pandemic pathogens.

The CSL Collaboration Agreement became effective on December 8, 2022.

The collaboration combines CSL Seqirus’

established global vaccine commercial and manufacturing infrastructure with Arcturus’

manufacturing expertise and innovative STARR self-amplifying mRNA vaccine and LUNAR® delivery platform technologies.

Under the framework of our collaboration with CSL Seqirus, we are evaluating in preclinical studies the efficacy and safety of a seasonal influenza vaccine (our LUNAR-FLU mRNA vaccine candidate).

Pursuant to a third party study agreement executed in December 2022 with Meiji Seika Pharma Co., Ltd.

(“Meiji”), a Japanese leader in the area of infectious disease, a Phase 3 clinical trial of ARCT-154 was initiated in Japan by Meiji to evaluate safety and immunogenicity of a booster shot of ARCT-154, and to evaluate non-inferiority of ARCT-154 as a booster.

The trial targeted a total of 780 adult participants, with half in the ARCT-154 group and half in a comparator group (Comirnaty®, Pfizer-BioNTech), and completed enrollment with 828 participants in February 2023.

We continued to advance our rare disease pipeline and collaborations.

In our ornithine transcarbamylase (OTC) deficiency program, the Phase 1b single ascending dose study of ARCT-810 (LUNAR-OTC) in adults with OTC deficiency completed dosing of the initial three dose cohorts in November 2022.

The protocol was amended to add a fourth dose cohort, and we anticipate full enrollment in the second quarter of 2023.

Furthermore, our Phase 2 multiple ascending dose study of ARCT-810 in OTC-deficient adolescents and adults has been approved in several countries including the UK, Spain, Belgium, France and Sweden and the first patient was dosed in December 2022.

We expect to release interim data on a subset of participants in 2023 in conjunction with the declaration of additional liver therapeutic programs.

For the cystic fibrosis program, results from a series of nonclinical studies have led us to an optimized formulation and aerosol delivery system that is being advanced into the clinic.

A First-in-Human study for ARCT-032 (LUNAR-CF), our mRNA therapeutic candidate for cystic fibrosis, has successfully dosed the first two cohorts in New Zealand and intends to enroll 32 participants to evaluate safety, tolerability and pharmacokinetics at four dose levels.

We also continued to make significant progress with our platform technologies and with product development, manufacturing processes and operations.

In addition to general development of our LUNAR platform, we continued to test and expand enabling technologies of our platform, including genome editing and immuno-oncology.

With our sourcing partners, we manufactured cGMP batches (current good manufacturing practices) yielding significant quantities of clinical trial materials for global studies of our candidates, including ARCT-810 (LUNAR-OTC) and ARCT-154 (LUNAR-COV19).

Nucleic Acid Medicines and an Introduction to Arcturus’

Platform Technologies

The collaboration (“CSL Collaboration”) combines CSL Seqirus’ established global vaccine commercial and manufacturing infrastructure with Arcturus’ manufacturing expertise and innovative STARR self-amplifying mRNA and LUNAR delivery platform technologies.

Our vaccines franchise, led by a self-amplifying mRNA-based COVID-19 program under license to CSL Seqirus, made significant strides in 2023, highlighted by the marketing authorization approval in Japan of ARCT-154.

The approval is the world’s first for a self-amplifying RNA (sa-mRNA) COVID-19 Vaccine.

In August 2023, we successfully completed the 12-month safety follow-up of the pivotal Phase 1/2/3 study in Vietnam of ARCT-154 that completed dosing in April 2022 of over 19,000 participants.

In February 2023, Meiji Seika Pharma Co., Ltd.

(“Meiji”), a Japanese leader in the area of infectious diseases, completed dosing of a Phase 3 clinical trial of ARCT-154 in Japan to evaluate the safety and immunogenicity of a booster dose of ARCT-154, and to assess the non-inferiority of ARCT-154 to a licensed mRNA vaccine, administered as a booster.

Meiji conducted the study under its exclusive partnership with CSL Seqirus for the distribution of ARCT-154 in Japan.

The study enrolled 828 adult participants, with half in the ARCT-154 group and half in a comparator group (Comirnaty®, Pfizer-BioNTech).

The results of this study demonstrated that a booster dose of ARCT-154 elicited a numerically higher immune response (meeting the non-inferiority criteria) against the original Wuhan-Hu-1 virus strain and a superior immune response against Omicron BA.4/5 subvariant of SARS-CoV-2 virus compared to a booster dose of the conventional mRNA vaccine Comirnaty®.

These Phase 3 study results were used to support the approval of ARCT-154 in Japan for primary immunization and as a booster dose.

Within the framework of the CSL Collaboration, we continue the development of the COVID-19 vaccine to establish a differentiated platform and address routine recommendations for periodic vaccine composition updates in a timely manner.

In 2023, we, along with our partner CSL Seqirus, developed a bivalent version of the self-amplifying mRNA vaccine (Bivalent ARCT-2301), including the Wuhan-Hu1 strain and Omicron BA.4/5 subvariant.

The clinical study with this vaccine candidate was initiated in September 2023 in Japan.

The immunogenicity and safety of Bivalent ARCT-2301 are being compared with those of the bivalent composition of the licensed conventional mRNA COVID-19 vaccine.

The LUNAR-FLU program, also under the CSL Collaboration, has made significant progress as well.

In 2023, we generated a comprehensive non-clinical data package to support a Phase 1 clinical trial with a novel seasonal influenza mRNA vaccine candidate and received all necessary approvals to initiate the Phase 1 study in Australia.

We initiated dosing in this 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 (84 young adults and 48 older adults) are planned to be recruited in this Phase 1 clinical study.

In August 2023, we entered into an amendment to the CSL Collaboration Agreement, pursuant to which CSL Seqirus made a $17.5 million milestone payment related to a development milestone for the LUNAR-FLU program.

We continue to advance our rare disease pipeline and collaborations.

In our ornithine transcarbamylase (OTC) deficiency program, the Phase 1b single ascending dose study conducted in the United States of ARCT-810 (LUNAR-OTC) in adults with OTC deficiency completed enrollment and dosing of all four cohorts (N=16 subjects).

The trial assessed safety, tolerability and pharmacokinetics of a single dose of ARCT-810, as well as various exploratory biomarkers of drug activity.

The final database lock occurred in December 2023.

A Phase 2 multiple-dose study of ARCT-810 in OTC-deficient adolescents and adults initiated dosing in December 2022 and plans to enroll approximately 24 participants in two dose cohorts.

The study is being conducted in the UK and several countries in the European Union.

ARCT-810 received Orphan Drug Designation from the FDA and the European Medicines Agency (the “EMA”) for treatment of OTC deficiency.

ARCT-810 was also granted Fast Track Designation in May 2023 and Rare Pediatric Disease Designation in June 2023.

Our mRNA therapeutic candidate for cystic fibrosis, ARCT-032 (LUNAR-CF), successfully achieved the recruitment target and administration in a First-in-Human study in New Zealand, a Phase 1 single ascending dosing study with 32 healthy participants (eight subjects in each of four dose cohorts).

In August 2023 we received regulatory approval for a protocol amendment to transition to a Phase 1b clinical study of ARCT-032 in up to eight adults with CF, with each participant receiving two administrations of ARCT-032.

Dosing began in patients with CF in November 2023 and enrollment is ongoing.

The FDA granted Rare Pediatric Disease Designation for ARCT-032 in October 2023.

ARCT-032 was granted Orphan Drug Designation by the FDA in November 2023 and Orphan Medicinal Product Designation by the EMA in February 2024.

We also continued to improve our platform technologies and to advance our early-stage research activities and manufacturing process development and operations.

We continue to conduct exploratory platform development activities, including the evaluation of genome editing, and new targeting approaches, where our LUNAR and STARR platforms could potentially be useful for identification and development of additional products for our portfolio.

Also, with our sourcing partners, we manufactured cGMP batches (current good manufacturing practices) yielding significant quantities of clinical trial materials for global studies of our candidates, including ARCT-810 (LUNAR-OTC), ARCT-032, (LUNAR-CF), ARCT-154 (LUNAR-COV19) and ARCT-2301 (Bivalent LUNAR-COV19).

Nucleic Acid Medicines and an Introduction to Arcturus’ Platform Technologies

Nucleic Acid Medicines

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Within a cell, DNA carries the blueprint, in the form of genes, from which all proteins necessary for life are encoded.

Each gene’s code is transcribed into a nucleic acid molecule called mRNA, which informs the cell’s own machinery how to organize amino acid building blocks to make one or more proteins needed for normal biological function.

Nucleic acid therapeutics represent a significant advancement in targeted medicines and several of this class of therapeutics are being developed by public and private companies.

Nucleic acid therapeutics represent a significant advancement in targeted medicines and several of these therapeutics are being developed by public and private companies.

The general objectives of these therapies include:

to increase the amount of a functioning target protein by introducing a functional gene or mRNA that encodes for a protein that replaces a malfunctioning protein (mRNA therapy, CRISPR, gene therapy);

• to introduce a gene product (e.g., mRNA, CRISPR, gene therapy) that encodes for a functional protein to replace an absent or defective protein;

• to restore a functional protein by correcting its encoding mRNA sequence;

to reduce the amount of a target protein in a patient by binding to and destroying the associated target mRNA (antisense and small interfering RNA (“siRNA”));

to introduce proteins from viruses or malfunctioning proteins in certain cancers to train the immune system to recognize and clear these proteins (nucleic acid vaccines).

• to reduce the amount of a target protein in a patient by binding to and destroying the associated target mRNA (antisense and small interfering RNA (“siRNA”));

• to introduce proteins from viruses or malfunctioning proteins obtained from certain cancers to train the immune system to recognize these proteins and clear these viruses or cancer cells (nucleic acid vaccines).

Brief Introduction to our LUNAR ® and STARR ® Technology Platforms

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We continue to expand our library of proprietary lipids, termed ATX, with over 250 to date.

Our preclinical studies have shown that formulations can be customized for the indication and target cell type of interest, and we have also demonstrated that our formulation process is scalable and reproducible.

Our preclinical studies have shown that formulations can be customized for the indication and target cell type of interest, and we have also demonstrated that our proprietary formulation process is scalable and reproducible.

Our LUNAR platform is described in more detail below.

Our STARR technology is our proprietary self-amplifying mRNA (or saRNA) technology platform.

Our STARR technology is our proprietary self-amplifying mRNA (or sa-mRNA) technology platform.

When combined with a delivery system, such as our lipid-mediated delivery system LUNAR, the STARR technology has the potential to generate a protective immune response or drive therapeutic protein expression to prevent against or treat a variety of diseases.

Self-amplifying RNA-based prophylactic vaccines developed with STARR may trigger rapid and prolonged antigen expression within host cells affording patients protective immunity against infectious pathogens.

We have clinically shown that the combination of LUNAR and STARR technology results in lower dose requirements (accompanied by fewer side effects) due to superior immune response and sustained protein expression compared to non-self-amplifying RNA-based vaccines and enables us to produce greater volumes of vaccine doses more quickly.

With the full enrollment of the pivotal Phase 1/2/3 study in Vietnam of ARCT-154, our next generation, self-amplifying mRNA-based vaccine candidate against COVID-19, and the initiation of a Phase 3 clinical trial of ARCT-154 in Japan, we are a global leader in the clinical development of self-amplifying RNA-based vaccines.

Our STARR platform is described in more detail below.

Self-amplifying RNA-based prophylactic vaccines developed with STARR may trigger rapid and prolonged antigen expression within host cells affording individuals protective immunity against infectious pathogens.

We have clinically shown that the combination of LUNAR and STARR technology can result in lower dose requirements with superior immune response and sustained protein expression compared to non-self-amplifying RNA-based vaccines, which may enable production of greater volumes of vaccine doses more quickly.

Development Programs

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Outbreaks of new infectious diseases, and the rise of variants to existing viruses, create demand for new and novel approaches to producing vaccines in a more cost effective and quicker manner.

The COVID-19 pandemic has highlighted the efficacy, safety, and rapidity in which nucleic acid medicines can be used to vaccinate vulnerable populations.

In 2020, we initiated the development of our first self-amplifying mRNA vaccine candidate, ARCT-021, to protect against COVID-19 and commenced a Phase 1/2 trial in 2020 and two Phase 2 trials in 2021.

In 2021, we began development of two next generation vaccine candidates designed to elicit an improved neutralizing antibody response to circulating strains of SARS-CoV-2, including our lead self-amplifying mRNA vaccine candidate against COVID-19, ARCT-154.

In April 2022, dosing of over 19,000 participants was completed in a Phase 1/2/3 study of ARCT-154 in Vietnam, and we announced that ARCT-154 met its primary efficacy endpoint in the study.

We also expanded our vaccine franchise to include seasonal influenza.

Progress in our vaccine franchise was highlighted in 2022 by the entry into the CSL Collaboration Agreement with CSL Seqirus for the global exclusive rights to research, develop, manufacture and commercialize self-amplifying mRNA vaccines against COVID-19, influenza and three other respiratory infectious diseases with non-exclusive rights to pandemic pathogens.

The CSL Collaboration Agreement became effective in December 2022.

The collaboration combines CSL Seqirus’

established global vaccine commercial and manufacturing infrastructure with Arcturus’

manufacturing expertise and innovative STARR self-amplifying mRNA vaccine and LUNAR® delivery platform technologies.

For a more comprehensive discussion of the CSL Collaboration Agreement, please see Item 1 “Business”

“Revenue and Collaboration Arrangements and Other Material Agreements”

“CSL Seqirus.”

Development Program –

The COVID-19 pandemic has highlighted the efficacy, safety, and rapidity in which nucleic acid medicines can be used to vaccinate vulnerable populations, and our vaccine program has continued to progress.

In 2020, we initiated the development of our first self-amplifying mRNA vaccine candidate to protect against COVID-19.

In December 2022 we entered into the CSL Collaboration Agreement, which combines CSL Seqirus’ established global vaccine commercial and manufacturing infrastructure with Arcturus’ manufacturing expertise and innovative STARR self-amplifying mRNA vaccine and LUNAR delivery platform technologies.

For a more comprehensive discussion of the CSL Collaboration Agreement, please see Item 1 “Business” – “Revenue and Collaboration Arrangements and Other Material Agreements” – “CSL Seqirus.” In a Phase 3 clinical study in Japan that completed dosing in February 2023, ARCT-154, administered as a booster dose, achieved a numerically higher immune response (meeting the non-inferiority criteria) against the original Wuhan-Hu-1 virus strain, and a superior immune response against Omicron BA.4/5 subvariant of SARS-CoV-2 virus compared to a booster dose of the conventional mRNA vaccine Comirnaty®.

In November 2023, ARCT-154 was approved for primary immunization and as a booster dose in Japan.

This approval marks the world’s first approval for a self-amplifying RNA (sa-mRNA) COVID-19 Vaccine.

In collaboration with CSL, and CSL's partner Meiji, we continue to generate clinical data to support using the self-amplifying vaccine platform for seasonal updates of the COVID-19 vaccine.

Our influenza vaccine franchise continued to expand, with the initiation of the Phase 1 clinical trial in January 2024 for the seasonal influenza candidate vaccine under our collaboration with CSL and our continued efforts under our pandemic influenza vaccine program with BARDA.

Development Program

Coronaviruses are a family of viruses that can lead to respiratory illness.

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Since late 2021, infections have been dominated by subvariants of the Omicron strain, which continue to displace previous circulating strains by evading immunity and spreading more efficiently, resulting in an increased risk of breakthrough infection among the vaccinated.

Despite the expeditious Emergency Use Authorization (“EUA”) and rollout of vaccines in many

countries, vaccine efficacy rates vary widely to currently circulating variants.

Additionally, relatively low percentages of people worldwide have received booster doses, including doses of a bivalent booster that encode Omicron spike, important for protection against rapidly emerging Omicron sub-strains.

As the world pivots from a pandemic to an endemic response to SARS-CoV-2 infections, primary and booster vaccines that induce a robust and durable immunity against current and emerging variants of concern (“VOCs”) can help to reduce the infection and disease burden for both the public and the health care systems globally.

As such, we are developing the next generation of mRNA vaccines, which have demonstrated encouraging antibody data, including neutralizing antibodies against several variants of concern, including Omicron, boosting pre-existing immunity to SARS-CoV-2.

Despite the expeditious Emergency Use Authorization (“EUA”) and rollout of vaccines in many countries, vaccine efficacy rates vary widely to currently circulating variants.

The current recommendations include seasonal vaccination of risk populations against COVID-19, using vaccine compositions, including the new emergent SARS-CoV-2 variants.

As the world pivots from a pandemic to an endemic response to SARS-CoV-2 infections, primary and booster vaccines that induce robust and durable immunity against current and emerging variants of concern (“VOCs”) can help to reduce the infection and disease burden for both the public and the health care systems globally.

As such, through the CSL collaboration, we are developing the next generation of mRNA vaccines, which have demonstrated encouraging immunogenicity data, including neutralizing antibody responses against various variants of concern, including Omicron, boosting pre-existing immunity to SARS-CoV-2.

Our initial COVID-19 vaccine candidate, ARCT-021, developed in conjunction with Duke-NUS Medical School, is based on our STARR (self-amplifying mRNA) technology platform and demonstrated antibody and cell-mediated immunogenicity and an excellent safety profile through Phase 2 clinical trials.

This vaccine was designed to promote immune responses to the spike protein of the SARS-CoV-2 virus, the critical part of the virus that allows infection to occur.

Our next generation vaccine candidate, ARCT-154 is based on the same platform as ARCT-021.

We modified the coding region to stabilize the spike protein and increase immune recognition to the receptor binding domain to improve neutralizing antibody titers and cross-protection to VOCs.

Results to date have established the efficacy and safety of ARCT-154 in a large Phase 3 clinical trial in Vietnam.

Phase 1/2 Study in United States, Singapore, and South Africa

In January 2022, we announced immunogenicity data for participants of a Phase 1/2 study being conducted in the United States and Singapore.

Results from the arms where participants were dosed with five (5) mcg of ARCT-154 as a booster after at least five months of being vaccinated with two doses of Comirnaty (Pfizer-BioNTech) showed encouraging increases in levels of neutralizing antibody activity against D614G and several variants of concern (VoCs) and variants of interest (VoIs).

In May 2022, we provided additional neutralization antibody activity data at Day 91 showing durability of neutralizing antibody response.

Validated pseudovirus microneutralization (MNT) assay results for D614G variant showed a 28- and 40-fold increase in geometric mean fold rise (GMFR) on Day 15 and 29 after booster dose compared to pre-dose levels, respectively.

The antibody levels remained elevated at 30-fold for Day 91 over pre-boost levels indicating the durability of the neutralizing antibody response.

We also shared immunogenicity data obtained in a validated MNT assay against Beta variant and the data indicated similar durability of the neutralizing antibody response with the increases in GMFR of 26-, 31-, and 24-fold at Days 15, 29, and 91, respectively.

From the same Phase 1/2 trial, we also reported data (exploratory MNT assay;

Moore Laboratory, National Institute for Communicable Diseases and University of the Witwatersrand, South Africa (“MNT Assay;

Moore Laboratory”)) demonstrating neutralizing antibody immune response to SARS-CoV-2 Omicron variants, BA.1 and BA.2, in participants that received ARCT-154 as booster.

Omicron-specific pseudovirus MNT assay results demonstrated neutralizing antibody titers of 54-fold (BA.1) and 46-fold (BA.2) GMFRs over baseline on Day 29 post-boost in ARCT-154 arm (n=12).

In August 2022, we reported additional data (MNT Assay;

Moore Laboratory) from the Phase 1/2 trial demonstrating sustained neutralizing antibody immune response to the SARS-CoV-2 Omicron variants, BA.1 and BA.2 at Day 91 post-boost in the ARCT-154 arm (n=12).

Omicron-specific pseudovirus MNT assay results demonstrated neutralizing antibody titers of 44-fold (BA.1) and 39-fold (BA.2) at Day 91 post-boost.

The following additional data from the Phase 1/2 trial demonstrates robust binding and neutralizing antibody titers out to 9 months post-vaccination with ARCT-154 boost.

In an exploratory pseudovirus neutralization assay, durable neutralizing antibody responses were observed with antibody GMFR increases at Day 271 from baseline (Day 1) of 41-, 30-, and 19-fold for Omicron BA.1, BA.2, and BA.4/5, respectively (Figure X).

Similar data has been generated for Omicron BA.1 on a validated microneutralization assay.

Additionally, in an ACE2 surrogate neutralization panel, greater than a 4-fold GMFR was observed at Day 271 across all tested SARS-CoV-2 variants (Figure Y).

Data through the end of study for boosted participants is expected in Q2 2023.

Exploratory pseudovirus microneutralization (MNT) assay results, showing GMFR levels of neutralizing antibody responses over Day 1 (baseline levels prior to boosting with ARCT-154) calculated with virus neutralization concentrations (with 95% confidence intervals) obtained for participants (for BA.1, BA.2, and BA.4/5:

n = 12/12, up to Day 91;

n=9, Day 181;

n=8, Day 271).

Data from participants with verified COVID-19 were left out of the analysis.

ACE2 surrogate neutralization panel, showing fold rise of neutralizing antibody responses over Day 1 (baseline levels prior to boosting with ARCT-154) calculated with virus neutralization concentrations (with

95% confidence intervals) obtained for participants across a range of SARS-CoV-2 variants.

Data from participants with verified COVID-19 were left out of the analysis.

Phase 1/2/3 Study in Vietnam

During 2021, we entered into a collaboration with Vinbiocare Biotechnology Joint Stock Company (“Vinbiocare”), a member company of the Vingroup Joint Stock Company (Vingroup) group of companies.

As part of a collaboration with Vinbiocare, ARCT-154, our investigational next generation, self-amplifying mRNA-based vaccine for COVID-19, was advanced into a Phase 1/2/3 study in Vietnam, funded and sponsored by Vinbiocare (the “Vinbiocare Study”).

Our next-generation COVID-19 vaccine candidate, ARCT-154, is also based on our STARR (self-amplifying mRNA) technology platform and our LUNAR platform.

Additional changes were implemented for new generation vaccine candidates to further improve the immunogenicity and tolerability profile and increase vaccine efficacy.

These changes include codon optimization for replicon and spike protein, additional mutations for stabilization of spike protein in pre-fusion confirmation, and changes in the manufacturing process to improve the impurity profile and reduce the amount of double-stranded RNA.

Marketing Authorization Approval of ARCT-154 in Japan

In November 2023, ARCT-154 received marketing authorization approval from the Japanese Ministry of Health, Labour and Welfare for use as a primary immunization and booster in Japan.

The approval was based on positive clinical data from several ARCT-154 studies, including the pivotal 19,000 subject efficacy, safety and immunogenicity study performed in Vietnam as well as the pivotal Phase 3 booster study in Japan.

Marketing Authorization Application for ARCT-154 in Europe

CSL Seqirus and Arcturus submitted a European Medicines Agency (EMA) marketing authorization application for ARCT-154 for active immunization to prevent COVID-19 caused by SARS-CoV-2 in individuals 18 years of age and older.

The application was accepted by EMA for review and the review procedure started on August 17, 2023.

Pivotal Phase 1/2/3 Study in Vietnam

During 2021, we entered into a collaboration with Vinbiocare Biotechnology Joint Stock Company (“Vinbiocare”), a member company of the Vingroup Joint Stock Company (Vingroup) group of companies.

As part of a collaboration with Vinbiocare, ARCT-154, our investigational next-generation, self-amplifying mRNA-based vaccine for COVID-19, was advanced into a Phase 1/2/3 study in Vietnam, funded and sponsored by Vinbiocare (the “Vinbiocare Study”).

The trial is randomized, observer-blinded, placebo, and active-controlled and is intended to assess the safety, immunogenicity, and efficacy of ARCT-154.

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The study enrolled over 19,000 adult subjects in Vietnam, including individuals with medical conditions, putting them at higher risk of severe complications of COVID-19.

The Phase 3 placebo-controlled efficacy portion of the study enrolled over 16,000 participants.

The Phase 3b placebo-controlled efficacy portion of the study enrolled over 16,000 participants.

In February 2022, Vinbiocare provided safety and immunogenicity data from the placebo-controlled Phase 1/2/3a portions of the study with approximately 1,000 participants.

In April 2022, Vinbiocare shared results from the vaccine safety and efficacy analysis of Phase 3b participants.

The vaccine primary efficacy endpoint in the placebo-controlled Phase 3b portion of the study was met.

The primary efficacy endpoint in the placebo-controlled Phase 3b portion of the study was met.

Analysis of the data demonstrated that two 5-mcg doses of ARCT-154 administered 28 days apart resulted in vaccine efficacy of 56.6% (95% CI;

48.7% - 63.3%) for protection against COVID-19 overall and 93.3% (95% CI;

80.4% - 98.9%) against severe and fatal COVID-19, respectively.

80.5% - 98.9%) against severe COVID-19.

Nine COVID-19-related deaths were reported in the placebo group and one in the ARCT-154 vaccinated group.

The single death in the ARCT-154 vaccination arm occurred in an older age group participant who was also at increased risk of severe COVID-19.

During the window when COVID-19 cases in the study were detected, the prevalent SARS-CoV-2 strain associated with COVID-19 infections in Vietnam was Delta.

Review of safety data has been performed by Vinbiocare from over 17,000 participants in the placebo-controlled Phase 1/2/3 portions through one month after second dose of ARCT-154.

The incidence of unsolicited events was found to be comparable in the vaccinated and placebo groups and no cases of myocarditis or pericarditis have been reported so far.

Analysis of solicited events also demonstrated that most events were mild or moderate in severity.

Additional data shared by Vinbiocare shows that the study also met the immunogenicity primary endpoint, with 98.4% 4-fold seroconversion for ancestral (Wuhan) strain, measured by surrogate virus neuralization test (sVNT) 28 days after the second dose of ARCT-154.

This Vinbiocare analysis was conducted in approximately 1,000 participants enrolled in the Phase 1/2/3a study.

The last visit for last subject in this study occurred in Q1 2023 and a six (6) month analysis of safety along with expanded immunogenicity assessment is underway.

More comprehensive immunogenicity, efficacy and safety data from the study will be disclosed at a later time.

On October 31, 2022, Arcturus Therapeutics, Inc., our wholly-owned subsidiary, entered into a Study Support Agreement (the “Vinbiocare Support Agreement”) with Vinbiocare, in furtherance of the Vinbiocare Study, to provide for Arcturus Therapeutics, Inc.

to conduct certain services and take on material financial responsibilities for certain matters to help achieve the objectives of the Vinbiocare Study.

The Vinbiocare Support Agreement provides that we will make certain limited payments to Vinbiocare, including upon the occurrence of specified events through the first quarter of 2025.

Vinbiocare is also eligible to receive a single digit percentage of amounts received by Arcturus on net sales, if any, of ARCT-154 (or next-generation COVID vaccine) up to a capped amount, subject to the limitations set forth in the Vinbiocare Support Agreement.

Phase 3 Non-Inferiority Study of ARCT-154 in Japan

Meiji is sponsoring a randomized, multicenter, Phase 3, observer-blind, active-controlled comparative study to evaluate safety and immunogenicity of a booster shot of ARCT-154 and to evaluate non-inferiority of ARCT-154 as a booster.

During the window when COVID-19 cases in the study were routinely collected, the prevalent SARS-CoV-2 strain associated with COVID-19 infections in Vietnam was Delta.

In the Phase 3b study population comprising 8,059 ARCT-154 recipients and 8,041 placebo recipients, and although local solicited AEs were reported more frequently by ARCT-154 recipients than placebo recipients (52.3% versus 15.3%) after Dose 1 or 2, the majority of solicited local AEs were mild or moderate in intensity.

Solicited local AEs of severe intensity were infrequent in ARCT-154 recipients (0.6%) and mainly consisted of injection site pain and tenderness.

Also, systemic solicited AEs were reported by ARCT-154 recipients more frequently than the placebo recipients (60.5% versus 40.8%), and most solicited systemic AEs were mild or moderate in intensity.

Solicited systemic AEs of severe intensity were reported by 2.7% of ARCT-154 recipients.

No Grade 4 solicited AE was reported in the study.

Local and systemic AEs were less frequent after the second dose than after the first dose of ARCT-154 and generally resolved within three days.

In the entire Phase 3b population and throughout the study, SAEs considered related to the study vaccine were infrequent and reported by 10 ARCT-154 recipients and five placebo recipients from Day 1 to Day 92, and 1 ARCT-154 recipient who had formerly received two placebo doses, from Day 92 to the end of the study.

The administration of the third dose (early booster dose) of the ARCT-154 vaccine approximately two months after the primary vaccination series was not associated with any safety concerns.

No clinically meaningful differences in the safety profile were observed when comparing different subgroups in terms of age/risk groups, sex, or site/region.

No signs of disease enhancement (VAERD) were observed during the study period, judging by the reduction in the severity of the COVID-19 cases observed after one or two doses of the ARCT-154 vaccine.

No case of myocarditis or pericarditis was reported.

Two doses of ARCT-154 were immunogenic in the adult study population without previous exposure to SARS-CoV-2 infection in terms of the induction of neutralizing and IgG-binding antibodies specific to the ancestral strain of SARS-CoV-2.

Moreover, two doses of ARCT-154 induced cross-neutralization responses to Alpha, Beta, Gamma, and Delta/B.1.617.2 variants of concern when measured by the ACE2 surrogate virus neutralization assay.

ACE2 surrogate neutralization panel, showing geometric mean concentrations of neutralizing antibody responses (with 95% confidence intervals) obtained for participants across a range of SARS-CoV-2 variants.

Data from participants with verified COVID-19 were left out of the analysis.

The administration of the third dose of ARCT-154 (early booster after 2-dose primary series) was associated with a further increase in immune responses to the ancestral SARS-CoV-2 strain and Delta and Omicron BA.1 variants of concern.

In August 2023, we submitted the primary manuscript with efficacy, immunogenicity and safety results of the pivotal Phase 1/2/3 clinical study of ARCT-154 in Vietnam.

The preprint of this article is available on https://doi.org/10.21203/rs.3.rs-3329097/v1.

The peer review of the manuscript is ongoing by Nature Communications.

Pivotal Phase 3 Non-Inferiority Study of ARCT-154 in Japan

Meiji is sponsoring a randomized, multicenter, Phase 3, observer-blind, active-controlled comparative study to evaluate the safety and immunogenicity of a booster dose of ARCT-154 and to evaluate the non-inferiority of ARCT-154 over COMIRNATY (Monovalent, Original strain).

The study targeted a total of 780 adult participants, with half in the ARCT-154 group and half in a comparator group, and completed enrollment with 828 participants in February 2023.

Vaccine Platform Stability Data

New data regarding the product format, stability and cold chain characteristics of our lyophilized COVID-19 vaccine compares favorably to existing COVID-19 vaccine stability requirements.

The lyophilized powder

demonstrated room temperature stability for four (4) days (25°C;

60% RH), refrigerator stability for six (6) months (2-8°C), and long-term stability for 18 months (-25°C to -15°C).

The vaccines are approved for shipping at 2-8°C and notably, remain stable in the event of temperature cycling.

Development Program –

Subjects were eligible if they had received three doses of approved mRNA COVID-19 vaccines with the last dose as COMIRNATY at least three months prior to screening.

The immunogenicity of ARCT-154 was non-inferior to COMIRNATY against the SARS-CoV-2 (Wuhan strain), thus meeting the primary objective of the study.

Furthermore, the immunogenicity of ARCT-154 was superior to COMIRNATY against SARS-CoV-2 (Omicron BA.4/5 strain).

(A) Geometric mean titers (GMT) of surrogate neutralizing antibodies at Days 1 (baseline) and 29, and geometric mean-fold rises (GMFR) in titers from Day 1 to Day 29;

B) GMT Ratio;

C) seroresponse rates (SRR) at Day 29;

D) SRR Difference - Study ARCT-154-J01.

GMT – Geometric Mean Titer;

SRR – seroresponse rate.

All values are from the Per Protocol Subset 1 (PPS-1) and are shown with 95% confidence intervals in parentheses.

Solid circles (●) represent the Wuhan variant, and open circles (○) represent the Omicron BA.4/5 variant.

Vertical dashed lines represent the threshold for achieving the non-inferiority comparison of ARCT-154 to Comirnaty.

In addition, the immunogenicity results of ARCT-154 compared to COMIRNATY were not affected by age, sex, time since the last vaccination, antibody titer against SARS-CoV-2 (Wuhan and Omicron BA.4/5 strains) before administration of the study vaccine, and brands of the vaccines administered in the past.

Six months after vaccination, GMTs and SRRs of neutralizing antibodies against SARS-CoV-2 (Wuhan and Omicron BA.4/5 strains) remained higher in ARCT-154 recipients than in COMIRNATY recipients.

Geometric mean titers (with 95% CI bars) of surrogate neutralizing antibodies against the SARS-CoV-2 Wuhan-Hu-1 (panel A) and Omicron BA.4/5 (panel B) strains up to six months after vaccination with one booster dose of either ARCT-154 or BNT162b2.

Geometric mean titer ratios (95% CI) for ARCT-154/ BNT162b2 are shown for Days 29, 91 and 181, and geometric mean-fold rises over baseline (GMFR) with 95% CI are shown for each group at Days 29, 91 and 181.

No safety concerns were raised from the study.

No deaths or ARCT-154-related SAEs were reported.

The proportions of subjects with the solicited local AEs of injection-site swelling, induration, and erythema were lower after administration of ARCT-154 than after administration of COMIRNATY, and the proportion of subjects with solicited systemic AEs was similar in both study arms.

The proportion of subjects with Grade 3 or higher solicited AEs was low in both study arms.

Rates of solicited local reactions and systemic adverse events in the two study groups with severity.

In summary, the pivotal Phase 3 Non-Inferiority Study of ARCT-154 in Japan met all primary and secondary immunogenicity endpoints, including a secondary pre-defined superiority assessment over Comirnaty (Omicron BA.4/5 strain).

Overall, the safety and immunogenicity results of the study support the favorable benefit/risk profile of the ARCT-154 vaccine when administered as a booster dose in adult individuals who previously received other mRNA COVID-19 vaccines.

On July 13, 2023, an article reporting the study results titled “Booster dose of self-amplifying SARS-CoV-2 RNA vaccine vs.

mRNA vaccine:

a Phase 3 comparison of ARCT-154 with Comirnaty” was posted on medRxiv.org at https://www.medrxiv.org/content/10.1101/2023.07.13.23292597v1.

In December 2023, Lancet Infectious Diseases published results of the study showing that a booster dose of ARCT-154, a novel, self-amplifying messenger RNA (sa-mRNA) vaccine, elicited a numerically higher immune

response (meeting the non-inferiority criteria) against the original Wuhan-Hu-1 virus strain, and a superior immune response against Omicron BA.4/5 subvariant of SARS-CoV-2 virus compared to a booster dose of the conventional mRNA vaccine Comirnaty®.

ARCT-154 results were achieved with one-sixth the dose of Comirnaty® (5 μg vs 30 μg).

In January 2024, Arcturus and Meiji submitted the article ‘Persistence of immune responses of a self-amplifying RNA COVID-19 vaccine (ARCT-154) versus BNT162b2’ to Lancet Infectious Disease, with a 6-month follow-up results from this study.

These additional data demonstrate the extended persistence of neutralizing antibodies after ARCT-154 compared with conventional mRNA vaccine in the clinical setting, indicating longer-lasting immunity and implying a longer duration of protection by ARCT-154 (Figure above).

The manuscript was published on February 1, 2024 (https://www.thelancet.com/journals/laninf/article/PIIS1473-3099(24)00060-4/fulltext).

Phase 1/2 Study in United States, Singapore, and South Africa

In January 2022, we announced immunogenicity data for participants of a Phase 1/2 study being conducted in the United States and Singapore.

Results from the arms where participants were dosed with five mcg of ARCT-154 as a booster after at least five months of being vaccinated with two doses of Comirnaty (Pfizer-BioNTech) showed encouraging increases in levels of neutralizing antibody activity against D614G and several variants of concern (VoCs) and variants of interest (VoIs).

On August 7, 2023, we announced that Phase 1/2 clinical trial data demonstrated one-year durability of immune response following ARCT-154 booster vaccine administration as measured using validated microneutralization (MNT) assays.

The geometric mean fold rise (GMFR) in neutralizing antibodies remained greater than 10-fold above baseline for one year across a panel of SARS-CoV-2 variants, including ancestral strain with the D614G mutation, Beta (B.1.351), Delta (B.1.617.2), and Omicron (BA.1, BA.2 and BA.4/5), for participants receiving ARCT-154 booster.

The results of this study were presented as a poster at the 9th Influenza Conference of the European Scientific Working Group on Influenza (ESWI) in Valencia, Spain.

Geometric mean fold rise (GMFR) of neutralizing antibodies against SARS-CoV-2 variants (versus pre-booster levels) after ARCT-154 booster vaccination measured by validated pseudovirus microneutralization assays (N=12).

Error bars represent the 95% CI.

Participants who received any COVID-19 vaccines or had laboratory-confirmed SARS-CoV-2 infection during the follow-up period were excluded from immunogenicity analysis at sampling times after the event.

Phase 3 Study of Bivalent Version of COVID-19 Vaccine Candidate in Japan

On September 29, 2023, Meiji initiated an additional Phase 3 clinical study with a bivalent version of our COVID-19 vaccine candidate (ancestral strain, ARCT-154 and Omicron BA.4/5) to further support immunogenicity and safety data for our self-amplifying mRNA platform, which may facilitate the timely release of future seasonal

updates of our COVID-19 vaccine against evolving variants of concern.

The study enrolled 930 healthy adults and individuals with comorbidities, who previously received three to five doses of mRNA COVID-19 vaccines, including the last booster at least three months prior to recruitment.

The study will compare the investigational vaccine, ARCT-2301 and COMIRNATY (ancestral strain and BA.4/5), to evaluate safety and immunogenicity between observer-blind groups.

Preliminary results of his study are expected by the end of Q1 2024.

The results of this study of the bivalent version of our COVID-19 vaccine candidate are not required for approval of ARCT-154 in Japan but will facilitate the timely release of future seasonal updates of the COVID-19 vaccine without the need for additional clinical data.

Geometric mean titers (GMT) of surrogate neutralizing antibodies at Days 1 (baseline) and 29, and geometric mean-fold rises (GMFR) in titers from Day 1 to Day 29;

B) GMT Ratio;

C) seroresponse rates (SRR) at Day 29;

D) SRR Difference – Study ARCT-2301-J01.

GMT – Geometric Mean Titer;

SRR – seroresponse rate.

All values are from the Per Protocol Subset 1 (PPS-1) and are shown with 95% confidence intervals in parentheses.

Solid circles (●) represent the Wuhan variant, open circles (○) represent the Omicron BA.4/5 variant, and open squares ( ☐ ) represent the Omicron XBB.1.5 variant.

Vertical lines represent the threshold for achieving the non-inferiority and superiority comparisons of ARCT-154 to Comirnaty .

Bivalent ARCT-2301, when administered intramuscularly as a booster dose in subjects who had received three to five doses of authorized mRNA COVID-19 vaccines at least three months before the recruitment, demonstrated immunological superiority over the comparator vaccine (Comirnaty® bivalent:

Wuhan strain/Omicron strain BA.4/5), as measured by GMT ratios and seroresponse rates differences for both vaccine strains (prototype Wuhan strain and Omicron BA.4/65 variant).

In addition, ARCT-2301 induced a higher immune response against the epidemiologically dominant Omicron XBB.1.5 variant.

COVID-19 Vaccine Platform Stability Data

Current data regarding the product format, stability and cold chain characteristics of our lyophilized self-amplifying mRNA COVID-19 vaccine compares favorably to existing smaller non-self-amplifying COVID-19 vaccine stability requirements.

The lyophilized powder of ARCT-154 demonstrated room temperature stability for four days (25°C;

60% RH), refrigerator stability for five months (2-8°C), and long-term stability for 24 months (-25°C to -15°C).

The vaccine stability data are supportive for shipping at 2-8°C.

Notably, the vaccine remains stable in the event of temperature cycling.

Development Program

LUNAR-qsFLU (Quadrivalent Seasonal Influenza)

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In many regions, influenza is seasonal, with infections peaking during November through April in the Northern Hemisphere and May through September in the Southern Hemisphere.

Year-round surveillance by the World Health Organization (“WHO”) in collaboration with various national health agencies informs WHO recommendations on the strains of influenza most likely to spread during the upcoming influenza season.

National health agencies (such as the U.S.

Food and Drug Administration (“FDA”)) then make the final decision of which strains should be covered by vaccines licensed in their country.

Our LUNAR-qsFLU (qs;

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In addition, we do not expect mRNA vaccines to face the challenge from mutations common to egg-grown vaccines.

Increasing evidence supports that immunity against the neuraminidase (NA), the second most abundant influenza surface protein, along with hemagglutinin (HA) specific immunity protects against influenza disease (Krammer et al, mBIO, 2018).

Increasing evidence supports that immunity against neuraminidase (NA), the second most abundant influenza surface protein, along with hemagglutinin (HA) specific immunity protects against influenza disease (Krammer et al, mBIO, 2018).

While most currently licensed vaccines contain some neuraminidase, the amount is not standardized, and currently licensed vaccines do not induce robust anti-neuraminidase immune responses.

LUNAR-qsFLU, in addition to targeting robust anti-HA responses, also encodes the neuraminidase from each of the four strains recommended by the FDA for quadrivalent cell-based vaccines.

Targeting both the HA and NA may have a protective benefit over current vaccines during seasons even when vaccine strains are not well matched to circulating strains (Sandbulte et al, PNAS, 2011).

LUNAR-qsFLU, targets both the HA and NA, and may have a protective benefit over current vaccines during seasons even when vaccine strains are not well matched to circulating strains (Sandbulte et al, PNAS, 2011).

LUNAR-qsFLU has been designed to take advantage of our expertise in both LUNAR lipid delivery systems and our STARR self-amplifying mRNA technology.

This platform has been shown to deliver effective protection against COVID-19 and has been optimized to elicit robust immunogenicity with acceptable reactogenicity at a lower dose than conventional mRNA vaccines with the aspiration of creating a highly effective influenza vaccine for use in general and high-risk populations.

In the graph below, mice pre-immunized with hemagglutinins from historical influenza strains (to simulate non-naïve immunity in humans) were immunized with a single dose of LUNAR-qsFLU (two target formulations) or two licensed comparator vaccines.

All vaccines encoded antigens from the FDA recommended strains from 2022/23 influenza season.

We observed similar or better responses against both the HA and NA components in both LUNAR-qsFLU formulations compared to licensed vaccines.

Mice previously exposed (i.e.

pre-immunized) to historical H1 and H3 HA antigens to better mimic a non-naïve response typical in humans were vaccinated once with LUNAR-FLU and comparator vaccines.

HA-specific responses were comparable to licensed vaccines.

NA-specific titers, however, surpassed responses elicited by licensed comparators.

Results from naïve mice using a single 2ug dose of LUNAR-qsFLU show robust and durable functional inhibition responses to both the HA and the NA components of LUNAR-qsFLU.

Even three months post vaccination, titers remain nearly unchanged.

Mice were vaccinated once with LUNAR-qsFLU formulated with either LNP-1 or LNP-2.

Both formulations resulted in robust hemagglutinin inhibition (HAI) titers and neuraminidase inhibition (NAI) titers which indicate that mice produce antibodies that can functionally interfere with both receptors.

These titers do not wane over the 84 days of the experiment.

A similar durable response in humans would likely cover both the early and late influenza seasons.

Development Program –

Working with CSL Seqirus, we have generated a comprehensive non-clinical data package to support the initiation of the Phase 1 clinical trial with a novel influenza mRNA vaccine candidate.

A Phase 1 dose-finding safety and immunogenicity study was initiated in January 2024 in Australia and is ongoing.

In non-clinical studies, the immunogenicity of ARCT-2138 was compared with those of three licensed influenza vaccines in naïve mice.

Naïve BALB/c mice were vaccinated once with 2 µg of ARCT-2138 or one-fifth of the human dose for comparator vaccines.

All vaccines contained antigens from the FDA recommended strains for the 2022/2023 influenza season for cell or egg-based vaccines.

Smaller doses than the full adult dose of the comparator vaccines was given due to limitation in the injection volume in the hind legs of mice (50µl per leg, total 100µl).

ARCT-2138 was dosed at 2 µg which is a five times lower dose than was tested in humans (10 µg) based on clinical dose escalation studies performed with ARCT-021.

The most significant differences in HAI titers were observed between ARCT-2138 and cell-based and recombinant influenza vaccines.

While a significant increase in HAI titers was observed for H1N1 and B Victoria antigens at day 56 for ARCT-2138 compared to the adjuvanted influenza vaccine, no difference was observed between these vaccine groups for H3N2 antigen, and the immune response for B Yamagata antigen was lower after ARCT-2138.

Neurominidase antibody responses were assessed at days 42 and 70.

As with HAI titers, ARCT-2138 elicited significant higher antibody titers for all four vaccine strains and at all time points analyzed when compared

to titers from mice immunized with cell-based and recombinant influenza vaccines.

ARCT-2138 neuraminidase antibody response were slightly, but significantly, higher for all vaccine strains except B Yamagata compared to mice immunized with adjuvanted influenza vaccines.

Altogether, the animal study data indicates that ARCT-2138 elicited higher antibody titers in mice than licensed cell-based and recombinant influenza vaccines and moderately higher titers for most antigens compared to an adjuvanted influenza vaccine.

HAI and NI Titers after Vaccination with ARCT-2138 and Licensed Comparator Vaccines.

Naïve BALB/c mice were vaccinated once with ARCT-2138 (2 µg) or once with one of three licensed vaccines (1/5 human dose) and assessed for HAI and NI titers for each of the antigens from the FDA recommended strains for the 2022/2023 Northern Hemisphere influenza season.

Antigens used to determine inhibition titers were from cell-based vaccine strains only.

ARCT-2138 showed similar or superior responses to (A) all four HAs and (B) all four NAs present in the licensed comparator.

Geometric mean with geometric SD shown.

Significance determined by 2-way ANOVA multiple comparisons test comparing ARCT-2138 to licensed vaccines at each time point (****=p<0.0001;

no asterisks=not significant).

Development Program

LUNAR-pandFLU (Influenza)

In the second half of 2022, we expanded our influenza program to develop self-amplifying mRNA vaccine against pandemic influenza strains for rapid response.

This program is funded by a $63.2M award from the Biomedical Advanced Research and Development Authority.

For a more comprehensive discussion of the funding award, please see Item 1 “Business”

“Revenue and Collaboration Arrangements and Other Material Agreements”

“BARDA.”

The ability to deliver an effective, lower dose, lyophilized pandemic influenza vaccine is consistent with the strategic objectives of the U.S.

government’s National Strategy for Pandemic influenza.

Rare Disease Medicines in Development

The Orphan Drug Act of 1983 (the “Orphan Drug Act”) defines a rare disease as a disease affecting fewer than 200,000 individuals in the United States.

According to the National Institutes of Health (“NIH”), there are approximately 10,000 such diseases that, together, affect nearly 30 million people in the United States.

The European Union (the “EU”) defines a rare disease as having a prevalence of fewer than five (5) in 10,000 people.

Our LUNAR-pandFLU program continues to progress under the award from the Biomedical Advanced Research and Development Authority (“BARDA”) that we obtained in 2022.

The program includes all non-clinical, manufacturing, and regulatory support to advance a vaccine to protect against disease caused by H5N1 highly-pathogenic avian influenza.

Non-clinical safety and pharmacology studies are ongoing, and a pre-IND meeting was granted.

Enrollment for a Phase 1 clinical trial designed to evaluate the safety and immunogenicity of ARCT-2304 (LUNAR-pandFLU candidate vaccine) is expected to begin before the end of 2024.

For a more comprehensive discussion of the funding award, please see Item 1 “Business” – “Revenue and Collaboration Arrangements and Other Material Agreements” – “BARDA.”

Rare Disease Program

Medicines in Development

The Orphan Drug Act of 1983 (the “Orphan Drug Act”) defines a rare disease as a disease affecting fewer than 200,000 individuals in the United States.

According to the National Institutes of Health (“NIH”), there are approximately 10,000 such diseases that, together, affect nearly 30 million people in the United States.

The European Union (the “EU”) defines a rare disease as having a prevalence of fewer than five in 10,000 people.

Collectively, these disorders affect between 6% and 7% of the population in the developed world.

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Specifically, we are focusing on developing medicines to treat people with rare respiratory and liver diseases who currently have limited or no treatment options.

Rare Disease Program –

ARCT-810 (LUNAR-OTC)

Rare Disease Program – ARCT-810 (LUNAR-OTC)

The LUNAR-OTC development program addresses ornithine transcarbamylase (OTC) deficiency, a rare, life-threatening, genetic disease caused by mutations in the OTC gene that lead to dysfunctional or deficient OTC.

OTC deficiency is the most common of the urea cycle disorders, a group of inherited metabolic disorders that are associated with reduced ability to eliminate ammonia from the body and has a population of over 5,000 patients in the United States and is prevalent in approximately one in 14,000 to one in 77,000 people worldwide.

OTC deficiency is the most common of the urea cycle disorders, a group of inherited metabolic disorders that are associated with reduced ability to eliminate ammonia from the body.

There are over 5,000 people with OTC deficiency in the United States and the prevalence is approximately one in 14,000 to one in 77,000 people worldwide.

Ammonia is a toxic waste product produced from the breakdown of protein.

OTC is a critical enzyme in the urea cycle, which takes place in liver cells and converts ammonia to urea which is eliminated in the urine.

OTC is a critical enzyme in the urea cycle, which takes place in liver cells and converts ammonia to harmless urea which is eliminated by the kidneys.

In patients with OTC deficiency, ammonia accumulates in the blood and is toxic to the brain and liver.

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Currently no cure exists for OTC deficiency apart from liver transplant;

however, this treatment comes with significant risk of complications such as organ rejection, and transplant recipients must take immunosuppressant drugs for the rest of their lives.

however, this treatment comes with significant risks and complications such as organ rejection, and transplant recipients must take immunosuppressant drugs for the rest of their lives.

Current standard of care for OTC deficiency is a low-protein diet, dietary supplements, and ammonia scavengers to try to prevent accumulation of ammonia.

Life-threatening episodes of high ammonia levels can occur, requiring treatment with dialysis or hemofiltration.

Life-threatening episodes of high ammonia levels can still occur, requiring treatment with dialysis or hemofiltration.

These treatments do not address the underlying cause of disease and there remains a high unmet need for an effective treatment.

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Our LUNAR-OTC approach has the potential to treat the underlying defect that causes the debilitating symptoms of OTC deficiency, rather than mitigating symptoms by sequestering ammonia.

LUNAR-OTC has received orphan drug designation from the FDA and the European Medicines Agency (“EMA”) for treatment of OTC deficiency.

We have retained worldwide development and commercialization rights to ARCT-810.

LUNAR-OTC has received orphan drug designation from the FDA and the EMA for treatment of OTC deficiency.

ARCT-810 was also successfully granted Fast Track Designation in May 2023 and Rare Pediatric Disease Designation (RPDD) in June 2023.

Fast Track Designation is designated to facilitate development and expedite review of new therapeutics intended to treat serious or life-threatening conditions that demonstrate the potential to address important unmet medical needs.

Rare Pediatric Disease Designation is designed to recognize rare pediatric diseases in which the serious or life-threatening manifestations primarily affect patients from birth to 18 years of age.

Due to such designation, if ARCT-810 achieves approval for a pediatric indication in the original

rare pediatric disease product application in the United States, Arcturus (or the sponsor of ARCT-810) is eligible to receive a voucher for priority review of a subsequent marketing application for a different product.

Preclinical data in OTC-deficient murine models have demonstrated that dosing of LUNAR-OTC results in robust OTC protein expression and activity, thereby improving ureagenesis, reducing plasma ammonia, and increasing survival.

The Phase 1, double-blind, placebo-controlled, single-dose, dose-escalation study of ARCT-810 in healthy volunteers, completed in November 2020, demonstrated favorable safety, tolerability and PK profiles.

A Phase 1b study in stable OTC-deficient adults is being conducted in the United States.

The trial is designed to assess safety, tolerability and pharmacokinetics of a single dose of ARCT-810, as well as various exploratory biomarkers of drug activity.

Twelve subjects in the 3 initially-planned dose cohorts have completed the study, and a fourth, higher-dose cohort was recently added and is expected to complete enrollment in Q2 2023.

multiple-dose study of ARCT-810 in OTC-deficient adolescents and adults initiated dosing in December 2022 and plans to enroll approximately 24 participants in 2 dose cohorts.

The study has been approved by the regulatory authorities in the UK and several other countries in Europe.

We anticipate that we will have interim data from a subset of participants in the second half of 2023.

A Phase 1b study in stable OTC-deficient adults completed dosing in the United States in August 2023.

The trial is designed to assess safety, tolerability and pharmacokinetics of a single dose of ARCT-810, as well as exploratory biomarkers of drug activity.

The Phase 1b study is a single ascending dose, placebo-controlled study that enrolled 16 adults with mild OTCD.

ARCT-810 was generally safe and well tolerated.

A Phase 2 multiple-dose study of ARCT-810 in OTC-deficient adolescents and adults initiated dosing in December 2022 and plans to enroll approximately 24 participants in two dose cohorts.

The study is being conducted in the UK and several other countries in the European Union.

Rare Disease Program - LUNAR-CF (Cystic Fibrosis)

The LUNAR-CF program addresses cystic fibrosis (CF) lung disease, a progressive lung disease caused by mutations in the cystic fibrosis transmembrane conductance regulator (“CFTR”) gene.

In 2020, we advanced ARCT-032 as a development candidate for treatment of cystic fibrosis.

ARCT-032 uses our LUNAR ® platform to deliver a codon-optimized CFTR mRNA into airway epithelial cells.

The LUNAR-CF program addresses cystic fibrosis (CF) lung disease, a progressive disorder caused by mutations in the cystic fibrosis transmembrane conductance regulator (CFTR) gene.

ARCT-032, our lead development candidate for the treatment of cystic fibrosis, uses our LUNAR platform to deliver a codon-optimized CFTR mRNA into airway epithelial cells.

This allows airway cells to produce functional human CFTR protein using native translational machinery and protein trafficking pathways which could result in the treatment of the underlying defect that causes CF lung disease, regardless of the specific mutation.

The Cystic Fibrosis Foundation (“CFF”) has partnered with us to support development of this therapy.

ARCT-032 represents the first LUNAR-based mRNA therapeutic delivered by the inhaled route, offering direct delivery to the affected airways with the possibility of restoring functional CFTR.

There are over 30,000 people living with CF in the United States, and a recent epidemiologic study reported over 100,000 cases worldwide.

Approximately 800 people are newly-diagnosed with cystic fibrosis each year in the United States.

Cystic fibrosis is caused by one of more than 2,000 known mutations in the CFTR gene.

The Cystic Fibrosis Foundation (the “CFF”) has partnered with us to support development of this therapy.

ARCT-032 represents the first LUNAR-based mRNA therapeutic delivered by the inhaled route, offering direct delivery to the affected airways to restore functional CFTR.

There are close to 40,000 children and adults living with cystic fibrosis in the United States (and an estimated 105,000 people have been diagnosed with CF across 94 countries), and CF can affect people of every racial and ethnic group.

Approximately 800 people are newly diagnosed with CF each year in the United States.

CF is caused by one of more than 2,000 known mutations in the CFTR gene.

These mutations have been grouped into several different classes based on the mechanism by which they cause reduction in the production and/or function of the CFTR protein.

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The median predicted survival of CF patients born between 2018-2022 in the United States is approximately 56 years, and the cause of most of the mortality and morbidity is due to the lung disease.

Current palliative therapies for CF lung disease are directed towards existing lung disease and to prevent the progression of the disease.

Current non-curative therapies for CF lung disease are directed towards disease severity and to prevent the progression of the disease.

These treatments include aerosolized mucolytics, antibiotics, and airway clearance techniques that are time-consuming and represent a significant treatment burden for people with CF.

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approximately 10% of CF cases worldwide), and people who are intolerant or have poor response to CFTR modulator therapies.

We are initially focusing ARCT-032 on these groups of patients, as they currently have the highest unmet needs for CF therapies.

Significant progress on the LUNAR-CF program was made in 2022, with reproducible demonstration of restoration of CFTR function in human bronchial epithelial cell cultures from CF donors, substantial functional improvement in a CF animal model, and the completion of the first-in-human enabling GLP toxicology studies.

A CTA was filed in December 2022 for the first-in-human study, and the first two cohorts have been successfully dosed.

An extensive portfolio of nonclinical studies support the advancement of ARCT-032 to the clinic.

We are initially focusing ARCT-032 on these groups of patients, as they currently have the highest unmet need for CF therapies.

We made significant progress on the LUNAR-CF program in 2023.

Following on our activities of 2022, which included reproducible demonstration of restoration of CFTR function in human bronchial epithelial cell cultures from CF donors and the completion of the first-in-human enabling GLP toxicology studies, in 2023 we

initiated and successfully achieved the recruitment target in a Phase 1 single ascending dose study of ARCT-032 (LUNAR-CF), our mRNA therapeutic candidate for CF, in 32 healthy participants (eight subjects in each of four dose cohorts).

In August 2023 we received regulatory approval of a protocol amendment to transition to a Phase 1b clinical study of ARCT-032 in up to eight adults with CF, with each participant receiving two administrations of ARCT-032.

We initiated Phase 1b enrollment in October 2023.

ARCT-032 was granted Orphan Drug Designation by the FDA in November 2023 and Orphan Medicinal Product Designation by the EMA in February 2024.

The FDA granted Rare Pediatric Disease Designation for ARCT-032 in October 2023.

The Rare Pediatric Disease Designation is designed to recognize rare pediatric diseases in which the serious or life-threatening manifestations primarily affect patients from birth to 18 years of age.

With this designation, if ARCT-032 achieves approval for a pediatric indication in the original rare pediatric disease product application in the United States, Arcturus (or the sponsor of ARCT-032) is eligible to receive a voucher for priority review of a subsequent marketing application for a different product.

An extensive portfolio of nonclinical studies supported the advancement of ARCT-032 to the clinic.

Our comprehensive data set showcasing the potential for ARCT-032 as a disease-modifying treatment has been presented at the major CF conferences in North America and Europe.

To help predict eventual success in the clinic, it is necessary to demonstrate drug stability with aerosolization, the ability to target and transduce the target cells in the lungs, and the ability to restore CFTR function.

Our data has demonstrated that (i) ARCT-032 remains stable after nebulization and retains functional activity, (ii) LUNAR protects mRNA in sputum isolated from CF patients, (iii) aerosolized LUNAR-mRNA delivers mRNA to airway epithelium across several species, (iv) LUNAR-mRNA transduced several epithelial cell types (secretory, ionocytes, basal, ciliated) in ferret and human bronchial epithelial cells, and (v) LUNAR-hCFTR restored CFTR activity in vivo (measured by nasal potential difference) in a CF mouse model with Class I mutations.

In addition, as explained below, recent data demonstrates that ARCT-032 restores CFTR expression and function to wild-type levels in human bronchial epithelial cells from CF donors.

Finally, preliminary data show that ARCT-032 administered to CF ferrets effectively doubled the mucociliary transport rate in vivo.

Cumulatively, we believe these robust data demonstrate the proof of concept to validate ARCT-032 as a potential therapy to target the root cause of CF lung disease.

In vitro proof of concept of ARCT-032 was obtained using human bronchial epithelial (HBE) cells cultured in an air-liquid interface system.

HBE cells cultured in this manner undergo extensive differentiation, resulting in an in vitro model that is representative of the in vivo airway.

For example, we recently presented data at the North American Cystic Fibrosis Conference in November 2023 that demonstrated that a single dose of ARCT-032, administered in the airways of CF ferrets by microsprayer, effectively doubled the mucociliary transport rate in vivo.

In vitro proof of concept of ARCT-032 was obtained using HBE cells cultured in an air-liquid interface system, a model system that has been shown to be highly correlated with clinical trial results with CFTR modulator drugs.

HBE cells cultured in this manner undergo extensive differentiation, resulting in an in vitro model that is representative of the in vivo airway epithelium.

The cells exhibit a pseudostratified morphology and are comprised of a heterogeneous cell population, including ionocytes, ciliated, basal, and secretory cells.

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WT = wild type (healthy subjects).

A significant increase in chloride activity was observed in cultured cells from CF donors (F508del) treated with LUNAR-CFTR (ARCT-032) compared to those treated with LUNAR-TdTomato (negative control).

A significant increase in chloride activity was observed in cultured cells from CF donors (F508del) treated

with LUNAR-CFTR (ARCT-032) compared to those treated with LUNAR-TdTomato (negative control).

ARCT-032 restored the levels of chloride efflux to the wild-type range observed for healthy human donors.

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Western blot demonstrates robust mature (C-band) CFTR protein expression specific to ARCT-032 treated CF cells (F508del+/+) comparable to WT cells, and not present in the LUNAR buffer or TdTomato controls.

The use of F508del HBEs allowed us to compare the activity of ARCT-032 with Vertex Pharmaceutical’s Trikafta (elexacaftor/tezacaftor/ivacaftor), a highly effective CFTR modulator combination approved for patients with F508del and other CFTR mutations.

Chloride conductance was measured in presence or absence of a chloride gradient in ALI-cultured F508 HBE cells (solid bars) or WT HBEs (textured bars) 24 hours following a single treatment with ARCT-032 (blue circles), LUNAR-TdT (red circles) or Trikafta (green circles).

The measurements were performed in three separate studies at different times.

ALI-cultured HBE cell monolayers derived from either three different CF patients carrying the F508del mutation or from an equal number of healthy donors carrying the WT CFTR.

The cells were transfected with a single, 20 µg dose of ARCT-032 or LUNAR-TdT, a formulation carrying TdTomato encoding mRNA that was used as a negative control.

When the HBE monolayer was tested for transepithelial chloride currents in presence of a chloride gradient, a single 20 µg treatment with ARCT-032 resulted in significantly increased chloride conductance compared to the LUNAR-TdT control at 24 hours post-treatment (Figure 1).

Importantly, ARCT-032-restored chloride efflux in F508del HBEs matched the chloride efflux observed in wild type HBEs from non-CF donors.

In absence of a chloride gradient, ARCT-032 driven chloride currents were lower than those with a chloride gradient but matched the activity of Trikafta tested alongside (Figure 1).

Our results from the UAB studies without chloride gradients are comparable to those previously obtained at CF Foundation Therapeutics under similar experimental conditions.

Next, ARCT-032 activity was evaluated in CF HBEs carrying the nonsense mutations (G542X/R1162X) which are associated with a severe CF phenotype due to the complete absence of CFTR expression (CFTR null).

CF patients harboring these and other nonsense mutations are not eligible to be treated with the approved CF modulators such as Trikafta and are a primary target population of patients for ARCT-032 treatment.

We demonstrated that a single 20 µg treatment with ARCT-032 resulted in a significantly higher CFTR-mediated chloride conductance compared to the LUNAR-TdT used as a negative control (Figure 2).

These observations highlight the potential applicability of ARCT-032 treatment in CF patients non-responsive to currently approved CF modulators.

Chloride conductance measured in G542X/R1162X nonsense mutation carrying HBEs or WT HBEs at 24 hours following a single treatment with ARCT-032 (blue circles) or LUNAR-TdT (red circles) or buffer (black circles).

Additional preliminary results have indicated that a single 20 µg treatment with ARCT-032 could impart substantial CFTR activity in F508del HBEs for at least three days while the activity is still detectable at five days from the treatment (Figure 3A).

This highlights the efficacy of transfection and the stability of translated CFTR protein.

Furthermore, we have demonstrated that treatment of F508 HBEs with multiple smaller doses (3 µg and 5 µg) of ARCT-032 can achieve CFTR activity comparable to a larger single dose (20 µg) (Figure 3B).

Together, these results have demonstrated the ability of ARCT-032 to generate a functional and stable CFTR protein in a dose and treatment amenable manner.

A) Time-course study in F508del HBEs carried out in presence of a chloride gradient following a single treatment with ARCT-032 indicated substantial CFTR activity for three days and detectable activity for at least five days.

B) Under no chloride gradient conditions, treatment of F508del HBEs with multiple smaller doses (3µg or 5µg) of ARCT-032 achieved CFTR function comparable to a single larger dose (20µg).

As mentioned, earlier work has shown successful transduction of airway epithelial cells with LUNAR-mRNA in multiple species of healthy animals.

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In collaboration with the University of Iowa and supported by the Cystic Fibrosis Foundation, a double transgenic ferret model of CF was used to assess transduction of bronchial epithelial cells in diseased ferrets.

Ferrets with the G551D mutation maintained on VX-770 (ivacaftor) developed a CF phenotype including thick mucus in the lungs when they were withdrawn from VX-770 treatment.

Ferrets with the G551D mutation maintained on VX-770 (ivacaftor) developed a CF phenotype including thick mucus in the lungs upon withdrawal from VX-770 treatment.

LUNAR-Cre was administered to the airways by microsprayer, and the Cre recombinase mRNA-transduced cells switched off TdTomato expression (shown in red) and expressed EGFP (cells in green).

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Further experiments with G551D CFTR-transgenic ferrets demonstrated in vivo proof of concept of ARCT-032 (LUNAR-CFTR) in this model system.

VX-770 treatment was withdrawn from the ferrets and the animals were treated with either ARCT-032 or LUNAR-TdTomato.

The LUNAR treatments were administered by a microsprayer.

Mucociliary clearance was assessed by PET/CT scan while still on VX-770, after a few weeks of VX-770 washout, and 24 hours following the first and fourth doses.

As shown in figure below, the mucociliary clearance in CF ferrets treated with ARCT-032 (green line) was about twice that of the ‘VX-770 Off’

baseline (black line), and comparable to or greater than that for ‘VX-770 On’

(turquoise line) after a single administration.

Similar results were obtained from ferrets treated with four doses of ARCT-032.

The G551D ferrets are initially maintained on VX-770 treatment and develop typical findings of CF lung disease upon withdrawal of the drug.

This enables the evaluation of therapeutic interventions.

Following withdrawal of VX-770, the ferrets were treated with either ARCT-032 or LUNAR-TdTomato (negative control) administered by a microsprayer.

Mucociliary clearance was assessed by PET/CT scan while maintained on VX-770, a few weeks after VX-770 withdrawal, and 24 hours following dosing.

As shown in figure below, after a single administration of ARCT-03 the mucociliary clearance in CF ferrets 2 (green line) was about twice that of the ‘VX-770 Off’ baseline (black line), and comparable to or greater than that for ‘VX-770 On’ (turquoise line).

LUNARhCFTR = ARCT-032;

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MCC was assessed post first dose.

Discovery Programs

Discovery Program –

Hepatitis B (HBV)

Hepatitis B virus (HBV) can cause both acute self-limiting and chronic infections of the liver, chronic hepatitis B (CHB), which may evolve to cirrhosis and hepatocellular carcinoma (HCC).

Approximately 296 million people are chronically infected with HBV with an increased life-time risk of death developing from liver disease or HCC between 15% and 25%.

Current treatment options have low functional cure rates, defined by serum HBsAg and HBV DNA levels measured below the lower limit of detection and maintained off-treatment.

HBsAg loss in CHB patients is rarely achieved (i.e., approximately 1% per year) and therefore life-long treatment is needed to prevent reoccurrence of liver disease.

For these reasons, there remains a strong need for finite, well-tolerated treatments with improved functional cure rates.

When the HBV virus infects hepatocytes, it forms a covalently closed circular DNA (cccDNA) in the nucleus, like a mini-chromosome, from which HBV transcripts are synthesized, including a complete copy of the HBV pre-genomic RNA that serves as a template for reverse transcription and replenishment of the cccDNA pool.

HBV DNA can also integrate into the human genome, frequently inducing chromosomal rearrangements.

Genomically-integrated DNA is a source of HBsAg transcripts, although it is generally assumed that no new HBV virus can be produced from integrated sequences.

None of the available therapies can target and eliminate cccDNA or integrated DNA, thus there is the possibility of viral recrudescence even after a functional cure.

LUNAR-HBV is a genome editing therapeutic consisting of engineered HBV-directed nucleases, delivered as mRNAs encapsulated in our proprietary liver-directed LUNAR ® lipid nanoparticles that are able to target a conserved sequence of the HBV genome and irreversibly inactivate both cccDNA and integrated DNA.

LUNAR-HBV was selected for functional genomic-HBV editing efficacy and further improved for reduced off-target activity.

We have generated preclinical data demonstrating efficacy of LUNAR-HBV targeting both integrated and non-integrated HBV DNA in the liver of different HBV mouse models where we can achieve >2 Logs irreversible reduction of HBV DNA and HBsAg levels in the plasma.

Furthermore, we demonstrated that this efficacy is due to gene editing of HBV DNA and reduction of nuclear HBV DNA levels.

In addition to this, LUNAR ® -HBV showed a significant safety margin relative to the minimal efficacious dose either with single or repeat dosing.

Biodistribution studies in mice show that the liver is the main target organ of LUNAR ® -HBV with no genome editing activity detected in other organs.

Furthermore, both the therapeutic mRNAs and proteins are short lived and are not detected in the liver 24 hours after dosing.

Orthogonal scientific approaches, combined with a rigorous risk assessment, are being used to examine the potential genotoxicity of LUNAR-HBV.

Bioinformatic predictions did not reveal any significant LUNAR-HBV potential off-target site and cell-based assays using the highest tolerated dose of mRNA encoding the genome editing nucleases (at least five-fold higher than the estimated therapeutic dose) preliminarily generated a small number of potential off-target sites at low occurrence.

These potential sites are in non-coding regions of genomic areas not associated with any disease or disorder.

Complementary studies are currently underway, to assess the potential risk of chromosomal rearrangements induced by LUNAR-HBV treatment.

Ex-vivo assays using human PBMCs from multiple donors suggest a low risk of an immunogenic response to LUNAR HBV from pre-existing immunity.

Furthermore, mice receiving repeat doses of LUNAR-HBV did not show evidence of an immunogenic response based on the absence of antibodies against the genome editing nucleases in the plasma and immune cells (T-cells, B-cells or NK cells) in the liver.

We are currently completing the scale-up activities to generate material for the IND-enabling studies.

LUNAR ® -HBV treatment reduces HBV DNA and HBsAg plasma levels in a mouse AAV-HBV model

Dosing of AAV-HBV injected mice with LUNAR ® -HBV on Day 0, 14 and 28 reduces levels HBV DNA (left panel) and HBsAg (center panel) in plasma.

Genome editing evaluation by Next Generation Sequencing of DNA extracted from the liver shows INDELs (insertion/deletions) only in the LUNAR ® -HBV treated mice.

Discovery Program

Discovery Program – Phenylketonuria (PKU)

Phenylketonurea (PKU) is an inherited metabolic disease characterized by the buildup of the amino acid phenylalanine in the body due to the lack or deficient activity of the enzyme responsible of its metabolism, phenylalanine hydroxilase (PAH).

Phenylketonurea (PKU) is an inherited metabolic disease characterized by the buildup of the amino acid phenylalanine (Phe) in the body due to the lack or deficient activity of the enzyme responsible for its metabolism, phenylalanine hydroxylase (PAH).

In PKU patients, high levels of phenylalanine affect normal nervous system function and can lead to brain disfunction and intellectual disability.

Globally, approximately 1:10,000 newborns carry mutations in the PAH gene responsible for the PKU disease.

Dietary restriction (low protein diet) has been the main therapeutic treatment to control Phe levels and, although successful, outcomes are not always optimal and patients often have difficulty adhering to it.

Dietary restriction (low protein diet) has been the main therapeutic treatment to control Phe levels and, although successful, outcomes are not always optimal, and patients often have difficulty adhering to restrictions.

There are only two approved treatments for PKU:

Palynziq®, which requires injections that may lead to an immune response, and the synthetic PAH co-factor, BH4, Kuvan®, which only helps a subpopulation of PKU patients.

The LUNAR ® PKU program attempts to address the unmet needs of PKU patients by delivering a functional PAH protein as mRNA formulated in LUNAR lipid nanoparticles to the PAH-deficient liver, restoring PAH function and reducing blood Phe to healthy levels.

In a PKU mouse model, we have shown that we can deliver a functional human PAH mRNA and reduce Phe to safe levels (Phe < 0.3 mM), and do repeated dosing maintaining the same efficacy after each repeated dose.

Palynziq®, which requires injections that may lead to an immune response against Palynziq® as it is an enzyme derived from bacteria, and the synthetic PAH co-factor, BH4, Kuvan®, which only helps a subpopulation of PKU patients.

The LUNAR PKU program attempts to address the unmet needs of PKU patients by delivering mRNA encoding the PAH protein formulated in LUNAR lipid nanoparticles to the PAH-deficient liver, restoring PAH function and reducing blood Phe to healthy levels.

In a PKU mouse model, we have shown that we can deliver a functional human PAH mRNA to the liver and reduce Phe to safe levels (Phe < 0.3 mM).

Presently, the program is aiming to increase the duration of the efficacy after a single dose treatment to reduce the frequency of dosing and improve the effectiveness of the therapy.

Proof of concept studies in PKU mice show that engineering of PAH mRNA and protein lead to a significant increase in the duration of the efficacy, longer than three (3) days, as compared to the original PAH mRNA design (~24-48 hours) as shown in the figure below.

Efficacy and tolerability in vivo studies are planned to nominate a candidate drug product and best PAH mRNA and LUNAR formulation.

LUNAR PAH mRNA reduces Phe plasma levels in a PKU mouse model after a single dose.

Proof of concept studies in PKU mice show that engineering of PAH mRNA and protein lead to a significant increase in the duration of the efficacy, longer than six (6) days, as compared to the original, first-generation PAH mRNA (~24-48 hours).

Additional in vivo efficacy and tolerability studies are underway to finalize a candidate drug product composed of the optimized PAH mRNA and LUNAR formulations.

LUNAR PAH mRNA reduces phenylalanine plasma levels in a PKU mouse model after a single dose.

Discovery Programs – Vaccine Programs (Lyme Disease and Gonorrhea)

Based on the clinical and regulatory validation of LUNAR and STARR technologies provided by the approval of ARCT-154, our next-generation vaccine for COVID-19, we have initiated new vaccine discovery programs for Lyme disease and gonorrhea.

The new discovery programs rely on the evidence of superior immunogenicity, durability, and breadth of immune response compared to conventional mRNA vaccines, as observed in the COVID-19 program.

Lyme disease is a bacterial infection and is the most common vector-borne disease in the United States.

Infection can spread to joints, the heart and the nervous system.

Gonorrhea is a sexually transmitted disease (STD) that can infect the mucous membranes of the reproductive tract.

It is the second most commonly reported bacterial sexually transmitted infection in the United States.

We selected these diseases based on high unmet medical needs, good understanding of the path forward in vaccine target selection, and demonstration of proof of concept, as well as platform advantages that may be translated in a favorable vaccine product.

Enabling Technologies

Enabling Technologies –

LUNAR-Genome Editing

Enabling Technologies – LUNAR-Genome Editing

Genome editing therapies are based on the ability to modify a specific DNA sequence in the human genome.

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For evaluation of the LUNAR TALEN mRNA strategy, we designed TALEN pairs targeting either the mouse Pcsk9 gene or the human LPA gene which are involved in lipid metabolism and are associated with cardiovascular disease.

The Pcsk9 gene is expressed only in the mouse liver, and the PCSK9 protein is then secreted into the blood circulation.

PCSK9 binds and downregulates the LDL receptors present in the hepatocytes cell membrane, therefore reduction of PCSK9 protein levels increases LDLR (defined below) levels and its availability to take and reduce LDL-Cholesterol from the blood (Figure 1.

A single intravenous dose of LUNAR-TALEN PCSK9 mRNA into wildtype mice lead to insertions and deletions in the PCSK9 genomic DNA sequence.

The edition of the PCSK9 genome sequence inactivated the PCSK9 gene and, consequently, there was a reduction of PCSK9 protein levels in the mouse plasma of the treated mice (Figure 1.

The Pcsk9 gene is expressed only in the liver, and the PCSK9 protein is secreted into the blood circulation.

PCSK9 binds and downregulates the low-density lipoprotein (LDL) receptors (LDLR) present in the hepatocytes cell membrane, therefore reduction of PCSK9 protein levels increases LDLR (defined below) levels and its availability to take and reduce LDL-Cholesterol from the blood (Figure below.

A single intravenous dose of LUNAR-TALEN PCSK9 mRNA encapsulated LUNAR LNPs into wildtype mice led to insertions and deletions in the PCSK9 genomic DNA sequence which resulted in the inactivation of the PCSK9 gene and, consequently, a reduction of PCSK9 protein levels in the mouse plasma of the treated mice (Figure below.

Bottom Left).

Examination of the targeted PCSK9 DNA sequence extracted from different organs did not show any DNA modifications except for the liver, which is explained by the liver specificity of this LUNAR formulation (Figure 1.

Bottom Right).

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Elimination of PCSK9 protein after editing the Pcsk9 target gene Bottom Left:

LUNAR-PCSK9 TALEN mRNA dosing of mice at time Day 0 irreversibly reduces levels of PCSK9 in circulation.

LUNAR-PCSK9 TALEN mRNA dosing of mice at time Day 0 reduces levels of PCSK9 in circulation.

Bottom Right:

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Lipid-lowering drugs do not effectively reduce Lp(a) levels that are mainly regulated by the genomic structure of the apo(a) gene named LPA .

LPA is expressed only in the liver and natural homozygous loss of this gene in humans has not been associated with adverse phenotypes, which makes the LPA a candidate for genome editing therapies.

LPA is expressed only in the liver and natural homozygous loss of this gene in humans has not been associated with adverse phenotypes, which makes LPA a candidate for genome editing therapies.

We designed and tested our LUNAR-TALEN-LPA technology in primary human hepatocytes and in a transgenic mouse model containing the human LPA gene.

Like the PCSK9 model, a single dose of LUNAR TALEN LPA mRNA led to a significant reduction of LPA levels in serum that correlated with the reduction of Apo(a) mRNA expression and the presence of editing in the LPA target sequence.

LUNAR TALEN LPA mRNA reduces human Lp(a) plasma levels in a human Lp(a) transgenic mouse model after a single dose.

To test the ability to deliver CRISPR technology into the liver, we use a single guide RNA known to target the mouse Ttr gene.

The transthyretin (TTR) protein is expressed only in the liver and is secreted into the blood circulation.

In humans, mutations in the TTR gene can cause transthyretin amyloidosis.

Mutations on the Ttr gene can alter the structure of the transthyretin protein impairing its normal function and leading to abnormal deposits of the TTR protein in different organs and tissues of the body, mainly in the nervous system and the heart.

of the TTR production could stop the progression of the disease (Fig.

LUNAR formulations containing a mouse TTR-specific single guide RNA (sgRNA) together with the Cas9 nuclease mRNA were injected intravenously into wildtype mice.

After a single dose, there was a reduction in the amount of TTR protein detected in the mouse serum (Fig.2, Bottom left).

This reduction of TTR protein correlated with the deletions detected in the targeted TTR genomic DNA extracted from the liver of the LUNAR TTR-CRISPR mRNA treated mice (Fig.2, Bottom right).

TTR protein containing mutations aggregates and deposits forming amyloid fibers in different organs causing cardiomyopathies or neuropathies.

TTT levels in the serum was reduced in mice treated with LUNAR-CRISPR Cas9 and sgRNA TTR mRNA but not in mice treated with LUNAR Cas9 mRNA.

Genome editing evaluation by sequencing shows INDEL (insertion/deletions) only in the livers of the group of mice treated with LUNAR CRISPR Cas9 sgRNA TTR.

Like the PCSK9 model, either one or two intravenous doses of LUNAR-TALEN-LPA mRNA encapsulated LUNAR LNPs led to a significant reduction of Lp(a) levels in serum that correlated with the reduction of LPA mRNA expression and the presence of gene editing in the LPA target sequence.

LUNAR-TALEN-LPA mRNA reduces human Lp(a) plasma levels and hepatic mRNA levels in a human Lp(a) transgenic mouse model after either one or two doses.

Enabling Technologies - CRISPR/Cas9

Our efforts in CRISPR/Cas9 genome engineering are focused on generating proof-of-concept for our platform technology.

To test the ability to deliver CRISPR/Cas9 complexes to the liver, we used a single guide RNA known to target the mouse TTR gene and an mRNA encoding the Cas9 nuclease, both encapsulated in a proprietary LUNAR LNP ( LUNAR-Cas9-TTR ).

The transthyretin (TTR) protein is expressed only in the liver and is secreted into the blood.

In humans, mutations in the TTR gene can cause transthyretin amyloidosis (ATTR), which is a progressive and fatal disorder resulting from the deposition of insoluble amyloid fibrils in different tissues of the body, predominantly the nervous system and the heart, resulting in organ failure.

Reduction of TTR production by CRISPR/Cas9-mediated gene editing has been shown to halt disease progression (Fig.

LUNAR-Cas9-TTR formulations were injected intravenously into wild-type mice.

After a single dose, there was a significant reduction in the amount of TTR protein detected in the mouse serum at the doses tested (Fig.2, Bottom left).

This reduction of TTR protein correlated with the deletions detected in the targeted TTR genomic DNA extracted from the liver of the LUNAR-Cas9-TTR treated mice (Fig.2, Bottom right).

Further, when our constructs were compared to a competitor’s results, using a similar Cas9 mRNA and TTR -targeting sgRNA, a significantly greater amount of gene editing was observed using the Arcturus mRNA and lipid nanoparticles.

Demonstration of efficacy of the LUNAR mRNA platform with different genome editing technologies and targets will enable future discovery efforts toward the identification of new potential therapies.

Enabling Technologies –

Cancer vaccines

TTR protein containing mutations aggregates and deposits forming amyloid fibers in different organs causing cardiomyopathies or neuropathies.

TTR levels in the serum were reduced in mice treated with LUNAR-Cas9-TTR.

Quantitation of genome editing by DNA sequencing analysis showed a significant amount of INDELs (insertion/deletions) in the livers of mice treated with LUNAR-Cas9-TTR.

Enabling Technologies – Cancer vaccines

Our LUNAR Cancer vaccine discovery efforts are aimed at developing an immunotherapy against a tumor via activated T-cells.

The vaccine would encode an antigen that would be specifically presented by (or associated with) a tumor, such that the vaccination would elicit T cell responses that recognize and attack the tumor.

We have applied our learnings from our more-advanced LUNAR-COVID-19 program to establish both STARR (self-amplifying) and conventional mRNA platforms for immuno-oncology therapy.

We contemplate that the vaccine would encode an antigen(s) that would be specifically presented by (or associated with) a tumor, such that the vaccination would elicit T cell responses that recognize and attack the tumor.

We have applied our learnings from our more-advanced LUNAR-COVID-19 vaccine program to establish both STARR (self-amplifying) and conventional mRNA platforms for immuno-oncology therapy.

In a preclinical study, our proof of concept (POC) vaccine encoding AH1 antigen of gp70 protein which is highly expressed on the surface of mouse colorectal carcinoma cell line CT26 has demonstrated clear effectiveness in a syngeneic mouse model of a colorectal CT26 cell line.

With intramuscular administration of the STARR vaccine (two doses of 10 ug), treated with a checkpoint inhibitor (CPI), anti-PD1/PDL1 antibody, led to a drastic reduction of tumor growth in comparison to the CPI treatment by itself (Panel A).

With intramuscular administration of the STARR vaccine (two doses of 10 ug), treated with a checkpoint inhibitor (CPI), anti-PD1/PDL1 antibody, led to a substantial reduction of tumor growth in comparison to the CPI treatment by itself (Panel A).

Moreover, the same level of efficacy was achieved with a single administration of a 0.2 ug dose of the STARR vaccine.

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We believe that these POC results from the two platforms hints for the possible applicability to various types of cancer with flexibility in dosing regimens.

Our current effort focuses on the selection of neoantigens and other tumor-specific antigens encoded in the cancer vaccines.

These antigens can be shared among patients, and therefore have more target patient populations.

Additional advancements of LUNAR Cancer Vaccine program include the improvement of antigen cassette designs, STARR RNA elements, and immune modulator molecules, all of which can significantly enhance T cell responses.

Our current effort focuses on the selection of neoantigens, and other common tumor-specific antigens encoded in the cancer vaccines.

Common tumor antigens can be shared among patients, and therefore target broader patient populations, whereas a neoantigen vaccine would be a personalized vaccine specific for an individual patient.

Additional advancements of the LUNAR Cancer Vaccine program include the improvement of antigen cassette designs, STARR RNA elements, and immune modulator molecules, all of which can significantly enhance T cell responses.

Antitumor activity and T cell response by Arcturus cancer vaccines.

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T responses elicited by conventional mRNA cancer vaccine by various LUNAR formulations.

Enabling Technologies –

Immuno-oncology

Cell-based therapies for hematologic malignancies using chimeric antigen receptor (CAR) T cells have made incredible advances in the past decade.

Enabling Technologies – Immuno-oncology

Cell-based therapies for hematologic malignancies using chimeric antigen receptor (CAR) T cells have made significant advances in the past decade.

The success of CAR-T cells in immuno-oncology has led to a growing number of therapies utilizing other immune cell types engineered to express a variety of immunomodulatory molecules.

Yet, despite their promise, extensive challenges still exist with this therapeutic approach.

Some of the issues include toxicity, potential for insertional mutagenesis of the CAR construct and an ex vivo manufacturing process that is complex, time consuming and costly.

Some of the issues include toxicity, potential for insertional mutagenesis of the CAR construct, T cell malignancies, and an ex vivo manufacturing process that is complex, time consuming and costly.

We believe that our LUNAR-I/O approach has the potential to ameliorate some of these issues.

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The goal of the LUNAR-I/O program is to leverage the inherent advantages of both RNA and LUNAR technology to maximize clinical effectiveness of CAR-expressing cells.

To this end, initial experiments have demonstrated that LUNAR lipid nanoparticles can transfect > 90% of both primary human CD8+ and CD4+ T lymphocytes in vitro.

To this end, initial experiments have demonstrated that our proprietary LUNAR lipid nanoparticles can transfect > 90% of both primary human CD8+ and CD4+ T lymphocytes in vitro.

Our current efforts are focused on targeting T lymphocytes in vivo with either CAR-mRNA or CAR-STARR (self-amplifying RNA) constructs in combination with other immunostimulatory molecules.

We are currently expanding this technology to effectively target other lymphoid and myeloid lineage cell types with a variety of immunomodulatory molecules for oncological indications.

Platform Technology Overview

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A key feature of our LUNAR lipids is their biodegradability, decreasing the undesired effects caused by lipid accumulation that are associated with tolerability issues present in other lipid-mediated RNA medicine delivery platforms.

Our team continues to advance in the area of producing LUNAR lipid formulated nucleic acid product candidates in a scalable and highly reproducible manner, reducing the costs of goods for the therapies in our pipeline.

Our team continues to advance our LUNAR lipid formulated nucleic acid platform in a scalable and highly reproducible manner, reducing the costs of goods for the therapies in our pipeline.

In addition to our LUNAR lipid-mediated delivery technology, we believe we have created innovative, proprietary advancements in producing mRNA medicines, including improvements that increase purity, scalability, efficiency in production times, and adaptability to different mRNA modification strategies.

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Active ATX lipid candidates demonstrating high levels of protein expression and equivalent or improved tissue clearance rates are then assigned to a specific disease target for development of therapeutic applications.

Results from a recent ATX lipid screening process is shown in the figure below.

As shown in the left figure above, mice were injected intravenously with LUNAR lipid formulations 21, 35,38, 39, 40 and 2 at a 0.3 mg/kg RNA dose.

The following results are from an in vivo mRNA expression study which identified three new highly active LUNAR lipids with regard to protein expression in non-human primates compared to the positive control.

In the top two figures, mice were injected intravenously with 4 different LUNAR lipid formulations containing mRNA expressing human erythropoietin (EPO).

The LUNAR lipids that were screened were LUNAR96, LUNAR97, LUNAR98 and LUNAR2 at 0.1 mg/kg 0.3 mg/kg RNA doses.

LUNAR lipid 2 formulation is a positive control to which expression from the other formulations is compared.

Mice were bled 24 hours after injection and assayed for erythropoietin (EPO), a secreted protein.

The left figure above shows the clearance of the LUNAR lipids from the liver 48 hours after administration of 0.1mg/kg and 0.3 mg/kg RNA doses.

LUNAR 35, 38, 39 and 40 yielded higher expression of EPO than LUNAR 2, the positive control, and LUNAR 21 yielded equivalent levels compared to LUNAR 2.

The right figure above shows the clearance of lipid from the liver 48 hours after administration.

No detectable ATX lipid was observed in the liver at the 0.1 mg/kg dose and only LUNAR 40 lipid showed any residual ATX lipid with a 0.3 mg/kg RNA dose which is approximately 1% to 2% of the administered lipid dose.

In retrospect, the LUNAR 2 formulation, positive control, showed approximately 70% of residual lipid in the liver in the same time frame.

Hence, this lipid screen identified 5 LUNAR lipids that yielded equivalent or greater RNA expression and were rapidly cleared from the liver within 48 hours after administration.

Mice were bled 24 hours after injection and assayed for EPO, a secreted protein.

The figure below the mouse human EPO expression figure shows the clearance of the LUNAR lipids from the liver 48 hours after administration of 0.1mg/kg and 0.3 mg/kg RNA doses.

LUNAR 96, 97 and 98 yielded much higher expression levels of EPO than LUNAR 2, the positive control for both doses tested.

The mouse liver clearance figure shows that the residual amount of LUNAR96 and LUNAR98 were below the limit of detection and the residual amount of LUNAR97 was at least 10-fold less than the remaining amount of LUNAR2 at the 0.1 mg/kg RNA dose and at least two-fold less than the residual amount of LUNAR2 at the higher RNA dose.

LUNAR96 and LUNAR98 formulations were tested for EPO expression in non-human primates at a single dose and assayed for secreted EPO in the blood 24 hours after IV administration.

Both LUNAR96 and LUNAR98 yielded significantly higher expression levels than the positive control, LUNAR2 further confirming the superior performance of the new LUNAR formulations.

Hence, this lipid screen identified 3 LUNAR lipids that yielded greater RNA expression in mice and 2 LUNAR lipids in NHPs, and were rapidly cleared from the liver within 48 hours after administration.

Lung Targeting

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Characterization and optimization of the aerosolized LUNAR formulations in targeting airway epithelium have been achieved in rodent (mice, rat) and nonrodent models (ferret, NHP) as depicted in the image using a reporter mRNA encapsulated in LUNAR.

We expect that the validation attained for the inhaled LUNAR ® platform in the Cystic Fibrosis program will serve as a “plug and play”

approach to support other respiratory approaches where targeting airway epithelium is needed.

We expect that the validation attained for the inhaled LUNAR platform in the Cystic Fibrosis program will serve as a translatable approach to support other respiratory approaches where targeting airway epithelium is needed.

LUNAR delivery to airways epithelium demonstrated in vivo across species (rodents, ferrets, NHPs)

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administration)

ARCT-810 Nonclinical Safety Profile

Arcturus has instituted a robust ATX lipid screening paradigm to ensure that we identify formulations with suitable properties for the intended drug’s target product profile, whether is it a protein replacement therapy, a gene editing treatment, or a vaccine.

LUNAR-CF - ARCT-032 Nonclinical Safety Profile

Drug product safety is a key feature in that profile.

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In addition to our LUNAR lipids technology, our platform technologies include our distinct and proprietary self-amplifying RNA (saRNA) platform, termed STARR.

The STARR platform includes proprietary algorithms that

inform the design and optimization of saRNA to enhance expression of the applicable antigen while minimizing structures that might inhibit expression.

The STARR platform includes proprietary algorithms that inform the design and optimization of saRNA to enhance expression of the applicable antigen while minimizing structures that might inhibit expression.

The replicase, an RNA-dependent RNA polymerase, is encoded upstream of the antigen of interest and functions to amplify transcripts and increase the duration of antigen expression compared to non-self-amplifying (conventional) mRNA.

The enhanced expression leads to higher immunogenicity at lower doses than conventional mRNA vaccines in preclinical studies (Figure x).

The enhanced expression leads to higher immunogenicity at lower doses than conventional mRNA vaccines in preclinical studies (Figure below).

The above results show the luciferase expression from an optimized saRNA, STARR Technology (Green), a non-optimized saRNA (Blue) and the conventional RNA (Purple).

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The STARR Technology also produces a longer duration of expression compared to the conventional RNA and also the non-optimized self-amplifying RNA.

We believe the combination of LUNAR and STARR technology can provide lower dose requirements due to superior immune response and sustained protein expression as compared to non-self-amplifying RNA-based vaccines.

We believe the combination of LUNAR and STARR technology can provide lower dose requirements by generating a superior immune response and sustained protein expression as compared to non-self-amplifying RNA-based vaccines.

We believe this LUNAR/STARR technology will enable us to simplify and increase the speed of vaccine production.

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With such collaborations, we have established an Integrated Global Supply Chain Network with our primary and secondary sourcing contract development & manufacturing organizations (CDMOs) based in the United States, EU and Asia for producing critical raw materials, drug substance, and packaged finished product.

We expect our current manufacturing capabilities, qualified sourcing sites, and ongoing global technology transfers to enable, by the end of 2023, a forecasted capacity of more than 200 million doses annually for stockpiling and commercialization of COVID vaccine.

To date, we have manufactured and supplied gram quantities of drug substance, and scaled-up and validated our finished drug products (COVID Vaccine) through our CDMOs for clinical studies, EUA, stockpiling and commercial readiness.

We have developed, and continue to dedicate, resources to advance our sophisticated manufacturing know-how, including formulation of lipid nanoparticles, which improves manufacturing efficiency and capacity.

Additionally, we are strategically exploring options to build our internal USA-based manufacturing capabilities for entire drug substance, drug product and finished product.

We continue to dedicate, resources to advance our sophisticated manufacturing know-how, including formulation of lipid nanoparticles, which improves manufacturing efficiency and capacity.

As the market for COVID vaccines shifts from multi-dose vial formats to lower and single-dose vial formats, we continue, with our collaborator CSL Seqirus, to evaluate and advance manufacturing process and capabilities and technology transfers, and prepare for commercialization of COVID vaccines.

Global Manufacturing Footprint

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• we have a collaboration with CSL Seqirus for vaccines against SARS-CoV-2 (COVID-19), influenza and three other respiratory infectious diseases;

we are partnering with Ultragenyx to develop mRNA therapeutic candidates for rare disease targets;

• we have received funding from the CFF to support our LUNAR-CF development program;

• we are partnering with Ultragenyx to develop mRNA therapeutic candidates for rare disease targets;

• we have a contract with BARDA to support the development of a low-dose pandemic influenza candidate based on our proprietary self-amplifying messenger RNA-based vaccine platform.

we are partnering with Curevac N.V.

(“CureVac”) to develop mRNA therapeutic candidates for rare disease targets.

In November 2022, we entered into the CSL Collaboration Agreement with Seqirus, Inc.

(“CSL Seqirus”), a part of CSL Limited, one of the world’s leading influenza vaccine providers, for the global exclusive rights to research, develop, manufacture and commercialize self-amplifying mRNA vaccines.

In November 2022, we entered into the CSL Collaboration Agreement with CSL Seqirus for the global exclusive rights to research, develop, manufacture and commercialize self-amplifying mRNA vaccines.

The CSL Collaboration Agreement became effective on December 8, 2022, following clearance under the Hart-Scott-Rodino Antitrust Improvements Act.

Under CSL Collaboration Agreement, CSL Seqirus receives global exclusive rights to our technology for vaccines against SARS-CoV-2 (COVID-19), influenza and three other respiratory infectious diseases.

Under the CSL Collaboration Agreement, CSL Seqirus receives global exclusive rights to our technology for vaccines against SARS-CoV-2 (COVID-19), influenza and three other respiratory infectious diseases.

Specifically, the collaboration agreement grants CSL Seqirus a license to our STARR mRNA technology and LUNAR lipid-mediated delivery, as well as mRNA drug substance and drug product manufacturing expertise.

CSL has also been granted global non-exclusive rights in the field of pandemic preparedness (i.e., pathogens identified as priority diseases by the WHO), with the right to convert to an exclusive license.

We received an up-front payment of $200.0 million.

We are eligible to potentially receive development milestones totaling more than $1.3 billion if all products are registered in the licensed fields.

We also are entitled to potentially receive up to $3.0 billion in commercial milestones based on “net sales”

of vaccines in the various fields.

In addition, we are entitled to receive a 40% share of net profits from COVID-19 vaccine sales and up to low double-digit royalties of annual net sales for vaccines against influenza and the other three specified infectious disease pathogens, as well as royalties on revenues from vaccines that may be developed for pandemic preparedness.

Entitlement to all such payments is subject to the strict conditions, requirements, royalty reduction provisions and other limitations set forth in the CSL Collaboration Agreement.

In March 2023, Arcturus achieved development milestones, including milestones associated with nominating next generation vaccine candidates, resulting in $90.0 million due from CSL Seqirus.

CSL has also been

granted global non-exclusive rights in the field of pandemic preparedness (i.e., pathogens identified as priority diseases by the WHO), with the right to convert to an exclusive license.

The CSL Collaboration Agreement sets forth how the parties will collaborate to research and develop vaccine candidates.

In the COVID-19 field, we will lead activities for certain regulatory filings for our leading self-amplifying mRNA vaccine candidate in COVID-19, ARCT-154, in the United States and Europe and for research and development activities of a next-generation COVID vaccine candidate.

CSL Seqirus will lead and be responsible for all other research and development in COVID-19, influenza and the other fields.

In the COVID-19 field, we undertake activities for certain regulatory filings for our leading self-amplifying mRNA vaccine candidate in COVID-19, ARCT-154, in the United States and Europe and for research and development activities of a next-generation COVID vaccine candidate.

CSL Seqirus leads and is responsible for all other research and development in COVID-19, influenza and the other fields.

We received an up-front payment of $200.0 million, with the potential to receive development milestones totaling more than $1.3 billion if all products are registered in the licensed fields.

We also are entitled to potentially receive up to $3.0 billion in commercial milestones based on “net sales” of vaccines in the various fields.

In addition, we are entitled to receive a 40% share of net profits from COVID-19 vaccine sales and up to low double-digit royalties of annual net sales for vaccines against influenza, pandemic preparedness and three additional respiratory infectious diseases.

Entitlement to all such payments is subject to the strict conditions, requirements, royalty reduction provisions and other limitations set forth in the CSL Collaboration Agreement.

Either party may terminate the CSL Collaboration Agreement on a field-by-field basis for material breach by the other party, following notice and opportunity to cure.

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The CSL Collaboration Agreement allows us to fulfill our obligations under the award from the Biomedical Advanced Research and Development Authority (BARDA) relating to rapid pandemic influenza response, announced by Arcturus in August 2022.

On October 26, 2015, we entered into a Research Collaboration and License Agreement with Ultragenyx, which was later amended in 2017, 2018 and during the second quarter of 2019 (as amended, the “Ultragenyx Agreement”).

Ultragenyx initially selected two development targets, including Glycogen Storage Disease Type III, and the parties initially agreed to a list of eight additional reserved rare disease targets which Ultragenyx has an exclusive option to select for collaborative development.

Under the Ultragenyx Agreement, we have granted Ultragenyx exclusivity (i) with respect to development targets, to the development and commercialization of products containing nucleic acid technology, and (ii) with respect to reserved targets, the development and commercialization of any product containing nucleic acid products or utilizing LUNAR lipid-mediated delivery technology.

Under the Ultragenyx Agreement, we have granted Ultragenyx a co-exclusive, royalty-free, sublicensable license of our technology for conducting collaborative development of development targets, compounds and products.

On June 18, 2019, we expanded our collaboration with Ultragenyx and entered into a third amendment (the “Third Amendment”) to the Ultragenyx Agreement.

Pursuant to the Third Amendment, the total number of targets was increased from 10 to 12, and we granted Ultragenyx exclusivity to development targets for four years at no additional cost.

In connection with the Third Amendment, Ultragenyx purchased shares of our common stock and made a one-time upfront payment.

Ultragenyx also received a two-year option to purchase additional shares of our common stock which they exercised in May of 2020.

On December 1, 2021, Ultragenyx announced that the first patient had been dosed in its Phase 1/2 study of UX053, an investigational messenger RNA therapy in development under the collaboration for the treatment of Glycogen Storage Disease Type III, and thus the first milestone under the collaboration agreement had been met.

Cystic Fibrosis Foundation Agreement

On May 16, 2017, pursuant to a Development Program Letter Agreement (the “CFF Agreement”), CFF agreed to award us funding for a development program to identify lead CFTR mRNA sequences and LUNAR formulations, demonstrate tolerability of LUNAR CFTR mRNA, and demonstrate translatability of aerosolized LUNAR (the “CFF Agreement”).

On May 16, 2017, pursuant to a Development Program Letter Agreement (as amended, the “CFF Agreement”) with the CFF, CFF agreed to award us funding for a development program to identify lead CFTR mRNA sequences and LUNAR formulations, demonstrate tolerability of LUNAR CFTR mRNA, and demonstrate translatability of aerosolized LUNAR.

The award includes a grant of rights to CFF know-how to assist us to research, develop, commercialize, make or otherwise exploit a product.

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Further, in the event of a license, sale or other transfer of the product or our development program technology (including a change of control transaction), we will pay CFF a percentage of such license, sale or transfer payments actually received by us or our shareholders (subject to a royalty cap).

On August 1, 2019, we amended the CFF Agreement.

On August 1, 2019, we entered into an amendment to the CFF Agreement.

Pursuant to the amendment, (i) CFF will increase the amount it will award to advance LUNAR-CF, (ii) we will provide a certain amount of matching funds for remaining budgeted costs, and (iii) the related disbursement schedule from CFF to us was modified such that (a) a disbursement was made upon execution of the amendment, (b) an agreed upon amount will be disbursed to us within thirty days of the first day of each of January, April, July and October 2020, and (c) the last payment will be disbursed upon us invoicing CFF to meet good manufacturing practices and submitting an IND application.

In January 2022, the parties signed an additional amendment for CFF to fund the development of a CF ferret model for application in the development of ARCT-032, our LUNAR-CF candidate.

In August 2022, we entered into a cost reimbursement contract with the Biomedical Advanced Research and Development Authority (“BARDA”) of the U.S.

On September 25, 2023, we entered into an additional amendment (the “Fourth Amendment”) to the CFF Agreement, pursuant to which we and CFF agreed to:

(a) increase the Amount of Award (as defined in the CFF Agreement and applicable amendment) from CFF to advance LUNAR-CF by up to $9 million (for a total to date of up to approximately $25 million), and required Arcturus to provide $15 million in matching funds for remaining budgeted costs;

(b) modify the existing rates and caps on royalties due to CFF under the CFF Agreement, including the addition of an option for Arcturus to reduce the royalty rate through a one-time payment;

(c) modify the calculation of payments from Arcturus to CFF in the event of certain dispositions or licensing of cystic fibrosis or other pulmonary assets or of a change of control of Arcturus;

and (d) make corresponding changes to exhibits, definitions and other provisions of the CFF Agreement.

Under the Ultragenyx Agreement, we granted Ultragenyx exclusivity (i) with respect to development targets, to the development and commercialization of products containing nucleic acid technology, and (ii) with respect to reserved targets, the development and commercialization of any product containing nucleic acid products or utilizing LUNAR lipid-mediated delivery technology.

On June 18, 2019, we expanded our collaboration with Ultragenyx and entered into a third amendment (the “Third Amendment”) to the Ultragenyx Agreement.

Pursuant to the Third Amendment, the total number of targets was increased from 10 to 12, and we granted Ultragenyx exclusivity to development targets for four years at no additional cost.

In connection with the Third Amendment, Ultragenyx purchased shares of our common stock and made a one-time upfront payment.

Ultragenyx also received a two-year option to purchase additional shares of our common stock which they exercised in May of 2020.

Ultragenyx completed dosing in the single ascending dose, or SAD, stage of the Phase 1/2 study of UX053 with no safety issues observed.

In May 2023, Ultragenyx announced that it terminated the Phase 1/2 study for UX053 due to reasons unrelated to safety concerns.

On June 18, 2023, the exclusivity period for reserved targets expired.

Prior to this expiration, Ultragenyx exercised its option with respect to some of its reserved targets thereby converting them to development targets under the agreement.

In August 2022, we entered into a cost reimbursement contract with the Biomedical Advanced Research and Development Authority (“BARDA”) of the U.S.

Department of Health and Human Services to support the development of a low-dose pandemic influenza candidate based on our proprietary self-amplifying messenger RNA-based vaccine platform.

The contract is to support our non-clinical and pre-clinical development, early-stage clinical development through Phase 1, and associated drug product manufacturing, regulatory and quality-assurance activities over a period of three years.

The contract provides for reimbursement by BARDA of Arcturus’

permitted costs incorporated into the contract, up to $63.2 million.

The contract provides for reimbursement by BARDA of Arcturus’ permitted costs incorporated into the contract, up to $63.2 million.

The contract does not include the purchase of any pandemic influenza vaccine that eventually may be developed.

The contract is terminable by BARDA at any time under specified circumstances, including for convenience.

This contract is part of BARDA’s ongoing efforts to bolster pandemic preparedness and response capabilities by investing in innovative medical counter-measures that can help prevent the medical consequences that result from outbreaks caused by pandemic influenza and emerging infectious diseases.

On January 1, 2018, we entered into a Development and Option Agreement with CureVac, which was amended on May 3, 2018 and later restated on September 28, 2018 (as amended and restated, the “Development and Option Agreement”).

Under the terms of the Development and Option Agreement, CureVac and Arcturus agreed to conduct joint preclinical development programs and we granted CureVac a license to develop and commercialize certain products incorporating certain of our technology (the “Arcturus LMD Technology”) and CureVac technology.

The products subject to the Development and Option Agreement relate to certain targets to be identified during the eight year term of the agreement.

In consideration for the rights granted under the Development and Option Agreement, we received an upfront fee from CureVac.

Prior to expiration of the initial term of eight years (which was subsequently amended, as discussed below), the Development and Option Agreement also includes an option to extend the term on an annual basis for up to three years, subject to payment by CureVac to Arcturus of a non-refundable annual extension fee.

The Development and Option Agreement includes potential milestone payments from CureVac for selected targets.

Additionally, CureVac will pay royalties as a percentage of net sales on a product-by-product and country-by-country basis during the applicable royalty term in the low single-digit range.

On July 26, 2019, we entered into an amendment (“CureVac Amendment”) to the Development and Option Agreement, pursuant to which the parties have agreed to shorten the time period during which CureVac may select

potential targets to be licensed from eight years to four years from the date of the CureVac Amendment, and to reduce the overall number of maximum targets that may be reserved and licensed.

Other Material Agreements

Alexion License Agreement

On February 17, 2021, we entered into an exclusive license agreement with Alexion Pharmaceuticals, Inc.

(“Alexion”) pursuant to which Alexion granted to Arcturus Therapeutics, Inc.

an exclusive, worldwide license to exploit certain specified Alexion patents.

In accordance with the terms of the license agreement, and in exchange for the license, we issued shares of our common stock to Alexion.

The per share price was determined based on the volume weighted average closing price of our common stock on The Nasdaq Global Market for the thirty trading days ending on February 17, 2021.

On January 1, 2018, we entered into a Development and Option Agreement with CureVac, which was amended on May 3, 2018, restated on September 28, 2018 and amended on July 24, 2019 (as amended and restated, the “Development and Option Agreement”).

CureVac did not exercise its option to extend the term prior to its expiration, and the Development and Option Agreement expired as of July 24, 2023.

ARCALIS Joint Venture

On August 14, 2023, we announced that ARCALIS Inc.

(ARCALIS), our manufacturing joint venture in Japan to support the production of mRNA vaccines and therapeutics, had been awarded up to $115 million in two separate grants from the Japanese government.

We anticipate that these grants will be used to fund the construction

of a factory and the purchase of capital equipment to support current Good Manufacturing Practice (cGMP) production of mRNA drug substance and mRNA drug product operations.

On October 4, 2023, we announced that ARCALIS was selected by the Japanese Ministry of Economy, Trade and Industry to receive additional financial support to construct a DNA template manufacturing facility along with new state-of-the-art equipment.

DNA plasmid generated at this facility would be used as key starting material in the manufacture of mRNA drug substance at ARCALIS’ neighboring mRNA drug substance facility, which was completed in July 2023.

To date, approximately $165 million has been awarded to ARCALIS by the Japanese government, subject to certain terms and conditions, to build mRNA Drug Substance, mRNA Drug Product manufacturing capabilities and to construct a DNA template manufacturing facility.

Intellectual Property

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Our Patent Portfolio

As of March 24, 2023, we own over 305 patents and pending patent applications including 41 U.S.

As of February 26, 2024, we own over 438 patents and pending patent applications including 46 granted U.S.

patents, 41 pending U.S.

patent applications, 10 pending international applications under Patent Cooperation Treaty (“PCT”), 100 foreign patents and 121 pending foreign patent applications.

patent applications, six pending international applications under Patent Cooperation Treaty (“PCT”), 157 granted foreign patents and 188 pending foreign patent applications.

The claims of these patents and pending applications include compositions of matter, methods of use, manufacturing process and drug product formulations.

These claims cover the use of our core platform technologies including the use of LUNAR and lipid components to deliver nucleic acids, the use of UNA oligomers for therapeutics and reagents, the use of LNA oligomers for therapeutics, specific nucleic acid modalities for treating disease, as well as our proprietary technology regarding the design, manufacture, and purification of nucleic acids for use in therapy.

Claims also cover the composition of matter, formulation, and use of our therapeutic candidates to prevent and/or treat target diseases including OTC deficiency, CF, HBV, and COVID-19.

Our issued patents are expected to expire between 2028 and 2042, without taking into account any possible patent term extensions.

Claims also cover the composition of matter, formulation, and use of our therapeutic candidates to prevent and/or treat target diseases including OTC deficiency, CF and COVID-19.

If issued, our patents are expected to expire between 2028 and 2044, without taking into account any possible patent term extensions.

Our patent portfolio includes the following patents and pending patent applications for LUNAR, UNA and the use of LNA in certain RNA medicines:

LUNAR –

As of March 24, 2023, we own 19 U.S.

• LUNAR ® – As of February 26, 2024, we own 20 U.S.

patents, 12 U.S.

pending patent applications, 4 international patent application (“PCT”), 29 foreign granted patents, and 61 foreign pending patent applications covering the composition of matter, manufacture of lipid nanoparticles (including lyophilization), and use of our LUNAR technology for nucleic acid delivery and drug delivery.

UNA, mRNA and LNA –

As of March 24, 2023, we own 22 U.S.

pending patent applications, one international patent application (“PCT”), 56 foreign granted patents, and 91 foreign pending patent applications covering the composition of matter, manufacture of lipid nanoparticles (including lyophilization), and use of our LUNAR technology for nucleic acid delivery and drug delivery.

• UNA, tRNA, mRNA and LNA – As of February 26, 2024, we own 25 U.S.

patents, 23 U.S.

pending patent applications, 3 PCT applications, 71 foreign patents and 31 foreign pending patent applications covering methods and uses of LNA, UNA oligomer and mRNA therapeutics, and compositions of UNA oligomers or mRNA to treat specific target diseases.

STARR –

In 2019, we began to develop our STARR platform which combines our proprietary LUNAR delivery systems with technologies that enable self-transcribing and self-amplifying RNA.

pending patent applications, three PCT applications, 83 granted foreign patents and 58 foreign pending patent applications covering methods and uses of LNA, UNA oligomer and mRNA therapeutics, tRNA constructs, and compositions of UNA oligomers or mRNA to treat specific target diseases.

• STARR ® – In 2019, we began to develop our STARR platform which combines our proprietary LUNAR delivery systems with technologies that enable self-transcribing and self-amplifying RNA.

As noted above, our robust LUNAR portfolio of over 168 patents and patent applications, provides protection for delivery vehicles that can enable specific and effective delivery of STARR drug substances.

In particular, we own one pending U.S.

provisional application, three pending U.S.

nonprovisional patent applications and one pending PCT application directed to the manufacture of

compositions that can comprise STARR RNA in a lipid delivery vehicle.

In addition, we have begun to develop our STARR patent portfolio, and as of March 24, 2023, we own four pending U.S.

patent applications, and one pending PCT application directed to specially designed RNA constructs, specific nucleotide and amino acid sequences, and lipid formulations comprising the same under the STARR technology.

Our portfolio has expanded, and as of February 26, 2024 own two pending U.S.

nonprovisional patent applications, 21 pending foreign applications.

Our first granted U.S.

patent for our STARR platform is U.S.

11,759,515 (issued September, 19, 2023).

This portfolio is generally directed

to specially designed RNA constructs, specific nucleotide and amino acid sequences, and lipid formulations comprising the same under the STARR technology.

We anticipate that further patents will be filed as we continue to innovate with respect to our STARR platform and that current applications covering these developments in our STARR platform, if granted, will last until 2044, not including any patent term extensions.

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Trade Secrets

We also rely on trade secrets to protect our product candidates and proprietary processes.

We have developed valuable trade secrets to protect our product candidates and proprietary processes, including trade secrets related to the design and optimization of nucleic acids, the design and optimization of lipid compositions for delivery of nucleic acids, manufacturing and formulation processes, and analytical techniques.

Certain Risks to Intellectual Property

Our commercial success also depends in part on our non-infringement of the patents or proprietary rights of third parties.

For a more comprehensive discussion of the risks related to our intellectual property, please see Item 1A “Risk Factors”

“Risks Related to Our Intellectual Property.”

For a more comprehensive discussion of the risks related to our intellectual property, please see Item 1A “Risk Factors” – “Risks Related to Our Intellectual Property.”

The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States.

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• operate our business without infringing the patents and proprietary rights of third parties, both in the United States and internationally.

Certain Risks to Intellectual Property

We seek to protect our proprietary technology and processes, in part, by confidentiality and invention assignment agreements with our employees, consultants, scientific advisors and other contractors.

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Government authorities in the United States, at the federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of products such as those we are developing.

Any product candidate that we develop must be authorized or approved by the FDA before it may be legally marketed in the United States and by the appropriate foreign regulatory agency before it may be legally marketed in foreign countries.

Any product candidate that

we develop must be authorized or approved by the FDA before it may be legally marketed in the United States and by the appropriate foreign regulatory agency before it may be legally marketed in foreign countries.

Drug Development Process

In the United States, the development, manufacturing, and marketing of human drugs and vaccines are subject to extensive regulation.

The FDA regulates drugs under the Federal Food, Drug and Cosmetic Act (“FDCA”) and implementing regulations, and biological products, including vaccines, under provisions of the FDCA and the Public Health Service Act (“PHSA”).

Drugs and vaccines are also subject to other federal, state and local statutes and regulations.

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The process required by the FDA before a drug or biological product may be marketed in the United States generally involves the following:

completion of nonclinical laboratory tests, animal studies and formulation and stability studies according to good laboratory practices (“GLP”) or other applicable regulations;

• completion of nonclinical laboratory tests, animal studies and formulation and stability studies according to good laboratory practices (“GLP”) or other applicable regulations;

• submission to the FDA of an application for an IND, which must become effective before human clinical trials may begin;

performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as current good clinical practices (“GCPs”) to establish the safety and efficacy of the proposed drug for its intended use;

submission to the FDA of a new drug application (“NDA”) or biologics license application (“BLA”) for a new drug or biologics;

satisfactory completion of FDA inspections of the manufacturing facility or facilities where the drug is produced to ensure compliance with the FDA’s current good manufacturing practice standards (“cGMP”), to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

• performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as current good clinical practices (“GCPs”) to establish the safety and efficacy of the proposed drug for its intended use;

• submission to the FDA of a new drug application (“NDA”) or biologics license application (“BLA”) for a new drug or biologics;

• satisfactory completion of FDA inspections of the manufacturing facility or facilities where the drug is produced to ensure compliance with the FDA’s current good manufacturing practice standards (“cGMP”), to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

• potential FDA audit of the nonclinical and clinical trial sites that generated the data in support of the NDA or BLA;

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Before testing any compounds with potential therapeutic value in humans, the drug candidate enters the preclinical study stage.

Preclinical tests, also referred to as nonclinical studies, include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and pharmacological activity of the drug candidate.

The conduct of the preclinical tests must comply with federal regulations and requirements including GLP.

Preclinical tests, also referred to as nonclinical studies, include discovery and target identification, in vitro testing to assess biological activity, mechanism of action, and potential toxicity, as well as animal studies to assess the potential safety, pharmacokinetics, and pharmacological activity of the drug candidate.

The conduct of the animal studies must comply with federal regulations and requirements including GLP.

The sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND.

The IND automatically becomes effective thirty days after receipt by the FDA, unless the FDA imposes a clinical hold within that 30-day time period.

In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.

In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before

the clinical trial can begin.

The FDA may also impose clinical holds on a drug candidate at any time before or during clinical trials due to safety concerns or non-compliance.

Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate such trial.

Clinical trials involve the administration of the drug candidate to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor’s direct control.

Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety.

Each protocol must be submitted to the FDA as part of the IND.

Clinical trials must be conducted in accordance with the FDA’s regulations comprising the good clinical practices requirements.

Further, each clinical

trial must be reviewed and approved by an independent institutional review board (“IRB”) at or servicing each institution at which the clinical trial will be conducted.

Clinical trials must be conducted in accordance with the FDA’s regulations comprising the good clinical practices requirements.

Further, each clinical trial must be reviewed and approved by an independent institutional review board (“IRB”) at or servicing each institution at which the clinical trial will be conducted.

An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits.

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The FDA or the sponsor or its data safety monitoring board may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk.

Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.

Concurrently with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.

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The results of product development, nonclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of an NDA or BLA requesting approval to market the product.

The submission of an NDA or BLA is subject to the payment of substantial user fees ($3,242,063 for 2023);

The submission of an NDA or BLA is subject to the payment of substantial user fees;

a waiver of such fees may be obtained under certain limited circumstances.

In addition, under the Pediatric Research Equity Act (“PREA”), an NDA or BLA or supplement to an NDA or BLA must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

The FDA may grant deferrals for submission of data or full or partial waivers.

otherwise required by regulation, PREA does not apply to any drug for an indication for which orphan designation has been granted.

Unless otherwise required by regulation, PREA does not apply to any drug for an indication for which orphan designation has been granted.

The FDA reviews all NDAs or BLAs submitted to determine if they are substantially complete before it accepts them for filing.

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Once the submission is accepted for filing, the FDA begins an in-depth review of the NDA or BLA.

Under the goals and policies agreed to by the FDA under the Prescription Drug User Fee Act (“PDUFA”), the FDA has 10 months from acceptance of filing in which to complete its initial review of a standard NDA or BLA and respond to the applicant, and six months from acceptance of filing for a priority NDA or BLA.

The FDA does not always meet its PDUFA goal dates.

The review process and the PDUFA goal date may be extended by three months or longer if the FDA requests or the NDA or BLA sponsor otherwise provides additional information or clarification regarding information already provided in the submission before the PDUFA goal date.

After the NDA or BLA submission is accepted for filing, the FDA reviews the NDA or BLA to determine, among other things, whether the proposed product is safe and effective for its intended use, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, strength, quality and purity.

The FDA may refer applications for novel drug or biological products or drug or biological products which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions.

The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

During the drug approval process, the FDA also will determine whether a risk evaluation and mitigation strategy (“REMS”) is necessary to assure the safe use of the drug.

If the FDA concludes a REMS is needed, the sponsor of the NDA or BLA must submit a proposed REMS;

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The deficiencies identified may be minor, for example, requiring labeling changes, or major, for example, requiring additional clinical trials.

Additionally, the complete response letter may include recommended actions that the applicant might take to place the application in a condition for approval.

Additionally, the complete response letter may include recommended actions that the applicant might take to place the application in a

condition for approval.

If a complete response letter is issued, the applicant may either submit new information, addressing all of the deficiencies identified in the letter, or withdraw the application.

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Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling.

In addition, the FDA may require post marketing clinical trials, sometimes referred to as Phase 4 clinical trials, which are designed to further assess a product’s safety and effectiveness and may require testing and surveillance programs to monitor the safety of approved products that have been commercialized.

Emergency Use Authorization (“EUA”)

The Commissioner of the FDA, under delegated authority from the Secretary of the U.S.

Department of Health and Human Services (“DHHS”) may, under certain circumstances, issue an authorization in the form of an EUA that would permit, for the duration of the declaration by the DHHS described below or until revocation of the EUA, the distribution and use of a drug or biological product that is not approved or licensed.

Before an EUA may be issued, the Secretary must make a declaration that circumstances exist to justify the authorization based on one of the following grounds:

a determination by the Secretary of the Department of Homeland Security that there is a domestic emergency, or a significant potential for a domestic emergency, involving a heightened risk of attack with a biological, chemical, radiological, or nuclear agent or agents;

a determination by the Secretary of the Department of Defense that there is a military emergency, or a significant potential for a military emergency, involving a heightened risk to U.S.

military forces of attack with a specified biological, chemical, radiological, or nuclear agent or agents or other agent or agents that may cause, or are otherwise associated with, an imminently life-threatening and specific risk to U.S.

military forces;

a determination by the Secretary of the DHHS that there is a public health emergency, or significant potential for such, that affects, or has the significant potential to affect, national security or the health and security of U.S.

citizens living abroad, and that involves a biological, chemical, radiological, or nuclear agent or agents, or a disease or condition that may be attributable to such agent or agent;

the identification of a material threat pursuant to Section 319F-2 of the Public Health Service Act, authorizing the creation of the Strategic National Stockpile and security countermeasure procurements, sufficient to affect the national security or the health and security of United States citizens living abroad.

In order to be the subject of an EUA, the FDA Commissioner must conclude that, based on the totality of scientific evidence available, it is reasonable to believe that the product may be effective in diagnosing, treating or preventing a disease attributable to the agents described above, that the product’s potential benefits outweigh its potential risks and that there is no adequate approved alternative to the product.

The FDA has issued EUAs to companies for products intended for the prevention and treatment of COVID-19.

The FDA expects EUA holders to work toward submission of an NDA, BLA, or other applicable approval.

In addition to the United States, other countries such as UK and Vietnam have a similar mechanism to facilitate the availability and use of medical countermeasures, including vaccines, during public health emergencies.

Post-approval requirements

Any drug or biological products for which we or our strategic alliance partners receive FDA approvals are subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, product sampling and distribution requirements, complying with certain electronic records and signature requirements and complying with FDA promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as “off-label use”), industry-sponsored scientific and educational activities, and promotional activities involving the internet.

Failure to comply with FDA requirements can have negative consequences, including adverse publicity, enforcement letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties.

Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses.

Manufacturers of our product candidates are required to comply with applicable FDA manufacturing requirements contained in the FDA’s cGMP regulations.

cGMP regulations require among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation.

Following approval, the FDA continues to monitor vaccine quality through real-time monitoring of lots by requiring manufacturers to submit certain information for each vaccine lot.

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Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.

Discovery of problems with a product after approval may result in

restrictions on a product, manufacturer, or holder of an approved NDA or BLA, including withdrawal of the product from the market.

Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved NDA or BLA, including withdrawal of the product from the market.

In addition, changes to the manufacturing process require notice to or prior approval from the FDA before being implemented and other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.

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Certain countries outside of the United States have a similar process that requires the submission of a clinical trial application much like the IND prior to the commencement of human clinical trials.

Once the CTA is approved in accordance with a country’s requirements, clinical trial development may proceed.

The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country.

In all cases, the clinical trials are conducted in accordance with GCPs and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

Once the CTA is approved in accordance with a country’s requirements, clinical trial development may proceed.

To obtain regulatory approval of an investigational drug or biological product under EU regulatory systems, we or our strategic alliance partners must submit a marketing authorization application.

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In all cases, again, the clinical trials are conducted in accordance with GCPs and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

The regulatory approval of marketing authorization application of an investigational drug or biological product is similar to that required in the United States, with the exception of, among other things, country-specific document requirements.

regulatory approval of marketing authorization application of an investigational drug or biological product is similar to that required in the United States, with the exception of, among other things, country-specific document requirements.

Our Business in General

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These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

Our recent collaboration with CSL, a global leader in vaccines, will allow us to compete better on the world stage within the COVID and influenza markets.

Our recent collaboration with CSL, a global leader in vaccines, will allow us to compete better commercially on the world stage within the COVID and influenza markets.

Our success will be based in part upon our ability to identify, develop and manage a portfolio of product candidates that are safer and more effective than competing products in the treatment of our targeted patients.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, are more convenient or are less expensive than any products we may develop.

The commercial opportunity could be reduced or eliminated if competitors develop and commercialize products that are safer, more effective, are more convenient or are less expensive than any products we may develop in our respective areas.

We are aware of several other companies that are working to develop nucleic acid medicines, including gene therapy, gene editing, mRNA (including saRNA), siRNA, and antisense therapeutics.

Many of these companies, such as Genevant, are also developing nucleic acid delivery platforms which compete with LUNAR technology.

Many of these companies, such as Genevant Sciences and Acuitas Therapeutics, are also developing nucleic acid delivery platforms which compete with LUNAR technology.

Below we have included what we believe to be the competitive landscape for certain of the medicines that we currently have in development.

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Our liver franchise has advanced into mid-stage clinical development with ARCT-810 in Phase 2 clinical development.

Potential competitors include, but are not limited to, Ultragenyx which is advancing a gene therapy program for OTC in clinical development, and Moderna which has a therapeutic candidate in pre-clinical development.

Potential competitors include, but are not limited to, Ultragenyx which is advancing a gene therapy

program for OTC in clinical development, and Moderna which has a therapeutic candidate in pre-clinical development.

Lung Franchise:

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In November 2017, Alcobra Ltd., an Israeli limited company, merged with our company, changed its name to Arcturus Therapeutics Ltd.

(“Arcturus Israel”), and commenced trading on Nasdaq under the symbol “ARCT.”

On June 17, 2019, we redomiciled to the United States (the “Redomiciliation”) and changed our name to Arcturus Therapeutics Holdings Inc.

(“Arcturus Israel”), and commenced trading on Nasdaq under the symbol “ARCT.” On June 17, 2019, we redomiciled to the United States (the “Redomiciliation”) and changed our name to Arcturus Therapeutics Holdings Inc.

Our Internet address is www.arcturusrx.com.

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The public may read and copy any materials that we file with the SEC electronically through the SEC website (www.sec.gov).

The information contained on the SEC’s website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered to be part thereof.

Ris k Factors

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The following is a summary of certain important factors that may make an investment in our company speculative or risky.

You should carefully consider the fuller risk factor disclosure set forth in this Annual Report, in addition to the other information herein, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

and our financial statements and related notes.

We have a limited operating history and, with exception for fiscal year 2022 have incurred significant operating losses since our inception and still anticipate that we will continue to incur significant operating losses for the foreseeable future.

• We have a limited operating history, have incurred significant losses since our inception (with the exception of fiscal year 2022) and anticipate that we will continue to incur significant losses for the foreseeable future.

• We have never generated any revenue from product sales, have generated only limited collaboration and grant revenue since inception, and may never be profitable in the long term.

• We expect that we will need to raise additional capital in the future, which may not be available on acceptable terms, or at all.

• We are dependent upon relationships with our collaboration partners, and the failure of these relationships could negatively affect our business and results of operations.

• We are exposed to interest rate risk, including under our loan agreements.

• Our debt contains customary default clauses, a breach of which may result in acceleration of the repayment of some or all of this debt.

• We are highly dependent upon our relationship with CSL Seqirus to further research, manufacture and commercialize self-amplifying mRNA vaccines against COVID-19, influenza and three other respiratory infectious diseases.

If such relationship is unsuccessful, or if CSL Seqirus fails to perform or terminates its collaboration agreement with us, it would negatively impact our ability to conduct our business and generate net product revenue.

Failure by CSL Seqirus to perform its duties under its collaboration agreement with us (e.g.

financial reporting or internal control compliance) may negatively affect us.

Even if we successfully develop a COVID-19 vaccine, we may not be able to sell it profitably, or it may not be accepted in the market.

Our next generation COVID-19 vaccine candidate, ARCT-154, does not have marketing approval and may never achieve marketing approval.

Regulators may refuse to approve ARCT-154 as a booster shot because we have not yet received approval for ARCT-154 as a primary vaccination series for COVID-19.

Data from our ongoing Phase 1/2/3 clinical trials of ARCT-154 in Vietnam may not provide sufficient evidence to any regulatory authorities, including the U.S.

FDA, that it is sufficiently safe and effective to achieve any marketing approval (including any emergency use authorization) or to have a plausible clinical path to an approval.

There is significant competition in the development of a vaccine against COVID-19, some competitors’

vaccines are already widely accepted in the market, and many of our competitors have substantially greater financial, scientific and other resources than we have.

• Even if our COVID-19 vaccine candidate is commercialized, it might not have a profitable commercial market.

• Our partnered next generation COVID-19 vaccine candidate, ARCT-154, only has marketing approval in Japan and may never achieve marketing approval in any other countries.

Regulators may refuse to approve our current or an updated COVID-19 vaccine candidate containing an updated variant strain in Japan and elsewhere.

• Regulatory authorities may change views and recommendations, which could lead to more challenging regulatory paths to approvals and to more expensive clinical and commercial efforts.

• Even with the approval in Japan of our partnered next generation COVID-19 vaccine candidate, ARCT-154, we might not achieve any sales in Japan.

• Regulatory authorities may change views and recommendations, which could lead to more challenging regulatory paths to approvals and to more expensive clinical and commercial efforts.

• There is significant competition in the development of a vaccine against COVID-19, some competitors’ vaccines are already widely accepted in the market, and many of our competitors have substantially greater financial, scientific and other resources than we have.

• If we are unable to generate successful results from preclinical and clinical studies of our product candidates, or experience significant delays in doing so, our business may be materially harmed.

• Our platform focuses on nucleic acid technology, and mRNA drug products in particular, which are relatively new and any adverse results from nucleic acid or mRNA technologies in the industry could significantly impact our ability to develop and commercialize marketable products.

• Changes to our drug product format could significantly impact our timeline to commercialize our products.

• We may not be successful in our efforts to identify or discover potential product candidates.

If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

• We may find it difficult to identify and enroll patients in our clinical studies, and the limited number of patients who have the diseases for which certain of our product candidates are being studied could delay or prevent clinical studies of certain of our product candidates.

• If any of our product candidates cause undesirable side effects or have other properties impacting safety, their regulatory approval could be prevented, delayed or limited.

Even if we complete the necessary preclinical studies and clinical trials, we may not obtain regulatory approval to commercialize a product candidate and we cannot, therefore, predict the timing of any revenue from a future product.

• Even if we obtain regulatory approval for a product candidate, we will still face extensive regulatory requirements and our products may face future development and regulatory difficulties.

We may use our financial and human resources to pursue a particular research program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success.

• If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

• Manufacturing issues may arise that could increase product and regulatory approval costs or delay or hinder commercialization.

If our alliance partners do not perform in accordance with the terms of our agreements, our potential to generate future revenue from these programs would be significantly reduced and our business would be materially and adversely harmed.

We face significant competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively.

The commercial success of our product candidates will depend upon the acceptance of these product candidates by the medical community, including physicians, patients and healthcare payors.

If we are unable to establish cost-effective sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to generate any revenues.

If we obtain approval to commercialize any approved products outside of the United States, a variety of risks associated with international operations could materially adversely affect our business.

• If our strategic alliances are unsuccessful or are terminated, we may be unable to commercialize certain product candidates and generate revenues.

If the outside contractors we rely on to conduct some aspects of our compound formulation, research and studies do not perform satisfactorily and meet deadlines, development of our product candidates could be delayed or precluded.

• If the contract manufacturers we rely on to produce the supply of our preclinical and clinical product candidates, including materials for the manufacture of our product candidates, do not timely deliver adequate quantities of quality materials, development and commercialization of our product candidates would be hindered.

Any disruption in the supply chain of raw materials for, or in the manufacturing capacity and timing for the manufacture of drug substance or drug product for, our product candidates may cause a delay in

developing and commercializing these product candidates and limit the revenues that we could generate.

• Any disruption in the supply chain of raw materials for, or in the manufacturing capacity and timing for the manufacture of drug substance or drug product for, our product candidates may cause a delay in developing and commercializing these product candidates and limit the revenues that we could generate.

• If the contract research organizations and clinical trial sites we rely on to conduct, supervise and monitor our clinical trials perform in an unsatisfactory manner, it may harm our business.

If we are unable to obtain or protect intellectual property rights related to our future products and product candidates, we may not be able to compete effectively in our markets.

• If we are unable to obtain or protect intellectual property rights related to our products and product candidates, we may not be able to compete effectively in our markets.

• Claims that we infringe the intellectual property rights of others, especially in the crowded and competitive field of mRNA patents, may prevent or delay our development and commercialization efforts.

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Government, and a negative audit could adversely affect our business.

• We have identified material weaknesses in our internal control over financial reporting, and determined that our disclosure controls and procedures were not effective.

If our remediations of these material weaknesses are not effective, or if we experience additional material weaknesses or otherwise fail to maintain an effective system of internal control over financial reporting or adequate disclosure controls and procedures, we may not be able to accurately and timely report our financial results, in which case our business may be harmed, investors may lose confidence in the accuracy and completeness of our financial reports, and the price of our common stock may decline.

RISKS RELATED TO OUR FINANCIAL CONDITION AND NEED FOR ADDITIONAL CAPITAL

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Consequently, any predictions about our future success or viability, or any evaluation of our business and prospects, is difficult and may not be accurate.

In the fourth quarter of 2022 we entered into an agreement with CSL Seqirus and recognized $154.4 million in revenue from a non-recurring up-front payment and license revenue recognized under the agreement resulting in the first year of having net income since our inception.

In 2023 we recognized a significant portion of our revenue from non-recurring milestone payments and license revenue under our collaboration agreement with CSL Seqirus.

Our future payments from CSL Seqirus are dependent on our ability to execute by meeting key product development and other milestones within the contract.

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For example, our clinical trials may encounter technical, regulatory or other difficulties.

Additionally, our strategic alliance collaborators may elect not to pursue the development and commercialization of any of our product candidates that are subject to their respective strategic alliance agreements with us.

Any of these events would increase our development costs more than we expect.

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relinquish or license on unfavorable terms, our rights to technologies or any future product candidates that we otherwise would seek to develop or commercialize ourselves.

We are highly dependent upon our relationship with CSL Seqirus to further research, manufacture and commercialize self-amplifying mRNA vaccines against COVID-19, influenza and three other respiratory infectious diseases.

In November 2022, we entered into the CSL Collaboration Agreement with CSL Seqirus, for the research, manufacture and global commercialization of self-amplifying mRNA vaccines against COVID-19, influenza and three other respiratory infectious diseases.

If such relationship is unsuccessful, or if CSL Seqirus terminates its collaboration agreement with us, it would negatively impact our ability to conduct our business and generate net product revenue.

Failure by CSL Seqirus to perform its duties under its collaboration agreement with us may negatively affect us.

The potential financial returns to us under our collaboration agreements with CSL Seqirus depends in large part on the achievement of milestones and generation of product sales, and if CSL Seqirus fails to perform or satisfy its obligations under the collaboration agreement, the development and commercialization of the licensed programs could be delayed, hindered or may not occur and our business and prospects could be materially and adversely affected.

The fulfillment of our obligations under the CSL Collaboration Agreement may require significant deployment of our resources, which could disrupt or delay our ability to pursue other programs, including our platform development and development of other product candidates.

We are dependent upon relationships with our collaboration partners, and the failure of these relationships could negatively affect our business and results of operations.

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• failure by a collaboration partner to timely deliver accurate and complete financial information to us or to maintain adequate and effective internal control over its financial reporting may negatively affect our ability to meet our financial reporting obligations as required by the SEC;

collaboration partners’

and their affiliates’

development and commercialization of products that compete directly or indirectly with our products or products candidates;

• collaboration partners’ and their affiliates’ development and commercialization of products that compete directly or indirectly with our products or products candidates;

• decisions by a collaboration partner to prioritize other of its current or future products more highly than our drug products or our product candidates when it performs its duties;

• possible disagreements with a collaboration partner as to the timing, nature and extent of our development plans or distribution and sales and marketing plans;

the financial returns to us, if any, under our collaboration agreements depend in large part on the achievement of milestones and generation of product sales, and if our partners fail to perform or satisfy their obligations under the collaboration agreement, the development and commercialization of our drug

products could be delayed, hindered or may not occur and our business and prospects could be materially and adversely affected.

• the financial returns to us, if any, under our collaboration agreements depend in large part on the achievement of milestones and generation of product sales, and if our partners fail to perform or satisfy their obligations under the collaboration agreement, the development and commercialization of our drug products could be delayed, hindered or may not occur and our business and prospects could be materially and adversely affected.

Due to these factors and other possible disagreements with our collaboration partners, we may be delayed or prevented from further developing, manufacturing or commercializing our drug products or our product candidates or we may become involved in litigation or arbitration, which would be time consuming and expensive.

If any collaboration partner were to terminate our collaborative relationship with it unilaterally, we would need to undertake development, commercialization or distribution or sale activities for our drug products and product candidates solely at our own expense, and/or seek one or more other partners for some or all of these activities worldwide.

If we pursued these activities on our own, it would significantly increase our capital and infrastructure requirements, might limit the indications we are able to pursue for our drug products and our product candidates, and could prevent us from effectively developing and commercializing our drug products and our product candidates.

If any collaboration partner were to terminate our collaborative relationship unilaterally, we would need to undertake development, commercialization or distribution or sale activities for our drug products and product candidates solely at our own expense, and/or seek one or more other partners for some or all of these activities worldwide.

If we pursued these activities on our own, it would significantly increase our capital and infrastructure

requirements, might limit the indications we are able to pursue for our drug products and our product candidates, and could prevent us from effectively developing and commercializing our drug products and our product candidates.

If we sought to find one or more other pharmaceutical company partners for some or all of these activities, we may not be successful in such efforts, or they may result in collaborations that have us expending greater funds and efforts than our relationships with our current collaboration partners.

We are exposed to interest rate risk, including under our loan agreements.

We are exposed to market risk from changes in interest rates.

Exposure to interest rate risk results from our debt obligations, including the credit agreement entered into on April 21, 2023 by our wholly-owned subsidiary, Arcturus Therapeutics, Inc., and Wells Fargo Bank, National Association (the “Credit Agreement”), providing for a revolving credit line evidenced by a revolving line of credit note (the “Note”).

Borrowings under the Credit Agreement will bear interest at a rate of 1.00% above either the Daily Simple SOFR or Term SOFR (as such terms are defined in the Note), with “SOFR” being the rate per annum equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York.

All Loans shall bear interest during an Event of Default (as defined in the Credit Agreement) at a rate equal to 2.00% above the interest rate applicable immediately prior to the occurrence of the Event of Default (as defined in the Credit Agreement).

As of December 31, 2023, we had no outstanding balance under the Credit Agreement.

Our indebtedness could materially and adversely affect our business, financial condition and results of operations.

Agreements with our lenders, including with Wells Fargo Bank, National Association, create several limitations on us, including but not limited to:

• limiting our flexibility in planning for, or reacting to, changes in our business and our industry;

• placing us at a competitive disadvantage compared to our competitors who may have less debt or comparable debt at more favorable interest rates or less strict covenants and other limitations or requirements;

• limiting our ability to incur specified types of additional indebtedness which may be desired for working capital, capital expenditures, research and development efforts, acquisitions, debt service requirements, execution of our business strategy or other purposes;

• resulting in an acceleration of our obligations upon the occurrence of an event of default.

Our ability to comply with these covenants in future periods will depend on our financial and operating performance, which in turn will be subject to economic conditions and to financial, market and competitive factors, many of which are beyond our control.

Any of these factors or others described in the Credit Agreement could materially and adversely affect our business, financial condition and results of operations.

Our debt contains customary default clauses, a breach of which may result in acceleration of the repayment of some or all of this debt.

The Credit Agreement contains customary default clauses.

In the event we were to default on our obligations under our debt and were unable to cure or obtain a waiver of such default, the repayment of our debt may be accelerated.

If such acceleration were to occur, we would be required to promptly secure alternative sources of equity or debt financing to be able to repay the debt.

Alternative financing may not be available on terms satisfactory to us, or at all.

New debt financing may require the cooperation and agreement of our existing lenders.

If acceptable alternative financing were unavailable, we would have to consider alternatives to fund the repayment of the debt, which could materially and adversely affect our business, financial condition and results of operations.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

Under the Tax Cuts and Jobs Act, as modified by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, U.S.

federal net operating losses (“NOLs”) incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such federal NOLs is limited.

It is uncertain if and to what extent various states will conform to the Tax Cuts and Jobs Act.

To the extent that we continue to generate taxable losses for United States federal income tax purposes, unused NOLs will carry forward to offset future taxable income (subject to any

applicable limitations), if any.

Under Sections 382 and 383 of the Internal Revenue Code, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be significantly limited.

We believe we may have triggered an “ownership change” limitation;

however, we have not completed a study in accordance with Sections 382 and 383 of the Code to determine whether this ownership change has occurred or what the possible effects of an ownership change would be on our ability to use NOLs.

We may also experience ownership changes in the future as a result of subsequent shifts in our share ownership.

As a result, if we earn net taxable income, our ability to use our pre-change NOL carryforwards to offset U.S.

federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.

Similar provisions of U.S.

state tax law may also apply to limit our use of accumulated state tax attributes, including our state NOLs.

In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

As a result, even if we attain profitability, we may be unable to use a material portion of our NOLs and other tax attributes, which could negatively impact our future cash flows.

RISKS RELATED TO THE DEVELOPMENT AND COMMERCIALIZATION OF PRODUCT CANDIDATES

Failure by CSL Seqirus to perform its duties under its collaboration agreement with us may negatively affect us.

Even if our COVID-19 vaccine candidate is commercialized, it might not have a profitable commercial market.

If the prevalence of COVID-19 continues to decline and more people get vaccinated, the potential market opportunity is likely shrinking for any vaccine, including any booster developed under our collaboration with CSL Seqirus.

If the prevalence of COVID-19 and public concern about the virus continues to decline, the potential market opportunity will shrink for our COVID-19 vaccine under our collaboration with CSL Seqirus.

As further COVID-19 vaccines are approved, production of existing COVID-19 vaccines improves and the COVID-19 impact transitions from pandemic to endemic stage, there may be downward pressure on prices.

Although many developing countries have large populations for whom COVID-19 vaccines have not been available, it may not be easy or profitable to get vaccines to those populations.

The price at which COVID-19 vaccines could be sold to developing countries is not likely to be as high as prices paid by wealthier countries eager to get vaccines when first available.

Therefore, even if we and CSL Seqirus can get through the extremely costly, long and risky process of developing and obtaining regulatory approval to market a vaccine, it may not be commercially successful.

This failure could be due to reduced demand for COVID-19 vaccines, lower prices, distribution problems, competitors’

products or many other reasons.

This failure could be due to reduced demand for COVID-19 vaccines, lower prices, distribution problems, competitors’ products or many other reasons.

Our manufacturing process for our current COVID-19 vaccine candidates include a step for lyophilization to enhance the stability of the vaccine product.

The additional step of lyophilization adds time and costs to the overall production output, which could adversely impact the production volumes and profitability of our COVID-19 vaccines if approval to market a vaccine is achieved.

Our partnered next generation COVID-19 vaccine candidate, ARCT-154, does not have marketing approval and may never achieve marketing approval.

Regulators may refuse to approve ARCT-154 as a booster shot because we have not yet received approval for ARCT-154 as a primary vaccination series for COVID-19.

In the coming months, we expect to receive important clinical data on ARCT-154, and the data may not support a regulatory approval (including emergency use authorization).

Regulatory authorities, including the FDA, may deem the data we expect to collect from studies outside of the United States to be inadequate or unacceptable.

Regulatory authorities, including the FDA, may also determine to foreclose or make more difficult a path to emergency use authorization.

If key regulatory authorities, such as the FDA, determine that our data is inadequate or unacceptable, or make the path to regulatory approval more difficult, we may not be able to achieve regulatory approval (including EUA) and any additional study may prove too costly for us to conduct without a strategic partner.

Though we have exciting preliminary clinical data on ARCT-154 as a booster dose, we do not have approval for ARCT-154 (or any vaccine candidate) as a primary vaccination series anywhere in the world and we are awaiting results from a Phase 3 clinical study of ARCT-154 being conducted in Japan by Meiji Seika Pharma.

We cannot provide any assurance that Japan or any other country will provide any approval of ARCT-154 as a primary vaccination series or as a booster.

The FDA and regulators in other jurisdictions may still refuse to approve ARCT-154 or any other vaccine as a booster even if our COVID-19 vaccine candidate demonstrates safety and efficacy.

In such event, ARCT-154 will not be authorized to be sold, and our efforts and the efforts of our partner, CSL Seqirus, on future generations of COVID-19 vaccines based on our platform could be substantially harmed.

Data from our ongoing Phase 1/2/3 clinical trials of ARCT-154 in Vietnam may not provide sufficient evidence to any regulatory authorities, including the U.S.

FDA, that it is sufficiently safe and effective to achieve any marketing approval (including any emergency use authorization) or to have a plausible clinical path to an approval.

Any changes to our manufacturing processes or our product format could take a long time, be expensive and be unsuccessful.

It is also still unclear if the vaccines will enable adequate long-term protection, as (i) many vaccinated individuals have become ill due to “breakthrough infections” and have transmitted the virus to many others, (ii) there are millions of individuals who refuse to be vaccinated or who cannot be vaccinated due to pre-existing conditions, (iii) it is unclear how long the vaccine protection will last, and (iv) genetic mutations or variants of the virus already have had, and are expected to continue to have, an adverse impact on the efficacy of available vaccines.

If we cannot, with and through our partner, develop and commercialize a vaccine that adequately addresses some of these shortcomings of vaccines currently on the market, we cannot expect to have commercial success.

Our partnered next generation COVID-19 vaccine candidate, ARCT-154, only has marketing approval in Japan and may never achieve marketing approval in any other countries.

Regulators may refuse to approve our current or an updated COVID-19 vaccine candidate containing an updated variant strain in Japan and elsewhere.

Although we have marketing approval for ARCT-154 in Japan, we do not have approval for ARCT-154 in any other countries and may never achieve marketing approval in any other countries.

Further, ARCT-154 is not commercially viable in Japan or any other country because it does not contain an updated variant strain, and we do not have approval of a COVID-19 vaccine with an updated variant strain and may never achieve a marketing approval containing an updated variant strain.

Our continued development efforts for our COVID-19 vaccine could face increased research and development costs, including for clinical trials, non-clinical studies and CMC, when updating COVID-19 vaccines containing new variants of concern based on WHO and FDA recommendations.

Regulatory authorities, including the FDA, may deem the variant strain data we expect to collect from studies outside of the United States to be insufficient.

If key regulatory authorities, such as the FDA, determine that our data is inadequate or unacceptable, or make the path to regulatory approval more difficult, we may not be able to achieve regulatory approval and any additional study may prove too costly for us to conduct without a strategic partner.

If we do not receive approvals to market our partnered COVID-19 vaccine, our efforts and the efforts of our partner, CSL Seqirus, on future generations of COVID-19 vaccines based on our platform could be substantially harmed.

Even with the approval in Japan of our partnered next generation COVID-19 vaccine candidate, ARCT-154, we might not achieve any sales in Japan.

We are relying on our partner, CSL Seqirus, and CSL Seqirus’ partner, Meiji Seika Pharma (Meiji), to conduct further development and commercialization of our COVID-19 vaccine candidate.

Even if our COVID-19 vaccine containing an updated variant strain achieves approval in Japan, purchasers in Japan might not purchase any doses of our vaccine, due to competition, pricing, product profile or other factors.

Japanese regulatory agencies and purchasers might require involvement of Japanese companies in the domestic production of our COVID-19 vaccine.

If any such Japanese companies do not participate or fail in such activities, then our and our partners’ ability to commercialize our COVID-19 vaccine will be materially harmed.

Data from our past and ongoing clinical trials of our COVID-19 vaccine candidates may not provide sufficient evidence to any regulatory authorities, including the FDA, that they are sufficiently safe and effective to achieve any marketing approval.

Clinical trial results are inherently uncertain, and a significant portion of our potential success and business prospects currently depend on our partnered COVID-19 vaccine program.

If we cannot demonstrate sufficient safety and efficacy and complete these clinical trials on a timely basis, we likely will have missed a substantial market opportunity for COVID-19 vaccines, after dedicating significant efforts and financial resources to this program, and our commercial relationships may be materially adversely affected.

Data from this trial is crucial for the success of the COVID-19 vaccine program.

Recommendations from an advisory committee of the U.S.

FDA may lead to a more challenging regulatory path to approval for ARCT-154 and any of our future COVID-19 vaccine candidates

At a meeting of the Vaccines and Related Biological Products Advisory Committee (VRBPAC) of the U.S.

FDA in January 2023, the committee members voted unanimously on harmonizing the vaccine strain composition of primary series and booster doses used in the U.S.

to a single composition, the result of which could be that the composition of all vaccines administered currently would be a bivalent vaccine (e.g., original plus Omicron BA.4/BA.5).

This recommendation by VRBPAC could lead the FDA to implement rules that would have an adverse impact on our primary series registration of ARCT-154 with FDA as ARCT-154 is a monovalent vaccine, and could in turn adversely impact a pathway to approval for our future COVID-19 vaccine candidates, if any.

Further, additional data demonstrating broad immunogenicity of ARCT-154 against emerging variant strains may be requested by FDA to support primary series registration.

Even if one of our vaccine candidates is approved for sale, it may not be accepted in the market, despite limitations on the effectiveness of some approved vaccines.

Notwithstanding the ongoing rollout of vaccines, it will still take a substantial amount of time to produce, distribute and administer the vaccines worldwide and, as a result, to achieve broad protection of the global population.

It is also still unclear if the vaccines will enable adequate long-term protection, as (i) many vaccinated individuals have become ill due to “breakthrough infections”

and have transmitted the virus to many others, (ii) there are millions of individuals who refuse to be vaccinated or who cannot be vaccinated due to pre-existing conditions, (iii) it is unclear how long the vaccine protection will last, and (iv) genetic mutations or variants of the virus already have had, and are expected to continue to have, an adverse impact on the efficacy of available vaccines.

There is significant competition in the development of a vaccine against COVID-19, some competitors’

vaccines are already widely accepted in the market, and many of our competitors have substantially greater financial, scientific and other resources than we have.

A large number of biopharmaceutical companies, academic institutions and other organizations currently have programs to develop COVID-19 vaccine candidates and many are further along in development of their vaccine candidates.

Pfizer, Moderna and Johnson & Johnson have received full approvals or emergency use authorization from the FDA and many other health regulatory authorities throughout the world, and other biopharmaceutical companies have received approvals or authorizations from many health regulatory authorities other than the FDA, for their COVID-19 vaccines and have already commercialized them on a large scale and have vaccinated billions of people around the world.

Regulatory authorities may change views and recommendations, which could lead to more challenging regulatory paths to approvals and to more expensive clinical and commercial efforts.

Regulatory authorities are still settling in on their advice and recommendations for approving COVID-19 vaccine candidates.

For example, at a meeting of the Vaccines and Related Biological Products Advisory Committee (VRBPAC) of the FDA in January 2023, the committee members voted to harmonize the vaccine strain composition of primary series and booster doses used in the U.S.

to a single composition, the result of which was to favor bivalent vaccines (e.g., original plus Omicron BA.4/BA.5).

However, five months later, FDA advised manufacturers seeking to update their COVID-19 vaccines with a monovalent XBB.1.5 composition for the 2023-2024 season based on the VRBPAC meeting on 15 June 2023.

Such a changing regulatory recommendation can make our development activities significantly more challenging and expensive, and have an adverse impact on a pathway to approval for our future COVID-19 vaccine candidates.

Further, additional data demonstrating broad immunogenicity against emerging variant strains may be requested by FDA and other regulatory agencies to support registration, and there can be no assurance that our vaccine candidates will achieve such immunogenicity.

There is significant competition in the development of a vaccine against COVID-19, some competitors’ vaccines are already widely accepted in the market, and many of our competitors have substantially greater financial, scientific and other resources than we have.

Pfizer, Moderna and Novavax have received full approvals or emergency use authorization from the FDA and many other health regulatory authorities throughout the world, and other biopharmaceutical companies have received approvals or authorizations from many health regulatory authorities other than the FDA, for their COVID-19 vaccines and have already commercialized them on a large scale and have vaccinated billions of people around the world.

Even with the partnering of our COVID-19 program, we are already at a significant competitive disadvantage to those companies with vaccines on the market, as well as many other competitors pursuing vaccine candidates.

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Larger pharmaceutical and biotechnology companies have extensive experience in clinical testing and obtaining regulatory approval for their products, and may have the resources to heavily invest to accelerate discovery and development of their vaccine candidates.

Our business could be further materially and adversely affected by our competitors commercialization of their vaccines before we development of our vaccine candidate is completed or approval is sought;

if they develop and commercialize one or more COVID-19 vaccines that are safer, more effective against multiple variants, have fewer or less severe side effects, have broader market

acceptance, are more convenient or are less expensive than any vaccine candidate that we may develop.

Our business could be further materially and adversely affected by our competitors’ commercialization of their vaccines before development of our vaccine candidate is completed or approval is achieved.

If they develop and commercialize one or more COVID-19 vaccines that are safer, more effective against multiple variants, have fewer or less severe side effects, have broader market acceptance, are more convenient or are less expensive than any vaccine candidate that we develop, then our COVID-19 vaccine candidate may not achieve any commercial success even if it is approved.

Furthermore, if any competitors are successful in producing a more efficacious vaccine or other treatment for COVID-19, or if any competitors are able to manufacture and distribute any such vaccines or treatments with greater efficiency, there may be a diversion of potential governmental and other funding away from us and toward such other parties.

We face significant competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively.

The biotechnology and pharmaceutical industries are intensely competitive.

We have competitors both in the United States and internationally, including major multinational pharmaceutical companies, biotechnology companies and universities and other research institutions.

Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff and experienced marketing, regulatory and manufacturing organizations.

Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors.

Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries.

Our competitors may succeed in developing, acquiring or licensing on an exclusive basis, drug products that are more effective, safer or less costly than any product candidate that we may develop.

Our existing competitors and new market entrants may respond more quickly to or integrate new or emerging technologies such as artificial intelligence and machine learning, undertake more extensive marketing campaigns, have greater access to clinical information to support ongoing product position in the market, have greater financial, marketing and other resources or be more successful in attracting potential customers, employees and strategic partners.

There can be no assurance that any products now in development, or that we may seek to develop in the future, will achieve technological feasibility, obtain regulatory approval or gain market acceptance.

If we are unable to develop and launch new products, our ability to maintain or expand our market position in the markets in which we participate may be negatively impacted.

Our competitors may achieve patent protection, regulatory approval, or product commercialization that would limit our ability to compete with them.

These and other competitive pressures could have a material adverse effect our business.

If we are unable to generate successful results from preclinical and clinical studies of our product candidates, or experience significant delays in doing so, our business may be materially harmed.

We have no products approved for commercial marketing and all of our product candidates are in preclinical or clinical development.

Other than the approval of ARCT-154 in Japan, we have no products approved for commercial marketing and all of our product candidates are in preclinical or clinical development.

Before obtaining regulatory approval for the commercial distribution of our product candidates, we or an existing or future collaborator must conduct extensive preclinical studies and clinical trials to demonstrate the safety and efficacy of our product candidates.

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If nucleic acid or mRNA approaches to drug products encounter setbacks based on the safety, efficacy, distribution, costs or other factors, it will significantly hurt our prospects and the value of our common stock.

Our focus on nucleic acid technology for developing drugs as opposed to more proven technologies for drug development increases the risks associated with the ownership of our common stock.

Our focus on nucleic acid technology for developing drugs as opposed to more proven technologies for drug development increases the risks associated with our business.

If we are not successful in developing any product candidates using nucleic acid technology, we may be required to change the scope and direction of our product development activities.

In that case, we may not be able to identify and implement successfully an alternative product development strategy.

In that case, we may not be able to identify and successfully implement an alternative product development strategy.

Changes to our drug product format could significantly impact our timeline to commercialize our products.

Each of our products, including our COVID-19 vaccine candidates, has a certain drug product format and utilizes certain manufacturing processes.

We evaluate and implement such attributes based on our considerations of regulatory and commercial potential, along with scientific feasibility.

There can be no assurance that the format and processes of any of our products is sufficient to achieve regulatory approval for commercialization per planned timelines.

For example, the stability of our products and the vial presentations could impact the commercial attractiveness of a product, and different markets may favor different characteristics.

Any changes to drug product formats will likely add additional cost and may delay approvals.

We may not be successful in our efforts to identify or discover potential product candidates.

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imposition of a clinical hold of our clinical trial operations or trial sites by the FDA or other regulatory authorities;

delays in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites;

our inability to adhere to clinical trial requirements directly or with third parties such as CROs;

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Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or could allow our competitors to bring products to market before we do, which would impair our ability to successfully commercialize our product candidates.

Any inability to timely and successfully complete preclinical and clinical development, whether independently or with our strategic alliance partners, could result in additional costs to us or impair our ability to generate revenues from product sales, regulatory and commercialization milestones and royalties.

Any inability to

timely and successfully complete preclinical and clinical development, whether independently or with our strategic alliance partners, could result in additional costs to us or impair our ability to generate revenues from product sales, regulatory and commercialization milestones and royalties.

We may find it difficult to identify and enroll patients in our clinical studies, and the limited number of patients who have the diseases for which certain of our product candidates are being studied could delay or prevent clinical studies of certain of our product candidates.

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The availability and efficacy of competing therapies and clinical studies can also adversely impact enrollment.

If we are unable to promptly enroll an adequate number of patients in our studies for the foregoing or other reasons, the timeline for conducting studies and obtaining regulatory approval of potential products may be delayed, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenue from any of these product candidates could be delayed or prevented.

If we are unable to promptly enroll an adequate number of patients in our studies for the foregoing or other reasons, the timeline for conducting studies and obtaining regulatory approval of potential products will be delayed, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenue from any of these product candidates could be delayed or prevented.

Furthermore, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical studies may also ultimately lead to the denial of regulatory approval of our product candidates.

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the population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which we seek approval;

we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;

such authorities may not agree that the data collected from clinical trials of our product candidates are acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere, and such authorities may impose requirements for additional preclinical studies or clinical trials;

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such authorities may find deficiencies in the manufacturing processes or facilities of manufacturers with which we contract for clinical and commercial supplies;

regulations or interpretations of such authorities may significantly change in a manner rendering our or any of our potential future collaborators’

clinical data insufficient for approval.

regulations or interpretations of such authorities may significantly change in a manner rendering our or any of our potential future collaborators’ clinical data insufficient for approval.

Additional delays may result if an FDA advisory committee recommends restrictions on approval or recommends non-approval.

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Even if we obtain regulatory approval in the United States, the FDA may still impose significant restrictions on the indicated uses or marketing of our product candidates, or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance.

The FDA may also require a risk evaluation and mitigation strategy as a condition of approval of our product candidates, which could include requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

methods, patient registries and other risk minimization tools.

Additionally, the manufacturing processes, packaging, distribution, adverse event reporting, labeling, advertising, promotion, and recordkeeping for the product will be subject to extensive and ongoing FDA regulatory requirements, in addition to other potentially applicable federal and state laws.

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We also could incur significant costs associated with civil or criminal fines and penalties.

Although we maintain workers’

compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities.

Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations.

These current or future laws and regulations may impair our research, development or production efforts.

These current or

future laws and regulations may impair our research, development or production efforts.

Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

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Furthermore, we are required by our contract manufacturers to make financial commitments in advance of the receipt of clinical data or feedback from regulatory authorities, which could result in significant financial obligations.

If our strategic alliance partners elect to further pursue the development and commercialization of any of the product candidates that are subject to our strategic alliance agreement, we will have limited influence and/or control over their approaches to development and commercialization.

If strategic alliance partners do not perform in the manner that we expect or fail to fulfill their responsibilities in a timely manner, or at all, the clinical development, regulatory approval and commercialization efforts related to product candidates we have licensed to such strategic alliance partners could be delayed or terminated.

If there is a termination of our strategic alliances or any program

thereunder, we may have the right to assume the responsibility at our own expense for the development of the applicable product candidates.

Assuming sole responsibility for further development will increase our expenditures, and may mean we will need to limit the size and scope of one or more of our programs, seek additional funding and/or choose to stop work altogether on one or more of the affected product candidates.

This could result in a limited potential to generate future revenue from such product candidates and our business could be materially and adversely affected.

We face significant competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively.

The biotechnology and pharmaceutical industries are intensely competitive.

We have competitors both in the United States and internationally, including major multinational pharmaceutical companies, biotechnology companies and universities and other research institutions.

Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors.

Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries.

Our competitors may succeed in developing, acquiring or licensing on an exclusive basis, drug products that are more effective, safer or less costly than any product candidate that we may develop.

The commercial success of our product candidates will depend upon the acceptance of these product candidates by the medical community, including physicians, patients and healthcare payors.

The commercial success of our product candidates will depend upon the acceptance of our product candidates by the medical community, including physicians, patients and healthcare payors.

The degree of market acceptance of any product candidates will depend on a number of factors, including:

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pricing and cost-effectiveness;

the effectiveness of our, or any of our collaborators’, sales and marketing strategies;

our ability to obtain hospital or payor formulary approval;

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Such increased competition may decrease any future potential revenue for future product candidates due to increasing pressure for lower pricing and higher discounts in the commercialization of our product.

In order to market any products that may be approved, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements with outside parties to perform these services.

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In addition, we intend to enter into strategic alliances with other parties to commercialize other product candidates, if approved, including in markets outside of the United States or for other large markets that are beyond our resources.

into strategic alliances for future product candidates in the United States if commercialization requirements exceed our available resources.

Although we intend to establish a sales organization if we are able to obtain approval to market any product candidates for niche markets in the United States, we will also consider the option to enter into strategic alliances for future product candidates in the United States if commercialization requirements exceed our available resources.

This will reduce the potential profit generated from the sales of these products.

Our current and any future strategic alliance partners may not dedicate sufficient resources to the commercialization of our product candidates, if approved, or may otherwise fail in their commercialization due to factors beyond our control.

If we are unable to establish effective alliances to enable the sale of our product candidates, if approved, to healthcare professionals and in geographical regions, including the United States, that will not be covered by our own marketing and sales force, or if our potential future strategic alliance partners do not successfully commercialize the product candidates that may be approved, our ability to generate revenues from product sales will be adversely affected.

If we are unable to establish effective alliances to enable the sale of our product

candidates, if approved, to healthcare professionals and in geographical regions, including the United States, that will not be covered by our own marketing and sales force, or if our potential future strategic alliance partners do not successfully commercialize the product candidates that may be approved, our ability to generate revenues from product sales will be adversely affected.

If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, we may not be able to generate sufficient product revenue and may not become profitable.

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We cannot be sure that coverage and adequate reimbursement will be available for any future product candidates.

In the United States, the Centers for Medicare & Medicaid Services (“CMS”), an agency within the U.S.

Department of Health and Human Services, decides whether and to what extent a new drug will be covered and reimbursed under Medicare.

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Inadequate reimbursement amounts could substantially reduce the demand for, or the price of, our future products.

Further, one payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage for the product.

If reimbursement is not available, or is available only at limited levels, we may not be able to successfully commercialize product candidates that we develop and that may be approved.

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We depend on alliance partners for financial and scientific resources for the clinical development, manufacture and commercialization of certain of our product candidates.

Under these alliances we are likely to have limited influence and control over their approaches to development and commercialization.

These alliances will likely provide us with limited control over the course of development of a product candidate, especially once a candidate has reached the stage of clinical development.

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our cash expenditures could increase significantly if it is necessary for us to hire additional employees and allocate limited resources to the development and commercialization of product candidates that were previously funded, or expected to be funded, by our alliance partners;

we could bear all of the risks and costs related to the further development and commercialization of product candidates that were previously the subject of our strategic alliance, including the reimbursement of third parties;

we could bear the risks and costs related to the further development and commercialization of product candidates that were previously the subject of our strategic alliance, including the reimbursement of third parties;

in order to fund further development and commercialization, we may need to seek out and establish alternative strategic alliances with other parties;

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Switching vendors may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.

In addition, if our alliance partners elect to control manufacturing for certain programs, we may lose control over the manufacturing activities for the product candidate, which would reduce our level of manufacturing process development and would make the success of such programs dependent on our partners’

ability to manufacture timely and properly.

If the contract research organizations and clinical trial sites we rely on to conduct, supervise and monitor our clinical trials perform in an unsatisfactory manner, it may harm our business.

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Accordingly, if our CROs fail to comply with these regulations or fail to recruit a sufficient number of patients, we may be required to repeat such clinical trials, which would delay the regulatory approval process and increase our costs.

Our CROs are not our employees, and we are not be able to control whether or not they devote sufficient time and resources to our clinical and nonclinical programs.

Our CROs are not our employees, and we are not able to control whether or not they devote sufficient time and resources to our clinical and nonclinical programs.

These CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other drug development activities, which could possibly harm our competitive position.

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RISKS RELATED TO OUR INTELLECTUAL PROPERTY

If we are unable to obtain or protect intellectual property rights related to our future products and product candidates, we may not be able to compete effectively in our markets.

If we are unable to obtain or protect intellectual property rights related to our products and product candidates, we may not be able to compete effectively in our markets.

Our success depends in part on our ability to obtain and maintain patents and other forms of intellectual property rights, including in-licenses of intellectual property rights of others, for our product candidates, methods used to develop and manufacture our product candidates and methods for treating patients using our product candidates, as well as our ability to preserve our trade secrets, to prevent third parties from infringing upon our proprietary rights and to operate without infringing upon the proprietary rights of others.

As of March 24, 2023, we own over 305 patents and pending patent applications including 41 U.S.

patents, 33 pending U.S.

patent applications, 10 pending international applications under Patent Cooperation Treaty (“PCT”), 100 foreign patents and 121 pending foreign patent applications.

As of February 26, 2024, we own over 438 patents and pending patent applications, including 46 granted U.S.

The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be highly uncertain.

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Our defense of a patent or patent application in such a proceeding may not be successful and, even if successful, may result in substantial costs and distract our management and other employees.

Even if our patents are issued and are not challenged or invalidated, our patents and patent applications may not adequately protect our intellectual property or prevent others from designing around our claims.

Even if our patents are issued and are not challenged or invalidated, our patents and patent applications may not adequately protect our intellectual property or products, or prevent others from designing around our claims.

In addition, patents have a limited lifespan.

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Once the patent life has expired for a product, we may be open to competition from generic medications.

Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate under patent protection could be reduced.

Further, if we encounter delays in regulatory approvals, the period during which we could market a product candidate under patent protection could be reduced.

In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect certain proprietary know-how, including processes for which patents are difficult to enforce, elements of our drug discovery and development processes and elements of our proprietary manufacturing processes.

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The outcomes of such activities and the advancement of our programs could give rise to third party claims of infringement against us and our partners.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our and our partners’

ability to further develop and commercialize products based on our platform.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our and our partners’ ability to further develop and commercialize products based on our platform.

Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee and financial resources from our business.

In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’

fees for willful infringement, pay significant royalties, or try to redesign our infringing products, which may be impossible or require substantial time and monetary expenditure, further delaying and commercialization and substantially reducing potential market revenue.

Or, in order to continue development, manufacture or sale of a product, we may need to obtain a license from the owner of intellectual property, which may not be available on commercially reasonable terms or at all.

In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay significant royalties, or try to redesign our infringing products, which may be impossible or require substantial time and monetary expenditure, further delaying and commercialization and substantially reducing potential market revenue.

In order to continue development, manufacture or sale of a product, we may need to obtain a license from the owner of intellectual property, which may not be available on commercially reasonable terms or at all.

If we fail to obtain licenses to necessary intellectual property or do not comply with our obligations in license agreements, we could lose important rights.

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We employ individuals who were previously employed at other biotechnology or pharmaceutical companies.

We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of our employees’

former employers or other third parties.

We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of our employees’ former employers or other third parties.

We may also be subject to claims that former employers or other parties have an ownership interest in our patents.

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We may not be successful in defending these claims, and if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees.

Certain of our patents are, and our future owned and in-licensed patents may be, discovered through government funded programs and thus may subject to federal regulations such as “march-in” rights, certain reporting requirements and a preference for U.S.-based companies, and the exercise of such “march-in” rights by the U.S.

government could harm our business, financial conditions, results of operations and prospects.

Certain of our patents have been, and our future owned and in-licensed patents may be, discovered through government funded programs.

As a result, the U.S.

government may have certain rights to intellectual property embodied in our current or future products pursuant to the Bayh-Dole Act of 1980 (the “Bayh-Dole Act”), and implementing regulations, which are amended from time to time.

On December 7, 2023, the Biden administration announced an initiative to control the price of prescription drugs through the use of march-in rights under the Bayh-Dole Act.

government rights in certain inventions developed under a government-funded program include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose.

In addition, the U.S.

government has the right to require us or our licensors to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party if it determines that:

(i) adequate steps have not been taken to commercialize the invention;

(ii) government action is necessary to meet public health or safety needs;

or (iii) government action is necessary to meet requirements for public use under federal regulations, which are also referred to as “march-in rights.” The U.S.

government also has the right to take title to these inventions if we, or the applicable licensor, fail to disclose the invention to the government and fail to file an application to register the intellectual property within specified time limits.

government decides to

exercise these rights, it is not required to engage us as its contractor in connection with doing so.

To the extent any of our current or future intellectual property is generated through the use of U.S.

government funding, the provisions of the Bayh-Dole Act may similarly apply.

Any exercise by the government of any of the foregoing rights could harm our business, financial condition, results of operations and prospects.

RISKS RELATED TO OUR BUSINESS OPERATIONS AND INDUSTRY

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We are highly dependent on principal members of our executive team, and any reduction or loss of their services may adversely impact the achievement of our objectives.

While we have entered into employment agreements with each of our executive officers, any of them could leave our employment at any time, as all of our employees are “at will”

While we have entered into employment agreements with each of our executive officers, any of them could leave our employment at any time, as all of our employees are “at will” employees.

Recruiting and retaining other qualified employees for our business, including scientific and technical personnel, will also be critical to our success.

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If we do not fully comply with applicable healthcare fraud and abuse laws, false claims laws and health information privacy and security laws, we could face criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

If we obtain FDA approval for any of our product candidates and begin commercializing those products in the United States, our operations may be directly, or indirectly through our customers, further subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act (the “FCA”).

These laws may impact, among other things, our proposed sales, marketing and education programs.

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This statute has been applied to arrangements between pharmaceutical manufacturers and those in a position to purchase products or refer others, including prescribers, patients, purchasers and formulary managers.

In addition, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “ACA”), amended the Social Security Act to provide that the United States government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil FCA penalties for which are described below.

Federal civil and criminal false claims laws and civil monetary penalty laws, including the FCA, which imposes criminal or civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, claims for payment to the federal government, including Medicare or Medicaid, that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.

FCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties in 2023 of $13,508 to $27,018 per false claim or statement, which are adjusted for inflation.

FCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties.

The civil monetary penalties statute, which imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which imposes civil and criminal penalties for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private), knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a healthcare offense and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare.

as well as their “business associates,”

independent contractors or agents of covered entities that receive or obtain individually identifiable health information in connection with providing a service on behalf of a covered entity, relating to the privacy, security and transmission of individually identifiable health information.

The federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS, information related to payments or other transfers of value made to physicians, and further requires applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and its implementing regulations, which imposes certain requirements on certain types of individuals and entities, such as healthcare providers, health plans and healthcare clearing houses, known as “covered entities,” as well as their “business associates,” independent contractors or agents of covered entities that receive or obtain individually identifiable health information in connection with providing a service on behalf of a covered entity, relating to the privacy, security and transmission of individually identifiable health information.

The support for Patients and Communities Act expanded the scope of reporting, such that beginning January 1, 2021 companies must also report payments and transfers of value provided to other types of healthcare professionals.

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anti-kickback and false claims laws which may apply to items or services reimbursed by any third party payor, including commercial insurers;

state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government;

state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures;

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and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

In addition, the EU has established its own data security and privacy legal framework, including but not limited to Directive 95/46/EC (the “Data Protection Directive”).

The European General Data Protection Regulation (“GDPR”) took effect on May 25, 2018, which contains new provisions specifically directed at the processing of health information, higher sanctions and extra-territoriality measures intended to bring non-E companies under the regulation.

In addition, the EU has established its own data security and privacy legal framework, including but not limited to Directive 95/46/EC (the “Data Protection Directive”).

We anticipate that over time we may expand our business operations to include additional operations in the EU, including potentially conducting preclinical and clinical trials.

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Medicaid rebates to individuals enrolled in Medicaid managed care plans, and requiring drug manufacturers to pay an annual fee based on their market share of prior year total sales of branded programs to certain federal health care programs.

There remain executive, legal and political challenges to certain aspects of the ACA.

For example, in December 2017, Congress repealed the tax penalty for an individual’s failure to maintain ACA-mandated health insurance as part of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), effective January 1, 2019.

On December 14, 2018, a Texas U.S.

District Court Judge ruled that the ACA is unconstitutional in its entirety because the “individual mandate”

was repealed by Congress as part of the Tax Act.

On December 18, 2019, the U.S.

Court of Appeals for the Fifth Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the ACA are invalid as well.

On March 2, 2020, the U.S.

Supreme Court granted the petitions for writs of certiorari to review the case and held oral arguments on November 10, 2020.

Although the U.S.

Supreme Court has not yet ruled on the constitutionality of the ACA, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through May 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.

The executive order also instructs certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare.

It is unclear how the U.S.

Supreme Court ruling, other such litigation, and the healthcare reform measures of the Biden administration will impact the ACA and our operations.

In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted.

On August 2, 2011, the Budget Control Act of 2011 among other things, created measures for spending reductions by Congress.

A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs.

This includes aggregate reductions to Medicare payments to providers of 2% per fiscal year, which started in April 2013, and, due to subsequent legislative amendments, will remain in effect through 2030 unless additional Congressional action is taken, except for a temporary suspension from May 1, 2020 through March 31, 2021 due to the COVID-19 pandemic.

On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, also reduced Medicare payments to several categories of healthcare providers.

Additionally, the Bipartisan Budget Act of 2018, among other things, amended the ACA to increase from 50% to 70% the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.”

Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics.

Such scrutiny has resulted in several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.

At the federal level, Congress and the Biden administration may seek new legislative and/or administrative measures to control drug costs.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, to encourage importation from other countries and bulk purchasing.

We expect that healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria and lower reimbursement, and in additional downward pressure on the price that we receive for any approved product.

Any reduction in reimbursement from Medicare or other government-funded programs may result in a similar reduction in payments from private payors.

We cannot predict what healthcare reform initiatives may be adopted in the future.

Further federal, state and foreign legislative and regulatory developments are likely, and we expect ongoing initiatives to increase pressure on drug pricing.

Such reforms could have an adverse effect on anticipated revenues from product candidates that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability to develop product candidates.

We face potential product liability, and, if successful claims are brought against us, we may incur substantial liability and costs.

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costs due to related litigation;

distraction of management’s attention from our primary business;

substantial monetary awards to patients or other claimants;

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These events could lead to the unauthorized access, disclosure and use of non-public information.

The techniques used by criminal elements to attack computer systems are sophisticated, change frequently and may originate from less regulated and remote areas of the world.

The techniques used by cyber criminals are sophisticated, change frequently, may originate from less regulated and more remote areas of the world, may not be recognized until launched and can originate from a wide variety of sources, including insider threats and outside groups such as external service providers, organized crime affiliates, terrorist organizations or hostile foreign governments or agencies, or generated using artificial intelligence.

As a result, we may not be able to address these techniques proactively or implement adequate preventative measures.

If our computer systems are compromised, we could be subject to fines, damages, litigation and enforcement actions, and we could lose trade secrets, the occurrence of which could harm our business.

If our computer systems are compromised, we could be subject to fines, damages, litigation and enforcement actions,

and we could lose trade secrets, the occurrence of which could harm our business.

In addition, any sustained disruption in internet access provided by other companies could harm our business.

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Government agencies have special contracting authority that gives them the ability to terminate and/or modify their contracts with us.

On August 31, 2022, the Company entered into a cost reimbursement contract with BARDA to support the development of a low-dose pandemic influenza candidate based on Arcturus’

proprietary self-amplifying messenger RNA-based vaccine platform.

On August 31, 2022, we entered into a cost reimbursement contract with BARDA to support the development of a low-dose pandemic influenza candidate based on Arcturus’ proprietary self-amplifying messenger RNA-based vaccine platform.

The contract with BARDA, as with most U.S.

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• preclude us, either temporarily or for a set period of time, from receiving new contracts or extending our existing or future contracts based on violations or suspected violations of laws or regulations;

terminate our contract, either for the convenience of the government (at the government’s sole discretion, for example, if funds become unavailable or the government no longer wants the work) or for default (for failing to perform in accordance with the contract schedule and terms);

• terminate our contract, either for the convenience of the government (at the government’s sole discretion, for example, if funds become unavailable or the government no longer wants the work) or for default (for failing to perform in accordance with the contract schedule and terms);

• revise the scope and value of our contract and/or revise the timing for work to be performed;

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Termination-for-convenience provisions generally enable us to recover only our costs incurred or committed, settlement expenses, and profit on the work completed prior to termination.

A contractor’s rights under a termination for convenience are limited to an adjustment of profit and, with the contracting officer’s concurrence, a reduction in the estimated cost.

Under the general termination for convenience procedures, a partial termination is treated as a full termination when (i) the terminated portion is clearly severable from the balance of the contract or (ii) when contract performance is virtually complete or performance of the continued portion of the contract is only on subsidiary items or is otherwise not substantial.

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Government, and a negative audit could adversely affect our business.

Government agencies, such as the Defense Contract Audit Agency (the “DCAA”), routinely audit and investigate government contractors.

These agencies review, among other things, a contractor’s performance under its contracts, incurred costs, cost structure and compliance with applicable laws, regulations and standards.

The DCAA also reviews the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information

Government agencies, such as the Defense Contract Audit Agency (the “DCAA”), routinely audit and investigate government contractors.

These agencies review, among other things, a contractor’s performance under its contracts, incurred costs, cost structure and compliance with applicable laws, regulations and standards.

Any costs found to be improperly allocated to a specific contract will not be reimbursed, while such costs already reimbursed must be refunded.

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In addition, we could suffer serious reputational harm if allegations of impropriety were made against us.

We have identified material weaknesses in our internal control over financial reporting, and determined that our disclosure controls were not effective.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on the effectiveness of our system of internal control.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles (“GAAP”).

We are required to furnish annually a report by management of its assessment of the effectiveness of our internal control over financial reporting as of the end of our most recent fiscal year.

In addition, our independent registered public accounting firm is required to provide a related attestation report on our internal control over financial reporting.

As part of our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023, management identified a material weakness related to information technology general controls (“ITGCs”) for information systems and applications that are relevant to the preparation of the consolidated financial statements.

Specifically, it was determined we did not design and maintain:

(i) sufficient user access controls to ensure appropriate segregation of duties and adequately restrict user and privileged access to financial applications, programs and data to the appropriate personnel;

(ii) program change management controls to ensure that information technology (“IT”) program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately;

and (iii) computer operations controls to ensure that critical batch and interfaced jobs are monitored, privileges are appropriately granted, and data backups are authorized and monitored.

Business process controls (automated and manual) that are dependent on the ineffective ITGCs, or that rely on data produced from systems impacted by the ineffective ITGCs, are also deemed ineffective.

Management also identified a material weakness related to revenue recognition.

Certain control activities within the area of revenue did not operate effectively, specifically controls over the review of costs incurred in satisfaction of our performance obligations under collaboration arrangements.

As such, we concluded that our disclosure controls and procedures were not effective as of December 31, 2023.

If we are unable to successfully remediate our existing material weaknesses or any future material weakness or other deficiencies in our internal control over financial reporting:

the accuracy and timing of our financial reporting may be adversely affected;

our liquidity, our access to capital markets and the perceptions of our creditworthiness;

we may be unable to maintain compliance with applicable securities laws, Nasdaq listing requirements, and the covenants under our debt instruments regarding the timely filing of periodic reports;

we may be subject to regulatory investigations and penalties;

and investors may lose confidence in our financial reporting.

If any such event or circumstance were to occur, our stock price could decline and our business, financial condition and results of operations could be materially adversely affected.

Notwithstanding the identified material weaknesses, management does not believe that the deficiencies had an adverse effect on our reported operating results or financial condition, and management has determined that the financial statements and other information included in this report and other periodic filings present fairly in all material respects our financial condition and results of operations at and for the periods presented.

The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included elsewhere herein.

For further discussion of the material weaknesses identified and our remedial efforts, see Item 9A.

Controls and Procedures.

RISKS RELATED TO OUR COMMON STOCK

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

Under the Tax Cuts and Jobs Act, as modified by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, U.S.

federal net operating losses (“NOLs”) incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such federal NOLs is limited.

It is uncertain if and to what extent various states will conform to the Tax Cuts and Jobs Act.

To the extent that we continue to generate taxable losses for United States federal income tax purposes, unused NOLs will carry forward to offset future taxable income (subject to any applicable limitations), if any.

Under Sections 382 and 383 of the Internal Revenue Code, as amended, if a corporation undergoes an “ownership change,”

generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be significantly limited.

We believe we may have triggered an “ownership change”

We may also experience ownership changes in the future as a result of subsequent shifts in our share ownership.

As a result, if we earn net taxable income, our ability to use our pre-change NOL carryforwards to offset U.S.

federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.

Similar provisions of U.S.

state tax law may also apply to limit our use of accumulated state tax attributes, including our state NOLs.

In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

As a result, even if we attain profitability, we may be unable to use a material portion of our NOLs and other tax attributes, which could negatively impact our future cash flows.

We do not intend to pay dividends on our common stock so any returns to investors will be limited to the value of our shares.

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We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.

GENERAL RISK FACTORS

The market price of our common stock has been, and is expected to continue to be, highly volatile and investors may not be able to resell shares at or above the price at which they purchased the shares.

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inability to obtain additional funding;

any delay in filing an application for authorization to commence a clinical trial of, or for authorization or approval to market, any of our product candidates and any adverse development or perceived adverse development with respect to the FDA’s review of that IND or BLA;

failure to maintain our existing strategic alliances or enter into new alliances;

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failure to successfully and timely develop and commercialize our product candidates;

failure to successfully and timely develop and validate manufacturing processes and product presentations;

changes in laws or regulations applicable to our preclinical and clinical development activities, product candidates or future products;

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Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.

The requirements of being a publicly traded company may strain our resources and divert management’s attention.

As a publicly traded company, we have incurred, and will continue to incur, significant legal, accounting and other expenses that we did not incur as a private company.

In addition, the Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies.

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was enacted.

There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and regulations in these areas such as “say on pay”

and proxy access.

In addition, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), as well as rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies.

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was enacted.

Shareholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.

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For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain our current levels of such coverage.

Failure to comply with these requirements could subject us to enforcement actions by the SEC, divert management’s attention, damage our reputation, and adversely affect our business, results of operations, or financial condition.

In particular, if our independent registered public accounting firm is not able to render the required unqualified attestation, it could result in a loss of investor confidence in the accuracy, reliability, and completeness of our financial reports.

If we are subject to securities class action litigation, we would incur substantial costs and diversion of management’s attention.

We may be at risk of securities class action litigation.

This risk is especially relevant for us due to our dependence on positive clinical trial outcomes and regulatory approvals of each of our product candidates.

In the past, medicines, biotechnology and pharmaceutical companies have experienced significant stock price volatility, particularly when associated with binary events such as clinical trials results and product approvals.

If we face such litigation, it could result in substantial costs, divert management’s attention and resources, and have a very material adverse effect on our business, operating results and prospects.

past, medicines, biotechnology and pharmaceutical companies have experienced significant stock price volatility, particularly when associated with binary events such as clinical trials results and product approvals.

Sales of a substantial number of shares of our common stock in the public market by our existing shareholders could cause our share price to fall.

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received an aggregate of 6,631,712 of our common stock pursuant to the merger with Alcobra Ltd.

in an unregistered transaction, which shares may be sold pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”).

Those shareholders are eligible to sell those shares in the public market without restriction, except for shareholders who are deemed our “affiliates”

under Rule 144 under the Securities Act.

in an unregistered transaction, which shares may be sold pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”).

Those shareholders are eligible to sell those shares in the public market without restriction, except for shareholders who are deemed our “affiliates” under Rule 144 under the Securities Act.

In addition, common stock that is either subject to outstanding options or reserved for future issuance under our employee benefit plans, may become eligible for sale in the public market to the extent permitted by vesting schedules and Rule 144 under the Securities Act.

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New investors could also be issued securities with rights superior to those of our existing shareholders.

On December 23, 2022, we entered into a Controlled Equity Offering℠

Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co.

(“Cantor”) and Wells Fargo Securities, LLC (“Wells Fargo”), relating to shares of our common stock.

On December 23, 2022, we entered into a Controlled Equity Offering℠ Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co.

(“Cantor”) and Wells Fargo Securities, LLC (“Wells Fargo”), relating to shares of our common stock.

In accordance with the terms of the Sales Agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $200,000,000 from time to time through Cantor or Wells Fargo, each acting as our sales agent.

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Although Nasdaq may provide us with a compliance period in which to regain compliance with the minimum bid price requirement, we may not be able to regain compliance within the period provided by Nasdaq.

In order to regain compliance with such requirement, the

closing bid price of our common stock would need to meet or exceed $1.00 per share for at least 10 consecutive business days during the compliance period.

In order to regain compliance with such requirement, the closing bid price of our common stock would need to meet or exceed $1.00 per share for at least 10 consecutive business days during the compliance period.

If we were not able to regain compliance within the allotted compliance period for this requirement or any other applicable listing standard, including any extensions that may be granted by Nasdaq, our common stock would be subject to delisting.

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If our common stock is not eligible for quotation or listing on another market or exchange, trading of our common stock could be conducted only in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board.

In such event, it could become more difficult to dispose of, or obtain accurate price quotations for our common stock and there would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our common stock to decline further.

In such event, it could become more difficult to dispose of, or obtain accurate price quotations for our common stock and there would likely also be

a reduction in our coverage by securities analysts and the news media, which could cause the price of our common stock to decline further.

Unresolve d Staff Comments

We have four properties located in San Diego, California.

Cyber security

Risk management and strategy

We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data.

Managing Material Risks & Integrated Overall Risk Management

We have implemented tools, processes and strategies to promote a company-wide culture of cybersecurity risk management.

This ensures that cybersecurity considerations are an integral part of our decision-making processes at every level.

Our IT Department works closely with our leadership and key operating personnel to evaluate and address cybersecurity risks in alignment with our business objectives and operational needs.

Engage Third-parties on Risk Management

Due to the complexity and evolving nature of cybersecurity threats, we engage with a range of external experts, including but not limited to cybersecurity assessors, consultants, and auditors to evaluate and test our risk management systems.

These partnerships enable us to leverage specialized knowledge and insights, to help ensure our cybersecurity strategies and processes remain at the forefront of industry best practices.

Our collaborations with these third-parties includes regular audits, threat assessments, 24-hour monitoring, and consultation on security enhancements.

Oversee Third-party Risk

Because we are aware of the risks associated with third-party service providers, we conduct thorough security assessments of all third-party providers before engagement to ensure compliance with industry cybersecurity standards and frameworks.

This includes assessments performed by our Executive Director of IT, who oversees the Company's cybersecurity function.

Risks from Cybersecurity Threats

We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing.

We have implemented standard operating procedures to define the channels by which cybersecurity threats are communicated to the Company's Board of Directors (the “Board”).

This ensures that The Board has oversight and effective governance in managing risks associated with cybersecurity threats.

Board of Directors Oversight

The Audit Committee of the Board (the “Audit Committee”) is central to the Board’s oversight of cybersecurity risks and bears the primary responsibility for this domain.

The Audit Committee is composed of board members with diverse expertise including, risk management, and finance, equipping them to oversee cybersecurity risks effectively.

The Audit Committee receives briefings on cybersecurity risks from the Executive Director of IT or the Chief Legal Officer as described below in “Management’s Role Managing Risk.”

Management’s Role Managing Risk

The Executive Director of IT and the Chief Legal Officer (“CLO”) play a pivotal role in informing the Audit Committee on cybersecurity risks.

They provide briefings to the Audit Committee on a regular basis, with a minimum frequency of once per year.

These briefings encompass a broad range of topics, including:

Current cybersecurity landscape and emerging threats;

Status of ongoing cybersecurity initiatives and strategies;

Incident reports and learnings from any cybersecurity events;

Compliance with regulatory requirements and industry standards.

Risk Management Personnel

Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with the Executive Director of IT and the Associate Director of IT Infrastructure and Security.

Our IT Leadership team oversees our governance programs, tests our compliance with standards, remediates known risks, stays informed of significant developments in the cybersecurity domain, and leads our employee training program.

Monitor Cybersecurity Incidents

The Executive Director of IT is continually informed about the latest developments in cybersecurity, including potential threats and innovative risk management techniques.

This ongoing knowledge acquisition is crucial for the effective prevention, detection, mitigation, and remediation of cybersecurity incidents.

In cooperation with the Executive Director of IT, the Associate Director of IT Infrastructure and Security implements and oversees processes for the regular monitoring of our information systems.

This includes the deployment of advanced security measures and regular system audits to identify potential vulnerabilities.

In the event of a cybersecurity incident, the Executive Director of IT is equipped with a well-defined incident response plan.

This plan includes immediate actions to mitigate the impact and long-term strategies for remediation and prevention of future incidents.

Reporting to Board of Directors

The Executive Director of IT, in his capacity, regularly informs the Chief Financial Officer (CFO) and Chief Legal Officer (CLO) of all aspects related to cybersecurity risks and incidents.

This ensures that the highest levels of management are kept abreast of the cybersecurity posture and potential risks facing us.

Furthermore, significant cybersecurity matters, and strategic risk management decisions are escalated to the Board, ensuring that they have comprehensive oversight and can provide guidance on critical cybersecurity issues.

See Item 1A “Risk Factors” – “Risks Related to Business Operations and Industry.”

We have two properties located in San Diego, California.

Our principal place of business is located at 10628 Science Center Drive, Suite 250, and consists of approximately 24,700 square feet of office space and laboratory space leased through March 2025.

We have the right to extend this lease for an additional five-year term.

On February 16, 2020, we entered into a short-term lease for additional office and laboratory space located in close proximity to our main office at 10578 Science Center Drive, Suite 150.

The additional space of approximately 11,750 square feet is leased through March 2025.

On February 26, 2021, we entered into a short-term lease for additional office and laboratory space located in close proximity to our main office at 10240 Science Center Drive, Suite 100.

The additional space of approximately 4,312 square feet is leased for a term of twelve months.

We have the right to extend this lease for an additional twelve months.

On September 29, 2021, we entered into a lease agreement for office, research and development, engineering and laboratory space located at 10285 Science Center Drive, San Diego, California.

The additional space of approximately 43,234 square feet is leased for a term of 10 years and 8 months.

The leased premises will serve as an addition to Arcturus’

existing properties.

The leased premises will serve as an addition to Arcturus’ existing properties.

We believe that our properties are suitable for the conduct of our business.

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From time to time, we may be involved in various legal proceedings and subject to claims that arise in the ordinary course of business, and the results of litigation and claims are inherently unpredictable and uncertain.

We are not currently a party to any legal proceedings.

We are not currently a party to any material legal proceedings.

Mine Saf ety Disclosures

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business