2 unchanged sentences
Our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure.
−Removed: Our Chief Executive Officer and Chief Financial Officer, with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of December 31, 2023, and, based on their evaluation, have concluded that the disclosure controls and procedures were not effective as of such date due to the material weaknesses in internal control over financial reporting, described below.
+Added: Our Chief Executive Officer and Chief Financial Officer, with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of December 31, 2024, and, based on their evaluation, have concluded that the disclosure controls and procedures were not effective as of such date due to the material weakness in internal control over financial reporting, described below.
Management’s Report on Internal Control Over Financial Reporting
5 unchanged sentences
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
−Removed: Our management, under the supervision of and with the participation of the Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2023.
+Added: Our management, under the supervision of and with the participation of the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2024.
In making this assessment, management used the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (“the COSO criteria”).
−Removed: Based on our assessment under the COSO criteria, management concluded that our system of internal control over financial reporting was not effective due to the material weaknesses described below.
−Removed: However, after giving full consideration to the material weaknesses, and the additional analyses and other procedures we performed to ensure that our consolidated financial statements included in this Annual Report on Form 10-K were prepared in accordance with U.S.
+Added: Based on our assessment under the COSO criteria, management concluded that our system of internal control over financial reporting was not effective due to the material weakness described below.
+Added: However, after giving full consideration to the material weakness, and the additional analyses and other procedures we performed to ensure that our consolidated financial statements included in this Annual Report on Form 10-K were prepared in accordance with U.S.
generally accepted accounting principles (“GAAP”), our management has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with “GAAP”.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
−Removed: As part of our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023, management identified the following material weaknesses:
−Removed: (1) a material weakness related to information technology general controls (“ITGCs”) that support our financial reporting processes;
−Removed: and (2) a material weakness related to revenue recognition.
−Removed: Management determined that we did not maintain effective controls over (i) user access to ensure appropriate segregation of duties and adequately restrict user and privileged access to financial applications, programs and data to the appropriate personnel;
+Added: Previously Reported Material Weaknesses and Remediation Plans
+Added: As reported in Part II, Item 9A.
+Added: “Controls and Procedures” of our Annual Reports on Form 10-K for the fiscal year ended December 31, 2023, we identified a material weakness related to information technology general controls (“ITGCs”) that support the financial reporting process.
+Added: Specifically, the material weakness relates to ineffective controls over (i) user access to ensure appropriate segregation of duties and adequate restriction of user
+Added: and privileged access to financial applications, programs and data, to the appropriate personnel;
(ii) program change management for financial applications 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) IT operations controls to ensure that critical interface jobs are monitored.
−Removed: As a result, our related IT dependent manual and application controls that rely upon the affected ITGCs, or information coming from IT systems with affected ITGCs, were also deemed ineffective.
−Removed: Further, management determined that 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.
−Removed: 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.
−Removed: Our independent registered public accounting firm, Ernst & Young LLP, has issued a report on the effectiveness of our internal control over financial reporting as of December 31, 2023, which is included in Item 8 of this Annual Report on Form 10-K.
−Removed: Management’s Plan to Remediate the Material Weaknesses
−Removed: Our remediation efforts are ongoing and we will continue our initiatives to implement measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively.
−Removed: We are committed to making the necessary changes and improvements to our system of controls to address the material weaknesses in internal control over financial reporting described above.
−Removed: Our renewed emphasis of designing and implementing improved processes and controls will involve but is not limited to the following:
−Removed: • Expand available resources with experience designing and implementing control activities, including ITGCs and automated controls, both by hiring internally and the use of third-party consultations and specialists.
−Removed: • Adjust access profiles in IT systems and relevant software, and adjust access review controls accordingly.
−Removed: • Refine the control to identify access profiles in IT systems and software that result in risks of segregation of duties.
−Removed: • Perform ongoing training with control performers to improve documentation that supports effective control activities, including evidence over the completeness and accuracy of information produced by the Company.
−Removed: • Add additional technical accounting resource to review our revenue accounting along with financial disclosures for collaboration arrangements on a quarterly basis.
−Removed: We are in the process of implementing the remediation activities as of the date of this report and believe that upon completion, we will have strengthened our ITGCs, and controls related to accounting for collaboration arrangements to address and successfully remediate the identified material weaknesses.
−Removed: However, control weaknesses are not considered remediated until new internal controls have been operational for a period of time, are tested, and management concludes that these controls are operating effectively.
−Removed: We expect to complete the remediation activities as early as practicable in the fiscal year 2024.
−Removed: We will continue to monitor the effectiveness of these remediation measures, and we will make any changes to the design of this plan and take such other actions that we deem appropriate given the circumstances.
+Added: Management has made significant enhancements to the Company’s process related to access provisioning and de-provisioning, program change management, as well as IT operations.
+Added: Management has implemented or is in the process of implementing new or enhanced internal control procedures intended to both address the material weakness identified and strengthen our overall financial control environment, including:
+Added: • updated and enhanced the IT policies and relevant internal controls to consider and address ITGCs including access security and change management.
+Added: • limited elevated access profiles in financially relevant IT systems and software to appropriate personnel;
+Added: • developing and enhancing access administration controls over provisioning, deprovisioning, and authentication;
+Added: • developing and enhancing user access reviews for financially relevant IT systems;
+Added: • designing and refining controls over change management and IT operations controls to monitor critical interface jobs;
+Added: • hired an internal audit manager with an appropriate level of knowledge and experience;
+Added: • engaged an accounting advisory firm to assist with the documentation, evaluation, remediation, and testing of our internal control over financial reporting;
+Added: • provided training to control owners and relevant personnel to improve documentation that supports effective control activities, including evidence over the completeness and accuracy of information used in controls.
+Added: While significant progress has been made to remediate this material weakness, management does not believe that these corrective measures have been either fully implemented or operating for a sufficient period of time to enable management to conclude that these internal controls over financial reporting are operating effectively and are fully implemented to remediate this material weakness.
+Added: When fully implemented and operational, we believe the measures described above will remediate the material weakness.
+Added: We are committed to making the necessary changes and improvements to our system of controls to address the material weakness in internal control over financial reporting described above.
+Added: In addition, as previously reported in Part II, Item 9A.
+Added: “Controls and Procedures” of our Annual Reports on Form 10-K for the fiscal year ended December 31, 2023, we identified a material weakness related to revenue recognition.
+Added: Specifically, control activities related to the review of costs incurred in satisfaction of performance obligations under collaboration agreements did not operate effectively.
+Added: We have completed the execution of our remediation plan for this material weakness and, as of December 31, 2024, successfully remediated the material weakness by implementing the following measures:
+Added: • designed and implemented enhanced control activities over the identification of and accounting assessment of key terms and conditions of all revenue collaboration agreements;
+Added: • designed and implemented new control activities around the technical review of quarterly and annual revenue recognition;
+Added: specifically, (i) verifying the completeness of revenue arrangements and collaboration agreements subject to quarterly measurement of progress toward the satisfaction of the relevant performance obligations and (ii) validating that the measurement of progress, including the measurement of costs incurred for satisfaction of performance obligations, are consistent with the technical conclusions reached within the corresponding technical memo;
+Added: • engaged a technical accounting consultant to review our revenue accounting and financial disclosures for collaboration arrangements, as needed;
+Added: • provided training to control owners and relevant personnel to improve documentation that supports effective control activities, including evidence over the completeness and accuracy of information used in controls.
+Added: These steps are subject to ongoing senior management review, as well as oversight by the Audit Committee of our Board of Directors.
+Added: Our independent registered public accounting firm, Deloitte & Touche LLP, has issued a report on the effectiveness of our internal control over financial reporting as of December 31, 2024, which is included in Item 8 of this Annual Report on Form 10-K.
Changes in Internal Control over Financing Reporting
13 unchanged sentences
Opinion on Internal Control Over Financial Reporting
−Removed: We have audited Arcturus Therapeutics Holdings Inc.
−Removed: and its subsidiaries’ internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
−Removed: In our opinion, because of the effect of the material weaknesses described below on the achievement of the objectives of the control criteria, Arcturus Therapeutics Holdings Inc.
−Removed: and its subsidiaries (the Company) has not maintained effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
−Removed: A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
−Removed: The following material weaknesses have been identified and included in management’s assessment.
−Removed: The Company did not design and maintain effective controls over information technology general controls (ITGCs) for information systems and applications that are relevant to the preparation of the consolidated financial statements.
−Removed: Specifically, the ITGCs in the areas of access and program change over information technology (IT) systems that support the Company’s financial reporting processes were not designed and operating effectively, and as result, the related IT dependent manual and application controls that rely upon the affected ITGCs, or information coming from IT systems with affected ITGCs, are also ineffective.
−Removed: The Company has also identified that certain control activities within the area of revenue did not operate effectively, specifically controls over the review of costs incurred in satisfying its performance obligations on collaboration arrangements.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders‘ equity and cash flows, for each of the three years in the period ended December 31, 2023.
−Removed: These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated March 14, 2024, which expressed an unqualified opinion thereon.
+Added: We have audited the internal control over financial reporting of Arcturus Therapeutics Holdings, Inc.
+Added: and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
+Added: In our opinion, because of the effect of the material weakness identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
+Added: We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated March 6, 2025, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting.
−Removed: Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
+Added: Our responsibility is to express an opinion on
+Added: the Company’s internal control over financial reporting based on our audit.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
11 unchanged sentences
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
−Removed: /s/ Ernst & Young LLP
+Added: Material Weakness
+Added: A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
+Added: The following material weakness has been identified and included in management's assessment:
+Added: The Company identified a material weakness related to information technology general controls (“ITGCs”) that support the financial reporting process.
+Added: Specifically, the material weakness relates to ineffective controls over (i) user access to ensure appropriate segregation of duties and adequate restriction of user and privileged access to financial applications, programs and data to the appropriate personnel;
+Added: (ii) program change management for financial applications 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;
+Added: and (iii) IT operations controls to ensure that critical interface jobs are monitored.
+Added: This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2024, of the Company, and this report does not affect our report on such financial statements.
+Added: /s/ Deloitte & Touche LLP
San Diego, California
March 6, 2025
−Removed: Changes in Internal Control Over Financial Reporting.
−Removed: An evaluation was also performed under the supervision and with the participation of our management, including our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer of any changes in our internal control over financial reporting that occurred during our last fiscal quarter and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
−Removed: There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the year ended December 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Other Information
1 unchanged sentence
For the year ended December 31, 2024, none of our directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" (as defined in Item 408 of Regulation S-K of the Exchange Act) intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act, other than as follows:
+Added: Kummerfeld’s Rule 10b5-1 trading arrangement terminated on March 18, 2024 upon the effective date of his resignation.
+Added: • Lance Kurata , our Chief Legal Officer , adopted a Rule 10b5-1 trading arrangement as of June 12, 2024 .
+Added: Kurata's trading arrangement provides for the exercise options to purchase up to an aggregate of 35,000 shares of common stock and subsequent sale of such underlying shares of common stock, until June 12, 2025 .
Padmanabh Chivukula , Chief Scientific Officer and Chief Operating Officer , cancelled an existing Rule 10b5-1trading arrangement on November 11, 2024.
1 unchanged sentence
Subsequent to this, Dr.
−Removed: Chivukula entered into a new Rule 10b5-1 trading arrangement on December 14, 2023 .
−Removed: The new trading arrangement provides for the sale of up to an aggregate of 152,000 shares, until September 15, 2025 .
−Removed: Kummerfeld , Senior Vice President, Corporate Controller and Principal Accounting Officer , modified an existing Rule 10b5-1trading arrangement on August 24, 2023.
−Removed: Kummerfeld's trading arrangement provides for the exercise of up to an aggregate of 36,064 options to purchase common stock and subsequent sale of such underlying shares of common stock, until August 23, 2024 .
−Removed: On February 20, 2024, Mr.
−Removed: Kummerfeld, informed the Company that he will resign from his position, effective March 15, 2024, to pursue another opportunity.
+Added: Chivukula entered into a new Rule 10b5-1 trading arrangement on November 20, 2024 .
+Added: The new trading arrangement provides for the sale of up to an aggregate of 120,000 shares, beginning on June 2, 2025 until November 10, 2025 .
There were no "non-Rule 10b5-1 trading arrangements" (as defined in Item 408 of Regulation S-K of the Exchange Act) adopted or terminated during the year ended December 31, 2024 by our directors and officers.
−Removed: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
+Added: Disc losure Regarding Foreign Jurisdictions that Prevent Inspections
Not Applicable.
46 unchanged sentences
Incorporated by reference to Exhibit 4.8 to Form 20-F filed on May 14, 2018 (File No.
−Removed: Research Collaboration and License Agreement, by and between Arcturus Therapeutics, Inc.
−Removed: and Ultragenyx Pharmaceutical Inc., entered into as of October 26, 2015, as amended October 17, 2017 and April 20, 2018.
−Removed: Incorporated by reference to Exhibit 4.10 to Form 20-F filed on May 14, 2018 (File No.
−Removed: Third Amendment to Research Collaboration and License Agreement, by and between Arcturus Therapeutics, Inc.
−Removed: and Ultragenyx Pharmaceutical Inc., effective June 18, 2019.
−Removed: Incorporated by reference to Exhibit 10.2 to Form 8-K filed on June 20, 2019 (File No.
Letter Agreement, by and between Arcturus Therapeutics, Inc.
96 unchanged sentences
Incorporated by reference to Exhibit 10.32 to Quarterly Report on Form 10-Q filed on November 14, 2023 (File No.
+Added: First Amendment to Credit Agreement and First Amendment to Revolving Line of Credit, dated June 26, 2024, by and between Arcturus Therapeutics, Inc.
+Added: and Wells Fargo Bank, National Association.
+Added: Incorporated by reference to Exhibit 10.35 to Quarterly Report on Form 10-Q filed on August 5, 2024 (File No.
+Added: Fifth Amendment to Lease, by and between Arcturus Therapeutics, Inc.
+Added: and ARE-SD Region No.
+Added: 44, LLC, dated July 12, 2024.
+Added: Incorporated by reference to Exhibit 10.36 to Quarterly Report on Form 10-Q filed on November 7, 2024 (File No.
Arcturus Therapeutics Holdings, Inc.
Insider Trading Policy
+Added: List of subsidiaries of Arcturus Therapeutics Holdings, Inc.
Consent of Independent Registered Public Accounting Firm
+Added: Consent of Independent Registered Public Accounting Firm
Power of Attorney (included on the signature page of this Annual Report).
Certification by Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
−Removed: Certification by Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
−Removed: Certification by Principal Accounting Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
+Added: Certification by Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
Certification of Principal Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
−Removed: Certification of Principal Financial Officer Pursuant to 18 U.S.C.
−Removed: Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
−Removed: Certification of Principal Accounting Officer Pursuant to 18 U.S.C.
+Added: Certification of Principal Financial and Accounting Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
21 unchanged sentences
(principal executive officer)
−Removed: Peter Farrell
+Added: Moncef Slaoui
Chairman of the Board
March 6, 2025
−Removed: Peter Farrell
+Added: Moncef Slaoui
/s/ Andrew Sassine
2 unchanged sentences
Andrew Sassine
−Removed: (principal financial officer)
+Added: (principal financial and accounting officer)
Magda Marquet
6 unchanged sentences
Edward Holmes
−Removed: /s/ Jing Marantz
+Added: Peter Farrell
March 6, 2025
+Added: Peter Farrell
March 6, 2025
−Removed: Senior Vice President of Finance and Corporate Controller
+Added: /s/ Jing Marantz
March 6, 2025
−Removed: (principal accounting officer)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID:
+Added: Report of Independent Registered Public Accounting Firm (PCAOB ID:
Consolidated Balance Sheets as of December 31, 2024 and 2023
−Removed: Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years ended December 31, 2023, 2022 and 2021
+Added: Consolidated Statements of Operations and Comprehensive (Loss) Income for the Years ended December 31, 2024, 2023 and 2022
Consolidated Statements of Changes in Stockholders’ Equity for the Years ended December 31, 2024, 2023 and 2022
2 unchanged sentences
Report of Independent Regist ered Public Accounting Firm
−Removed: To the Stockholders and the Board of Directors of Arcturus Therapeutics Holdings Inc.
+Added: To the shareholders and the Board of Directors of Arcturus Therapeutics Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Arcturus Therapeutics Holdings, Inc.
−Removed: and its subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.
−Removed: generally accepted accounting principles.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 14, 2024 expressed an adverse opinion thereon.
+Added: and subsidiaries (the “Company”) as of December 31, 2024, the related consolidated statements of operations, comprehensive loss, stockholder’s equity, and cash flows, for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).
+Added: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
+Added: We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 6, 2025, expressed an adverse opinion on the Company’s internal control over financial reporting because of a material weakness.
Basis for Opinion
10 unchanged sentences
Critical Audit Matter
−Removed: The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:
−Removed: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.
−Removed: The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Clinical trial accruals
−Removed: Description of the Matter
−Removed: For the year ended December 31, 2023, the Company incurred $192.1 million for research and development expenses and accrued $2.3 million for clinical trial expenses at December 31, 2023.
−Removed: As described in Note 2 to the consolidated financial statements, the Company records accruals for estimated costs of research and development activities, including for third party contractors, laboratories, participating clinical trial sites and others.
−Removed: Clinical trial activities performed by third parties are accrued and expensed based upon estimates of the proportion of work completed over the life of the individual clinical trial and patient enrollment rates in accordance with agreements established with Clinical Research Organizations ("CROs") and clinical trial sites.
−Removed: Estimates are determined by reviewing contracts, vendor agreements and purchase orders, and through discussions with internal clinical personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services.
−Removed: Auditing management’s accounting for clinical trial accruals, was especially challenging as evaluating the progress or stage of completion of the activities under the Company’s clinical trial agreements is dependent upon information from internal clinical personnel and third party service providers and involves a high volume of data which is tracked in spreadsheets and other end user computing programs.
−Removed: How We Addressed the Matter in Our Audit
−Removed: To test the Company’s clinical trial accruals, we evaluated evidence of the research and development activities performed for significant clinical trials.
−Removed: To assess the appropriate measurement of clinical trial accruals, our audit procedures included, among others, obtaining and inspecting significant agreements and agreement amendments, evaluating the Company’s documentation of trial timelines, confirming amounts incurred to-date with third-party service providers, and testing a sample of transactions and comparing the costs against related invoices and contracts.
−Removed: We also tested a sample of subsequent payments to evaluate the completeness of the accrued expenses and compared the results to the current year accrual.
−Removed: /s/ Ernst & Young, LLP
+Added: These financial statements are the responsibility of the Company’s management.
+Added: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
+Added: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
+Added: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
+Added: We conducted our audits in accordance with the standards of the PCAOB.
+Added: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
+Added: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audits provide a reasonable basis for our opinion.
+Added: Collaboration Revenue — Refer to Note 2 and Note 3 to the financial statements
+Added: Critical Audit Matter Description
+Added: The Company has entered into a license and collaborative research and development arrangement with Seqirus, Inc.
+Added: There are five distinct performance obligations under this arrangement.
+Added: The Company recognizes revenue over time for all performance obligations except for the vaccine license.
+Added: The vaccine license is recognized at the point in time it is transferred.
+Added: The accounting for revenue recognized over time measures the progress using an input method which is based on costs incurred toward the satisfaction of the performance obligation.
+Added: As of December 31, 2024, Collaboration revenue was $138.4 million, of which $138.4 million relates to the agreement with Seqirus, Inc.
+Added: Given the judgments necessary to estimate total costs to be incurred to satisfy the performance obligations, as well as the high volume of expense data used in the revenue calculation, auditing such estimates required extensive audit effort and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures.
+Added: How the Critical Audit Matter Was Addressed in the Audit
+Added: Our audit procedures related to the recognition of revenue for the Seqirus, Inc.
+Added: arrangement included the following, among others:
+Added: • We tested the operating effectiveness of controls over collaboration revenue, including those related to the determination of the timing and amount of revenue recognized.
+Added: • We evaluated the total costs incurred related to each performance obligation by inspecting, on a sample basis, underlying source documents to determine costs were recorded to the correct performance obligation.
+Added: • We evaluated the assumptions used in the estimates of total costs and the estimated measure of progress for recognizing revenue by:
+Added: o Analyzing period-over-period changes in the total cost assumption, identifying any significant fluctuations.
+Added: o Inspecting third-party evidence of the agreed-upon total costs to be incurred and comparing that to the total cost to be incurred used by the Company in the calculation.
+Added: /s/ Deloitte & Touche LLP
+Added: San Diego, California
+Added: March 6, 2025
We have served as the Company’s auditor since 2024.
+Added: Report of Independent Registered Public Accounting Firm
+Added: To the Stockholders and the Board of Directors of Arcturus Therapeutics Holdings Inc.
+Added: Opinion on the Financial Statements
+Added: We have audited the accompanying consolidated balance sheet of Arcturus Therapeutics Holdings Inc.
+Added: and its subsidiaries (the Company) as of December 31, 2023, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S.
+Added: generally accepted accounting principles.
+Added: Basis for Opinion
+Added: These financial statements are the responsibility of the Company's management.
+Added: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
+Added: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
+Added: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
+Added: We conducted our audits in accordance with the standards of the PCAOB.
+Added: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
+Added: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audits provide a reasonable basis for our opinion.
+Added: /s/ Ernst & Young LLP
+Added: We served as the Company's auditor from 2018 to 2024.
San Diego, California
March 14, 2024
+Added: except for Note 12, as to which the date is
+Added: March 6, 2025
ARCTURUS THERAPEUTICS HOLDINGS INC.
2 unchanged sentences
As of December 31,
−Removed: (in thousands, except par value information)
+Added: (in thousands, except per share data)
Current assets:
5 unchanged sentences
Property and equipment, net
−Removed: Operating lease right-of-use asset, net
+Added: Operating lease right-of-use asset
Non-current restricted cash
3 unchanged sentences
Accrued liabilities
−Removed: Current portion of long-term debt
Deferred revenue
16 unchanged sentences
AND ITS SUBSIDIARIES
−Removed: C ONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
+Added: C ONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
Year Ended December 31,
8 unchanged sentences
(Loss) income from operations
−Removed: (Loss) gain from equity-method investment
−Removed: (Loss) gain from foreign currency
+Added: Loss from equity-method investment
+Added: Loss from foreign currency
Finance income (expense), net
1 unchanged sentence
Net (loss) income before income taxes
−Removed: Provision for income taxes
+Added: (Benefit) provision for income taxes
Net (loss) income
+Added: Comprehensive (loss) income
(Loss) earnings per share:
Weighted-average shares used in calculation of (loss) earnings per share:
−Removed: Comprehensive (loss) income:
−Removed: Net (loss) income
−Removed: Comprehensive (loss) income:
ARCTURUS THERAPEUTICS HOLDINGS INC.
5 unchanged sentences
Share-based compensation
−Removed: Issuance of common stock related to acquired in-process research and development
Issuance of common stock upon exercise of stock options
20 unchanged sentences
Share-based compensation expense
−Removed: Acquired in-process research and development expense
−Removed: Loss (gain) from equity-method investment
+Added: Loss from equity-method investment
Gain on debt extinguishment
−Removed: Foreign currency transaction loss (gain)
+Added: Foreign currency transaction loss
Other non-cash expenses
16 unchanged sentences
Payments on debt obligations
−Removed: Net cash (used in) provided by financing activities
+Added: Net cash provided by (used in) financing activities
Net (decrease) increase in cash, cash equivalents and restricted cash
4 unchanged sentences
Cash paid for interest
+Added: Cash paid for income taxes
Non-cash investing activities
Right-of-use assets acquired through operating leases
−Removed: Acquisition of in-process research and development through issuance of common stock
+Added: Non-cash asset disposal
Purchase of property and equipment in accounts payable and accrued expenses
2 unchanged sentences
AND ITS SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: NOTES TO CONSOLIDATED FINAN CIAL STATEMENTS
Description of Business
Arcturus Therapeutics Holdings Inc.
−Removed: (the “Company” or "Arcturus") is a clinical messenger RNA medicines company focused on the development of infectious disease vaccines and significant opportunities within liver and respiratory rare diseases.
−Removed: The Company became a clinical stage company during 2020 when it announced that its Investigational New Drug (“IND”) application for ornithine transcarbamylase (“OTC”) deficiency and its Clinical Trial Application (“CTA”) for candidate LUNAR-COV19 were approved by applicable health authorities.
+Added: (the “Company” or "Arcturus") is a messenger RNA medicines company focused on the development of infectious disease vaccines and opportunities within liver and respiratory rare diseases.
+Added: Arcturus developed the world’s first approved self-amplifying messenger RNA (sa-mRNA) vaccine, KOSTAIVE ® (“KOSTAIVE”).
+Added: KOSTAIVE achieved approval in Japan in 2023 as a vaccine against COVID-19.
+Added: Sales of KOSTAIVE began in Japan in October 2024, marking the transition to a commercial stage company.
Recent Developments
7 unchanged sentences
During fiscal year 2024, the Company received milestone payments totalin g $ 96.0 million f rom CSL Seqirus.
−Removed: Additionally, the Company received milestone payments of $ 23.8 million from CSL Seqirus subsequent to December 31, 2023.
At December 31, 2024, the Company’s balance of cash and cash equivalents, including restricted cash, was $ 293.9 million.
1 unchanged sentence
There can be no assurance that the Company will be successful in acquiring additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years.
−Removed: Arcturus Therapeutics Holdings Inc.
−Removed: and its Subsidiaries
−Removed: Notes to Consolidated Financial Statements — Continued
Summary of Significant Accounting Policies
8 unchanged sentences
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance.
−Removed: The Company and its chief operating decision-maker view the Company’s operations and manage its business in one operating segment which is the research and development of medical applications for the Company’s nucleic acid-focused technology.
+Added: The Company and its chief operating decision-maker view the Company’s operations and manage its business in one operating segment, which includes all activities related to the discovery, development and commercialization of messenger RNA medicines.
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
Cash and Cash Equivalents
1 unchanged sentence
Restricted cash
−Removed: Restricted cash includes collateral pledged and held at the Company’s securities accounts pursuant to a security agreement with Wells Fargo Bank, National Association (“Wells Fargo”) (Note 7).
+Added: Restricted cash includes collateral pledged and held at the Company’s securities accounts pursuant to a security agreement with Wells Fargo Bank, National Association (“Wells Fargo”) ( Note 7, Debt ).
At December 31, 2024, such collateral amounted to $ 55.0 million.
Restricted cash also includes cash required to be set aside as security for lease payments and to maintain a letter of credit for the benefit of the landlord for the Company’s offices.
−Removed: At December 31, 2023 and 2022, the Company had restricted cash of $ 1.9 million and $ 2.1 million in conjunction with property leases in San Diego, California, and such restriction is expected to be removed at the end of the lease term.
+Added: At December 31, 2024 and 2023, the Company had restricted cash of $ 1.9 million in conjunction with property leases in San Diego, California, and such restriction is expected to be removed at the end of the lease term.
Fair Value Measurements
12 unchanged sentences
The Company reserves for specific receivables if collectability is no longer reasonably assured.
−Removed: Estimates for allowances for doubtful accounts are
−Removed: Arcturus Therapeutics Holdings Inc.
−Removed: and its Subsidiaries
−Removed: Notes to Consolidated Financial Statements — Continued
−Removed: determined based on existing contractual obligations, historical payment patterns, and individual customer circumstances.
+Added: Estimates for allowances for doubtful accounts are determined based on existing contractual obligations, historical payment patterns, and individual customer circumstances.
The Company reevaluates such reserves on a regular basis and adjusts its reserves as needed.
2 unchanged sentences
Concentration of Credit Risk and Significant Customers
−Removed: Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents.
−Removed: The Company limits its exposure to credit loss by placing its cash and cash equivalents with high credit quality financial institutions in instruments with short maturities.
−Removed: There were two customers that comprised 100 % of the total accounts receivable balance at December 31, 2023 and 2022.
−Removed: For the year ended December 31, 2023, the Company’s top three customers collectively represented 99 % of the Company’s total revenue.
−Removed: For the year ended December 31, 2022, the Company's top five customers collectively represented 99 % of the Company’s total revenue.
−Removed: For the year ended December 31, 2021, there were four customers that collectively represented 99 % of the Company’s total revenue.
+Added: The Company is exposed to concentrations of credit risk primarily related to cash, cash equivalents, and accounts receivable.
+Added: Cash and Cash Equivalents
+Added: The Company mitigates credit risk exposure by maintaining cash and cash equivalents only with high-credit-quality financial institutions and investing in instruments with short maturities.
+Added: The Company continuously monitors counterparty risk to minimize potential financial exposure.
+Added: Accounts Receivable Concentration
+Added: As of December 31, 2024 and 2023, the Company had significant concentrations of credit risk related to accounts receivable from a limited number of customers.
+Added: The following customers accounted for 10% or more of total accounts receivable in each respective period:
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
+Added: As of December 31, 2024:
+Added: • BARDA – 60 % of total accounts receivable
+Added: • CSL – 20 % of total accounts receivable
+Added: As of December 31, 2023:
+Added: • CSL – 74 % of total accounts receivable
+Added: • BARDA – 23 % of total accounts receivable
+Added: The Company monitors its credit exposure through regular assessments of counterparty risk and maintains ongoing collection efforts to mitigate potential credit losses.
+Added: Revenue Concentration
+Added: The Company generates a substantial portion of its revenue from a limited number of key customers.
+Added: The following customers accounted for 10% or more of total revenue for each period:
+Added: For the year ended December 31, 2024:
+Added: • CSL – 91 % of total revenue
+Added: For the year ended December 31, 2023:
+Added: • CSL – 92 % of total revenue
+Added: For the year ended December 31, 2022:
+Added: • CSL – 75 % of total revenue
+Added: • Vinbiocare – 12 % of total revenue
+Added: Given this concentration, the Company’s financial performance and cash flows may be materially impacted if there are changes in demand, contract renewals, or the financial condition of these key customers.
+Added: The Company continues to evaluate opportunities to expand its customer base and mitigate concentration risk over time.
Joint Ventures, Equity Method Investments and Variable Interest Entities
3 unchanged sentences
The Company’s share of the investees’ results is presented as either income or loss from equity method investees in the accompanying consolidated statements of operations and comprehensive income (loss).
+Added: As of December 31, 2024, the carrying value of the equity method investment in ARCALIS remained at zero as ARCALIS' cumulative losses exceeded any gains from dilution.
Property and Equipment, net
7 unchanged sentences
Comprehensive income/loss is defined as the change in stockholders’ equity during a period from transactions and other events and circumstances from non-owner sources.
−Removed: There was no other comprehensive loss in the years ended December 31, 2023, 2022 or 2021.
−Removed: There was no income tax effect related to unrealized losses for the years ended December 31, 2023, 2022 , or 2021.
+Added: There was no other comprehensive loss or income tax effect related to unrealized losses in the years ended December 31, 2024, 2023 or 2022.
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
Revenue Recognition
7 unchanged sentences
and (v) recognize revenue when, or as, the company satisfies a performance obligation.
−Removed: Arcturus Therapeutics Holdings Inc.
−Removed: and its Subsidiaries
−Removed: Notes to Consolidated Financial Statements — Continued
The terms of the Company’s revenue agreements include license fees, upfront payments, milestone payments, reimbursement for research and development activities, option exercise fees, consulting and related technology transfer fees and royalties on sales of commercialized products.
12 unchanged sentences
See “Note 3, Revenue” for specific details surrounding the Company’s arrangements.
+Added: Grant revenue
+Added: Grant revenue consists of funding under cost reimbursement programs primarily from federal and non-profit foundation sources for qualified research and development activities performed by the Company.
+Added: Such amounts are invoiced and recorded as revenue as grant-funded activities are performed, with any advance funding recorded as deferred revenue until the activities are performed.
The Company determines if an arrangement is a lease at inception.
4 unchanged sentences
For the Company's operating leases, if the interest rate used to determine the present value of future lease payments is not readily determinable, the Company estimates its incremental borrowing rate as the discount rate for the lease.
−Removed: The Company's incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in similar economic environments.
+Added: The Company's incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
+Added: similar economic environments.
Lease expense for lease payments is recognized on a straight-line basis over the lease term.
3 unchanged sentences
All research and development costs are expensed as incurred.
−Removed: Research and development costs consist primarily of salaries, employee benefits, costs associated with preclinical studies and clinical trials (including amounts paid to clinical research organizations and other professional services), in process research and development expenses and license agreement expenses, net of any grants and prelaunch inventory.
+Added: Research and development costs consist primarily of salaries, employee benefits, costs associated with preclinical studies and clinical trials (including amounts paid to clinical research organizations and other professional services), pre-launch inventory, in-process research and development expenses and license agreement expenses.
Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods are received or the services are performed.
+Added: The Company recognizes grants that fall within the scope of ASC 808 as contra research and development expense in the consolidated statement of operations on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate.
The Company records accruals for estimated research and development costs, comprising payments for work performed by third party contractors, laboratories, participating clinical trial sites, and others.
1 unchanged sentence
For the latter, the Company accrues the expenses as goods or services are used or rendered.
−Removed: Arcturus Therapeutics Holdings Inc.
−Removed: and its Subsidiaries
−Removed: Notes to Consolidated Financial Statements — Continued
Clinical trial activities performed by third parties are accrued and expensed based upon estimates of the proportion of work completed over the life of the individual clinical trial and patient enrollment rates in accordance with agreements established with Clinical Research Organizations (“CROs”) and clinical trial sites.
Estimates are determined by reviewing contracts, vendor agreements and purchase orders, and through discussions with internal clinical personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services.
+Added: General and Administrative Costs
+Added: General and administrative expenses consist primarily of personnel-related costs, including share-based compensation, for executives, finance, legal, human resources, business development, and other administrative and operational functions, professional fees, accounting and legal services, information technology and facility-related costs, and expenses associated with obtaining and maintaining intellectual property (“IP”).
+Added: These costs relate to the operation of the business, unrelated to the research and development function, or any individual program.
Pre-Launch Inventory
1 unchanged sentence
When the Company believes regulatory approval and subsequent commercialization of an investigational product candidate is probable, and the Company also expects future economic benefit from the sales of the investigational product candidate to be realized, it will then capitalize the costs of production as inventory.
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
Share-Based Compensation
−Removed: The Company recognizes share-based compensation for equity awards granted to employees, consultants, officers and directors as an expense on the statements of operations and comprehensive income (loss).
+Added: The Company records share-based compensation for equity awards granted to employees, consultants, officers and directors within general and administrative and research and development expenses on the statements of operations and comprehensive income (loss).
Share-based compensation is recognized over the requisite service period of the individual awards using the straight-line attribution method, which generally equals the vesting period.
Employees and officers’ stock options have a ten-year life and generally vest 25 % on the first anniversary of the grant and in 1/36 th equal installments on each monthly anniversary thereafter, such that options are fully vested on the four-year anniversary of the date of grant.
−Removed: The exercisability and vesting periods of options granted to consultants and directors vary.
+Added: The exercisability and vesting periods of equity awards granted to consultants and directors vary.
The fair value of stock options is estimated using a Black-Scholes valuation model on the date of grant.
1 unchanged sentence
The Company has limited historical stock option activity and therefore estimates the expected term of stock options granted using the simplified method, which represents the average of the contractual term of the stock option and its weighted-average vesting period.
−Removed: The expected volatility of stock options is based upon the historical volatility of a peer group of publicly traded companies.
+Added: For the nine months ended September 30, 2024, the expected volatility of stock options was based on the historical volatility of a peer group of publicly traded companies.
+Added: For the three months ended December 31, 2024, the Company used its own historical volatility to estimate expected volatility, as it had accumulated sufficient historical stock price data.
The Company has not declared or paid any dividends and does not currently expect to do so in the foreseeable future.
The risk-free interest rates used are based on the implied yield currently available in United States Treasury securities at maturity with a term equivalent to the expected term of the stock options.
−Removed: The effect of forfeited awards is recorded when the forfeiture occurs.
+Added: The effect of forfeited or cancelled awards is recorded when the forfeiture or cancellation occurs
Statement of Cash Flows
10 unchanged sentences
The Company records a valuation allowance against its deferred tax assets to reduce the net carrying value to an amount that it believes is more likely than not to be realized.
−Removed: Management has considered estimated taxable income and ongoing prudent and feasible tax planning strategies in assessing the
−Removed: Arcturus Therapeutics Holdings Inc.
−Removed: and its Subsidiaries
−Removed: Notes to Consolidated Financial Statements — Continued
−Removed: amount of the valuation allowance.
+Added: Management has considered estimated taxable income and ongoing prudent and feasible tax planning strategies in assessing the amount of the valuation allowance.
Based upon the weight of available evidence, which includes the Company’s historical operating performance and limited potential to utilize tax credit carryforwards, the Company has determined that total deferred tax assets should be fully offset by a valuation allowance.
4 unchanged sentences
Additionally, the Company follows an accounting standard addressing the accounting for uncertainty in income taxes that prescribes rules for recognition, measurement, and classification in the consolidated financial statements of tax positions taken or expected to be taken in a tax return.
−Removed: Net Income (Loss) per Share
−Removed: Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of shares of common stock outstanding for the period, without consideration for common stock equivalents.
−Removed: Diluted net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding for the period determined using the treasury-stock method.
−Removed: Dilutive shares of common stock for the year ended December 31, 2023 were comprised of stock options and restricted stock units.
−Removed: Dilutive shares of stock for the years ended December 31, 2022 and 2021 were comprised of stock options.
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
+Added: Net (Loss) Income per Share
+Added: Basic net (loss) income per share is calculated by dividing the net (loss) income by the weighted-average number of shares of common stock outstanding for the period, without consideration for common stock equivalents.
+Added: Diluted net (loss) income per share is calculated by dividing the net (loss) income by the weighted-average number of shares of common stock and dilutive common stock equivalents outstanding for the period determined using the treasury-stock method.
+Added: Dilutive shares of common stock for the years ended December 31, 2024 and 2023 were comprised of stock options and restricted stock units.
+Added: Dilutive shares of stock for the years ended December 31, 2022 were comprised of stock options.
No dividends were declared or paid during the reporting periods.
+Added: Recently Adopted Accounting Pronouncements
+Added: In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):
+Added: Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.
+Added: Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis.
+Added: ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023, and for interim reporting periods beginning January 1, 2025.
+Added: The Company adopted ASU 2023-07 for the annual reporting period beginning on January 1, 2024 .
+Added: See “ Note 12, Segment Information ” for further information.
Recently Issued Accounting Standards Not Yet Adopted
1 unchanged sentence
The Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the consolidated financial statements and disclosures.
+Added: In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40):
+Added: Disaggregation of Income Statement Expenses, which requires public entities to disclose specified information about certain costs and expenses on an interim and annual basis.
+Added: ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted.
+Added: The Company is currently evaluating the impact that adoption of ASU 2024-03 will have on the financial statement disclosures.
The Company has entered into license agreements and collaborative research and development arrangements with pharmaceutical and biotechnology companies, as well as consulting, related technology transfer and product revenue agreements.
5 unchanged sentences
The Company cannot guarantee the achievement of these milestones due to risks associated with preclinical and clinical activities required for development of nucleic acid medicine-based therapeutics and vaccines.
−Removed: The following table presents changes in the balances of receivables and contract liabilities related to strategic collaboration agreements during the year ended December 31, 2023:
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
+Added: The following table presents changes in the balances of receivables and contract liabilities related to revenue generating agreements during the year ended December 31, 2024:
(in thousands)
5 unchanged sentences
Deferred revenue
−Removed: Arcturus Therapeutics Holdings Inc.
−Removed: and its Subsidiaries
−Removed: Notes to Consolidated Financial Statements — Continued
+Added: During the year ended December 31, 2024, the Company recognized $ 62.6 million in revenue from the deferred revenue balance as of December 31, 2023.
The following table summarizes the Company’s revenue for the periods indicated.
8 unchanged sentences
The following paragraphs provide information regarding the nature and purpose of the Company’s most significant revenue arrangements.
−Removed: On November 1, 2022, the Company entered into a Collaboration and License Agreement (as amended, the “CSL Collaboration Agreement”) with Seqirus, Inc., a part of CSL Limited (“CSL Severus”), for the global exclusive rights to research, develop, manufacture, and commercialize vaccines.
+Added: On November 1, 2022, the Company entered into a Collaboration and License Agreement (as amended, the “CSL Collaboration Agreement”) with Seqirus, Inc., a part of CSL Limited (“CSL Seqirus”), for the global exclusive rights to research, develop, manufacture, and commercialize vaccines.
Under the terms of the CSL Collaboration Agreement, the Company provides CSL Seqirus with an exclusive global license to its mRNA technology (including STARR ® ) and LUNAR ® lipid-mediated delivery, along with mRNA drug substance and drug product manufacturing process.
CSL Seqirus will lead development and commercialization of vaccines under the collaboration.
−Removed: The collaboration plans to advance vaccines against SARS-CoV-2 (COVID-19), influenza, pandemic preparedness as well as three other respiratory infectious diseases.
−Removed: The Company received a $ 200.0 million upfront payment and is eligible to receive over $ 1.3 billion in development milestones if all products are registered in the licensed fields and entitled to potentially receive up to $ 3.0 billion in commercial milestones based on “net sale” of vaccines in the various fields.
−Removed: In addition, the Company is eligible to receive a 40 % net profit share for COVID-19 vaccine products and up to low double-digit royalties for vaccines against flu, pandemic preparedness and three other respiratory pathogens.
−Removed: During 2023, the Company achieve d $ 154.2 million o f development milestones and a conditional payment related to the CSL Collaboration Agreement, of which $ 23.8 million was included in accounts receivable as of December 31, 2023.
+Added: The collaboration plans to advance vaccines against SARS-CoV-2 (COVID-19), influenza, pandemic preparedness as well as three other infectious diseases.
+Added: The Company received a $ 200.0 million upfront payment and is eligible to receive over $ 1.3 billion in development milestones if all products are registered in the licensed fields and entitled to potentially receive up to $ 3.0 billion in commercial milestones based on “net sales” of vaccines in the various fields.
+Added: In addition, the Company is eligible to receive a 40 % net profit share for COVID-19 vaccine products and up to low double-digit royalties for vaccines against flu, pandemic preparedness and three other pathogens.
+Added: During 2024, the Company achieve d $ 72.2 million o f development and regulatory milestones related to the CSL Collaboration Agreement, of which none was included in accounts receivable as of December 31, 2024.
In evaluating the CSL Collaboration Agreement in accordance with Accounting Standards Codification (“ASC”) Topic 606, the Company concluded that CSL Seqirus is a customer.
The Company identified all promised goods/services within the CSL Collaboration Agreement, and when combining certain promised goods/services, the Company concluded that there are five distinct performance obligations.
−Removed: The nature of the performance obligations consists of delivery of the vaccine license, research and development services for COVID and non-COVID vaccines and regulatory activities for COVID vaccines.
−Removed: For each performance obligation, the Company estimated the standalone selling price based on 1) in the case of the license, the fair value using costs to recreate plus margin method and 2) in the case of research and development services and regulatory activities, cost plus margin for estimated full-time equivalent (“FTE”) costs, direct costs including laboratory supplies, contractors, and other out-of-pocket expenses for research and development services and regulatory activities.
−Removed: As of December 31, 2023, the transaction price consisted of upfront consideration received and milestones achieved in 2023.
−Removed: Additional variable consideration was not included in the transaction price at December 31, 2023 because the Company could not conclude that it is probable that including the variable consideration will not result in a significant revenue reversal.
+Added: The nature of the performance obligations consists of delivery of the vaccine license, research and development services for COVID and non-COVID vaccines
Arcturus Therapeutics Holdings Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements — Continued
+Added: and regulatory activities for COVID vaccines.
+Added: For each performance obligation, the Company estimated the standalone selling price based on 1) in the case of the license, the fair value using costs to recreate plus margin method and 2) in the case of research and development services and regulatory activities, cost plus margin for estimated full-time equivalent (“FTE”) costs, direct costs including laboratory supplies, contractors, and other out-of-pocket expenses for research and development services and regulatory activities.
+Added: As of December 31, 2024, the transaction price primarily consisted of upfront consideration received and milestones achieved as of December 31, 2024.
+Added: Additional variable consideration was not included in the transaction price at December 31, 2024 because the Company could not conclude that it is probable that including the variable consideration will not result in a significant revenue reversal.
The Company allocated the transaction price to the performance obligations in proportion to their standalone selling price.
−Removed: The vaccine license was recognized at the point in time it was transferred in 2022.
+Added: The portion of the upfront payment that was allocated to the vaccine license was recognized at the point in time it was transferred in 2022.
The research and development and regulatory activities performance obligations are recognized over a period of time based on the percentage of services rendered using the input method, meaning actual costs incurred divided by total costs budgeted to satisfy the performance obligation.
Any consideration related to sales-based royalties will be recognized when the amounts are probable of non-reversal, provided that the reported sales are reliably measurable and the Company has no remaining promised goods/services, as they are constrained and therefore have also been excluded from the transaction price.
−Removed: The revenue recognized in 2023 and 2022 relates to the license delivered, milestones achieved and services performed through December 31, 2023.
+Added: The revenue recognized in 2024 reflects variable consideration added to the transaction price upon the achievement of milestones, attributable to the license granted in 2022 and research and development services provided through December 31, 2024.
T otal deferred revenue as of December 31, 2024 and 2023 for the CSL Collaboration Agreement was $ 30.7 million and $ 87.1 million, respectively.
2 unchanged sentences
The Company concluded that the promise to manufacture and supply ARCT-154 drug product is a customer option as part of the CSL Collaboration Agreement and is accounted for as a separate contract.
−Removed: The advance payment is included in deferred revenue as of December 31, 2023 and will be recognized as revenue when the drug product is transferred to CSL Seqirus.
−Removed: During 2023, the Company entered into an amendment to the CSL Collaboration Agreement, pursuant to which the Company agreed to sponsor and conduct a Phase I clinical study in the influenza field.
+Added: The Company recognized $ 18.0 million in revenue related to this customer option during the second quarter of 2024.
+Added: No amount related to this customer option remained in deferred revenue as of December 31, 2024.
+Added: During 2023, the Company entered into an amendment to the CSL Collaboration Agreement, pursuant to which the Company agreed to sponsor and conduct a Phase 1 clinical study in the influenza field.
As part of the amendment, the Company received $ 17.5 million from CSL Seqirus.
−Removed: The amendment also provides for up to $ 1.5 million in additional payments which are achievable upon meeting certain clinical milestones relating to the Phase I clinical study in the influenza field.
+Added: The amendment also provides for up to $ 1.5 million in additional payments which are achievable upon meeting certain clinical milestones relating to the Phase 1 clinical study in the influenza field.
The Company previously concluded that the expansion of research and development support services under the CSL Collaboration Agreement represented an option that was not a material right.
−Removed: Therefore the Company concluded the promise to sponsor and conduct the Phase I clinical study is a separate contract and the sole performance obligation under the new arrangement.
−Removed: During the year ended December 31, 2023, the Company recognized $ 2.4 million related to the performance obligation and the remaining amount of $ 15.1 million is included in deferred revenue.
−Removed: In December 2023, the Company also received an advance payment of $ 5.3 million from CSL Seqirus for manufacturing activities related to COVID-19 vaccine product.
+Added: Therefore the Company concluded the promise to sponsor and conduct the Phase 1 clinical study is a separate contract and the sole performance obligation under the new arrangement.
+Added: During the year ended December 31, 2024, the Company recognized revenue of $ 12.0 million related to the performance obligation compared to $ 2.4 million during the year ended December 31, 2023.
+Added: The remaining amount of $ 3.1 million is included in deferred revenue.
+Added: During the fourth quarter of 2023, the Company received an advance payment of $ 5.3 million from CSL Seqirus for manufacturing activities related to COVID-19 vaccine product.
+Added: During the first quarter of 2024, the Company received an additional advance payment of $ 5.1 million from CSL Seqirus for manufacturing activities related to COVID-19 vaccine product.
The Company concluded that the promise to perform manufacturing activities is a customer option as part of the CSL Collaboration Agreement and is accounted for as a separate contract.
−Removed: The advance payment is included in deferred revenue as of December 31, 2023 and will be recognized as revenue when the vaccine product is transferred to CSL Seqirus.
+Added: The Company recognized $ 5.3 million in revenue related to this customer option during the third quarter of 2024 upon the transfer of vaccine product to CSL Seqirus.
+Added: The remaining $ 5.1 million is included in deferred revenue as of December 31, 2024 and will be recognized as revenue when the remaining vaccine product is transferred to CSL Seqirus.
+Added: In March 2024, the Company entered into an amendment to the CSL Collaboration Agreement, pursuant to which the parties agreed to, among other things, adjust (i) the development plans for certain product candidates, (ii) various development milestones related to such product candidates, (iii) provisions of the CSL Collaboration
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
+Added: Agreement related to specific royalty payments, (iii) provisions of the CSL Collaboration Agreement related to distributors, and (iv) proprietary payment calculations related to the foregoing.
During 2021 the Company entered into certain agreements with Vinbiocare, a member of Vingroup Joint Stock Company, whereby the Company would provide technical expertise and support services to Vinbiocare to assist in the build out of a mRNA drug product manufacturing facility in Vietnam.
5 unchanged sentences
In February 2023, the Company agreed to provide additional financial support in the amount of approximately $ 2.1 million to allow Vinbiocare to provide additional study support duties related to the ARCT-154 clinical study.
−Removed: As a result, the Company reserved $ 11.8 million of the original upfront payment to be paid to Vinbiocare over the future periods pursuant to the Study Support Agreement by reclassifying a portion of the upfront payment received from Vinbiocare pursuant to the
−Removed: Arcturus Therapeutics Holdings Inc.
−Removed: and its Subsidiaries
−Removed: Notes to Consolidated Financial Statements — Continued
−Removed: License & Supply Agreements, from deferred revenue to short-term and long-term liabilities, based on the anticipated timing of the payments to Vinbiocare, and removed that portion of the upfront payment from the transaction price of the modified arrangement.
+Added: As a result, the Company reserved $ 11.8 million of the original upfront payment to be paid to Vinbiocare over the future periods pursuant to the Study Support Agreement by reclassifying a portion of the upfront payment received from Vinbiocare pursuant to the License & Supply Agreements, from deferred revenue to short-term and long-term liabilities, based on the anticipated timing of the payments to Vinbiocare, and removed that portion of the upfront payment from the transaction price of the modified arrangement.
The transaction price was not adjusted for payments that are contingent upon the occurrence of future regulatory or sales-related events based on the information currently available to the Company.
The Company has concluded that it has no remaining performance obligations under its prior arrangements with Vinbiocare as summarized above as of December 31, 2024.
−Removed: As of December 31, 2023, the Company has accrued liabilities related to this arrangement of $ 2.5 million in current liabilities and $ 0.5 million in non-current liabilities that will be paid upon the occurrence of specified events through the first quarter of 2025.
+Added: As of December 31, 2024, the Company has accrued liabilities related to this arrangement of $ 2.4 million in current liabilities that will be paid upon the occurrence of specified events through the end of 2025.
Vinbiocare is also eligible to receive a single digit percentage of amounts from net sales, if any, of ARCT-154 (or next-generation COVID vaccine) up to a capped amount of low single digit millions.
7 unchanged sentences
The costs associated with these reimbursements are reflected as a component of research and development expense in the Company’s consolidated statements of operations and comprehensive income (loss).
−Removed: The Company recognized $ 9.1 million and $ 0.2 million of grant revenue during the years ended December 31, 2023 and 2022, respectively.
−Removed: which is included in revenue on the Company's consolidated statements of operations.
+Added: The Company recognized $ 13.9 million and $ 9.1 million of grant revenue during the years ended December 31, 2024 and 2023, respectively, which is included in revenue on the Company's consolidated statements of operations.
As of December 31, 2024, the remaining available funding net of revenue earned was $ 40.0 million.
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
Fair Value Measurements
10 unchanged sentences
The fair value of these financial instruments was measured based on quoted prices.
−Removed: Arcturus Therapeutics Holdings Inc.
−Removed: and its Subsidiaries
−Removed: Notes to Consolidated Financial Statements — Continued
Accrued Liabilities Detail
7 unchanged sentences
Vinbiocare contractual liabilities
+Added: Legal accrual
Other accrued research and development expenses
11 unchanged sentences
Construction in progress is primarily comprised of research equipment not yet placed in service.
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
Wells Fargo Credit Agreement
On April 21, 2023, the Company’s wholly-owned subsidiary, Arcturus Therapeutics, Inc.
−Removed: entered into a credit agreement with Wells Fargo whereby Wells Fargo will make a $ 50.0 million revolving credit line available to the Company (the “Loan”) and each Loan evidenced by a revolving line of credit note (the “Note”).
+Added: entered into a credit agreement with Wells Fargo (the “Credit Agreement”) whereby Wells Fargo will make a $ 50.0 million revolving credit line available to the Company (the “Loan”) and each Loan evidenced by a revolving line of credit note (the “Note”).
+Added: On June 26, 2024, the parties entered into Amendment No.
+Added: 1 to the Credit Agreement, whereby the term was extended by one year to April 2026.
Borrowings under the 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.
If an Event of Default (as defined in the agreement) occurs, then all Loans shall bear interest at a rate equal to 2.00 % above the interest rate applicable immediately prior to the occurrence of the Event of Default.
−Removed: The term of the agreement is two years , with an option for one-year renewals subject to Wells Fargo approval and the Company furnishing to Wells Fargo a non-refundable commitment fee equal to 0.25 % of the Loan amount for each such renewal.
+Added: The original term of the agreement is two years , with an option for one-year renewals subject to Wells Fargo approval and the Company furnishing to Wells Fargo a non-refundable commitment fee equal to 0.25 % of the Loan amount for each such renewal.
There is no penalty for terminating the facility prior to the maturity date of the Note.
2 unchanged sentences
Manufacturing Supply Agreement
−Removed: On November 7, 2020, the Company’s wholly-owned subsidiary, Arcturus Therapeutics, Inc., entered into a Manufacturing Support Agreement (the “Support Agreement”) with the Economic Development Board of the
−Removed: Arcturus Therapeutics Holdings Inc.
−Removed: and its Subsidiaries
−Removed: Notes to Consolidated Financial Statements — Continued
−Removed: Republic of Singapore (the “EDB”).
+Added: On November 7, 2020, the Company’s wholly-owned subsidiary, Arcturus Therapeutics, Inc., entered into a Manufacturing Support Agreement (the “Support Agreement”) with the Economic Development Board of the Republic of Singapore (the “EDB”).
Pursuant to the Support Agreement, the EDB agreed to make a term loan (the “Singapore Loan”) of S$ 62.1 million to the Company, subject to the satisfaction of customary deliveries, to support the manufacture of the LUNAR-COV19 vaccine candidate (ARCT-021).
4 unchanged sentences
During the first quarter of 2023, the remaining principal portion of the Singapore Loan plus accrued interest, totaling $ 34.0 million, was forgiven and recorded as a gain on debt extinguishment in the consolidated statement of operations and comprehensive loss.
−Removed: Total interest expenses related to the Singapore Loan was $ 0.5 million, $ 2.1 million and $ 1.9 million for the year ended December 31, 2023, 2022 and 2021, respectively.
+Added: No interest expense was incurred on the Singapore Loan for the year ended December 31, 2024, and $ 0.5 million and $ 2.1 million of interest expense was incurred for the years ended December 31, 2023 and 2022, respectively.
As of December 31, 2023, the Company no longer had debt or interest related to this agreement.
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The Company was released from all liens under the Western Alliance Agreement.
−Removed: For the years ended December 31, 2023, 2022 and 2021, the Company recorded interest expense of $ 0.3 million, $ 0.9 million and $ 0.8 million, respectively.
−Removed: Stockholders’ Equity
−Removed: Earnings Per Share
−Removed: Potentially dilutive securities that were not included in the calculation of diluted net loss per share for the year ended December 31, 2023 as they were anti-dilutive totaled 0.8 million.
−Removed: Potent ially dilutive securities that were not included in the calculation of diluted earnings per share for the year ended December 31, 2022 as they were anti-dilutive totaled 3.7 million.
−Removed: Potentially dilutive securities that were not included in the calculation of diluted net loss per share for the year ended December 31, 2021 as they were anti-dilutive totaled 1.3 million.
−Removed: Alexion Pharmaceuticals License Agreement
−Removed: On February 17, 2021, the Company entered into an exclusive license agreement with Alexion Pharmaceuticals, Inc.
−Removed: (“Alexion”) pursuant to which Alexion granted to the Company an exclusive, worldwide license to exploit certain specified Alexion patent applications.
−Removed: In accordance with the terms of the license agreement, and in exchange for the license, the Company issued 74,713 shares of its common stock to Alexion on February 19, 2021 valued at approximately $ 5.0 million.
−Removed: The number of shares issued under the agreement was calculated by dividing (i) five million dollars ($5.0 million) by (ii) the volume-weighted average price per share of the Company’s common stock on the Nasdaq Global Market for the thirty (30) trading days immediately preceding the Effective Date (rounded to the nearest whole share).
−Removed: The Company recorded the transaction as an asset purchase as management concluded that all of the value received was related to a single identifiable asset.
−Removed: Further, the Company concluded that there was no alternative future use for the asset and recorded a charge at the closing of the transaction for the full $ 5.0 million value assigned to the shares issued in connection with the license agreement.
−Removed: This non-cash charge was recorded as acquired in-process research and development expense in the statements of operations and comprehensive income (loss).
−Removed: Share-Based Compensation
−Removed: In June 2022 at the Company’s 2022 Annual Meeting of Stockholders (the "2022 Annual Meeting"), the stockholders of the Company approved an amendment to the Company’s 2019 Omnibus Equity Incentive Plan (as
+Added: The Company recorded no interest expense for the year ended December 31, 2024, and for the years ended December 31, 2023 and 2022, the Company recorded interest expense of $ 0.3 million and $ 0.9 million, respectively.
Arcturus Therapeutics Holdings Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements — Continued
−Removed: amended, the “2019 Plan”) which, among other things, increases the aggregate number of shares authorized for use in making awards to eligible persons under the 2019 Plan by 3,750,000 shares, for a total of up to 8,750,000 shares available for issuance.
+Added: Stockholders’ Equity
+Added: Net (Loss) Income Per Share
+Added: Potentially dilutive securities that were not included in the calculation of diluted net loss per share for the year ended December 31, 2024 and 2023 as they were anti-dilutive totaled 1.4 million and 0.8 million, respectively.
+Added: Potentially dilutive securities that were not included in the calculation of diluted earnings per share for the year ended December 31, 2022 as they were anti-dilutive totaled 3.7 million.
+Added: Share-Based Compensation
+Added: In June 2024 at the Company’s 2024 Annual Meeting of Stockholders (the "2024 Annual Meeting"), the stockholders of the Company approved an amendment to the Company’s 2019 Omnibus Equity Incentive Plan (as amended, the “2019 Plan”) which, among other things, increased the aggregate number of shares authorized for use in making awards to eligible persons under the 2019 Plan by 2,000,000 shares, for a total of up to 10,750,000 shares available for issuance.
As of December 31, 2024, a total of 1,834,158 shares remain available for future issuance under the 2019 Plan, subject to the terms of the 2019 Plan.
In October 2021, the Company adopted the 2021 Inducement Equity Incentive Plan which covers the award of up to 1,000,000 shares of common stock (the “2021 Plan”) effective as of October 15, 2021.
−Removed: Approval of the Company’s stockholders will not be required as a condition to the effectiveness of the 2021 Plan for so long as the plan is in compliance with Nasdaq inducement plan rules.
+Added: Approval of the Company’s stockholders is not required as a condition to the effectiveness of the 2021 Plan for so long as the plan is in compliance with applicable Nasdaq inducement plan rules.
In April 2022, the compensation committee of the Company’s board of directors approved a proposal to reduce the total number of shares available for future issuance under the 2021 Plan to 130,000 .
19 unchanged sentences
At December 31, 2024 , the total unrecognized compensation cost of $ 48.5 million will be recognized over the weighted-average remaining service period of approximately 2.6 years.
−Removed: The fair value of the options vested during the years ended December 31, 2023 , 2022 and 2021 wa s $ 35.3 million, $ 39.2 million and $ 28.4 million, respectively.
+Added: The fair value of the options vested during the years ended December 31, 2024 , 2023 and 2022 was $ 40.5 million, $ 35.3 million and $ 39.2 million, respectively.
The total intrinsic value of options exercised during the years ended December 31, 2024, 2023 and 2022 was $ 3.3 million, $ 4.3 million and $ 1.6 million, respectively.
−Removed: In August 2023, the Company granted 18,786 restricted stock units to its board of directors, when the fair value of the Company's common stock was $ 34.92 per share.
−Removed: These restricted stock units will vest at the Company's 2024 annual stockholders' meeting.
−Removed: Share-based compensation expenses included in the Company’s statements of operations and comprehensive income (loss) for the years ended December 31, 2023, 2022 and 2021 were:
Arcturus Therapeutics Holdings Inc.
1 unchanged sentence
Notes to Consolidated Financial Statements — Continued
+Added: Restricted Stock Units
+Added: In August 2023, the Company granted 18,786 restricted stock units ( “RSUs” ) to its board of directors, when the market value of the Company's common stock was $ 34.92 per share.
+Added: These RSUs fully vested at the Company's 2024 annual stockholders' meeting.
+Added: However, the release of the units remains subject to specific conditions and will occur only in the event of a board separation or a change in control.
+Added: The following table summarizes the Company’s RSU activity for the year ended December 31, 2024:
+Added: Outstanding – December 31, 2023
+Added: Outstanding – December 31, 2024
+Added: Share-based compensation expenses included in the Company’s statements of operations and comprehensive income (loss) for the years ended December 31, 2024, 2023 and 2022 were:
For the Year Ended December 31,
7 unchanged sentences
Total (loss) income before income taxes
−Removed: A reconciliation of income tax expense for the years ended December 31, 2023, 2022 and 2021 is as follows:
+Added: A reconciliation of income tax (benefit) expense for the years ended December 31, 2024, 2023 and 2022 is as follows:
For the Year Ended December 31,
−Removed: Total current income tax expense
+Added: Total current income tax (benefit) expense
Total deferred income tax expense
−Removed: Total income tax expense
+Added: Total income tax (benefit) expense
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
A reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate is as follows:
2 unchanged sentences
State income taxes, net of federal benefit
−Removed: Stock-based compensation
+Added: Share-based compensation
Officers compensation
5 unchanged sentences
Provision for income taxes
−Removed: Arcturus Therapeutics Holdings Inc.
−Removed: and its Subsidiaries
−Removed: Notes to Consolidated Financial Statements — Continued
The significant components of deferred income taxes are as follows:
5 unchanged sentences
Basis difference in equity investments
−Removed: Depreciation and amortization
Capitalized R&D
14 unchanged sentences
At December 31, 2024, the Company has federal and state net operating losses, or NOL, carryforwards of approximately $ 47.5 million and $ 223.5 million, respectively.
−Removed: The federal net operating loss carryover includes $ 27.9 million of net operating losses generated in 2018 and after which can be carried forward indefinitely.
−Removed: The Company's state net operating losses start to expire 2039 .
+Added: The federal net operating loss carryforward includes losses generated in 2018 and after which can be carried forward indefinitely.
+Added: The state net operating loss carryforward includes $ 0.4 million of losses that can be carried forward indefinitely.
+Added: The remaining state net operating losses begin to expire in 2039 .
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
At December 31, 2024, the Company has federal and state research and development credit carryforwards of approximately $ 19.8 million and $ 11.5 million, respectively.
The federal credit carryforwards begin to expire in 2037 , and the state credits carry forward indefinitely.
+Added: $ 0.8 million of the state credit begin to expire in 2037 and the remainder carryforward indefinitely.
Additionally, the Company has an Orphan Drug Credit of $ 4.7 million as of December 31, 2024 which will begin to expire in 2042 unless previously utilized.
8 unchanged sentences
An uncertain tax position will not be recognized if it has less than 50 % likelihood of being sustained.
−Removed: Arcturus Therapeutics Holdings Inc.
−Removed: and its Subsidiaries
−Removed: Notes to Consolidated Financial Statements — Continued
A reconciliation of unrecognized tax benefits is as follows (in millions):
Beginning balance of unrecognized tax benefits
−Removed: Settlement of prior period tax positions
Decrease for prior period tax positions
15 unchanged sentences
As of December 31, 2024, $ 7.4 million remained in accrued liabilities.
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
In October 2017, the Company entered into a non-cancellable operating lease agreement for office space adjacent to its previously occupied headquarters.
3 unchanged sentences
In conjunction with the new lease, the Company received free rent for four months and received a tenant improvement allowance of $ 0.1 million.
−Removed: The lease may be extended for one five-year period at the then current market rate with annual escalations ;
−Removed: however, the Company deemed the extension option not reasonably certain to be exercised and therefore excluded the option from the lease terms.
+Added: In March 2024, the Company negotiated with the lessor to extend the lease through March 2027.
The Company entered into an irrevocable standby letter of credit with the landlord for a security deposit of $ 0.1 million upon executing the lease which is included (along with additional funds required to secure the letter of credit) in the balance of non-current restricted cash.
2 unchanged sentences
In February 2021, the Company opted to extend the lease through March 2025 to coincide with the lease term of the Company’s headquarters.
−Removed: In September 2021, the Company entered into a fourth non-cancellable lease agreement for office, research and development, engineering and laboratory space near its current headquarters and lease term commenced during the second quarter of 2022.
−Removed: The initial term of the lease will extend ten years and eight months from the date of possession, and the Company will have the right to extend the term of the lease for an additional five-year period .
−Removed: When the lease term was determined for the operating lease right-of-use assets and lease liabilities, the extension
−Removed: Arcturus Therapeutics Holdings Inc.
−Removed: and its Subsidiaries
−Removed: Notes to Consolidated Financial Statements — Continued
−Removed: option for the lease was not included.
+Added: In January 2024, the Company vacated this office space with no intention of operating out of the location in the future.
+Added: The Company was still engaged in the lease for the property and obligated to make the remaining lease payments through March 31, 2025, and therefore recorded an impairment loss in the amount of $ 1.3 million during the three months ended March 31, 2024, as there was no future economic benefit from the lease.
+Added: In July 2024, the Company terminated the existing lease agreement, in accordance with its terms, thereby ending their contractual obligation to pay for the premises.
+Added: As a result, no lease liability remains as of December 31, 2024.
+Added: In September 2021, the Company entered into a third non-cancellable lease agreement for office, research and development, engineering and laboratory space near its current headquarters, and such lease term commenced during the second quarter of 2022.
+Added: The initial term of this lease extends ten years and eight months from the date of possession, and the Company has the right to extend the term of the lease for an additional five-year period.
+Added: When the lease term was determined for the operating lease right-of-use assets and lease liabilities, the extension option for the lease was not included.
The lease has a monthly base rent ranging from $ 0.3 million to $ 0.4 million which escalates over the lease term.
11 unchanged sentences
Total operating lease liabilities
−Removed: Weighted-average remaining lease term
+Added: Weighted-average remaining lease term (in years)
Weighted-average discount rate
+Added: Arcturus Therapeutics Holdings Inc.
+Added: and its Subsidiaries
+Added: Notes to Consolidated Financial Statements — Continued
Operating lease costs consist of the fixed lease payments included in operating lease liability and are recorded on a straight-line basis over the lease terms.
Operating lease costs were $ 4.5 million, $ 5.6 million and $ 4.7 million for the years ended December 31, 2024, 2023 and 2023, respectively.
+Added: Segment Information
+Added: The Company operates in one business segment, which includes all activities related to the discovery, development and commercialization of messenger RNA medicines.
+Added: The determination of a single business segment is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (“CODM”).
+Added: The Company’s CODM is its Chief Executive Officer , who reviews and evaluates consolidated net (loss) income for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods.
+Added: The CODM does not evaluate the operating segment using asset or liability information.
+Added: The following table presents information about reported segment revenues, segment loss and income, and significant segment expenses:
+Added: For the Year Ended December 31,
+Added: (in thousands)
+Added: Research and development:
+Added: LUNAR-CF, net
+Added: Early-stage programs
+Added: Discovery technologies
+Added: Payroll and benefits
+Added: Facilities and equipment
+Added: Total research and development
+Added: General and administrative
+Added: Net (loss) income
+Added: (1) Primarily includes interest income and expense, foreign currency gains and losses, and income taxes.
+Added: The year ended December 31, 2023 includes a $ 34.0 million gain on debt extinguishment related to forgiveness of the Singapore Loan.
Related Party Transactions
−Removed: On December 13, 2022, Vallon Pharmaceuticals, Inc.
−Removed: (“Vallon”) entered into an agreement with GRI Bio, Inc.
−Removed: (“GRI Bio”) pursuant to which GRI Bio was to merge with a wholly-owned subsidiary of Vallon in an all-stock transaction.
−Removed: The transaction closed in April 2023 and the Company's executive resigned from the board of directors of Vallon.
−Removed: Following the closing of the merger, the combined company now operates under the name “GRI Bio, Inc.” and will focus on the development of GRI Bio’s pipeline and trade on the Nasdaq under the ticker symbol “GRI”.
−Removed: Following the closing of the merger, the Company holds 28,125 shares in GRI Bio, or approximately 1 %.
−Removed: Upon the closing of the merger, the Company determined that it did not have the ability to exercise significant influence over operating and financial policies of GRI Bio.
−Removed: As such, the Company discontinued the equity method of accounting for its investment in GRI Bio.
See “ Note 2, Joint Ventures, Equity Method Investments and Variable Interest Entities ” for specific details surrounding the Company’s agreement with Axcelead to form the joint venture entity, ARCALIS, Inc.
1 unchanged sentence
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.