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Item 2. Management’s Discussion and Analysis

2025-05-12 compared with 2024-11-07 · 158 added, 204 removed, 105 unchanged (78% of the section changed)

1 unchanged sentence

The following is a discussion of the financial condition and results of operations of Arcturus Therapeutics Holdings Inc.

for the three- and nine-month periods ended September 30, 2024.

for the three-month period ended March 31, 2025.

Unless otherwise specified herein, references to the “Company,” “Arcturus,” “we,” “our” and “us” mean Arcturus Therapeutics Holdings Inc.

9 unchanged sentences

You should also review the factors and risks we describe in the reports we will file or submit from time to time with the Commission after the date of this report.

We are a commercial messenger RNA medicines company focused on the development of infectious disease vaccines and opportunities within liver and respiratory rare diseases.

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

Our proprietary self-amplifying mRNA technology (STARR ® technology) has been demonstrated to be longer lasting and broader response at lower dose levels than conventional mRNA.

In 2023, our COVID-19 vaccine, ARCT-154 (also referred to as KOSTAIVE ® ), received marketing authorization approval in Japan, and in September 2024 KOSTAIVE became the world’s first approved and commercially available self-amplifying RNA (sa-mRNA) vaccine.

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

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

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

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

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

We developed the world’s first approved self-amplifying messenger RNA (sa-mRNA) vaccine, KOSTAIVE®(“KOSTAIVE”).

KOSTAIVE achieved approval in Japan in 2023 as a vaccine against COVID-19.

Sales of KOSTAIVE began in Japan in October 2024, marking our transition to a commercial stage company.

We have several key platform technologies that we leverage to develop and advance a pipeline of mRNA-based vaccines and therapeutics for infectious diseases and for rare genetic disorders with significant unmet medical needs.

Current mRNA medicines have two critical components:

the messenger RNA (“mRNA”) constructs and the lipid nanoparticles (“LNP”) which help deliver the mRNA to disease-relevant target tissues.

We have extensive expertise in the design and optimization of mRNA constructs, including with respect to a type of mRNA technology known as self-amplifying mRNA (sa-mRNA).

Our proprietary self-amplifying mRNA technology platform, or STARR® (“STARR”), has been demonstrated to induce a longer-lasting and broader humoral immune response at lower dose levels than conventional mRNA-based vaccines.

Our proprietary LNP delivery system, LUNAR® (“LUNAR”), is intended to address the major hurdle in RNA drug development, namely the effective and safe delivery of RNA therapeutics to disease-relevant target tissues.

LUNAR may enable multiple nucleic acid medicines.

Finally, we have significant expertise and valuable know-how in the development and scalability of complex and robust manufacturing processes required to deliver the next generation of nucleic acid medicines.

Our internal pipeline includes RNA therapeutic candidates to potentially treat ornithine transcarbamylase (OTC) deficiency and cystic fibrosis (CF), both rare diseases.

Given current market conditions, we have made a strategic decision to streamline resources to focus on our mRNA therapeutics pipeline.

In our vaccine program, we have partnered with Seqirus, Inc.

(“CSL Seqirus”), a part of CSL Limited and one of the world’s leading influenza vaccine providers, on the development and commercialization of mRNA vaccines for COVID-19, influenza and certain other infectious diseases.

Business Updates

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

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

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

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

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

In November 2023, KOSTAIVE ® , a self-amplifying messenger RNA (sa-mRNA) vaccine, received marketing authorization approval from the Japanese Ministry of Health, Labour and Welfare for use as a primary immunization and booster in Japan for adults 18 years and older.

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

KOSTAIVE ® is the brand name approved in Japan for ARCT-154, which is the version of the sa-mRNA COVID vaccine encoding the ancestral strain of SARS-CoV-2, and for updated variant-specific versions of this vaccine.

We may use KOSTAIVE or the specific internally generated name, such as ARCT-154, ARCT-2302 and ARCT-2303, to identify the vaccine.

In September 2024, we announced that Japan’s Ministry of Health, Labor and Welfare (MHLW) granted approval and authorization for an updated version of KOSTAIVE, targeted to protect against the JN.1 lineage of Omicron subvariants for adults 18 years of age and older.

CSL’s exclusive partner in Japan, Meiji Holdings Co., Ltd (“Meiji”) began distributing the updated vaccine in Japan in October 2024, marking the world’s first commercially available sa-mRNA COVID-19 vaccine for adults 18 and older.

The approval was based on manufacturing data demonstrating the quality and consistency of the vaccine product, non-clinical immunogenicity data against JN.1 lineage of Omicron subvariants of KOSTAIVE (JN.1), and clinical evidence supporting the safety and immunogenicity of KOSTAIVE (bivalent, BA.4/5 and ancestral strain).

The European Medicines Agency (EMA) is currently reviewing a marketing authorization application for ARCT-154.

The review procedure started on August 17, 2023.

Earlier this year, CSL Seqirus’ partner Meiji Seika Pharma announced that it submitted a partial change application for an amendment to the manufacturing and marketing approval of KOSTAIVE ® to include manufacturing sites in Japan, including ARCALIS, Inc., Arcturus’ manufacturing joint venture in Japan.

Meiji Seika Pharma will begin selling domestically produced KOSTAIVE ® this season.

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

In November 2023, KOSTAIVE received marketing authorization approval from the Japanese Ministry of Health, Labour and Welfare for use as a primary immunization and booster in Japan for adults 18 years and older.

Commercial sales of KOSTAIVE began in Japan in October 2024 by Meiji Seika Pharma (“Meiji”), CSL Seqirus’ exclusive partner in Japan.

KOSTAIVE® is the brand name approved in Japan and Europe for ARCT-154, which is the version of the sa-mRNA COVID vaccine encoding the ancestral strain of SARS-CoV-2, and for updated variant-specific versions of this vaccine.

We may use KOSTAIVE or the specific internally generated name, such as ARCT-154, to identify the vaccine.

In January 2025, CSL Seqirus’ partner Meiji announced that it received approval for a partial amendment to the manufacturing and marketing approval of KOSTAIVE to include manufacturing sites in Japan.

With this approval, Meiji and ARCALIS, Inc., Arcturus’ manufacturing joint venture in Japan, have been added as manufacturing sites.

As a result, KOSTAIVE, with active pharmaceutical ingredients manufactured at such sites, may be shipped for commercial use in Japan.

Approval of KOSTAIVE (ARCT-154) in Europe

In February 2025, the European Commission granted marketing authorization for KOSTAIVE (ARCT-154) for individuals 18 years of age and older.

The European Commission approval follows a positive opinion adopted by the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) on December 12, 2024.

The centralized marketing authorization of KOSTAIVE provided by the EC is valid in all 27 European Union (EU) member states and 3 additional European Economic Area (EEA) countries summarized here:

Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, The Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.

The approval of KOSTAIVE in Europe, as well as the approval in Japan, are significant milestones, which further validate our LUNAR and STARR platforms, as well as sa-mRNA more generally as a meaningful modality.

Clinical Studies of KOSTAIVE (COVID-19 vaccine)

In connection with our collaboration with CSL Seqirus, we continue to collect data from the various ongoing studies described below.

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

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

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

The study met all primary and secondary immunogenicity endpoints, including a secondary pre-defined superiority assessment over COMIRNATY ® (Omicron BA.4/5 strain).

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

On February 1, 2024, the journal Lancet Infectious Diseases published the article ‘Persistence of immune responses of a self-amplifying RNA COVID-19 vaccine (ARCT154) versus BNT162b2’ (https://www.thelancet.com/journals/laninf/article/PIIS1473-3099(24)00060-4/fulltext), with six-month follow-up results from this study.

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

On September 30, 2024, we announced results from this study demonstrating that ARCT-154 maintained superior immunogenicity compared to the conventional mRNA vaccine (COMIRNATY) for up to 12 months against Wuhan-Hu-1, Omicron BA.4-5 and certain other COVID-19 variants, and at one-sixth the dose of the comparator (5µg vs 30µg, respectively).

In October 2024, Lancet Infectious Diseases published the follow-up article ‘12-month persistence of immune responses to self-amplifying mRNA COVID-19 vaccines:

ARCT-154 versus BNT162b2 vaccine’ ( https://www.thelancet.com/journals/laninf/article/PIIS1473-3099(24)00615-7/fulltext ), which confirmed a better neutralizing immune response against a panel of SARS-CoV-2 strains in pre-immunized Japanese adults boosted with ARCT-154 compared with the conventional mRNA vaccine, BNT162b2, which persisted up to 12 months post-vaccination, including in those age 50 years and older.

Phase 3 Study of Bivalent Version of COVID-19 KOSTAIVE in Japan

On September 29, 2023, Meiji initiated an additional Phase 3 clinical study with ARCT-2301, a bivalent version of KOSTAIVE (ancestral strain and Omicron BA.4/5) to further support immunogenicity and safety data for our self-amplifying mRNA platform, which may facilitate the timely release of future seasonal updates of our COVID-19 vaccine against evolving variants of concern.

On March 19, 2024, Meiji announced that the bivalent vaccine met the primary study endpoint (non-inferiority).

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

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

Both the geometric mean titer (GMT) ratio and seroresponse rate (SRR) difference of neutralizing antibodies against SARS-CoV-2 (Omicron BA.4/5 and Wuhan strains) met pre-specified non-inferiority and superiority criteria versus COMIRNATY.

There were no causally-associated severe or serious adverse events with ARCT-2301.

In September 2024, we announced 6-month immunogenicity and safety results from this study.

As with the monovalent vaccine, the bivalent sa-mRNA formulation demonstrates superior immunogenicity over the conventional bivalent mRNA vaccine

COMIRNATY, a higher immune response persisting up to six months after a booster dose, and improved breadth, supporting the robustness of the sa-mRNA vaccine platform for future vaccine strain updates.

The study results were presented at OPTIONS XII for the Control of Influenza conference in Brisbane, Australia, in September 2024.

Phase 3 Study in Southern Hemisphere of KOSTAIVE (Monovalent XBB1.5)

In March 2024, Arcturus and CSL Seqirus initiated a Phase 3 pivotal study with the ARCT-2303 candidate vaccine containing the XBB1.5 Omicron variant.

The study aims to generate additional immunogenicity and safety data in multiple ethnicities to support regulatory filings in the US and globally.

In addition, the study will assess the co-administration of the ARCT-2303 vaccine with the age-appropriate seasonal influenza vaccines.

Overall, 1,499 young and older adults were recruited in the study in Australia, Costa Rica, Honduras and the Philippines.

The study results show that all four primary study objectives and key secondary study objectives were met.

ARCT-2303 demonstrated superior immune response compared to ARCT-154 as measured by neutralizing antibodies against Omicron XBB.1.5 in terms of GMT ratio and SCR difference.

Co-administration of ARCT-2303 and quadrivalent influenza vaccine (QIV;

Flucelvax, CSL) in adults 18-64 years old showed noninferior immune response compared to standalone QIV.

Co-administration of ARCT-2303 and QIV also showed noninferior immune response compared to standalone ARCT-2303.

Co-administration of ARCT-2303 and adjuvanted QIV (Fluad, CSL) in adults 65 years of age and above showed similar results for co-administered and separately administered groups.

The safety and reactogenicity of co-administered vaccines were comparable with standalone administration.

No safety concerns were raised based on the study results.

Seasonal Flu Collaboration Program Updates

Our LUNAR-qsFLU (qs;

quadrivalent seasonal) program, now exclusively licensed to CSL Seqirus, has the objective of producing a safe and effective seasonal influenza vaccine candidate with significant advantages over the traditional egg-based inactivated quadrivalent vaccine.

Inaccurate predictions of circulating influenza strains as well as mutations due to adaptation in egg-grown vaccines can substantially reduce efficacy on a year-to-year basis.

We believe the ability of mRNA platforms to nimbly adapt to new viral strains should help improve efficacy.

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

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

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

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

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

Pandemic Influenza Program

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

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

A pre-IND meeting was

granted, and a Written Response Only (“WRO”) was received for integration into future development plans.

Nonclinical safety studies have been completed that will enable the Phase 1 clinical trial.

The IND application was submitted on October 9, 2024.

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

In connection with our collaboration with CSL Seqirus, we continue to collect data from various ongoing studies.

See the 2024 Annual Report for a description of studies.

Recent KOSTAIVE Publications

In April 2025, we published a comprehensive analysis of safety data for KOSTAIVE®, with a 12-month follow-up from the pivotal clinical study in Vietnam (NCT05012943), which had 17,582 participants who received at least one dose of the study vaccine (https://doi.org/10.1080/14760584.2025.2487542).

The study confirmed the favorable reactogenicity profile.

Acceptable tolerability of ARCT-154 was also observed in older participants and in those liable to severe consequences of COVID-19 due to underlying medical conditions.

ARCT-154 is the version of KOSTAIVE encoding the ancestral strain of the COVID-19 virus.

Long-term follow-up has not revealed any safety concerns, with no reports of myocarditis or pericarditis.

No serious consequences occurred in several pregnancies reported after vaccination.

Long-term data from this large trial suggest that the sa-mRNA COVID-19 vaccine (ARCT-154;

KOSTAIVE) is safe and well-tolerated.

In April 2025, our Japanese partner, Meiji, published an analysis characterizing the distribution and clearance of ARCT-154 encoded spike protein and non-structural proteins nsP1, nsP2, nsP3 and nsP4 in the lymph nodes and injection-site muscle in mice following a single vaccination.

The study showed the encoded spike protein reached its highest level approximately three days after vaccination and quickly disappeared from the injection site muscle.

The spike protein levels also peaked at an early time point in the lymph nodes, it remained detectable 28 days after the vaccination and disappeared by 44 days after the vaccination.

Expression of nsP1, nsP2 and nsP4 was observed in the injected muscle and/or the lymph nodes for up to 15 days post-vaccination.

The data indicates that the extended expression of spike proteins in lymph nodes may be responsible for the induction of higher and prolonged levels of neutralizing antibodies.

The study also confirmed that the self-replication is limited over time.

Seasonal Influenza Program Updates

A Phase 1 dose-finding safety and immunogenicity study was initiated in January 2024 in Australia and completed recruitment of 132 young and older participants.

The immunological testing and assessment of the study results are ongoing.

Pandemic Avian Influenza Program (H5N1 Influenza) Updates

Our LUNAR-H5N1 program, which is part of the CSL Collaboration Agreement, continues to progress under the award from BARDA that we obtained in 2022 to advance through Phase 1 a vaccine to protect against disease caused by H5N1 highly-pathogenic avian influenza.

The Phase 1 study of ARCT-2304, an sa-mRNA vaccine candidate, also known as LUNAR-H5N1, initiated dosing in December 2024 and continues to advance.

We recently completed the recruitment of 212 adults (132 participants 18-59 years old;

80 participants 60+ years old) for the randomized placebo-controlled Phase 1 trial (NCT06602531), which is being conducted at multiple sites in the U.S.

The primary objective of this initial clinical trial is to evaluate the safety and immune responses of three different dose levels and two different vaccination schedules of the ARCT-2304 vaccine.

Immune responses are measured by hemagglutination inhibition (HAI), virus microneutralization (MN) and neuraminidase enzyme-linked lectin assays (ELLA).

The recruitment in this study was completed in April 2025.

In April 2025, the U.S.

Food and Drug Administration (“FDA”) granted Fast Track Designation for ARCT-2304.

This designation recognizes the potential of ARCT-2304 as an innovative approach to address unmet medical needs for the prevention of disease caused by pandemic influenza A virus H5N1, a significant global health risk.

Fast Track Designation from the FDA is granted to vaccines intended to prevent serious conditions caused by infectious diseases.

The designation is designed to expedite the

development and review process, providing several benefits, including enhanced communication with the FDA, eligibility for priority review, and the possibility of a rolling review.

Key Updates on Arcturus-Owned mRNA Therapeutic Development Candidates

The following chart represents our current pipeline of Arcturus-owned mRNA therapeutic candidates:

• LUNAR-OTC/ARCT-810

o A Phase 1b study in stable OTC-deficient adults was completed in the United States in September 2023.

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

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

ARCT-810 was generally safe and well tolerated at doses ranging from 0.1-0.5mg/kg and no serious or severe adverse events were observed.

Sporadic infusion-related reactions (IRRs) were managed with symptomatic treatment and appeared to be less frequent with slower infusion rates.

In plasma, ARCT-810 mRNA could be detected up to 4 weeks, while ionizable lipid was no longer measurable after 48 hours, indicating rapid degradation of the lipid nanoparticle that was utilized to deliver ARCT-810 mRNA.

Study results were presented at the Society for Inherited Metabolic Disorders meeting in Charlotte, North Carolina in April 2024 and at the annual symposium for the Society for the Study of Inborn Errors of Metabolism in Porto, Portugal in August 2024.

o A Phase 2 double-blind study of ARCT-810 in OTC-deficient adolescents and adults in the European Union and United Kingdom completed dosing of eight subjects in August 2024 at the 0.3 mg/kg dose level.

The participants in this group were randomized 3:1 to receive 6 doses of ARCT-810 or placebo administered every 14 days, and follow-up is ongoing.

o We are expanding the Phase 2 clinical program of ARCT-810 to the U.S.

with an open-label, multiple-dose study to evaluate pharmacodynamics and safety in adult and adolescent patients requiring clinical management for OTC-deficiency.

The study is currently recruiting patients.

o ARCT-810 was granted Orphan Drug Designation in June 2019, Fast Track Designation in May 2023, and Rare Pediatric Disease Designation in June 2023 by the FDA, and Orphan Medicinal Product Designation in August 2022 by the European Commission (EC).

• LUNAR-CF/ARCT-032 – Our program for cystic fibrosis is being supported in part by the Cystic Fibrosis Foundation (“CFF”).

• LUNAR-CF/ARCT-032 .

Our program for cystic fibrosis is being supported in part by the Cystic Fibrosis Foundation (“CFF”).

In 2023, we initiated and successfully completed a safety and tolerability Phase 1 single ascending dose study of ARCT-032 (LUNAR-CF), our mRNA therapeutic candidate for cystic fibrosis (CF).

Thirty-two healthy participants (eight subjects in each of four dose cohorts) received a single inhaled dose of ARCT-032.

A subsequent protocol amendment to transition to a safety and tolerability Phase 1b clinical study of ARCT-032 in adults with CF received regulatory approval in August 2023 and completed dosing and follow-up visits for 7 CF participants in August 2024, with each CF participant having received two administrations of ARCT-032 separated by two days.

o In the Phase 1/1b clinical study, ARCT-032 was generally safe and well tolerated in healthy volunteers and in the participants with CF.

Of the seven total CF participants in the Phase 1b study, six were being treated with CFTR modulators while one subject had Class I mutations that do not benefit from modulator therapy.

No serious or severe adverse events (SAEs) were observed, and the safety profile was similar between healthy volunteers and CF participants.

Mild, transient events of elevated temperature or feeling hot accompanied by other nonspecific symptoms were observed at dose levels that are higher than those planned for the Phase 2 study.

In the CF subjects, lung function measured over 8 days did not demonstrate a discernable pattern or safety concern after 2 doses of

Preliminary findings from the study were presented at the European CF Society Conference in June 2024 in Glasgow, Scotland, and at the North American CF Conference in September 2024 in Boston, MA.

o We submitted an IND application at the end of July 2024, and on August 29, 2024, the FDA issued a “Study May Proceed” notification for an ARCT-032 Phase 2 multiple ascending dose study designed to identify a safe and effective dose in Class I (null) and other CF participants who do not benefit from CFTR modulators.

This study is supported by safety and tolerability data collected in healthy volunteers (N = 32) and the two-administration Phase 1b study.

o In February 2024, the European Commission (EC), based on a positive opinion issued by the European Medicines Agency (EMA), granted Orphan Medicinal Product Designation for ARCT-032 to treat CF.

ARCT-032 was granted Rare Pediatric Disease Designation in October 2023, and Orphan Drug Designation in November 2023 by the FDA.

Updates on Research and Platform Activities

We continue to invest and improve our LUNAR-lipid mediated delivery of mRNA with continuous improvements in our mRNA and sa-mRNA platforms in conjunction with improvements in our next generation proprietary lipids to improve targeting, efficacy and safety profiles for both our vaccine and therapeutic protein platforms.

This investment has led to key innovations ensuring that our LUNAR formulated drug product candidates have optimal characteristics for therapeutic use, which we believe sets us apart from other nucleic acid therapeutics and lipid-mediated delivery platforms.

As such, we consider ourselves a leader in the research and development of mRNA therapeutics for multiple indications.

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

Discovery Programs – Vaccine Programs (Lyme Disease and Gonorrhea)

Based on the clinical and regulatory validation of LUNAR and STARR technologies provided by the approval of KOSTAIVE, a self-amplifying messenger RNA (sa-mRNA) vaccine for COVID-19, we initiated new vaccine discovery programs earlier this year for Lyme disease and gonorrhea and continue to progress such programs.

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

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

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

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

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

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

Updates on Supply and Manufacturing

We have built a global manufacturing footprint with our partners, including Aldevron, Catalent, Recipharm, Polymun and ARCALIS.

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

As the market for COVID vaccines shifts from multi-dose vial to lower and single-dose vial presentation, we continue, with our collaborator CSL Seqirus, to evaluate and pursue different forms of drug product presentations, advance manufacturing process and capabilities and technology transfers, and prepare for stockpiling and commercialization of COVID vaccines.

A subsequent protocol amendment to transition to a safety and tolerability Phase 1b clinical study of ARCT-032 in adults with CF received regulatory approval in August 2023 and completed dosing and follow-up visits for seven CF participants in August 2024, with each CF participant having received two administrations of ARCT-032 separated by two days.

o We are advancing enrollment in our ARCT-032 Phase 2 multiple ascending dose study to identify a safe and effective dose in Class I (null) and other CF participants who do not benefit from CFTR modulators.

IND including Phase 2 protocol was allowed to proceed in August 2024.

We initiated dosing in the study in US in December 2024.

This study is supported by safety and tolerability data collected in healthy volunteers (N = 32) and the two-administration Phase 1b study in CF adults.

Each participant in the Phase 2 CF study (NCT06747858) is expected to receive daily treatments of ARCT-032 over a period of 28 days.

• LUNAR-OTC/ARCT-810 .

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

o In June 2024, we expanded the Phase 2 clinical program of ARCT-810 to the U.S.

with an open-label, multiple-dose study to evaluate pharmacodynamics and safety in adult and adolescent patients requiring clinical management for OTC-deficiency.

The first OTC deficient participant receiving 0.5mg/kg of ARCT-810 initiated dosing in December 2024.

We continue to enroll participants in the study.

Each participant is expected to receive five intravenous infusions administered over two months.

We previously completed the dosing phase (N=8;

0.3 mg/kg) of a placebo-controlled European Phase 2 double-blind study enrolling OTC deficient individuals.

Results of Operations

1 unchanged sentence

Our historical results of operations and the year-to-year comparisons of our results of operations that follow are not necessarily indicative of future results.

We enter into arrangements with pharmaceutical and biotechnology partners and government agencies that may contain upfront payments, license fees for research and development arrangements, research and development funding, milestone payments, option exercise and exclusivity fees, royalties on future sales, consulting fees and payments for technology transfers.

We expect that sales of KOSTAIVE ® by Meiji Holdings Co., Ltd, CSL’s partner in Japan will commence in the fourth quarter of 2024 in Japan.

However, revenues for us will be subject to a profit sharing mechanism whereby development costs are deducted from sales revenues prior to any distribution to the Company.

The following table summarizes our total revenues for the periods indicated:

Three Months Ended September 30,

(in thousands)

Revenue decreased by $3.5 million during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

The decline was mostly attributable to a lower milestone achievement from the CSL agreement during the third quarter of 2024.

This decrease was offset by revenue recognized from a supply agreement related to the commercial production of KOSTAIVE ® and an increase in revenue from the BARDA agreement during the three months ended September 30, 2024.

Nine Months Ended September 30,

Three Months Ended March 31,

Change 2025 vs 2024

(in thousands)

Revenue decreased by $6.4 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The decrease was due to the timing and value of milestone achievements and the achievement of a conditional payment during the nine months ended 2023, offset by revenue from supply agreements during the current year.

Additionally, there was a decrease in revenue recognized under other agreements during the nine months ended September 30, 2024 due to lower activity or completion of collaboration agreements.

The total decrease in revenue was offset by an increase in revenue recognized from the BARDA Contract.

Operating expenses

Revenue decreased by $8.6 million during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

The decrease during the three months ended March 31, 2025 primarily relates to a $6.9 million decrease in revenue related to the CSL Collaboration Agreement, primarily caused by smaller milestone achievements and less amortization as KOSTAIVE transitions from a development program to the commercial phase.

The remaining decrease is due to a $1.7 million decrease in revenue related to the BARDA Contract as well other revenue agreements.

Operating Expense

Our operating expenses consist of research and development and general and administrative expenses.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Change 2025 vs 2024

(in thousands)

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The following table presents our total research and development expenses by category:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Change 2025 vs 2024

(in thousands)

External pipeline development expenses:

LUNAR-COVID, net

LUNAR-OTC, net

LUNAR-CF, net

Early-stage programs

Discovery technologies

External platform development expenses:

Personnel related expenses

Facilities and equipment expenses

Payroll and benefits

Facilities and equipment

Total research and development expenses, net

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Our research and development expenses consist primarily of external manufacturing costs, in-vivo research studies and clinical trials performed by contract research organizations, clinical and regulatory consultants, personnel related expenses, facility related expenses and laboratory supplies related to conducting research and development activities.

Research and development expenses were $39.1 million for the three months ended September 30, 2024, compared with $51.1 million for the three months ended September 30, 2023.

The decrease was due to high manufacturing expenses in 2023 for Meiji supply batches and other clinical trial batches which were not incurred in 2024.

The decrease was also due to lower facilities and equipment expenses in 2024.

This was offset by an increase in clinical trial related expenses.

Research and development expenses for the nine months ended September 30, 2024 were $151.4 million compared with $155.5 million for the nine months ended September 30, 2023.

The decrease was due to lower manufacturing expenses in 2023 for Meiji supply batches and other clinical trial batches which were not incurred in 2024.

Additionally, there was a decrease in consulting expenses as well as facilities and equipment expenses in 2024.

This was offset by increased clinical related expenses for the COVID program and increased personnel related expenses in 2024.

Research and development expenses were $34.9 million for the three months ended March 31, 2025, compared with $53.6 million for the three months ended March 31, 2024, primarily reflecting a decrease in manufacturing costs related to the LUNAR-COVID and LUNAR-FLU programs, offset by an increase in clinical and manufacturing costs related to the LUNAR-CF and LUNAR-OTC programs as we have shifted our focus to our clinical stage programs.

The remaining decrease is primarily attributable to a decrease in payroll and benefits costs and a decrease in facilities and equipment costs.

We expect that our research and development efforts and associated costs will continue to be substantial over the next several years as our pipeline progresses.

Early-stage programs represent programs that are in the pre-clinical or Phase 1 clinical stage and may be partnered or unpartnered, including the LUNAR-CF and LUNAR-FLU programs.

Early-stage programs represent programs that are in the pre-clinical or Phase 1 clinical stage and may be partnered or unpartnered, and primarily includes the LUNAR-FLU program which is partnered with CSL Seqirus.

Discovery technologies represent our efforts to expand our product pipeline and are primarily related to pre-partnered studies and new capabilities assessment.

For some of our programs, the activities are part of our collaborative and other relationships, and the expenses may be partially offset with funds that have been awarded to the Company.

The expenses for early-stage programs and discovery technologies primarily consist of external manufacturing costs, lab supplies, equipment, and consulting and professional fees.

Early-stage programs and discovery technologies expenses are expected to steadily increase over the coming years.

Personnel related expenses primarily consist of employee salaries and benefits, share-based compensation and consultants.

Although such expenses increased during 2024 as compared to 2023, we expect that they will not increase over the next twelve months.

Facilities and equipment expenses primarily consist of rent expenses, common area maintenance charges, shipping costs, various costs of our offices and laboratories and depreciation expenses.

A few of our programs are part of our collaborative relationships.

The related expenses may be partially offset with funds that have been reimbursed or awarded to the Company and consist of external manufacturing costs, lab supplies, equipment, and consulting and professional fees.

Expenses for both early-stage programs and discovery technologies are expected to decrease as we shift our focus to later-stage programs.

Payroll and benefits primarily consists of employee salaries and benefits, share-based compensation and consultant costs.

We expect that payroll and benefits costs will not increase over the next twelve months due to reduced share-based compensation expense.

Facilities and equipment expenses include rent, common area maintenance (“CAM”) costs, depreciation, shipping costs and various other costs related to the operation of our two office and laboratory locations.

These costs decreased during the first quarter of 2025 as compared to the first quarter of 2024, as we downsized from three to two facilities.

Facilities and equipment expenses are not expected to increase during the next twelve months.

General and Administrative Expenses

General and administrative expenses primarily consist of salaries and related benefits for our executive, administrative, legal and accounting functions and professional service fees for legal and accounting services as well as other general and administrative expenses.

General and administrative expenses were $13.3 million for the three months ended September 30, 2024 compared with $13.4 million for the three months ended September 30, 2023.

The decrease in general and administrative expenses was attributable to decreased personnel expenses, partially offset by increased legal and other professional expenses, facilities expenses and other various general and administrative expenses.

General and administrative expenses for the nine months ended September 30, 2024 remained consistent compared to the nine months ended September 30, 2023.

The Company expects that general and administrative expenses will remain relatively consistent over the next fiscal year with the current pipeline.

General and administrative expenses consist primarily of salaries and related benefits for our executive, administrative and accounting functions and professional service fees for legal and accounting services as well as other general and administrative expenses.

General and administrative expenses were $11.3 million for the three months ended March 31, 2025, compared with $14.9 million for the three months ended March 31, 2024.

The decrease in general and administrative expenses was primarily attributable to reduced share-based compensation costs.

Finance income (expense), net

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Change 2025 vs 2024

(in thousands)

Interest income

Interest expense

Interest income is generated on cash and cash equivalents.

The decrease in interest income for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was primarily the result of decreased interest earned on investment accounts.

The increase in interest income for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 was primarily the result of increased interest earned on investment accounts caused by higher interest rates.

Interest expense during the nine months ended September 30, 2023 was incurred in connection with the Western Alliance Agreement and the Singapore Loan, both of which have since been terminated.

Other income and expense

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

(Loss) gain from foreign currency

Gain on debt extinguishment

* Greater than 100%

Other income and expense items primarily relate to gains and losses from foreign currency transactions.

Additionally, we recorded a gain on debt extinguishment related to the Singapore Loan of $34.0 million during the first quarter of 2023 as a result of the Singapore Loan being forgiven.

The decrease in interest income for the three months ended March 31, 2025 as compared to the comparable period last year was primarily the result of lower interest rates and a decrease in cash and cash equivalents during the three months ended March 31, 2025.

Off-balance sheet arrangements

Through September 30, 2024, we have not entered into and did not have any relationships with unconsolidated entities or financial collaborations, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Through March 31, 2025, we have not entered into and did not have any relationships with unconsolidated entities or financial collaborations, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Liquidity and Capital Resources

From the Company’s inception through the quarter ended September 30, 2024, the Company has funded its operations principally with the proceeds from the sale of capital stock, long-term debt and revenues earned through collaboration agreements and government contracts.

Through the third quarter of 2024, we have achieved a total of approximately $462.1 million in upfront payments and milestones from CSL Seqirus, including a milestone of $25.0 million achieved in the current quarter with payment anticipated in the fourth quarter of 2024.

At September 30, 2024, we had $294.1 million in cash and cash equivalents and restricted cash.

From the Company’s inception through the quarter ended March 31, 2025, the Company has funded its operations principally with the proceeds from revenues earned through collaboration agreements and government contracts, the sale of capital stock and long-term debt.

Through the first quarter of 2025, we have achieved a total of approximately $488.1 million in upfront payments and milestones from CSL Seqirus, including milestones of $15.0 million achieved in the current quarter.

We expect to receive future payments from CSL Seqirus primarily by meeting future milestones related to the CSL Collaboration Agreement.

As of March 31, 2025, the Company’s balance of cash and cash equivalents, including restricted cash, was $273.8 million.

CSL Seqirus, Inc.

Collaboration and License Agreement

We entered into the CSL Collaboration Agreement with CSL Seqirus, a part of CSL Limited, one of the world’s leading influenza vaccine providers, for the global exclusive rights to research, develop, manufacture and commercialize mRNA vaccines.

CSL Seqirus received exclusive global rights to our technology for vaccines against SARS-CoV-2 (COVID-19), influenza and three other respiratory infectious diseases and non-exclusive rights to pandemic pathogens.

In 2022, we entered into the CSL Collaboration Agreement with CSL Seqirus, a part of CSL Limited, one of the world’s leading influenza vaccine providers, for the global exclusive rights to research, develop, manufacture and commercialize mRNA vaccines.

CSL Seqirus received exclusive global rights to our technology for vaccines against SARS-CoV-2 (COVID-19), influenza and three other infectious diseases with non-exclusive rights to pandemic pathogens.

We received an up-front payment of $200.0 million during the fourth quarter of 2022.

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Wells Fargo Credit Agreement

On April 21, 2023, our wholly-owned subsidiary, Arcturus Therapeutics, Inc.

entered into a credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”) whereby Wells Fargo agreed to make a $50.0 million revolving credit line available to the Company (the “Wells Fargo Loan”) and each Wells Fargo Loan evidenced by a revolving line of credit note (the “Note”).

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 Wells Fargo 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.

On April 21, 2023, the Company’s wholly-owned subsidiary, Arcturus Therapeutics, Inc.

entered into a credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”) whereby Wells Fargo agreed to make a $50.0 million revolving credit line available to the Company (as amended, the “Wells Fargo Loan”) with each Wells Fargo Loan evidenced by a revolving line of credit note (each, a “Note”).

On June 26, 2024, the parties entered into Amendment No.

1 to the Wells Fargo Loan, whereby the term was

extended by one year to April 2026.

During the three months ended March 31, 2025, we drew down $15.0 million which was subsequently repaid in April 2025.

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 Wells Fargo Loan), 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 credit agreement) occurs, then all Wells Fargo 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.

As of September 30, 2024, no borrowings were made against the Wells Fargo Note.

The term of the agreement was originally 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 Wells Fargo Loan amount for each such renewal.

In June 2024, Arcturus Therapeutics and Wells Fargo entered into an amendment to the Note, whereby the term of the Note was extended by one year to April 2026.

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 Wells Fargo Loan amount for each such renewal.

There is no penalty for terminating the agreement.

There is no penalty for terminating the facility prior to the maturity date of the Wells Fargo Note.

As collateral, we agreed to pledge $55.0 million in cash to be held in our securities accounts with Wells Fargo Securities, LLC, an affiliate of Wells Fargo, pursuant to a security agreement.

There is no penalty for terminating the facility prior to the maturity date of the Wells Fargo Loan.

As collateral, the Company has agreed to pledge $55.0 million in cash to be held at the Company’s securities accounts with Wells Fargo Securities, LLC, an affiliate of Wells Fargo, pursuant to a security agreement.

Grant from the Biomedical Advanced Research and Development Authority

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It provides for reimbursement by BARDA of our permitted costs up to $63.2 million.

As of September 30, 2024, the remaining available funding net of revenue earned was $41.6 million.

As of March 31, 2025, the remaining available funding net of revenue earned was $36.1 million.

Vinbiocare Agreement

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In October 2022, in association with the termination of the Vinbiocare License and Supply Agreements, we signed the Vinbiocare Support Agreement with Vinbiocare which continues Vinbiocare’s clinical obligations and reserved a portion of the original $40.0 million upfront payment received from the License and Supply Agreements to be paid over the future periods.

The Vinbiocare Support Agreement requires us to pay Vinbiocare certain limited payments, including upon the occurrence of specified events through the first quarter of 2025.

The Vinbiocare Support Agreement requires us to pay to Vinbiocare certain limited payments, including upon the occurrence of specified events through the first quarter of 2025.

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

General Financial Resources

A portion of our current cash balance is expected to be utilized during fiscal year 2024 to fund (i) advances to our LUNAR-CF program in clinical trials, (ii) the continued Phase 2 trial of ARCT-810, our LUNAR-OTC candidate, (iii) expenses incurred prior to customer payments under the CSL Collaboration Agreement and BARDA Contract and (iv) continued exploratory activities related to our platform and other general administrative activities.

A portion of our current cash balance is expected to be utilized during fiscal year 2025 to fund (i) the continued Phase 2 trial of ARCT-810, our LUNAR-OTC candidate, (ii) advances to our LUNAR-CF program in clinical trials, (iii) expenses incurred prior to customer payments under the CSL Collaboration Agreement and BARDA Contract and (iv) continued exploratory activities related to our platform and other general administrative activities.

Our future capital requirements are difficult to forecast and will depend on many factors that are out of our control.

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We expect to continue to incur additional losses in the long term, and we will need to execute on milestones within the CSL Collaboration Agreement, raise additional debt or equity financing or enter into additional partnerships to fund development.

Our ability to transition to profitability is dependent on executing on milestones within the CSL Collaboration Agreement, successful clinical trials for OTC and CF and identifying and developing successful mRNA drug and vaccine candidates.

If we are not able to

achieve planned milestones or incur costs in excess of our forecasts, we will need to reduce discretionary spending, discontinue the development of some or all of our programs, which will delay part of our development programs, all of which will have a material adverse effect on our ability to achieve our intended business objectives.

Our ability to transition to profitability is dependent on regulatory approvals and subsequent sales of KOSTAIVE, executing on milestones within the CSL Collaboration Agreement and identifying and developing other successful mRNA drug and vaccine candidates.

If we are not able to achieve planned milestones or incur costs in excess of our forecasts, we will need to reduce discretionary spending, discontinue the development of some or all of our programs, which will delay part of our development programs, all of which will have a material adverse effect on our ability to achieve our intended business objectives.

The following table shows a summary of our cash flows for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(in thousands)

Cash provided by (used in):

Operating activities

Investing activities

Financing activities

Net decrease in cash and restricted cash

Operating Activities

Net cash used in operating activities was $35.1 million for the three months ended March 31, 2025, compared to a $5.6 million for the three months ended March 31, 2024.

The increase was primarily driven by a $15.6 million use of cash in accounts receivable due to the timing of invoicing and collections.

It was also impacted by a $15.5 million unfavorable change in both accrued liabilities and accounts payable related to payment timing, and a $5.8 million use of cash in deferred revenue, reflecting the recognition of amounts received under CSL supply agreements.

Additionally, a $3.4 million reduction in non-cash share-based compensation contributed to the higher cash usage.

These factors were partially offset by an $12.7 million improvement in net loss.

Investing Activities

Net cash used in investing activities of $0.1 million for the three months ended March 31, 2025, and $0.2 million for the three months ended March 31, 2024, reflected the acquisition of property and equipment.

Financing Activities

Net cash provided by financing activities was $15.2 million for the three months ended March 31, 2025, compared to a $2.2 million for the three months ended March 31, 2024.

The increase was primarily due to the receipt of $15.0 million in debt proceeds during the current quarter.

Funding Requirements

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We believe that our current cash position will be sufficient to meet our anticipated cash requirements through at least the next twelve months, assuming, among other things, no significant unforeseen expenses and continued funding from partners at anticipated levels.

We intend to seek additional capital through equity and/or debt financings, collaborative or other funding arrangements with partners or through other sources of financing.

We intend to seek additional capital through equity and/or debt financings, collaborative or other funding arrangements with partners or through other sources of financing when and as needed.

Should we seek additional financing from outside sources, we may not be able to raise such financing on terms acceptable to us or at all.

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Our future funding requirements are difficult to forecast and will depend on many factors, including the following:

• the development and commercialization of our LUNAR-COV19 and LUNAR-FLU vaccine candidates;

• the development of our LUNAR-COV19 and LUNAR-FLU vaccine candidates;

• the achievement of milestones under our strategic alliance agreements;

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• the terms and timing of any other strategic alliance, licensing and other arrangements that we may establish, including those with CSL Seqirus and CSL Seqirus’ arrangement with Meiji, and any related payments thereunder;

• the initiation, progress, timing and successful completion of preclinical studies and clinical trials for our product candidates, including OTC and CF;

• the initiation, progress, timing and completion of preclinical studies and clinical trials for our product candidates;

• the number and characteristics of product candidates that we pursue;

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Due to the nature of our cash and cash equivalents, we believe that we are not subject to any material market risk exposure.

We do not have any foreign currency or other derivative financial instruments.

We maintain an immaterial amount of foreign currency, which we do not consider to pose a material risk.

We do not use derivative financial instruments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis