Arcturus Therapeutics Holdings Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 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, 2025. Unless otherwise specified herein, references to the “Company,” “Arcturus,” “we,” “our” and “us” mean Arcturus Therapeutics Holdings Inc. and its consolidated subsidiaries. You should read the following discussion and analysis together with the interim condensed consolidated financial statements and related notes included elsewhere herein. For additional information relating to our management’s discussion and analysis of financial conditions and results of operations, please see our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”), which was filed with the U.S. Securities and Exchange Commission (the “Commission”) on March 6, 2025. Unless otherwise defined herein, capitalized words and expressions used herein shall have the same meanings ascribed to them in the 2024 Annual Report. This report includes forward-looking statements which, although based on assumptions that we consider reasonable, are subject to risks and uncertainties which could cause actual events or conditions to differ materially from those currently anticipated and expressed or implied by such forward-looking statements. This report also includes certain statements based solely on information, reports and studies provided by or conducted by Seqirus, Inc. and Meiji Holdings Co., Ltd or their respective affiliates. You should read this report and the documents that we reference in this report and have filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect. 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. Overview We are a commercial messenger RNA medicines company focused on the development of liver and respiratory rare disease therapeutics and infectious disease vaccines. 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 robust, 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 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. 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 three other infectious diseases. Business Updates Vaccine Collaboration with CSL Seqirus 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 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. 14 Meiji has launched in Japan the two-dose vial of KOSTAIVE updated for the JN.1 variant XEC following receipt of approval, in August 2025, from Japan’s Pharmaceuticals and Medical Devices Agency (PMDA). 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. KOSTAIVE BLA Submission On September 5, 2025, the week prior to the planned Biologics License Application (“BLA”) submission related to KOSTAIVE, the U.S. Food and Drug Administration (the “FDA”) requested that the Company delay its submission of the BLA filing based on the FDA’s expectation of providing additional advice. On October 14, 2025, the FDA informed the Company that, although the FDA had previously agreed that the Company’s proposed data package could support a single-dose indication, upon further consideration it finds that additional data from a clinical endpoint efficacy study will be needed to align with the current COVID-19 vaccine regulatory framework requirements published in The New England Journal of Medicine in May 2025. The Company and CSL Seqirus are evaluating the new requirements. Marketing Authorization Application filing of KOSTAIVE in United Kingdom In June 2025, CSL Seqirus submitted a marketing authorization application (“MAA”) to the UK Medicines and Healthcare Products Regulatory Agency (MHRA) for KOSTAIVE. Although there can be no assurances, approval of the MAA is expected in the first quarter of 2026. Clinical Studies of KOSTAIVE (COVID-19 vaccine) 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 July 2025, we published the manuscript ‘Immunogenicity of ARCT-154, a self-amplifying mRNA COVID-19 vaccine, in different booster settings’ ( https://doi.org/10.1016/j.jvacx.2025.100693 ) where we summarized extensive clinical data and concluded that KOSTAIVE (ARCT-154), administered as a homologous or heterologous booster after previous COVID-19 vaccination or natural exposure, provides robust, broad and durable immune responses against diverse SARS-CoV-2 viruses. In July 2025, a researcher from Tokyo University, Japan, published the manuscript ‘A second-generation, self-amplifying COVID-19 Vaccine: World’s first approval and distribution in the Japanese market with vaccine hesitancy’ ( https://doi.org/10.1080/21645515.2025.2530291 ). The manuscript positions KOSTAIVE as a second-generation mRNA vaccine, differentiating it based on effective dose, durability, and breadth of immune response. It also summarizes the experience from the first year of routine use of the vaccine in Japan. In August 2025, the manuscript ‘Immunogenicity and Safety of Self-Amplifying mRNA COVID-19 Vaccine (ARCT-2303), With or Without Co-Administration of Seasonal Inactivated Influenza Vaccine in Adults: a Phase 3, Randomised, Controlled, Observer-blind, Multicentre Study’ (https://doi.org/10.1016/j.eclinm.2025.103428) was published in eClinicalMedicine. The manuscript includes the results of the recent pivotal Phase 3 clinical study and concludes that KOSTAIVE (ARCT-2303; XBB.1.5 strain) induces a robust immune response against the vaccine variant of SARS-CoV-2 and can be co-administered with licensed influenza vaccines in adults with no impact on the safety or immunogenicity of either vaccine. In August 2025, our Japanese partner, Meiji, announced that it has received manufacturing and marketing approval in Japan for a new presentation of KOSTAIVE ® against COVID-19. The product targets the SARS-CoV-2 Omicron sub lineage JN.1 variant XEC. In non-clinical studies, it induced neutralizing antibodies not only against Omicron JN.1 and XEC, but also against LP.8.1 and the currently circulating variants XFG and NB.1.8.1. The formulation is supplied as a two-dose vial, with one vial per carton. Seasonal Influenza Program Updates Under our collaboration with CSL Seqirus, we conducted a Phase 1 study of ARCT-2138, a sa-mRNA seasonal influenza vaccine candidate encoding haemagglutinin (HA) and neuraminidase (NA) of four seasonal influenza strains as recommended by the 15 World Health Organization (WHO). The study objectives were to evaluate the safety and tolerability and to describe the immune response of different dose levels of the vaccine in 100 young adults (18-49 years of age) and 35 older adults (≥65 years of age). All tested dose levels of ARCT-2138 were immunogenic as measured by hemagglutinin-inhibition assay in both age groups, demonstrating a modest dose-response (≤2.1-fold) within the range of the tested doses (2-20 μg). ARCT-2138 also induced NA-specific antibody response against all four influenza strains in all tested dose levels in both age groups. In both age categories, HA- and NA-specific antibodies demonstrated a good persistence profile within 6 months post-vaccination. ARCT-2138 was associated with a dose-dependent increase in the number of activated CD4+ T-cells, more prominent in the higher dose groups. Most CD4 T-cells induced by the ARCT-2138 vaccine produced cytokines important for an antiviral response. The higher vaccine doses kept elevated levels of flu-specific CD4 T-cells through Day 91, outperforming two licensed influenza vaccines. There is also a signal of potential CD8+ activation, as the number of HA- and NA-specific CD8+ T-cells increased after vaccination, indicating the induction of an anti-viral cytotoxic T cell response by the vaccine. In younger and older adults, the higher dose levels (12 μg and 20 μg) of ARCT-2138 tended to be more reactogenic than the comparator licensed influenza vaccines. Most solicited adverse events were reported within 24 hours after vaccination and resolved within 2-4 days. The frequencies of unsolicited adverse events and medically attended adverse events appeared to be comparable between ARCT-2138 and comparator vaccines. No major safety concerns were raised from the study results. Overall, the study showed the potential of a self-amplifying mRNA vaccine, encoding eight antigens, to induce an immune response in both young and older adults with a dose as low as 2 μg, and was tolerable across a dose range of 2 to 20 μg. 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 a candidate vaccine to protect adults against disease caused by H5N1 highly pathogenic avian influenza. The BARDA funds the development program from the preclinical stage through Phase 1. In April 2025, the 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. Our Phase 1 study of ARCT-2304, an sa-mRNA pandemic influenza A/H5N1 vaccine candidate, released interim results in September 2025. The study objectives were to evaluate the safety and tolerability and to describe the immune response of three different dose levels in 132 young adults (18-59 years of age) and 80 older adults (60-80 years old). ARCT-2304 induced a humoral immune response after a single dose (as measured by microneutralization and enzyme-linked lectin anti-neuraminidase assays) in all tested dose levels. The administration of a second dose of ARCT-2304 further increases immune responses. The magnitude of anti-HA response was higher after an 8-week interval compared to a 4-week interval in both young and older adults. ARCT-2304 in dose levels 5 and 12 µg (2 doses administered 4 or 8 weeks apart) and 1.5 µg (2 doses administered 8 weeks apart) induces a hemagglutinin-specific immune response similar to or higher than that after the MF59-adjuvanted pandemic vaccine (in both young and older adults). No safety or tolerability concerns were raised from available data. Key Updates on Arcturus-Owned mRNA Therapeutic Development Candidates • LUNAR-CF/ARCT-032 . LUNAR-CF (ARCT-032) is our mRNA therapeutic candidate for CF and it continues to progress in the clinic. The initial nonclinical and clinical Phase 1 studies for CF were supported in part by the Cystic Fibrosis Foundation (“CFF”). In 2023, we successfully completed a safety and tolerability Phase 1 single ascending dose study of ARCT-032. Thirty-two healthy participants (eight subjects in each of four dose cohorts) received a single inhaled dose of ARCT-032 or placebo. We 16 then amended the protocol to conduct a safety and tolerability Phase 1b clinical study of ARCT-032 in adults with CF and completed dosing and follow-up visits for seven CF participants in August 2024, with each participant having received two administrations of ARCT-032 separated by two days. The U.S. IND including the ongoing Phase 2 protocol was allowed to proceed in August 2024. The Phase 2 study is an open-label, multiple ascending dose study to assess safety and efficacy of ARCT-032 in CF adults who do not benefit from current CFTR modulators, including those with Class I null mutations. We initiated dosing in the study in the U.S. in December 2024 and enrollment is ongoing. Each participant in the Phase 2 CF study (NCT06747858) receives daily inhaled treatments of ARCT-032 for 28 days, with dose escalation expected to occur following safety reviews of the data. On October 21, 2025, we announced interim results from the ongoing Phase 2 clinical trial of ARCT-032 for CF. In the second cohort of the study, six Class I CF adults received inhaled 10 mg doses of ARCT-032 daily over 28 days. High-resolution computed tomography (HRCT) lung scans analyzed using FDA 501(k)-cleared AI technology, revealed reductions in mucus burden in four of six Class I CF participants. The treatment was generally safe and well tolerated. Treatment related AEs that were identified in the single-dose Phase 1 study were also observed in some participants for the first few doses but ceased with continued dosing. One SAE occurred in a participant well after the end of the dosing period. The Data Monitoring Committee found no convincing evidence that the SAE is related to ARCT-032 and approved the study to proceed. The third cohort is ongoing and aims to enroll up to six subjects to determine if there is a dose escalation response at 15 mg daily over 28 days and if ARCT-032 continues to be generally safe and well tolerated. • 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. On June 30, 2025, we announced positive multiple dosing data of ARCT-810 from two Phase 2 studies: (i) a completed placebo-controlled study in Europe that randomized eight participants to ARCT-810 0.3 mg/kg or placebo; and (ii) an open-label multiple ascending dose study in the U.S., with interim data from the initial three completed participants. Both studies evaluate safety and pharmacodynamics in adult and adolescent patients requiring clinical management for OTC-deficiency. We continue to enroll participants in the U.S. study. Each participant in the U.S. study is expected to receive five intravenous infusions administered over two months. A Linear Mixed-Effects Model (LMM) was applied as an exploratory analysis to the Phase 2 glutamine and ureagenesis data. LMM is suitable for analyses of small rare disease trial datasets. In the Phase 2 randomized European study, glutamine levels in patients who received multiple doses of ARCT-810 significantly (p-value = 0.016; LMM) decreased during the dosing period. In the Phase 2 open-label U.S. study, all three participants had a sustained and significant (p-value = 0.004; LMM) decrease in glutamine from baseline reaching normal levels after the first three doses. In the combined analysis of both Phase 2 studies, significantly (p-value = 0.0055; LMM) decreased glutamine levels were observed. The ongoing U.S. Phase 2 open-label study uses a modified and improved 15N-ureagenesis assay (Allegri et al., 2025). The assay measures relative ureagenesis function (RUF) against a normal range established from healthy controls. The assay is not impacted by ammonia scavengers, has low intraindividual variability, and can distinguish between symptomatic and asymptomatic OTC deficient patients. In the first three participants in the ongoing Phase 2 open-label study, RUF statistically (p-value = 0.026, LMM) increased at all post treatment evaluations from a baseline of 29.0% (SD; 9.1%) to 43.7% (SD; 21.7%) at 28 days post-fifth dose. These results suggest a progressive increase of functional OTC enzyme in the liver with continued administrations of ARCT-810. Two of the three participants achieved RUF > 50% indicating a clinically meaningful improvement in urea cycle flux. ARCT-810 was generally safe and well tolerated in single dose Phase 1/1b and multi-dose Phase 2 studies, comprising 40 participants to date, including 20 OTC deficient participants. The early studies enabled us to improve the tolerability of the infusion regime without using corticosteroid pre-treatment. To date, no serious infusion-related reactions (“IRRs”) have been observed using the improved 3-hour IV regimen (N = 8; up to 6 infusions) in the Phase 2 protocols. Arcturus continues to advance the ARCT-810 program for OTC deficiency. Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Report and our audited financial statements and related notes for the year ended December 31, 2024. 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. 17 Revenue 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 and royalties on future sales. The following table summarizes our total revenues for the periods indicated: Three Months Ended September 30, Change 2025 vs 2024 (in thousands) 2025 2024 Change % Revenue $ 17,151 $ 41,673 $ (24,522 ) -59 % Revenue decreased by $24.5 million during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The decrease was primarily attributable to lower revenue recognized under the CSL collaboration, driven by reduced revenue from supply agreements and less amortization of deferred revenue as KOSTAIVE transitions from a development program to the commercial phase. Nine Months Ended September 30, Change 2025 vs 2024 (in thousands) 2025 2024 $ change % change Revenue $ 74,835 $ 129,544 $ (54,709 ) -42 % Revenue decreased by $54.7 million during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The decrease was primarily attributable to lower revenue recognized under the CSL collaboration during the current period, driven by reduced revenue from supply agreements and less amortization of deferred revenue as KOSTAIVE transitions from a development program to the commercial phase. The remaining decrease was primarily attributable to a decrease in grant revenue. Operating Expense Our operating expenses consist of research and development and general and administrative expenses. Three Months Ended September 30, Change 2025 vs 2024 Nine Months Ended September 30, 2024 to 2025 (in thousands) 2025 2024 $ change % change 2025 2024 $ change % change Operating expenses: Research and development, net $ 23,265 $ 39,134 $ (15,869 ) -41 % $ 87,736 $ 151,376 $ (63,640 ) -42 % General and administrative 10,398 13,276 (2,878 ) -22 % 32,052 40,443 (8,391 ) -21 % Total $ 33,663 $ 52,410 $ (18,747 ) -36 % $ 119,788 $ 191,819 $ (72,031 ) -38 % Research and Development Expenses, net The following table presents our total research and development expenses by category: Three Months Ended September 30, Change 2025 vs 2024 Nine Months Ended September 30, 2024 to 2025 (in thousands) 2025 2024 $ change % change 2025 2024 $ change % change LUNAR-COVID $ 3,890 $ 12,035 $ (8,145 ) -68 % $ 13,530 $ 55,092 $ (41,562 ) -75 % LUNAR-OTC 780 890 (110 ) -12 % 5,257 7,200 (1,943 ) -27 % BARDA 1,043 1,347 (304 ) -23 % 5,983 6,949 (966 ) -14 % LUNAR-CF, net 3,210 5,502 (2,292 ) -42 % 14,987 12,307 2,680 22 % Early-stage programs 370 2,100 (1,730 ) -82 % 536 14,566 (14,030 ) -96 % Discovery technologies 1,720 2,071 (351 ) -17 % 6,346 4,123 2,223 54 % Payroll and benefits 9,693 13,718 (4,025 ) -29 % 33,347 43,234 (9,887 ) -23 % Facilities and equipment 2,559 1,471 1,088 74 % 7,750 7,905 (155 ) -2 % Total research and development expenses, net $ 23,265 $ 39,134 $ (15,869 ) -41 % $ 87,736 $ 151,376 $ (63,640 ) -42 % 18 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 $23.3 million for the three months ended September 30, 2025, compared with $39.1 million for the three months ended September 30, 2024. The decrease was primarily driven by lower manufacturing costs related to the LUNAR-COVID, LUNAR-FLU, and LUNAR-CF, as well as reduced clinical trial expenses associated with the LUNAR-COVID and LUNAR-CF programs. Additional decreases were attributable to lower payroll and benefits costs. These reductions were partially offset by increased facilities and equipment costs, driven by the absence of the prior year lease impairment reversal. Research and development expenses were $87.7 million for the nine months ended September 30, 2025, compared with $151.4 million for the nine months ended September 30, 2024. The decrease was primarily driven by lower manufacturing and clinical costs related to the LUNAR-COVID program, reflecting the program’s transition from a development program to the commercial phase. Additional decreases were attributable to lower manufacturing costs for the LUNAR-CF and LUNAR-FLU programs. These reductions were partially offset by higher clinical costs for Phase 2 of the LUNAR-CF program. Payroll and benefits expenses also decreased, primarily due to lower stock-based compensation expense. 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. 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 us 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 nine months of 2025 as compared to the first nine months of 2024, as we downsized from three to two facilities. Facilities and equipment expenses are not expected to increase during the next twelve months compared to expense levels recognized in the third quarter of 2025. General and Administrative Expenses 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 $10.4 million for the three months ended September 30, 2025, compared with $13.3 million for the three months ended September 30, 2024. General and administrative expenses were $32.1 million for the nine months ended September 30, 2025, compared with $40.4 million for the nine months ended September 30, 2024. The decreases in both periods were primarily due to reduced share-based compensation expense as well as reduced payroll and benefits associated with reductions in headcount. Finance income, net Three Months Ended September 30, Change 2025 vs 2024 Nine Months Ended September 30, Change 2025 vs 2024 (in thousands) 2025 2024 $ change % change 2025 2024 $ change % change Interest income $ 3,234 $ 3,818 $ (584 ) -15 % $ 8,572 $ 11,981 $ (3,409 ) -28 % Interest income is generated on the Company’s cash and cash equivalents. The decrease in interest income for the three and nine months ended September 30, 2025, compared to the same periods in 2024, was primarily due to lower interest rates and a reduced cash balance. 19 Off-balance sheet arrangements Through September 30, 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, 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 third quarter of 2025, we have achieved a total of approximately $513.8 million in upfront payments and milestones from CSL Seqirus, including $4.1 million in upfront payments during 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 September 30, 2025, the Company’s balance of cash and cash equivalents, including restricted cash, was $237.2 million. CSL Seqirus, Inc. Collaboration and License Agreement 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. We will be eligible to receive development milestones totaling more than $1.3 billion if all products are registered in the licensed fields. We will also be entitled to receive up to $3.0 billion in commercial milestones based on “net sales” of vaccines in the various fields. In addition, we are entitled to receive a 40% share of net profits from COVID-19 vaccine sales and up to low double-digit royalties of annual net sales for vaccines against influenza and the other three specified infectious disease pathogens, as well as royalties on revenues from vaccines that may be developed for pandemic preparedness. The CSL Collaboration Agreement sets forth how CSL Seqirus and we shall collaborate to research and develop vaccine candidates. In the COVID-19 field, we will lead activities for certain regulatory filings for ARCT-154 in the US and Europe and for research and development activities of a next-generation COVID vaccine candidate. CSL Seqirus will lead and be responsible for all other research and development in COVID-19, influenza and the other fields. 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 us (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. 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. The original term of the agreement is two years, with an option for one-year renewals subject to Wells Fargo approval and we 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 Loan. As collateral, the Company has agreed to pledge $55.0 million in cash to be held at our securities accounts with Wells Fargo Securities, LLC, an affiliate of Wells Fargo, pursuant to a security agreement. 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. No amounts were drawn down under the Loan during the three months period ended September 30, 2025. Grant from the Biomedical Advanced Research and Development Authority On August 31, 2022, we entered into a cost reimbursement contract (the “BARDA Contract”) with the Biomedical Advanced Research and Development Authority (“BARDA”), a division of the Office of the Assistant Secretary for Preparedness and Response (“ASPR”) within the U.S. Department of Health and Human Services (“HHS”) to support the development of a low-dose pandemic influenza candidate based on our proprietary self-amplifying messenger RNA-based vaccine platform. The BARDA Contract is to support our non-clinical and pre-clinical development, early-stage clinical development through Phase 1, and associated drug product manufacturing, regulatory and quality-assurance activities over a period of three years. It provides for reimbursement by BARDA of 20 our permitted costs up to $63.2 million. As of September 30, 2025, the remaining available funding net of revenue earned was $30.3 million. Vinbiocare Agreement During 2021, we entered into a technology license and technical support agreement and the framework drug substance supply agreement with Vinbiocare, a member of Vingroup Joint Stock Company (collectively, the “Vinbiocare License & Supply Agreements”), whereby we would provide technical expertise and support services to Vinbiocare to assist in the build out of an mRNA drug product manufacturing facility in Vietnam. We received an upfront payment in aggregate of $40.0 million as part of the Vinbiocare License and Supply Agreements. 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 required 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. As of September 30, 2025, the Vinbiocare contractual liabilities in accrued expenses was $0.4 million. General Financial Resources 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. If we are unable to maintain sufficient financial resources, our business, financial condition and results of operations will be materially and adversely affected. There can be no assurance that we will be able to obtain additional needed financing on acceptable terms or at all. Additionally, equity or debt financings may have a dilutive effect on the holdings of our existing shareholders. We expect to continue to incur additional losses in the long term, and we will need to execute on the additional 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 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. Overview The following table shows a summary of our cash flows for the nine months ended September 30, 2025 and 2024: Nine Months Ended September 30, (in thousands) 2025 2024 Cash provided by (used in): Operating activities $ (58,044 ) $ (59,463 ) Investing activities (318 ) (648 ) Financing activities 1,694 5,284 Net decrease in cash and restricted cash $ (56,668 ) $ (54,827 ) Operating Activities Net cash used in operating activities was $58.0 million for the nine months ended September 30, 2025, compared to $59.5 million for the nine months ended September 30, 2024. The increase in cash outflows was primarily driven by higher payments of accrued liabilities, partially offset by the timing of payments received under collaboration agreements and reductions in prepaid balances. Investing Activities Net cash used in investing activities was $0.3 million for the nine months ended September 30, 2025, compared with $0.7 million for the nine months ended September 30, 2024. Activity in both periods primarily reflected purchases of property and equipment. Financing Activities 21 Net cash provided by financing activities was $1.7 million for the nine months ended September 30, 2025, compared to $5.3 million for the nine months ended September 30, 2024. The decrease in cash inflow was primarily driven by reduced stock option exercise activity in 2025. Funding Requirements We anticipate that we will continue to generate losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates, and begin commercialization of our products. As a result, we will require additional capital to fund our operations in order to support our long-term plans. 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 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. If we are unable to raise additional capital when required or on acceptable terms, we may be required to scale back or discontinue the advancement of product candidates, reduce headcount, liquidate our assets, file for bankruptcy, reorganize, merge with another entity, or cease operations. Our future funding requirements are difficult to forecast and will depend on many factors, including the following: • the development of our LUNAR-COV19 and LUNAR-FLU vaccine candidates; • the achievement of milestones under our strategic alliance agreements; • maintaining and/or expanding our manufacturing network and capabilities; • 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, including payments related to completion of milestones under our arrangements with any of these parties; • 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; • the outcome, timing and cost of regulatory approvals; • delays that may be caused by changing regulatory requirements; • the cost and timing of hiring new employees to support our continued growth; • the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims; • the costs and timing of procuring clinical and commercial supplies of our product candidates; • the costs and timing of establishing sales, marketing and distribution capabilities; • the costs associated with legal proceedings; • the costs associated with potential litigation related to collaboration agreements; and • the extent to which we acquire or invest in businesses, products or technologies. Critical Accounting Policies and Estimates We prepare our condensed consolidated financial statements in conformity with GAAP. As such, we make certain estimates, judgments and assumptions that we believe are reasonable, based upon information available to us. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact our reported results of operations and financial condition. We describe our significant accounting policies more fully in Note 2 to our consolidated financial statements for the year ended December 31, 2024 included in the 2024 Annual Report. There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the 2024 Annual Report. 22 Item 3. Quantitative and Qualitati ve Disclosures About Market Risk. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of interest rates in the United States. Due to the nature of our cash and cash equivalents, we believe that we are not subject to any material market risk exposure. 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.