Arcturus Therapeutics Holdings Inc. (ARCT) Earnings Call Transcript & Summary

Good afternoon, everyone. My name is Gena Wang. I'm a SMid-cap biotech analyst at the Barclays. Welcome to our Second Virtual Global Healthcare Conference. First, I wish you -- you must stay healthy. And I would like to thank all the participants, investors, company and especially our event team and corporate execs team who made this virtual health care conference possible. With that, I would like to introduce our next presenter, Joe Payne, Chief Executive Officer of Arcturus. Joe, maybe I will hand over to you to give a few minutes of high-level overview about the company, and then we can go to the Q&A.

Sure. Thanks, Gena, and it's good to be with you, and appreciate the time. Hi, everyone. My name is Joe Payne. I'm the President and CEO of Arcturus. Arcturus has been around since 2013. We're a clinical stage messenger RNA medicines and vaccines company, a therapeutics and vaccines company. We have technologies that allow us to design, modify and synthesize messenger RNA molecules and intellectual property around the formulating of these drug products and vaccine products. We have a proprietary delivery system that we call LUNAR. This is a lipid nanoparticle delivery technology that's very important for these types of therapeutics that we -- that supports our pipeline. There's many opportunities now that are coming forward for messenger RNA therapeutics. At Arcturus, we're -- we have 3 franchises of mRNA therapeutics and vaccines. We have a vaccine franchise that's led by our COVID-19 vaccine. We have a liver franchise led by a rare liver disease called ornithine transcarbamylase deficiency. And we have a lung franchise led by cystic fibrosis as the indication there. And these are 3 different franchises with 3 different routes of administration for messenger RNA medicines. You have the intramuscular injection for vaccine applications; you have intravenous or systemic delivery of messenger RNA, a huge commercial opportunity there for our first product -- for the liver franchise; and then inhaled messenger RNA as the route of delivery to get to bronchial epithelial cells for cystic fibrosis there. So 3 platforms, 3 franchises. We're based in San Diego. I'm going to move my -- you can see the palm trees in the background. So we welcome anybody to come visit San Diego in the winter time to see us. But it's good to be with you, Gena, and look forward to addressing your questions.

Sure. Thank you. So Joe, maybe we'll start with the COVID-19 vaccine. We did show some data earlier. So maybe if you can just highlight on the Phase I/II data and the most recent updates on the mutualized antibody and also T cell data. So maybe we'll just start with that.

Sure, sure. So the COVID-19 vaccine is presently in Phase II trials. We've already dosed between 500 and 600 people to support that trial. And we're, in parallel, preparing to initiate a Phase III trial in multiple countries. We've completed a Phase I/II trial last year in Singapore under the guidance of the Health Sciences Authority there, and we've learned that our vaccine is -- has both humoral and cellular immune responses after a single administration. Our vaccine is -- some people view Arcturus as a fast following messenger RNA vaccine, when in reality, we're a first-moving, self-amplifying messenger RNA vaccine. So we're slightly different than the messenger -- the other messenger RNA vaccines out there. Our vaccine enters a cell and expresses the antigen for an extended period of time, and that provides a different profile. And we've learned what that looks like now in the clinic, in clinical trials that are dose levels much lower, which we anticipated based upon this next-generation mRNA technology. Our dose level that we're planning to advance into Phase III, for example, is 5 micrograms. That instead of a prime boost regimen, it's a single-dose regimen, and that's what we're planning to initiate in Phase III as well. So this is a single administration. The other unique aspect of our technology is the immunogenicity profile. We have a robust cellular immune response that's associated with this vaccine after a single administration. And the question for that is why that is the case, it's attributed to the self-amplifying mRNA mechanism and this extended duration of expression. It's more similar to the actual COVID-19 virus itself. If you look at COVID-19 and all these vaccines are aiming to do the same thing, and that's mimic the COVID-19 virus and trick the body that it's getting infected. And the Arcturus vaccine candidate is unique in that it utilizes self-amplifying mRNA, just like COVID-19 virus itself, which is self-amplifying messenger RNA. But -- so that provides the rationale behind the different immunogenicity profile that we're observing, the different regimen, meaning it's a single shot. And it also provides explanation as to why the dose level is very low at 5 micrograms because of this mechanism. And this next-generation technology, by the way, is not just Arcturus. There's other great companies that are looking at self-amplifying RNA clinically, including Pfizer. And GSK initiated a program recently as well for self-amplifying mRNA. But we'd be considered one of the leaders in this area, first movers, you can call us, for self-amplify -- this next-generation technology. Is there more specifics that you want me to address, Gena, with respect to the trial or numbers? Or how would you like to proceed?

Yes. I think that's a very, very helpful information. So maybe I'll go to specific questions. You've selected 5-microgram single-dose regimen, right, at that phase [ we've done a ] -- we set these on the tolerability and the immunogenicity data. So can you give a little bit more color on those parts in terms of tolerability data like safety data, how that 5 micrograms compared to the 7.5 or the 2 doses regimen? And then the second question is immunogenicity data, how is that compared to data for 2 doses or high doses data?

Right. Sure. So I'll address that. First of all, with respect to 5 micrograms, why we selected it is because we have a considerable body of data telling us that's where we need to go. At 5 micrograms, we saw very consistent results from a humoral response and cellular response in both young and old. And by consistency, I mean 100% 0 positivity was observed at 5 micrograms, a single administration in both young and old and with binding antibodies and/or neutralizing antibodies. And then you have -- we have -- with respect to the cellular response, we saw a very consistent and robust T cell responses at that particular dose level. And we have the opportunity to compare this immunogenicity profile at 5 micrograms as well, and we just feel really good about it, looking at the totality of the data. With respect to safety and tolerability, at 5 micrograms and 7.5 micrograms, we saw similar safety profiles. We do anticipate, in larger trials, that we'll be able to tease out some benefits by lowering the dose a little bit. So I think that, that would be expected. But so far, we haven't seen any difference between 5 micrograms or 7.5 micrograms from a safety or tolerability profile. We do incur a benefit by selecting 5 micrograms from a manufacturing efficiency perspective or output. We have 50% more doses made per manufacturing run by going with the 5-microgram dose level as well, which has its benefits. But that -- it's the consistency and the totality of the data that allows us to give us confidence at 5 micrograms. And it's been -- and then recently, we were allowed to compare this specific dose level to the 30-microgram dose level of a conventional messenger RNA vaccine recently. There were some fortuitous or luck here, but the Duke-NUS Medical School did a study on conventional messenger RNA vaccines. They wanted to understand. The purpose of this study was to understand why the Pfizer and Moderna vaccines are very effective at early time points. You see a separation between the vaccinated group and the unvaccinated group at day 10, and Duke-NUS Medical School wanted to understand why that's the case. So they looked at blood samples before, during and after that day 10 time point. And the conclusion from that study is that T cells play a very important role in the early efficacy of these vaccines. And so -- and -- but the fortuitous element is our Phase I/II data was collected at the same institution with the same assays and the same methods. Now our time points were at day 14 or day 15 and day 28, the standard time points for a Phase I/II trial. But because the assays were at least collected at the same institution, by the same people with the same methods, it allows us more accurate comparisons, which has presented a challenge for investors and scientific community because it's very difficult to compare vaccines one to another because of all these changes and all these variables changing. So we looked at our vaccine, how it compares to the to conventional messenger RNA vaccines, and it looks like we're 8 to 16-fold higher from a T cell number, an ELISPOT assay number. And if you look closely at the data, remember, the Duke-NUS study was looking at before, during and after day 10. So they had a day 10 number and they had a day 21 number for conventional messenger RNA vaccines, and that range from 28 down to 13, a double-digit ELISPOT number that was significant enough to provide protection or efficacy at that early time point, was a conclusion from that study. And then you -- but then comparing ours using, again, the same lab, same assay, same methods, we looked at our day 15 time point, which is in between the day 10 and day 21 time point that they collected for the conventional mRNA vaccine. And we saw an ELISPOT number of 211, and this is a median number, and that's very encouraging. It's 8 to 16-fold higher. And no doubt that, that gives us a positive surge of confidence that our vaccine is going to be very effective at those early time points, just like we saw with Moderna and Pfizer and J&J. And so that's -- and that was the 5 micrograms as well. But I'll pause there. Do you have another question, Gena?

Sure. Yes. So I think I wanted to maybe comment on the data, the time line. So we don't know like -- I think this is -- I mean it is very encouraging. Within the early time point, you already saw the increase of T cell activity. Well, I think if we understand that, actually, memory T cell CD8 actually will take a longer time. So we don't know at a later time point how that's now. And then so I think with one data point, what's a little bit missing was after the boost, how the data looked like. They did show the increase afterwards. They won a -- from their end also has missing data points, it's not perfect comparison to your time line, but when we look at also before second boost shot, you did see the increase. And then we don't know after the boost, how much more you actually have. So I think those are the [ open ] question, but certainly, initial data, we did see some sign of the T cell activity, and then shows relatively robust, I think that that's a good sign. And let's see how the later data will play out. So the dose lines, I do have a question on the 7.5 and 5 microgram, when we look at the December presentation, we did see 7.5 increase a little bit higher mutualizing antibody level. But only looking at day 29, just wondering, do you have any data of day 1, day 29 to look at the neutralizing antibody titers?

No, we haven't looked at any durability data pertaining to the antibody titer levels. We believe the profile of our vaccine should also focus on the other parameters of our vaccine after a single administration. The neutralizing antibody titers are very protective, right? There's a nice correlative protection being drawn on with other first-moving vaccines. They're excellent. They're very protective. But it takes 2 shots to get them for the conventional messenger RNA vaccine. With a single administration, you can begin to see T cells with conventional mRNAs. We now understand that. We've seen that. And then ours has a more robust response with cellular immunity and humoral immunity after a single administration. But we're now focusing on what's the durability of this cellular immunity. Because whether it's a humoral response or a cellular response, that all gets converted to memory. These antibodies get converted to memory, and these T cells get converted to memory. There's some substantial theory to suggest that cellular immunity is more robust and, I mean, more durable because T cells last longer and the subsequent process, therefore, last longer. But we're looking to prove that out. So it comes down to the fact that the Moderna and Pfizer vaccines are working after a single administration. We've been able to look at our vaccine at early time points, and it looks like the binding antibodies, neutralized antibodies, especially the T cells are higher levels. So the likelihood of our vaccine working at those early time points is very encouraging. And then the durability question is, what you brought up is the right question to ask, is how durable will our vaccine last. And we're -- the theory around this is very robust, that T cells last longer than antibodies, and cellular immunity as a whole can be more durable, but we have to prove that out.

So Joe, maybe related to that question, the T cell activation at the ELISPOT. I think during the earnings call, you did comment, there was a contraction of T cells beyond day 28. Yes. So like any -- could you give a little bit more color? So I think comments will switch to memory cells. Any additional color you can provide us?

Yes. So if you look at any vaccine that's collected ELISPOT data over time points, you see this consistent theme. We're at around the second week of the vaccine. You see a spike in T cells. And then over time, you see contraction and reduction. So as -- these T cells are measurable and available swimming around in the plasma and available to be drawn out in the blood. But over time, these T cells get embedded in the tissue and converted to memory cells, and they become unavailable to measure in the process. But -- and so that's the key aspect of it. That's the nuance, is understanding -- because everybody now that at least is -- understands the importance of these T cells for protection and durability and variant coverage. But how do we measure them? And they are measurable in that first or second week because that's where they tend to spike up. But over time, those values drop because they get embedded in the tissues and converted to memory cells as nature intends to protect us from the subsequent infection.

Okay. So for the memory T cell, just wondering any particular biomarker you're using to evaluate the CD8 T cells? And how is that, like CD8 memory T cell, how does that compare to the biomarker data?

Yes. Yes, we are collecting that data, but there's different markers that we can use to measure CD8s and CD4s, it's interferon responses and the like. But for us, it's just important to see an ELISPOT number that's very high, very early in the process. And what that means for our vaccine, the likelihood that it's going to be working early on, and it increases the likelihood that this is going to be a more durable vaccine because of this cellular immune component. And the consistency we're seeing as well is important due to this mechanism of self-amplifying mRNA that gives us this unique feature. And that's what this vaccine is really all about, is how long this intriguing, interesting early biomarker profile that seems to be superior than other vaccines, how durable is it? And we're going to be learning, and that's one of the purposes of the Phase III trial, is to, under a placebo control, get us that efficacy number. And of course, we're optimistic that things are going to work in our favor.

So regarding the AEs, what were the most common AE observed? And then I think there was 2 trends in the way AEs of the T cell recipient gets. So like any thoughts there regarding the safety profile? [indiscernible] Say, 5-microgram versus 7.5 and the prime boost versus the single dose.

Yes. Early in the process in Phase I, we were dosing up at doses of 1, 3, 5, 7.5 and 10. And at 10, we started to see some G3s that were transient. Not -- they weren't serious adverse events, and they all recovered on their own very quickly. But it was important for us that since we were a second-generation vaccine, at the end of the pandemic/endemic-type vaccine that we have a much improved safety profile. So we have increased sensitivities to these G3s. So we selected the dose level where we haven't seen any. The dose level and regimen we're advancing in the Phase III, we haven't seen at least yet, knock on wood, any G3 adverse events. We do see the same fatigue systemically and injection site inflammation, the G1s and the G2s that you see with the other vaccines. But we have increased sensitivity to G3s because we're a next-generation vaccine where people, when there's a selection, they're going to be choosing one that has perhaps a better safety and tolerability profile, and we want to capture that portion of the market.

Okay. And then for the Phase II data in early '21, what type of data should we be expecting?

Well, the first wave of data is observational, tolerability and safety. We do have a day 28 time point associated with the Phase II trial, where we do a blood draw at day 28 and collect the immunogenicity markers. The purpose of this Phase II is not only to strengthen our safety database, but also to strengthen our relationship with the U.S. FDA because our Phase I/II was conducted under the Health Sciences Authority. We've got a great relationship with them in Singapore. But we want to strengthen the relationship with the FDA, get them familiar with the safety profile, the tolerability profile, the immunogenicity profile and then also to give us confidence that we selected the right dose. And so far, that's the case. And so the first wave of data, to address your question, is safety, followed by immunogenicity data, we'll be able to provide as we enter Q2 and throughout Q2. We haven't specifically guided the timing on how we're going to be sharing that data, but there will be an appropriate time to do so. And in parallel, we're ramping up our efforts to initiate our Phase III trial in multiple countries, again, outside the U.S. because there's challenges with recruiting for a placebo-controlled trial here in the U.S. The FDA, of course, understands this, and that's another reason why we're doing a Phase II trial here so that it can be familiar with those -- our profile of our vaccine while we do our Phase III study outside the U.S. in multiple countries. We'll be able to disclose which countries those are after we complete enrollment. That will be the appropriate time to do that.

Okay. Sounds good. And then for the immunogenicity data, first, like how many patients should we expect for the Phase II data?

Well, at our quarterly call, we said we've done over 500. So it's between 500 and 600. So we essentially completed enrollment. But that gives you an idea of what that number is. It's between 500 and 600 people. We had over 100 people from our Phase I/II participants in Singapore. So that kind of gives you an idea for a total number of participants that have been...

And then -- sorry, the immunogenicity data, so we should see the T cell data neutralizing antibody data, right? So all those data, you will share with us, right, at the day 28?

Correct. We'll be able to share safety, tolerability and immunogenicity data from our Phase II. We may not -- there are some assays that you'll see with other vaccines. They don't do on every participant in the trial because they're more costly than others, sort of be a portion of the subjects. But yes, the data will be collected and shared, of course.

Okay. Will you have some kind of data from here to the convalescent serum? Or will be just your own data?

Good question. convalescent sera data, we have shared previously. There -- it's difficult to get convalescent sera in an area where there's been so much prevalence and so much vaccinations occurring. But it provides additional challenges. But we can leverage the human convalescent sera data that we've already collected from Phase I/II, where we looked at all of these biomarkers and human convalescent sera already. We'll be able to use that as a comparison.

Last question on your -- on the thoughts on pivotal trial design. And we are also considering now we will have a new variance coming. So how would you enroll -- design your study to be able to...

I'm glad you brought up the variance because we are closely monitoring them. We synthesize, made them, evaluating them. We want to be in a position to deploy them if needed. Our plan A for our vaccine is to really leverage the cellular immunogenicity profile, which could be very effective at protecting against variance. There was a study just last week where a group collected blood samples from COVID-19 survivors and Pfizer and Moderna vaccine recipients. They isolated the antibodies from these blood samples and the T cells from these samples and did a survey of all the variance, and it was very clear that the T cells provide robust variant coverage, where there is some gaps and variant escape from antibodies. So this was now more concrete data to the strong theory that T cells should provide broad variant coverage. So our -- because of the robust cellular immune response that we've already seen, observed, we're hoping, of course, as you can appreciate, plan A is that our vaccine as is has broad variant coverage. But if there is a variant that escapes, that becomes a problem now or in the future, we're well positioned to rapidly update our vaccine just like the other mRNA vaccine companies are. It's one of the benefits of this technology, is that you can just simply switch out the payload, and everything else stays the same from the manufacturing processes and the delivery technology, all that stays the same. So it makes it a very efficient technology to rapidly update. And we can do that as well, and we may need to. But at this point, our expectation is that the cellular immunity profile will be robust and provide broad variant coverage as a vaccine as it is right now.

Okay. Great. Well, thank you very much, Joe. And we're running over time, but that was a very productive discussion. And we look forward to continue talking to you. And we will keep our fingers crossed for the data. Okay, thank you.

Thanks, Gena. As always, appreciate it. And hello, everyone. Be sure to ask questions and follow up with us if needed. Bye-bye.

Bye-bye.