Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT) is a pioneering commercial-stage messenger RNA (mRNA) medicines and vaccines company. Founded in 2013 and headquartered in San Diego, California, Arcturus has established itself as a leading innovator in the rapidly evolving field of nucleic acid therapeutics. The company's expertise spans the development of novel mRNA constructs, advanced lipid nanoparticle (LNP) delivery technologies, and scalable manufacturing processes - all of which have positioned Arcturus at the forefront of the mRNA revolution.
Business Overview and History
Arcturus' business overview and history can be traced back to its inception as a private company focused on developing innovative RNA-based therapies. In its early years, the company relied on upfront payments, research funding, and milestone payments from strategic alliances and collaborations, as well as the sale of equity and convertible securities, to fund its operations. The company made significant strides in advancing its proprietary LUNAR® lipid-mediated delivery platform and STARR™ self-amplifying mRNA technology. These foundational platforms enabled Arcturus to pioneer the development of novel mRNA-based product candidates targeting a diverse range of therapeutic areas, including infectious diseases and rare genetic disorders.
In 2017, Arcturus entered into a development program agreement with the Cystic Fibrosis Foundation to advance its LUNAR-CF program, which helped support the company's progress in developing a messenger RNA therapeutic for cystic fibrosis. Around the same time, Arcturus established a license agreement with Protiva Biotherapeutics, gaining access to key lipid nanoparticle delivery technology.
The year 2018 brought both challenges and opportunities for Arcturus. The company faced a financial hurdle when it had to repay a loan and security agreement with Western Alliance Bank, which it managed to navigate using available cash on hand. In the same year, Arcturus merged with Alcobra Ltd., an Israeli company, and began trading on the Nasdaq exchange under the ticker symbol ARCT, marking a significant milestone in the company's growth and public presence.
A Transformative Transition to Commercialization
The company's landmark achievement in 2023 was the approval of KOSTAIVE®, the world's first approved self-amplifying mRNA (sa-mRNA) COVID-19 vaccine, in Japan. This regulatory milestone not only validated Arcturus' scientific and technological capabilities but also marked the company's transition into a commercial-stage entity. The approval of KOSTAIVE in Japan was followed by its subsequent authorization in the European Union in early 2025, further expanding the global reach of this innovative vaccine.
The successful commercialization of KOSTAIVE has been a game-changer for Arcturus, providing the company with a steady stream of revenue and positioning it as a leader in the rapidly evolving mRNA vaccine landscape. In the fourth quarter of 2024, Arcturus reported that its share of the gross profit from KOSTAIVE sales in Japan amounted to approximately $28 million, which was credited against the company's share of the COVID-19 development costs paid by its partner, CSL Seqirus.
In September 2024, an updated version of KOSTAIVE targeted to the JN.1 lineage of Omicron subvariants also received approval in Japan, making it the world's first commercially available sa-mRNA COVID-19 vaccine for adults 18 and older. This achievement further solidified Arcturus' position as a pioneer in the mRNA vaccine space.
Diversified Pipeline Targeting Infectious Diseases and Rare Genetic Disorders
While the KOSTAIVE COVID-19 vaccine has been the cornerstone of Arcturus' recent success, the company's pipeline extends far beyond infectious disease applications. Arcturus has leveraged its proprietary LUNAR and STARR platforms to develop a diverse portfolio of mRNA-based product candidates targeting various therapeutic areas, including rare genetic disorders and additional infectious disease indications.
In the rare disease space, Arcturus is progressing two key programs: ARCT-810 for the treatment of ornithine transcarbamylase (OTC) deficiency, a rare and life-threatening genetic disorder, and ARCT-032 for the treatment of cystic fibrosis (CF). Both of these programs have advanced into late-stage clinical development, with Arcturus expecting to report interim data from their respective Phase 2 studies in the first half of 2025.
ARCT-810, the company's lead OTC deficiency candidate, uses the LUNAR platform to deliver normal OTC mRNA into liver cells. In a Phase 1 study, ARCT-810 demonstrated a favorable safety and tolerability profile. The program has received Orphan Drug Designation, Fast Track Designation, and Rare Pediatric Disease Designation from the FDA. In 2024, Arcturus completed dosing in a Phase 2 double-blind study of ARCT-810 and initiated an additional open-label Phase 2 study.
For cystic fibrosis, Arcturus is developing ARCT-32, which also leverages the LUNAR platform to deliver a codon-optimized CFTR mRNA into airway epithelial cells. ARCT-32 has received Orphan Drug Designation, Orphan Medicinal Product Designation, and Rare Pediatric Disease Designation. In 2024, Arcturus initiated a Phase 2 multiple ascending dose study of ARCT-32 after completing a Phase 1b study that demonstrated the candidate was generally safe and well-tolerated in CF patients.
The company's infectious disease pipeline extends beyond COVID-19, with Arcturus pursuing the development of mRNA vaccines for influenza, including seasonal and pandemic strains. In late 2024, the company initiated a Phase 1 clinical trial for ARCT-2304, a self-amplifying mRNA vaccine candidate targeting the H5N1 "bird flu" virus, in collaboration with the Biomedical Advanced Research and Development Authority (BARDA). Additionally, Arcturus' seasonal influenza candidate entered Phase 1 trials in January 2024 under the CSL Seqirus collaboration.
Strengthening Strategic Partnerships and Manufacturing Capabilities
Arcturus' success has been underpinned by its strategic partnerships and collaborations with industry leaders. The company's global licensing and collaboration agreement with CSL Seqirus, one of the world's leading influenza vaccine providers, has been instrumental in the development and commercialization of KOSTAIVE and the advancement of its broader infectious disease vaccine portfolio.
Under the 2022 Collaboration and License Agreement, CSL Seqirus received exclusive global rights to Arcturus' technology for vaccines against COVID-19, influenza, and three other infectious diseases. Arcturus received a $200 million upfront payment and is eligible for over $1.3 billion in potential development milestones, as well as up to $3 billion in commercial milestones. Arcturus also stands to receive a 40% net profit share for COVID-19 vaccine sales and up to low double-digit royalties for other vaccines.
In addition to the CSL Seqirus partnership, Arcturus has forged a joint venture, ARCALIS, with Axcelead, Inc. to bolster its manufacturing capabilities. The ARCALIS facility in Japan has been granted approval by the Japanese Ministry of Health, Labor and Welfare (MHLW) to produce KOSTAIVE, enabling the company to meet the growing demand for the vaccine in the domestic market.
Furthermore, Arcturus has received significant financial support from government agencies, such as the Biomedical Advanced Research and Development Authority (BARDA), to advance the development of its pandemic influenza vaccine candidate. This collaboration not only provides non-dilutive funding but also underscores the strategic importance of Arcturus' mRNA technology platforms in addressing global public health challenges.
Navigating Challenges and Setbacks
While Arcturus has achieved remarkable success in its transition to a commercial-stage company, the journey has not been without its challenges. In 2023, the company encountered a material weakness in its internal control over financial reporting related to information technology general controls (ITGCs). Arcturus has since worked diligently to remediate this issue, implementing enhanced control activities and strengthening its overall financial control environment.
Additionally, the COVID-19 pandemic posed significant operational and logistical hurdles for Arcturus, particularly in the early stages of KOSTAIVE's development and commercialization. The company's ability to navigate these unprecedented circumstances and maintain its development timelines has been a testament to its resilience and the dedication of its team.
Despite these challenges, Arcturus has remained focused on executing its strategic priorities, strengthening its financial position, and advancing its diversified pipeline of mRNA-based therapies and vaccines. The company's cash position, which stood at $293.9 million as of December 31, 2024, provides a solid foundation to fund its ongoing operations and support the development of its promising product candidates.
Financials
Arcturus' financial performance has been steadily improving since the commercialization of KOSTAIVE. The company's revenue for the fiscal year 2024 reached $152.3 million, a decrease from $166.8 million in the previous year. This decline was primarily due to lower milestone achievements from the CSL agreement, offset by increased BARDA revenue due to progress of the pandemic flu program.
For the fourth quarter of 2024, Arcturus reported revenues of $22.8 million, a decrease from $30.9 million in the same period of 2023. The decline was attributable to lower milestone achievements from the CSL agreement during the fourth quarter of 2024. Year-over-year revenue growth decreased by 26.2% from the same quarter in the prior year.
The company's research and development expenses for 2024 were $195.2 million, reflecting ongoing investments in its diverse pipeline of mRNA-based therapies and vaccines. General and administrative expenses for the same period were $52.8 million, as Arcturus continued to build out its commercial infrastructure and support its transition to a commercial-stage organization.
Arcturus reported a net loss of approximately $80.9 million or $3 per diluted share for the year ended December 31, 2024, compared to a net loss of $29.7 million, or $1.12 per diluted share for the year ended December 31, 2023. For the fourth quarter of 2024, the company reported a net loss of approximately $30 million, or $1.11 per diluted share, compared with a net loss of $11.7 million, or $0.44 per diluted share for the same period in 2023.
The company's operating cash flow for the fiscal year 2024 was negative $59.8 million, while free cash flow was negative $60.4 million. Arcturus does not break out performance by geographic markets. However, approximately $138.4 million, $154.9 million, and $192.7 million of total revenue represents revenue derived from foreign countries for the years ended December 31, 2024, 2023, and 2022, respectively.
Liquidity
As of December 31, 2024, Arcturus reported a strong liquidity position with cash, cash equivalents, and restricted cash totaling $293.9 million. This robust cash position provides the company with a runway to fund its ongoing operations, support the advancement of its clinical programs, and pursue strategic growth opportunities.
The company's improved financial outlook is further bolstered by potential future milestone payments and royalties from its partnerships, as well as anticipated revenue growth from KOSTAIVE sales in Japan and Europe. Arcturus has a debt-to-equity ratio of 0.12, indicating a relatively low level of debt compared to its equity.
Arcturus maintains a $50 million revolving credit facility with Wells Fargo. As of December 31, 2024, no borrowings were made against the credit facility. The company's current ratio and quick ratio both stand at 4.67, indicating strong short-term liquidity and ability to meet its short-term obligations.
Outlook and Future Catalysts
As Arcturus looks towards the future, the company is well-positioned to capitalize on the continued growth and adoption of mRNA technologies. The successful commercialization of KOSTAIVE in Japan and its recent approval in Europe have established Arcturus as a leader in the sa-mRNA vaccine space, setting the stage for potential global expansion and partnerships.
The company expects general and administrative expenses to decrease slightly during the next 12 months, driven by lower share-based compensation costs and a reduction in expenses related to the commercial manufacturing transition of the COVID program to CSL. However, Arcturus anticipates that its cash burn will increase in the next two years, driven by its CF and OTC programs as they progress through their respective Phase 2 multiple ascending dose trials. Despite this, the company's cash runway is expected to extend until the end of the first quarter of 2027 based on the current pipeline and programs.
Arcturus' advancement of its rare disease programs, ARCT-810 for OTC deficiency and ARCT-032 for cystic fibrosis, represents a significant opportunity to address substantial unmet medical needs. The company expects to provide interim data from CF participants who completed dosing in the ARCT-032 Phase 2 study by the end of Q2 2025. Similarly, interim data from participants who completed dosing in the ARCT-810 U.S. Phase 2 study for OTC deficiency is expected by the end of Q2 2025.
Arcturus' pipeline also includes the development of mRNA vaccines for influenza, both seasonal and pandemic strains, in collaboration with CSL Seqirus. The company expects to provide interim data from the Phase 1 study of ARCT-2304, its self-amplifying mRNA vaccine candidate for pandemic influenza disease caused by the H5N1 virus, in the second half of 2025.
The biotechnology and pharmaceutical industries are intensely competitive, with many large multinational companies as well as smaller biotechnology companies developing new technologies and product candidates. The mRNA medicines market is rapidly growing, with an estimated compound annual growth rate (CAGR) of over 20% from 2024 to 2030. Arcturus' innovative platforms and diverse pipeline position the company to capitalize on this growth trend.
With a strengthened financial position, a diversified pipeline of promising product candidates, and strategic partnerships that leverage its technological capabilities, Arcturus Therapeutics is well-positioned to continue its transformation into a leading global player in the mRNA medicines and vaccines arena. As the company navigates the next phase of its growth, investors will eagerly await the key clinical and regulatory milestones that can drive long-term value creation.