Arcturus Therapeutics Holdings Inc.

Previous wording

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

Current wording

The following is a discussion of the financial condition and results of operations of Arcturus Therapeutics Holdings Inc. for the three- and six-month periods ended June 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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

Acceptable tolerability of KOSTAIVE (ARCT-154) was also observed in older participants and individuals who are at risk of severe consequences of COVID-19 due to underlying medical conditions. 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 KOSTAIVE is safe and well-tolerated.

Previous wording

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.

Current wording

In April 2025, our Japanese partner, Meiji, published an analysis characterizing the distribution and clearance of KOSTAIVE (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.

Previous wording

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 seven CF participants in August 2024, with each CF participant having received two administrations of ARCT-032 separated by two days.

Current wording

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 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.

Previous wording

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. The U.S. 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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

Revenue decreased by $21.6 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The decrease was due to reduced revenue related to the CSL collaboration, caused by less revenue from supply agreements and less amortization as KOSTAIVE transitions from a development program to the commercial phase.

Previous wording

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 $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.

Current wording

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.

Previous wording

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.

Current wording

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 six months of 2025 as compared to the first six 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.

Previous wording

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.

Current wording

General and administrative expenses were $10.3 million for the three months ended June 30, 2025, compared with $12.3 million for the three months ended June 30, 2024. General and administrative expenses were $21.7 million for the six months ended June 30, 2025, compared with $27.2 million for the six months ended June 30, 2024. The decreases in both periods were primarily due to reduced share-based compensation expense as well as reduced payroll and benefits.

Previous wording

Interest income is generated on cash and cash equivalents. 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.

Current wording

Interest income is generated on the Company’s cash and cash equivalents. The decrease in interest income for the three and six months ended June 30, 2025, compared to the same periods in 2024, was primarily due to lower interest rates and a reduced cash balance.

Previous wording

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.

Current wording

From the Company’s inception through the quarter ended June 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 second quarter of 2025, we have achieved a total of approximately $509.7 million in upfront payments and milestones from CSL Seqirus, including milestones of $20.0 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 June 30, 2025, the Company’s balance of cash and cash equivalents, including restricted cash, was $253.4 million.

Previous wording

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.

Current wording

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.

Previous wording

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 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.

Current wording

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.

Previous wording

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 our permitted costs up to $63.2 million. As of March 31, 2025, the remaining available funding net of revenue earned was $36.1 million.

Current wording

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 our permitted costs up to $63.2 million. As of June 30, 2025, the remaining available funding net of revenue earned was $32.2 million.

Previous wording

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.

Current wording

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.

Previous wording

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 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.

Current wording

We expect to continue to incur additional losses in the long term, and we will need to execute on the remaining 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.

Previous wording

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

Current wording

The following table shows a summary of our cash flows for the six months ended June 30, 2025 and 2024:

Previous wording

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.

Current wording

Net cash used in investing activities of $0.1 million for the six months ended June 30, 2025, and $0.6 million for the six months ended June 30, 2024, reflected the acquisition of property and equipment.

Previous wording

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.

Current wording

Net cash provided by financing activities was $0.5 million for the six months ended June 30, 2025, compared to $4.6 million for the six months ended June 30, 2024. The decrease was primarily driven by reduced stock option exercise activity in 2025.

Previous wording

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;

Current wording

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;