Arcturus Therapeutics Holdings Inc. (ARCT) Earnings Call Transcript

Hello, and welcome, everyone, joining today's Arcturus Therapeutics presentation. [Operator Instructions] please note, this call is being recorded, and we are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to Neda Safarzadeh, Vice President, Head of Investor Relations, Public Relations and Marketing. Please go ahead.

Thank you, operator. Good afternoon, and welcome to Arcturus Therapeutics presentation. Today's call will be led by Joe Payne, our President and CEO; Dr. Alan Cohen, our Chief Medical Officer; Dr. Marshall Summar, a recognized expert in rare diseases and OTC deficiency and Dr. Pat Chivukula, our Chief Scientific Officer. Before we begin, please note that today's call may contain forward-looking statements. Such statements are based on current expectations and assumptions, and actual results may differ. Please refer to our filings made with the SEC, including the risk factors contained therein for more information. We undertake no obligation to update any forward-looking statement. And with that, I will now turn the call over to Joe.

Thank you, Neda. Before we turn to the data, I want to frame the four key messages you will hear today. First, ARCT-810, our mRNA therapeutic candidate to treat OTC deficiency has generated preliminary Phase II clinical evidence that supports our core therapeutic hypothesis. That with generally safe and well-tolerated repeat dosing, we can produce biomarker changes consistent with improved urea cycle function. Second, we introduced LUNAR 2.0, a new standard in mRNA delivery, producing greater than 30-fold higher protein expression in nonhuman primates across two different studies with two different mRNA payloads. Third, the LUNAR 2.0 delivery platform has been incorporated into our OTC deficiency program. We call this mRNA therapeutic candidate, ARCT-2601. As advised by the FDA during our Type C meeting in June, we plan to integrate ARCT-2601 and into the ongoing ARCT-810 Phase II study this year. LUNAR 2.0 is expected to help us achieve lower, less frequent dosing and shorter infusion times. . And fourth, our mRNA therapeutics platform, together with engineered mRNA and proprietary AI-enabled computational design capabilities creates opportunities to expand our liver franchise into PKU, gout and additional indications. Today's message is straightforward clinical validation today a compellingly more powerful delivery platform going forward and multiple new opportunities made possible with this new platform to create substantial value. Alan, I will turn the presentation over to you.

Thanks, Joe. Good afternoon, and thank you for joining. Today, I'll walk you through ARCT-810, our LUNAR OTC messenger RNA therapeutic candidate for ornithine transcarbamylase deficiency. The arc is simple. First, the disease and why current standards of care and clinical management options fall short. Then I'll review Arcturus' clinical program to date, including the preliminary findings from our U.S. Phase II study summarize the safety, biomarkers, protein intake and what this means for our recycle function. Let's begin with the disease and the biology that makes messenger RNA a rational approach to consider and develop as a next-generation therapeutic option. Protein metabolism constantly generates ammonia, which is toxic to the brain even at modest levels. . But through the urea cycle in the liver, ammonia is converted to urea, preventing ammonia buildup in the blood. Ornithine transcarbamylase deficiency or OTC deficiency is the most common recycled disorder affecting roughly 10,000 people across the United States and Europe. With deficient OTC enzyme expression or activity, if individuals consume a normal protein containing diet, ammonia will accumulate in the blood leading to potentially irreversible neurological damage and even coma or death. Today's standard of care asks people suffering with OTC deficiency to adhere to a strict low protein, high fluid diet and use ammonia scavenger medications to keep ammonia levels low. That regimen is demanding, and it still does not reliably prevent life-threatening ammonia spikes or severe patients, liver transplantation unfortunately, remains the only cure. That is the unmet medical need that Lunar OTC is designed to address. To deliver messenger RNA to the liver, restore expression of the OTC enzyme and reactivate urea cycle activity so ammonia is detoxified in the bloodstream before it causes harm while potentially mitigating or forestalling the need for a liver transplant. With that in mind, let's look at ARCT-810 clinical trial journey. Here's a summary of the clinical development program for ARCT-810 thus far from first-in-human studies through Phase II. We Phase I was first initiated in 24 healthy adult volunteers, where ARCT-810 was observed to be safe and generally well tolerated. We then moved into a Phase Ib single-ascending dose study in 16 adults with OTC deficiency, testing doses from 0.2 to 0.5 milligrams per kilo, again, with a clean safety and tolerability profile. Phase II moved to repeat dosing. Our placebo-controlled study in the U.K. and Europe enrolled adolescents and adults at 0.3 milligrams per kilo with a total of 6 intravenous infusions every 2 weeks. We observed that ARCT-810 continues to be safe and generally well tolerated across multiple repeated administrations. Limited glutamine measures suggested in early clinical signal via a reduction in the treated group versus placebo and early signal of potential efficacy. With this supportive early clinical data, we then initiated a Phase II study to evaluate 2 doses. 0.3 and 0.5 milligram per kilo over 5 intravenous infusions every 2 weeks. I will now share with you the preliminary data from this recently concluded Phase II study. . The Phase II program was an open-label U.S.-based study, investigating the safety, PK and efficacy of ARCT-810 at 0.3 and 0.5 milligrams per kilo over 10 weeks with a 4-week observation follow-up period after discontinuation of study drug. Eight adolescents and adults with confirmed OTC deficiency were enrolled, four individuals per dosing cohort. For four weeks prior to dosing, participants were required to be on a stable, protein-restricted diet as well as continue their standard of care medical management, including all of their typical medications. In this Phase 2 study, we observed that ARCT-810 continued to be safe and well-tolerated across repeated dosing at both the 0.3 and 0.5 milligram per kilogram doses. There were no serious adverse events and no adverse events of special interest, and most importantly, no hyperammonemia events observed in either dose and cohort. Every study participant had at least one treatment-emergent adverse event, but the large majority were mild to moderate, and the most common were headache, transaminitis, and anemia, and infusion-related reactions, each in two of eight participants. Two Grade 3 events occurred, both asymptomatic transaminitis, and both resolved with that intervention after study drug was stopped. One discontinuation was the result of an intravenous infiltration and a subsequent injection site reaction, a procedural event rather than a systemic drug effect. Based on these safety and tolerability findings, we are overall pleased with the safety profile of ARCT-810. Regarding the Phase 2 study measures of efficacy at both the 0.3 and 0.5 milligram per kilogram doses, we measured several relevant biomarkers and clinically meaningful functional measures for people with OTC deficiency. Defects in the urea cycle impact protein metabolism and lead to a buildup of ammonia in the bloodstream, which also unfortunately can cross the blood-brain barrier and cause transient and more permanent injury to the brain and central nervous system. When the nitrogen load increases, glutamine levels also increase. These two biomarkers of urea cycle function are routinely used in the clinical care of those with OTC deficiency to assess urea cycle activity and serve to direct clinical decision making and management. As such, we measured both ammonia and glutamine levels in the blood. We also measured OTC activity by looking at the formation of urea cycle byproducts in a metric called relative urea function. Since these biomarkers are influenced by the consumption of protein, referred to as the protein load, we additionally examined how dietary protein intake compared in study subjects pre- and post-ARCT-810 administration. The table on the right shows the baseline characteristics of seven individuals who received more than one dose of ARCT-810. The current Phase 2 study focused on adolescents and adults with OTC deficiency, and given the X-linked recessive genetics pattern of the disease, all of these adult subjects were not unexpectedly female. Nearly all participants were also on nitrogen scavenger medications at baseline, which is typical of most individuals with OTC deficiency. We had all study subjects remain on their usual standards of care, including all of their dietary restrictions and medications. The first biomarker we will examine is ammonia. As mentioned, it is imperative to keep ammonia levels low to prevent neurological damage. To achieve this, many individuals with OTC deficiency are on ammonia scavenger medications, and not unexpectedly, most of our study participants were on these medications as well. At all reported ammonia measurements illustrated here, participants in both the 0.3 and 0.5 milligram per kilogram cohorts were on the same amount of ammonia scavenger medications. We would anticipate stability or a flat line in ammonia levels across the study period. At 0.3 and 0.5 milligrams per kilogram, we observed that mean first morning fasting ammonia levels were generally similar or lower than baseline values. Of clinical importance, after either the 0.3 or 0.5 milligram per kilogram dose of ARCT-810, all individuals were able to achieve and maintain normal plasma ammonia levels. Glutamine is a physiologic repository of excess nitrogen. But like ammonia, too much glutamine can be toxic. Like ammonia, glutamine is an important measurement of urea cycle activity, often being used in clinical practice to direct diet and medication adjustments. In OTC deficiency, plasma glutamine can be elevated even when ammonia levels are normal, indicating persistent nitrogen excess and impaired urea cycle activity. Thus, glutamine can be a very useful and highly sensitive indicator of nitrogen burden and urea cycle activity. All study participants had elevated glutamine levels at baseline, even though most had normal ammonia levels. Following ARCT-810 treatment, all participants experienced a reduction in glutamine levels, with mean glutamine levels falling below baseline at both 0.3 and 0.5 mg per kg dose levels roughly 15 to as much as 25% less than prior to ARCT-810 treatment. Following the introduction of ARCT-810, we not only observed a significant reduction of glutamine levels across all individuals, but during the one-month post-discontinuation of ARCT-810, we observed a reversal of this reduction, with glutamine levels at the end of the follow-up period being similar to those observed prior to initiating ARCT-810 study drug. These two graphics compare the cumulative changes in ammonia as well as glutamine observed for both 0.3 and 0.5 milligram per kilogram ARCT-810 doses studied. Additionally, it is worth noting the tighter error bars observed for both the ammonia and glutamine measures at the higher of the two administered doses of ARCT-810 at the 0.5 milligram per kilogram dose. Our preliminary conclusions are that we have observed what appears to be drug-specific changes in glutamine, a sensitive indicator of urea cycle function, following initiation of ARCT-810 at both administered doses. Since changes in protein intake can impact glutamine levels, we examine the change in average protein intake per kilogram body weight per day for ARCT-810 treatment compared to baseline protein intake to verify the observed reductions in glutamine were not due to reductions in protein intake. The guidance given to study subjects was to keep their protein intake stable throughout the study. However, we found that participants generally took in more protein while on ARCT-810 as evidenced by the columns pointing upward. In fact, the majority of individuals in our study took in more than 25% of their baseline protein intake at some point during the treatment period. This data suggests that individuals who normally restrict their protein intake due to not only adverse biochemical effects, but also because of the adverse symptoms they feel, such as nausea, headache, and GI upset, were likely experiencing greater protein tolerance on ARCT-810, allowing them to take in more protein. Further evidence is the observed decreased trend in protein intake back to near baseline levels after discontinuation of ARCT-810 at the end of the dosing period. In the context of increased protein intake, ammonia levels were stable or lower, and we also observed decreased glutamine levels. Both changes in these biomarkers support increased urea cycle activity following administration of ARCT-810. To summarize, in this recently completed U.S. Phase 2 OTC deficiency study, ARCT-810 was generally safe and well-tolerated across 5 repeat infusions at both dose levels with no serious adverse events. Ammonia normalized in all participants and glutamine declined in all participants. And all of this occurred despite protein intake rising above baseline. Together, these findings support the core hypothesis that with administration of ARCT-810 in adults with OTC deficiency, restoring OTC enzyme expression in the liver can restore urea cycle activity in people living with OTC deficiency. That's the foundation for the next stage of development. It is now my honor and privilege to introduce Dr. Marshall Summar, who is an internationally renowned expert in the urea cycle disorders and who in the balance of his illustrious career, has contributed significant clinical and scientific advances in our understanding of the genotypic nature as well as the clinical and metabolic phenotypes of OTC deficiency. Dr. Marshall Summar, thank you for joining us today to share your thoughts on the current management of OTC deficiency and to share your thoughts on our development program and our progress thus far.

Thanks, Alan. You've just seen the Phase 2 data, so let me tell you what a metabolic physician takes from it. The result that persuades me is glutamine. Every participant entered the study with an elevated glutamine despite a normal ammonia, which is precisely the profile of the patient we call well-controlled. Glutamine fell in every participant on drug, and it returned toward baseline when dosing stopped. I remind you that glutamine levels are what we track long term to determine patient stability. That on and off pattern appears to be drug effect, not variability. The ammonia decline was a genuine surprise. These were stable patients on unchanged scavenger doses where a flat line is the expected result and the half milligram cohort in particular moved. My conclusion is that ARCT-810 is safe, it's tolerated, and it works. And I would expect a quarter or more of eligible patients to be early adopters. And I'm now turning this call back over to Dr. Pad Chivukula.

Thank you, Dr. Summar. I'm the Chief Scientific Officer at Arcturus Therapeutics. You've just heard a metabolic physician say there's three things about ARCT-810. That it's safe, that it's tolerated, and it works. The question is no longer whether an mRNA medicine can treat OTC deficiency. The question is how much better can we make it. And that's what I'm here to show you. For 13 years, my team has been tackling one problem. How do you get this fragile strand of RNA from a vial into human liver cells, keep it stable for long enough, and have it survive to be effective. Today, I want to tell you about the biggest step forward we've made in that problem. We call it LUNAR 2.0. I'm going to show you data but first I want to start with the problem itself because you can't appreciate the answer until you see what we've been losing. Every IV mRNA medicine in the world, ours, anyone's, starts as a nanoparticle containing four lipids. An ionizable lipid is the one that does the real work, a structural lipid called DSPC, cholesterol, and a PEG lipid coat that's on the outside that keeps the particles from sticking to each other. Wrapped inside is mRNA, the instructions for the protein we want the liver to make. Within minutes of the infusion, the PEG coat sheds and something rather elegant happens. A protein already circulating in your blood, ApoE, apolipoprotein E, lands on the surface of our particles. The body then uses ApoE containing nanoparticles to bind to the LDL receptors on hepatocytes and the cell internalizes the whole particle into a membrane called the endosome. Up to this point, we're winning. We've made it to the right cell in the right organ. And this is where the story turns. The endosome is a sorting room. As it acidifies, the ionizable lipids pick up positive charge, disrupts the membrane, and the mRNA slips into the cytoplasm where the ribosomes are waiting. Well, that's the theory. Here's the reality. Only 2 to 5% of that enters the cell ever gets out. The rest is shuttled to the lysosome and is degraded. Think about that. 95% of the delivered dose is thrown away by the cell after we've done all of the hard work of getting it to the right cell type and the right organ. That's the rate limiting step. That's the step that we've been trying to optimize for a decade. So, LUNAR 2.0 is at the heart of a new ionizable lipid, a next-generation ATX lipid. And I want to show you the experiment that we've done. And set it up properly, because the design is what makes the numbers believable. We took non-human primates, three animals per group, and gave each a single one-hour IV infusion at 0.3 milligrams per kilogram. And that's a clinically relevant dose. The mRNA encoded human erythropoietin. Why EPO? Well, EPO is a secreted protein and the liver makes it. It appears in the blood and we can measure it simply with a blood draw. And 48 hours later, we can do that. No biopsy, no interpretation. It's the cleanest yardstick in the field. Everything on this chart is relative to our own first-generation LUNAR lipid, the ATX-2. That's the baseline of 1. We also ran two clinically approved lipids as a benchmark. The ALC-315, the lipid in an approved mRNA vaccine. And it comes in at 2.2-fold over ATX-2. And the ATX-126, the lipid in Kostaive, our own approved self-amplifying mRNA vaccine that comes in at 14. And then LUNAR 2.0, roughly 40-fold. Same mRNA, same dose, same infusion. The only thing that's changed is the ionizable lipid. The liver made 40 times more protein. Now there's two ways to think about a 40-fold enhancement. You can make 40 times more protein at the same dose, or you can make the same protein from a fraction of the dose. Just hold on to that second one, and I'll come back to it. Dr. Summar already told you what OTC deficiency is and what it does to the families. So let me show you what an extra potency does in an animal that actually has the disease. This is an spf-ash mouse model, an animal with only a trace of working OTC on a high protein diet, which is a stress state. Weekly IV administrations. Untreated, every animal dies within a month. On the left is where we start from, the ARCT-810, our current drug. At 1 milligram per kilogram, it protects them, and that's the bar. And now, the same OTC mRNA delivered with LUNAR 2.0. That's the ARCT-2601. At 0.3 milligrams per kilogram, a third of that dose. Every animal is alive and at day 63. 80% are still alive at day 70 and when the study ends. Look at where the dosing stops. 5 doses finished around day 28. Everything after that line is the drug no longer being there. And at 0.3 milligrams per kilogram, every animal is still alive four weeks later. That's not just more protein. That is protection that outlasts the dosing. At 0.1, a tenth of that dose, they hold for 42 days. And then, of course, they decline. That's what a 40-fold buys us in an animal model with the disease. So that was the mouse. Now let me show you the same question asked in a primate with the actual human enzyme. Same design as the EPO study, three animals per group, one hour infusion, 0.3 milligrams per kilogram. But this time the payload is the real thing, the human OTC mRNA. And because OTC is an intracellular enzyme, it's not a secreted one, we couldn't just draw blood. We took liver biopsies at 48 hours and measured the human OTC protein directly by mass spectrometry. The comparator here is ATX-95, the lipid in ARCT-810. And we just showed you the Phase 2 data on that. That's the baseline of 1. The SM-102, the lipid in another approved mRNA vaccine, comes in at 2.5. The ALC-315 at 5.3. And LUNAR 2.0, the lipid in ARCT-2601, at 38-fold in non-human primates. Two different proteins, one secreted, one in the blood, and one locked inside the cell. Two different ways to measure, a simple blood draw and a liver biopsy. Two different baselines, and the answer comes back the same, roughly 40-fold more proteins. That's why it tells me that this lipid is really what's doing the work and it's not just a quirk of the LNP. A new lipid, of course, raises new questions, and it's really one of the first ones all of us would ask. Is it safe? We have three clinical studies so far, each run head-to-head against ARCT-810, a rodent safety study, a non-human primate tolerability study, and biodistribution. Here's the headline. Nothing in this package separates the ARCT-2601 from ARCT-810. No new findings in the rodent study, no new findings in the primate study. And one difference we did see in the biodistribution, that LUNAR 2.0 lipids clear faster from tissue than the other one. That runs in our favor. I want to be careful with my words. Again, all of these are non-GLP studies. They're supportive, not definitive. The pivotal GLP study is on its way, and ultimately we'll rest on that. And that reads out in November. So here's the practical question. How do you take a new lipid into patients without resetting the clinical clock to zero? And that was the conversation we had with the FDA. In June, we had a Type C meeting on ARCT-2601. The question we put to them was whether we could leverage the platform, the CMC package, the non-clinical data, and the clinical experience we have already with ARCT-810? And the answer was yes. And it went further than that. The FDA agreed that ARCT-2601 can be added as an arm to the ARCT-810 study that's already running. And again, we just presented on that. We will evaluate safety, PK, biomarkers in a small subset of patients. And if the initial data are favorable, we will proceed to an adequate, well-controlled pivotal trial. In practical terms, three to six patients age 12 and up with elevated baseline ammonia dosing inside the existing study. And then, in the second half of '27, the patients, this is what the drug has always been for, a Phase 2/3 pediatric study, age 0 to 6, neonatal onset, severe late onset disease. The whole point of the extra potency is lower dose given less often and this is the plan to prove that it works in people. Again, every mRNA LNP therapy targeting the liver has to be infused, and that's the real bottleneck for patients, for families, or the clinic that has to find the chair. Today, our drug is 0.5 milligrams per kilogram diluted into 250 mL bag, run over 3 hours. For a child with urea cycle disorder on a repeat schedule, that's a morning out of school every single time and a parent's morning out of work with it. Near-term, our objective with the potency, it should allow us to go to 0.3 milligrams per kilogram in about 40 mL, roughly an hour. That's the case we're building and that's closest to our hands. With LUNAR 2.0, of course, we're also trying to target the 0.15 milligrams per kilogram in 5 mL with a syringe pump under 5 minutes, ready to use right out of the vial. My team is working on the formulation now. But the logic is pretty simple. It's the same in both columns. The lipid lets us drop the dose. A more concentrated product lets us drop the volume. You multiply the two, and an afternoon in an infusion chair, becomes a few minutes at the end of a routine appointment. And that's the direction the product potency really opens up. How far can we get and how fast is what we're working on now. So that was delivery that I spent quite a bit of time on. But delivery is only half of the mRNA medicine. The other half is the payload, the sequence itself. We've always designed our own sequence, and we've always screened our payloads. What's changed is that this work can now be done computationally at scale, at speeds that wasn't available to anyone a few years ago. So we're bringing that capability in-house. We just announced we're acquiring myNEO, computational immunologic company that's based out of Ghent. What comes with them is two published peer review algorithms, neoMS, which predicts which peptide gets presented on MHCs across HLA types, and neoIM, which predicts T cells and how it reacts to them. A platform of 10 AI modules already running with pharma partners. A production workflow, not just a demo. And the myNEO team itself, a capability we would have spent years hiring into San Diego. And this goes straight into construct design for both LUNAR and STAR. Codon choices, UTRs, and parts of the sequence that describe how much protein you need for how long. All of this will get incorporated. And it lets us screen express proteins for immunological hotspots computationally before we pick candidates rather than after. Now, this brings us to the next two programs I want to show you, PKU and Gout. Both are enzyme replacement. So the rule becomes screen before you select, better candidates, design faster, with fewer wasted cycles at the bench. So where do we go from here? We've taken the two capabilities I've just described, the AI-guided mRNA design and the LUNAR 2.0 delivery platform and asked, which liver disease do they open up? The answer we've landed on is PKU. There is roughly 1 in every 10 to 15,000 babies born with it. The liver enzyme that converts phenylalanine into tyrosine is missing. Without a working PAH, phenylalanine builds up, crosses into the brain, and untreated, can cause severe irreversible intellectual disability. We catch it at birth on newborn screening, and we manage it with diet and a handful of approved drugs. None of them are perfect. Patients still live on protein restriction, and many of them can stay on it. Our approach, the same logic as OTC, an IV mRNA that has the liver make the working PAH. The enzyme activity, these patients don't have in the cell. But here is where this has been hard and difficult to do with mRNA. PKU is not like OTC. In OTC deficiency, you're fighting an acute crisis, and even partial enzyme activity keeps a patient out of the hospital. PKU, you're managing a metabolite every single day for a lifetime in a patient who's otherwise well. To replace that diet, you don't need a little enzyme, you need a lot of enzyme, and you need it to last. That's the potency problem. Until now, the LNPs simply weren't potent enough to get there at the dose and a schedule a person would accept. LUNAR 2.0 is changing that equation, and I'm going to show you the data on the next slide. This is the slide where it comes together and it comes together in two stages because mRNA and the lipids are two separate problems and we had to solve them both. Stage one is the mRNA itself. These are PKU mice, a single dose, 1 milligram per kilogram, and we followed plasma phenylalanine for a week. The shaded band is the range we're trying to get to in patients. The dashed pink line is the published PAH sequence. That's our benchmark. It drops phenylalanine into the range, and by day three, it climbs back up. Then watch our own generations. Gen 1, the black line, it's out by day two. Gen 2 holds onto it for four days. Gen 3, five. And Gen 5, the light purple line holds on to phenylalanine in the range for six to seven days from a single dose. This is the sequence working. Same delivery, same dose, same animals, expression, and durability engineered directly into the mRNA itself. Stage two is putting that optimized mRNA into LUNAR 2.0 and asking what happens in the primate liver. A single IV administration at 0.5 milligrams per kilogram and we measure PAH protein in the liver. At day two, the liver is producing human PAH at 44% the level of endogenous human PAH. That's the dotted line at the top. And the number I care about most is day seven, 16% still. That dashed green line is the therapeutic threshold. Roughly 10% of the endogenous is where you'd expect clinical benefit. A week after one dose, we're still above it. So a sequence that holds for a week in a lipid that reaches the liver 40 times better than the one before it, this is what I mean by coordinated optimization. You don't get it by just fixing one of them. And a week in a mouse is not a week in a patient. Metabolic rates scale with body size and the larger animal clears these enzymes more slowly. So allometrically scaling, the same construct should last considerably longer in a human than it does in a mouse. Dosing every two weeks is what we're confident this gets us to. We are striving for monthly, and that's the goal. We think for further optimization, think we can reach it. The second program is Gout. I like this one, but it's because it's something every person in this room is missing. Every other mammal on the planet makes an enzyme called uricase. It breaks down uric acid into something soluble and is simply excreted. We don't. Humans and great apes lost it. Somewhere around 15 million years ago, that gene was switched off. We still carry it as a pseudogene. So uric acid becomes our terminal metabolite, and it runs several times higher in us than in a dog or a mouse. Most mammals sit between 0.5 and 2 milligrams per deciliter. A healthy human, 3.5 to 7. And above 6.8, that red line, uric acid stops dissolving and it comes out of solution. It crystallizes in the joints and that is gout. 9.2 million patients in the United States. 200,000 of them fail every oral drug we have. The therapeutic rationale is straightforward. Deliver an mRNA encoding uricase to the liver and restore enzyme activity with a human enzyme that's no longer there. We are introducing not a novel biology, we're just reconstituting a pathway that mammals already use. It is expressing an enzyme delivered directly into hepatocytes, which is exactly the kind of payload LUNAR 2.0 was built for. This is exactly kind of payload that's where myNEO works and earns its place. Uricase is a foreign sequence to the human immune system that has been central challenge for every uricase therapy that has come before. So this is the program where we are screening the construct computationally before we select a candidate rather than discovering the answer clinically. That's the platform working the way it's meant to be. The delivery, the sequence design, and the immunological screening pointed all at same problem. So now, let me leave you with four things. Potency. LUNAR 2.0 makes roughly 40 times more protein in primates' liver than the lipid it replaces. It did it twice with two different proteins measured two different ways. The ARCT-2601, highly potent, no new safety signals, and an FDA-agreed path into a study that's already running, integrated into our ongoing Phase 2 by end of this year. Lower dose means faster infusion, 3 hours today, an hour within reach, and a single syringe pump as the goal. And PKU and Gout again uses the same platform, engineered mRNA, potent delivery, using our computational screening expertise, opens the set of new liver indications. If you remember one line, this is one. More protein from less mRNA. Lower dose, shorter infusions, new indications. 13 years ago, we started Arcturus to solve the delivery. LUNAR 2.0 was a result that changed the way we thought what could be achieved. And once you see that, you start asking which diseases we can go after. I think this is where delivery stops being a bottleneck. Thank you. Now I'll turn the time over to Dr. Summar for his comments.

Thank you, Pad. The next-generation platform is the part of the program I would pay closest attention to. Greater than 30-fold improvement in potency is a change in kind rather than degree. It moves the objective from supporting the urea cycle to correcting it, and it buys headroom that can be spent on elevated enzyme expression, duration of efficacy, or extending the dosing interval. Once monthly dosing is the variable that determines real-world benefit. These families already manage protein at every meal and scavengers several times a day. Interval drives enzyme persistence and persistence is what changes outcomes. If close to full correction is obtained, diet becomes normal and scavengers should not be needed. Multiple benefits from that in growth and development. So, I will state my expectation plainly. I believe ARCT-2601 has the potential to become the standard of care, particularly in severe OTC deficiency. And I expect this platform to read through to a long list of liver-based rare diseases where roughly 70% of patients are children. Thank you for your attention. We'll now pass the call to the operator for Q&A.

[Operator Instructions] And we will take our first question from Myles Minter with William Blair. Please go ahead. Your line is now open.

You've been talking with regulators and it seems like you've got alignment here with amending this Phase 2 to include 2601, and the actual GLP studies look clean. I'm wondering whether you talked about endpoints, particularly as it relates to maybe a potential accelerated approval for the program. I think previously your focus being on glutamine reductions, but there's obviously some interesting sort of protein exposure data that you're generating here, which might increase importance of dietary relaxation as an endpoint. Just wondering whether you've got any more regulatory feedback about the pathway moving forward here from an endpoints perspective.

Hey, thanks, Myles. And this is Joe. We definitely did get some additional regulatory feedback through a pair of Type C meetings earlier this year and elevated the importance of ammonia as an endpoint, especially in pediatrics, and definitely open to glutamine as an endpoint in adults. But I'd like to turn the time over to Al to comment further.

Sure. So let me just add to what Joe pointed out. If you look historically at what were the measures, the biomarkers and the endpoints that have resonated and are important to the FDA, as Joe mentioned, durable suppression of ammonia, durable reduction in glutamine, and also as we are starting to see evidence of here, an ability to maintain metabolic stability and perhaps evidence of improved protein tolerance and consistency over many dosing cycles. So these earlier studies were really fairly brief and they were not intended to modify protein intake or have any impact at all on standards of care such as ammonia stabilizers. However, the possibility of wanting to look at those over longer periods of time in a patient population that's stable and where we have sufficient time to introduce our new construct, I think is exactly the kinds of endpoints that will be not only meaningful but will resonate with the regulators and they're the sorts of measures that are going to be necessary. Thanks, Myles.

Thank you. And we'll now move to Pete Stavropoulos with Cantor Fitzgerald. Please go ahead. Your line is now open.

In the slide deck for regulatory and clinical plan, it says advance the Phase 2 into pediatric study in the second half of next year, ages 0 to 6. Is this the population you're going to focus on solely, or will you do studies around those greater than 6 years and adults? How should we be thinking about this and what needs to be done to sort of move into that younger population, and how prevalent is it?

Yes, a couple things. 2601 is intended to service the entire population. However, the initial focus is on the largest unmet need, which is pediatrics. Alan, maybe you could comment further.

Yes, sure. You know, it's quite possible that it would make sense from our enrollment criteria perspective to include 6 to 11-year-olds. As you know, in the study that we currently did, we studied 12 to 18 in the adolescent age group and then 18 and above for adults. Metabolically, the kids that are at highest risk and the ones that are requiring liver transplants or unfortunately sustain neurological damage and succumb to their disease before school age are obviously those most severe from birth to six years. That's really going to be our focus, but it's quite possible that it may make sense to include 6 to 11-year-olds, and that'll be some of the further discussions we'll be having as we finish designing our trial and move it forward into the clinics in the second half of next year.

Thank you. And we'll move next to Lili Nsongo with Leerink Partners. Please go ahead. Your line is now open.

Coming back to the Phase 2 data from the U.S. study, could you provide a bit more color on how the baseline was assessed for both glutamine and ammonia? How many times were the baseline measured and at what time interval? And also, how should we think about the magnitude of change that will be considered clinically relevant in terms of both change in glutamine and ammonia? And how are those changes that we are seeing comparing to natural history for patients in restricted diet and ammonia scavengers?

There's a lot there, but with respect to baseline assessment, Alan, why don't you start.

Yes, sure. There was a lot loaded into that question. We did a screening at a baseline of glutamine and ammonia, as well as a baseline dietary assessment and counseling by our dietitian to make sure that over a period of time coming into the study, the patients were in fact maintaining their protein intake and they were following the regimen that had been prescribed and recommended by their physicians, as well as continuing to stay on their baseline meds. And then around the times of the infusions, we had patients come back in and we were measuring glutamine, ammonia levels, et cetera, throughout the course of the 5-dose study. So we think we got enough points on the curve and enough individual measures that we were able to follow the patients adequately, but obviously in a longer study with a slightly larger patient population, we have the latitude to get, I think, a greater breadth of information, particularly if we're going to want to do the things that I spoke about just a few moments ago, getting patients to, in a more controlled way, liberalize their protein intake over time. So we give them a greater protein challenge, which speaks directly to ureagenesis. And then also the possibility of working with their physicians and having them decide if it was appropriate to back off on some of the ammonia scavengers if the patients are on them to see if they're even necessary anymore. The goals for this would be to show that patients have a stable, refunctioning urea cycle, and those are really the best ways to measure these. Hopefully that answers your question.

Thank you. And we'll move next to Yanan Zhu with Wells Fargo. Please go ahead. Your line is now open.

I was wondering, LUNAR 2.0 seems to have a much higher potency, 40x. I was wondering, A, whether that's due to delivery to the liver or purely due to endosomal escape. And then, but the dose that you showed in NHP seems to be only 3 times lower than the older LNP. So I was wondering, could we or should we expect even further reduction in dose given the 40x or 38x potency increase? And then lastly, once you put the 2601 into patients, how soon can we see data and how do we appreciate the improved potency in the data? Is that going to reflect in even deeper glutamine reduction or some other aspect that you aspire to?

Great. A lot there. I'll unpack it and then I'll allow Pad to comment as well. Yes, Pad implied and communicated on the recent presentation that endosomolytic disruption or endosomal escape was the area where there was the most opportunity to optimize the technology. And that's where we feel we got a lot of traction with LUNAR 2.0. With respect to the target product profile of 810 was looking like a 0.5 mgs per kg every two weeks, as we expected. The TPP for 2601 has not been disclosed yet, but you can imagine that with a 40-fold improvement in primates, or 38 to give the exact number, you can target 0.3 milligrams per kilogram or less and once a month or less and less time in chair, right? So there'll be an appropriate time to provide more granularity on the TPP or the target profile for 2601. But I want to focus most of my answer on how soon the data. I want to remind everyone that what we're doing here with 2601 is simply integrating it into the present 810 study, and this is per advice by the FDA, in a handful of patients. This isn't expected to change the budget or the timeline. If anything, with respect to the timeline to approval, we've always learned, especially in OTC deficiency, that Phase 3 enrollment cadence is key and we believe and make sense that a better product will accelerate that cadence. And so that's the objective of 2601 is to simply integrate it into the path that's already established per the advice of the FDA and evaluated in a small handful of patients that can get people excited and help accelerate our Phase 3 enrollment. Now I'm going to turn the time over to Pad to address.

Yes, I think one part of your question was about the biodistribution of LUNAR 2.0 versus the previous generation. Both of the biodistributions are similar, so both get into the liver using the ApoE mechanism. So because of that, the distribution is the same. The only thing we're changing is the endosomolytic activity. So hopefully that helps. So both go to the liver, about the same percentage. One is just better at getting out in a nutshell.

Joe, can I comment on one thing? This is Marshall. Yes, you asked if the glutamine levels would go even lower. Actually, the glutamine levels achieved in the current study actually return to normal levels. The body has sort of a homeostasis there. So you wouldn't expect to see the glutamines to go lower. You'd just expect them to stay in that nice normal range right there. Sorry, that's all I needed to add.

Thank you for the comment.

Thank you. And we'll move next to Seamus Fernandez with Guggenheim Securities. Please go ahead.

Hi, this is Evan Lang. I'm from Janus. I had a follow-up in terms of the ARCT-2601 program and just the dose selection there. Just curious if I'm understanding it correctly that the planned Phase 2 dose is that 0.3 mgs per kg over 1 hour. That's highlighted in the slide. Curious what's informed that dose level and if there's an equivalent 810 dose level there. And then I did have one follow-up, and just in terms of the speed of onset benefit we're seeing here, it does look like we're seeing some degree of ammonia benefit each visit. Glutamine, I see, really seems to have a benefit at day 35-ish, but wasn't sure if that was the first measure or if there was some multi-dose time course of seeing benefit.