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What changed in Arcturus Therapeutics Holdings Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Arcturus Therapeutics Holdings Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+454 added−459 removedSource: 10-K (2026-03-03) vs 10-K (2025-03-06)

Top changes in Arcturus Therapeutics Holdings Inc.'s 2025 10-K

454 paragraphs added · 459 removed · 286 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

132 edited+85 added−104 removed127 unchanged
Biggest changeWe are aware of product candidates of the following companies that we consider as competitors or future competitors to ARCT-032: Moderna/Vertex, Eloxx Pharmaceuticals, Recode, 4DMT, Spirovant, SalioGen and Splisense. 32 Multiple Areas Of the competitors noted above, the following compete with us across multiple areas of our portfolio and/or aspects of our platform technologies: • While we are the first and only company with an approved sa-mRNA vaccine in a major market, there are two other manufacturers with approved conventional mRNA-based vaccines o BioNTech, in collaboration with Pfizer, has a marketed COVID-19 conventional mRNA vaccine, COMIRNATY® available in multiple geographies, and is developing mRNA flu vaccine and COVID-19/flu combination vaccine, as well as latent virus and other vaccines of global public health interest in early development. o Moderna manufactures the only other approved conventional mRNA based COVID-19 vaccine, Spikevax®, which is available in multiple geographies.
Biggest changeMultiple Areas Of the competitors noted above, the following compete with us across multiple areas of our portfolio and/or aspects of our platform technologies: • While we are the first and only company with an approved sa-mRNA vaccine in a major market, there are two other manufacturers with approved conventional mRNA-based vaccines, according to information published by the relevant companies: o BioNTech, in collaboration with Pfizer, has a marketed COVID-19 conventional mRNA vaccine, COMIRNATY ® , available in multiple geographies, and is developing an mRNA flu vaccine and a COVID-19/flu combination vaccine, as well as latent virus and other vaccines of global public health interest in early development. o Moderna manufactures two other approved conventional mRNA-based COVID-19 vaccines, Spikevax ® and mNEXSPIKE ® , which are available in multiple geographies.
The general objectives of these therapies include: • to introduce a gene product (e.g., mRNA or DNA) that encodes for a functional protein to replace an absent or defective protein; • to restore a functional protein by genomic DNA editing of the corresponding gene resulting in the correction of the mRNA sequence; • to reduce the amount of a target protein in a patient by binding to and destroying the associated target mRNA (antisense DNA or small interfering RNA (“siRNA”)); and • to express proteins from viruses or unique proteins only found in cancer and not in non-cancerous cells resulting in the induction of protective immunity against specific viral pathogens or immune mediated elimination of cancer cells.
The general objectives of these therapies include: • to introduce a gene product (e.g., mRNA or DNA) that encodes for a functional protein to replace an absent or defective protein; • to restore a functional protein by genomic DNA editing of the corresponding gene or RNA editing resulting in the correction of the mRNA sequence; • to reduce the amount of a target protein in a patient by binding to and destroying the associated target mRNA (antisense DNA or small interfering RNA (“siRNA”)); and • to express proteins from viruses or unique proteins only found in cancer and not in non-cancerous cells resulting in the induction of protective immunity against specific viral pathogens or immune mediated elimination of cancer cells.
The COVID-19 pandemic has highlighted the efficacy, safety, and rapidity in which nucleic acid medicines can be used to vaccinate vulnerable populations, and our vaccine program has continued to progress. In 2020, we initiated the development of our first self-amplifying mRNA vaccine candidate to protect against COVID-19.
The COVID-19 pandemic highlighted the efficacy, safety, and rapidity in which nucleic acid medicines can be used to vaccinate vulnerable populations, and our vaccine program has continued to progress. In 2020, we initiated development of our first self-amplifying mRNA vaccine candidate to protect against COVID-19.
The approval was based on manufacturing data demonstrating the quality and consistency of the vaccine product, non-clinical immunogenicity data against JN.1 lineage of Omicron subvariants of KOSTAIVE, and clinical evidence supporting the safety and immunogenicity of KOSTAIVE (bivalent, BA.4/5 and ancestral strain).
The approval was based on manufacturing data demonstrating the quality and consistency of the vaccine product, non-clinical immunogenicity data against JN.1 lineage of Omicron subvariants of KOSTAIVE (JN.1), and clinical evidence supporting the safety and immunogenicity of KOSTAIVE (bivalent, BA.4/5 and ancestral strain).
The Gates Foundation awarded Arcturus a grant of $3.9 million in November 2024 to support the development of such a therapeutic HPV vaccine through clinical candidate nomination stage. Enabling Technologies Enabling Technologies – Cancer vaccines Our LUNAR Cancer vaccine discovery efforts are aimed at developing an immunotherapy against a tumor via activated T-cells.
The Gates Foundation awarded Arcturus a grant of $3.9 million in November 2024 to support the development of such a therapeutic HPV vaccine through the clinical candidate nomination stage. Enabling Technologies Enabling Technologies – Cancer vaccines Our LUNAR Cancer vaccine discovery efforts are aimed at developing an immunotherapy against a tumor via activated T-cells.
On September 25, 2023, we entered into an additional amendment (the “Fourth Amendment”) to the CFF Agreement, pursuant to which we and CFF agreed to: (a) increase the Amount of Award (as defined in the CFF Agreement and applicable amendment) from CFF to advance LUNAR-CF by up to $9 million (for a total to date of up to approximately $25 million), and required Arcturus to provide $15 million in matching funds for remaining budgeted costs; (b) modify the existing rates and caps on royalties due to CFF under the CFF Agreement, including the addition of an option for Arcturus to reduce the royalty rate through a one-time payment; (c) modify the calculation of payments from Arcturus to CFF in the event of certain dispositions or licensing of cystic fibrosis or other pulmonary assets or of a change of control of Arcturus; and (d) make corresponding changes to exhibits, definitions and other provisions of the CFF Agreement.
On September 25, 2023, we entered into an additional amendment (the “Fourth Amendment”) to the CFF Agreement, pursuant to which we and CFF agreed to: (a) increase the Amount of Award (as defined in the CFF Agreement and applicable amendment) from CFF to advance LUNAR-CF by up to $9 million (for a total to date of 25 up to approximately $25 million), and required Arcturus to provide $15 million in matching funds for remaining budgeted costs; (b) modify the existing rates and caps on royalties due to CFF under the CFF Agreement, including the addition of an option for Arcturus to reduce the royalty rate through a one-time payment; (c) modify the calculation of payments from Arcturus to CFF in the event of certain dispositions or licensing of cystic fibrosis or other pulmonary assets or of a change of control of Arcturus; and (d) make corresponding changes to exhibits, definitions and other provisions of the CFF Agreement.
Platform Technologies and R&D Programs We have four key proprietary platform technologies: • lipid-mediated delivery (LUNAR ® ) • mRNA and protein design • self-amplifying mRNA (STARR ® ) • manufacturing and formulation for mRNA medicines LUNAR (Lipid-Mediated Delivery) Platform Our LUNAR lipid-mediated delivery technology includes a diverse, growing library of over 300 proprietary lipids that we are rationally designing to be versatile, while maximizing efficacy and improving tolerability of a diverse selection of nucleic acids, refining the LNPs to target specific cell types, and determining the most favorable routes of administration.
Platform Technologies and R&D Programs We have four key proprietary platform technologies: • lipid-mediated delivery (LUNAR ® ) • mRNA and protein design 14 • self-amplifying mRNA (STARR ® ) • manufacturing and formulation for mRNA medicines LUNAR (Lipid-Mediated Delivery) Platform Our LUNAR lipid-mediated delivery technology includes a diverse, growing library of over 300 proprietary lipids that we are rationally designing to be versatile, while maximizing efficacy and improving tolerability of a diverse selection of nucleic acids, refining the LNPs to target specific cell types, and determining the most favorable routes of administration.
Among other collaboration arrangements, • we have a collaboration with CSL Seqirus for vaccines against SARS-CoV-2 (COVID-19), influenza and three other infectious diseases; • we have received funding from the CFF to support our LUNAR-CF development program; and 23 • we have a contract with BARDA to support the development of a low-dose pandemic influenza candidate based on our proprietary self-amplifying messenger RNA-based vaccine platform.
Among other collaboration arrangements, • we have a collaboration with CSL Seqirus for vaccines against SARS-CoV-2 (COVID-19), influenza and three other infectious diseases; • we have received funding from the CFF to support our LUNAR-CF development program; and • we have a contract with BARDA to support the development of a low-dose pandemic influenza candidate based on our proprietary self-amplifying messenger RNA-based vaccine platform.
In December 2022 we entered into a Collaboration and License Agreement (“CSL Collaboration Agreement”) with CSL Seqirus, a part of CSL Limited and one of the world’s leading influenza vaccine providers, for the global exclusive rights to research, develop, manufacture and commercialize self-amplifying mRNA vaccines against COVID-19, influenza and three other infectious diseases and global non-exclusive rights to pandemic pathogens.
In December 2022, we entered into a Collaboration and License Agreement (“CSL Collaboration Agreement”) with CSL Seqirus, a part of CSL Limited and one of the world’s leading influenza vaccine providers, for the global exclusive rights to research, develop, manufacture and commercialize self-amplifying mRNA vaccines against COVID-19, influenza and up to three other infectious diseases and global non-exclusive rights to pandemic pathogens.
We have extensive expertise in the design and optimization of mRNA constructs, including with respect to a type of mRNA technology known as self-amplifying mRNA (sa-mRNA). Our proprietary self-amplifying mRNA technology platform, or STARR ® (“STARR”), has been demonstrated to induce a longer-lasting and broader humoral immune response at lower dose levels than conventional mRNA-based vaccines.
We have extensive expertise in the design and optimization of mRNA constructs, including with respect to a type of mRNA technology known as self-amplifying mRNA (sa-mRNA). Our proprietary self-amplifying mRNA technology platform, or STARR ® (“STARR”), has been demonstrated to induce a robust, longer-lasting and broader humoral immune response at lower dose levels than conventional mRNA-based vaccines.
For a more comprehensive discussion of the CSL Collaboration Agreement, please see Item 1 “Business” – “Revenue and Collaboration Arrangements and Other Material Agreements” – “CSL Seqirus.” In November 2023, ARCT-154 became the world’s first approved self-amplifying RNA vaccine following Japan’s approval of ARCT-154 for primary immunization and as a booster dose against COVID-19.
For a more comprehensive discussion of the CSL Collaboration Agreement, please see Item 1 “Business” – “Revenue and Collaboration Arrangements and Other Material Agreements” – “CSL Seqirus.” In November 2023, ARCT-154 (KOSTAIVE) became the world’s first approved self-amplifying RNA vaccine following Japan’s approval of ARCT-154 for primary immunization and as a booster dose against COVID-19.
Some of the major accomplishments that have been achieved using this manufacturing development process are increased drug substance yield, reduction in drug substance impurities, increased manufacturing efficiency, and extended refrigerated and ambient temperature shelf life. Discovery Programs The versatile nature of our platform technologies may allow for a broad spectrum of nucleic acid medicines.
Some of the major accomplishments that have been achieved using this manufacturing development process are increased drug 20 substance yield, reduction in drug substance impurities, increased manufacturing efficiency, and extended refrigerated and ambient temperature shelf life. Discovery Programs The versatile nature of our platform technologies may allow for a broad spectrum of nucleic acid medicines.
This allows airway cells to produce functional human CFTR protein using native translational machinery and protein trafficking pathways which could result in the treatment of the underlying defect that causes CF lung disease, regardless of the specific mutation. The Cystic Fibrosis Foundation (the “CFF”) has partnered with us to support development of this therapy.
This allows airway cells to produce functional human CFTR protein using native translational machinery and protein trafficking pathways which could result in the treatment of the underlying defect 6 that causes CF lung disease, regardless of the specific mutation. The Cystic Fibrosis Foundation (the “CFF”) has partnered with us to support the development of this therapy.
CSL has also been granted global non-exclusive rights in the field of pandemic preparedness (i.e., pathogens identified as priority diseases by the WHO), with the right to convert to an exclusive license. The CSL Collaboration Agreement sets forth how the parties will collaborate to research and develop vaccine candidates.
CSL has also been granted global non-exclusive rights in the field of pandemic preparedness (i.e., pathogens identified as priority diseases by the WHO), with the right to convert to an exclusive license. 24 The CSL Collaboration Agreement sets forth how the parties will collaborate to research and develop vaccine candidates.
LUNAR formulations encapsulating hEPO mRNA with different ATX lipids are intravenously administered to these mouse 19 strains at three and five mg/kg doses and monitored for clinical signs. Blood was drawn at six and 48 hours after LUNAR administration and assayed for both liver functions and cytokine elevations.
LUNAR formulations encapsulating hEPO mRNA with different ATX lipids are intravenously administered to these mouse strains at three and five mg/kg doses and monitored for clinical signs. Blood was drawn at six and 48 hours after LUNAR administration and assayed for both liver functions and cytokine elevations.
Although prophylactic HPV vaccinations have substantially lowered the incidence of cervical cancer in developed countries, 21 cervical cancer is still the fourth leading cause of cancer in women globally with the vast majority (approximately 90%) of cases in countries that have not yet widely adopted prophylactic HPV vaccinations and other cervical cancer prevention strategies, including screening and treatment.
Although prophylactic HPV vaccinations have substantially lowered the incidence of cervical cancer in developed countries, cervical cancer is still the fourth leading cause of cancer in women globally with the vast majority (approximately 90%) of cases in countries that have not yet widely adopted prophylactic HPV vaccinations and other cervical cancer prevention strategies, including screening and treatment.
Some of the issues include toxicity, potential for insertional mutagenesis of the CAR construct, T cell malignancies, and an ex vivo manufacturing process that is complex, time consuming and costly. We believe that our LUNAR-I/O approach has the potential to ameliorate some of these issues. For example: 1.
Some of the issues include toxicity, potential for insertional mutagenesis of the CAR construct, T cell malignancies, and an ex vivo manufacturing process that is complex, time consuming and costly. We believe that our LUNAR-I/O approach has the potential to ameliorate some of these issues. For example: 23 1.
The public may read and copy any materials that we file with the SEC electronically through the SEC website (www.sec.gov). The information contained on the SEC’s website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered to be part thereof. 33
The public may read and copy any materials that we file with the SEC electronically through the SEC website (www.sec.gov). The information contained on the SEC’s website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered to be part thereof.
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 CF. Thirty-two healthy participants (eight subjects in each of four dose cohorts) received a single inhaled dose of ARCT-032.
In 2023, we successfully completed a safety and tolerability Phase 1 single ascending dose study of ARCT-032 (LUNAR-CF), our mRNA therapeutic candidate for CF. Thirty-two healthy participants (eight subjects in each of four dose cohorts) received a single inhaled dose of ARCT-032.
In addition to enabling uptake of the medicine into cells, the nucleic acids delivery vehicle seeks to protect the nucleic acid from degradation prior to cell entry and to release the nucleic acid payload inside the cell. Arcturus has developed a novel lipid-mediated delivery system called LUNAR.
In addition to enabling uptake of the medicine into cells, the nucleic acid delivery vehicle seeks to protect the nucleic acid from degradation prior to cell entry and to release the nucleic acid payload inside the cell. Arcturus has developed a novel lipid-mediated delivery system called LUNAR.
For a more comprehensive discussion of the risks related to our intellectual property, please see Item 1A “Risk Factors” – “Risks Related to Our Intellectual Property.” The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States.
For a more comprehensive discussion of the risks related to our intellectual property, please see Item 1A “Risk Factors” – “Risks Related to Our Intellectual Property.” 27 The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States.
Our proprietary LNP delivery system, LUNAR ® (“LUNAR”), is intended to address the major hurdle in RNA drug development, namely the effective and safe delivery of RNA therapeutics to disease-relevant target tissues. LUNAR may enable multiple nucleic acid medicines.
Our proprietary LNP delivery system, LUNAR ® (“LUNAR”), is intended to address the major hurdle in RNA drug development, namely the effective and safe delivery of RNA to disease-relevant target tissues. LUNAR may enable multiple nucleic acid medicines.
In plasma, ARCT-810 mRNA could be detected up to four weeks, while ionizable lipid was no longer measurable after 48 hours, indicating rapid degradation of the lipid nanoparticle that was utilized to deliver ARCT-810 mRNA.
In plasma, ARCT-810 mRNA could be detected for up to four weeks, while ionizable lipid was no longer measurable after 48 hours, indicating rapid degradation of the lipid nanoparticle that was utilized to deliver ARCT-810 mRNA.
We conducted exploratory platform development activities, including the evaluation of genome editing, and new targeting approaches, where our LUNAR and STARR platforms could potentially be useful for identification and development of additional products for our portfolio.
We conducted exploratory platform development activities, including the evaluation of genome editing, and new targeting approaches, where our LUNAR and STARR platforms could be useful for identification and development of additional products for our portfolio.
Figure 4: C9G and C9I formulations were tested for EPO expression in non-human primates at a single dose and assayed for secreted hEPO in the blood six hours after IV administration. Both C9G and C9I yielded significantly higher expression levels than the positive control, B2G further confirming the superior performance of the new LUNAR formulations.
Figure 3: C9G and C9I formulations were tested for EPO expression in non-human primates at a single dose and assayed for secreted hEPO in the blood six hours after IV administration. Both C9G and C9I yielded significantly higher expression levels than the positive control, B2G further confirming the superior performance of the new LUNAR formulations.
Claims also cover the composition of matter, formulation, and use of our therapeutic candidates to prevent and/or treat target diseases including OTC deficiency, CF, COVID-19 and Influenza. If issued, our patents are expected to expire between 2028 and 2045, without taking into account any possible patent term extensions.
Claims also cover the composition of matter, formulation, and use of our therapeutic candidates to prevent and/or treat target diseases including OTC deficiency, CF, COVID-19 and Influenza. If issued, our patents are expected to expire between 2028 and 2046, without taking into account any possible patent term extensions.
We designed the ATX lipid to be rapidly biodegradable by engineering chemical structural components, called esters, into the ATX backbone that are sensitive to cellular enzymes, called esterases. This degradation prevents ATX lipids from accumulating inside the cell and causing toxicity.
We designed the ATX lipid to be rapidly biodegradable by engineering chemical structural components, called esters, into the ATX backbone that are sensitive to esterases. This degradation prevents ATX lipids from accumulating inside the cell and causing toxicity.
Currently no cure exists for OTC deficiency apart from liver transplant; however, this treatment comes with significant risks and complications such as organ rejection, and transplant recipients must take immunosuppressant drugs for the rest of their lives. Current standard of care for OTC deficiency is a low-protein diet, dietary supplements, and nitrogenscavengers to try to prevent accumulation of ammonia.
Currently no cure exists for OTC deficiency apart from liver transplant; however, this treatment comes with significant risks and complications such as organ rejection, and transplant recipients must take immunosuppressant drugs for the rest of their lives. Current standard of care for OTC deficiency is a low-protein diet, dietary supplements, and nitrogen scavengers to try to prevent accumulation of ammonia.
In March 2024, we entered into Amendment Number Two to Collaboration and License Agreement between CSL and the Company to reflect updates to the development program and other adjustments consistent with our prior disclosures regarding the Collaboration and License Agreement (“Amendment Number Two”).
In March 2024, we entered into Amendment Number Two to the CSL Collaboration Agreement to reflect updates to the development program and other adjustments consistent with our prior disclosures regarding the Collaboration and License Agreement (“Amendment Number Two”).
We anticipate that further patents will be filed as we continue to innovate with respect to our STARR platform and that current applications covering these developments in our STARR platform, if granted, will last until 2044, not including any patent term extensions. 26 Patent Terms The term of individual patents depends on the countries in which they are obtained.
We anticipate that further patents will be filed as we continue to innovate with respect to our STARR platform and that current applications covering these developments in our STARR platform, if granted, will last until 2046, not including any patent term extensions. Patent Terms The term of individual patents depends on the countries in which they are obtained.
Each of our ATX lipids contain an ionizable head group and a biodegradable lipid backbone. The head group is a key chemical component of the ATX lipid, making it pH-sensitive and providing it distinct advantages as a component of our LUNAR lipid formulation.
Each of our ATX lipids contains an ionizable head group and a biodegradable lipid backbone. The head group is a key chemical component of the ATX lipid, making it pH-sensitive and providing it distinct advantages as a component of our LUNAR lipid formulation.
Upon uptake into a cell by endocytosis (a process that forms a cellular structure called an endosome around the LUNAR formulated nucleic acid therapeutic), the head group again becomes positively charged, disrupting the endosome and the LUNAR particle, resulting in release of the nucleic acid therapeutic into the cell where is it translated to produce a therapeutic protein.
Upon uptake into a cell by endocytosis (a process that forms a cellular structure called an endosome around the LUNAR formulated nucleic acid therapeutic), the head group again becomes positively charged due to the low pH of the endosome, disrupting the endosome and the LUNAR particle, resulting in release of the nucleic acid therapeutic into the cell where it is translated to produce a therapeutic protein.
Therefore, we plan to continue to file patent applications in jurisdictions around the world as we discover and develop novel nucleic acid technology platforms and novel nucleic acid therapeutic candidates. We cannot guarantee that future applications will be issued. Our Patent Portfolio As of January 31, 2025, we own over 500 patents and pending patent applications.
Therefore, we plan to continue to file patent applications in jurisdictions around the world as we 26 discover and develop novel nucleic acid technology platforms and novel nucleic acid therapeutic candidates. We cannot guarantee that future applications will be issued. Our Patent Portfolio As of January 31, 2026, we own over 500 patents and pending patent applications.
The disruption of the LUNAR particle also releases the components of the formulation into the cell, where the ATX lipid is degraded by enzymes in the cell allowing for the lipids to be cleared from the cell.
The disruption of the LUNAR particle also releases the components of the formulation into the cell, where the ATX lipid is degraded by enzymes called esterases in the cell allowing for the lipids to be cleared from the cell.
On August 1, 2019, we entered into an amendment to the CFF 24 Agreement.
On August 1, 2019, we entered into an amendment to the CFF Agreement.
Self-amplifying RNA-based prophylactic vaccines developed with STARR trigger rapid and prolonged antigen expression within host cells which may provide protective immunity against infectious pathogens.
Self-amplifying RNA-based prophylactic vaccines developed with STARR trigger rapid and prolonged antigen expression in host cells, which may provide protective immunity against infectious pathogens.
Our LUNAR-FLU (seasonal) program, now exclusively licensed to CSL Seqirus, has the objective of producing a safe and effective seasonal influenza vaccine candidate with significant advantages over the traditional egg-based inactivated quadrivalent vaccine. Inaccurate predictions of circulating influenza strains as well as mutations due to adaptation in egg-grown vaccines can substantially reduce efficacy on a year-to-year basis.
Our LUNAR-FLU (seasonal) program, partnered with CSL Seqirus, has the objective of producing a safe and effective seasonal influenza vaccine candidate with significant advantages over the traditional egg-based inactivated quadrivalent vaccine. Inaccurate predictions of circulating influenza strains as well as mutations due to adaptation in egg-grown vaccines can substantially reduce efficacy on a year-to-year basis.
Expression of Human EPO in Mice 6 hours After IV Administration (Figure 2) 16 Mouse Liver Clearance of LUNAR Lipids 48 hours After IV Administration (Figure 3) 17 Expression of Human EPO in Non-Human Primates 6 Hours After IV Administration (Figure 4) Figure 2: mice were injected intravenously with 4 different LUNAR lipid formulations containing mRNA expressing human erythropoietin (EPO).
Expression of Human EPO in Mice 6 hours After IV Administration (Figure 1) 16 Mouse Liver Clearance of LUNAR Lipids 48 hours After IV Administration (Figure 2) 17 Expression of Human EPO in Non-Human Primates 6 Hours After IV Administration (Figure 3) Figure 1: mice were injected intravenously with 4 different ATX lipid formulations containing mRNA expressing human erythropoietin (hEPO).
Additional advancements of the LUNAR Cancer Vaccine program include the improvement of antigen cassette designs, STARR RNA elements, and immune modulator molecules, all of which can significantly enhance T cell responses. Figure 11: Antitumor activity and T cell response by Arcturus cancer vaccines. A.
Additional advancements of the LUNAR Cancer Vaccine program include the improvement of antigen cassette designs, STARR RNA elements, and immune modulator molecules, all of which can significantly enhance T cell responses. 21 Figure 7: Antitumor activity and T cell response by Arcturus cancer vaccines. A.
In January 2025, CSL Seqirus’ partner Meiji announced that it received approval for a partial amendment to the manufacturing and marketing approval of KOSTAIVE to include manufacturing sites in Japan. With this approval, Meiji and ARCALIS, Inc., Arcturus’ manufacturing joint venture in Japan, have been added as manufacturing sites.
In January 2025, CSL Seqirus’ partner Meiji received approval for a partial amendment to the manufacturing and marketing approval of KOSTAIVE to include manufacturing sites in Japan. With this approval, Meiji and ARCALIS, Inc., Arcturus’ manufacturing joint venture in Japan, have been added as manufacturing sites.
The LUNAR lipids that were screened were C9G, C9H, C9I and B2G at 0.1 mg/kg and 0.3 mg/kg RNA doses. LUNAR lipid B2G formulation is a positive control to which expressions from the other formulations are compared. Mice were bled 6 hours after injection and assayed for EPO, a secreted protein.
The ATX lipids that were screened were C9G, C9H, C9I and B2G at 0.1 mg/kg and 0.3 mg/kg RNA doses. ATX lipid B2G formulation is a positive control to which expressions from the other formulations are compared. Mice were bled 6 hours after injection and assayed for hEPO, a secreted protein.
Biodegradable, highly optimized for each cell type LUNAR-platform development The development of our LUNAR platform is focused on continuous innovation and advancement in the following areas: • Design, manufacture and incorporate novel ATX lipids into formulations to enrich our library of proprietary ATX lipids for target cell/tissue specificity, improved tolerability and translatability to larger species; • Develop, optimize and innovate manufacturing processes for LUNAR formulations to ensure RNA encapsulation across compositions and scales; • Develop stabilization strategies (e.g. lyophilized presentation) for LUNAR formulations to mitigate the need for frozen storage and to extend shelf-life; and • Continually optimize and innovate LUNAR screening paradigm to enable rigorous selection of ATX lipids for various therapeutic programs and routes of administration. 15 Through the above efforts, our versatile LUNAR platform continues to drive internal and partner programs.
Biodegradable, highly optimized for each cell type 15 LUNAR-platform development The development of our LUNAR platform is focused on continuous innovation and advancement in the following areas: • Design, manufacture and incorporate novel ATX lipids into formulations to enrich our library of proprietary ATX lipids for target cell/tissue specificity, improved tolerability and translatability to larger species; • Develop, optimize and innovate manufacturing processes for LUNAR formulations to ensure RNA encapsulation across compositions and scales; • Develop stabilization strategies (e.g. lyophilized presentation) for LUNAR formulations to mitigate the need for frozen storage and to extend shelf-life; and • Continually optimize and innovate LUNAR screening paradigm to enable rigorous selection of ATX lipids for various therapeutic programs and routes of administration.
We believe the ability of mRNA platforms to nimbly adapt to new viral strains should help improve efficacy. In addition, we do not expect mRNA vaccines to face the challenge from mutations common to egg-grown vaccines. LUNAR-FLU has been designed to take advantage of our expertise in both LUNAR lipid delivery systems and our STARR self-amplifying mRNA technology.
We believe the ability of mRNA platforms to nimbly adapt to new viral strains should help improve efficacy. In addition, we do not expect mRNA vaccines to face the challenge from mutations common to egg-grown vaccines. LUNAR-FLU has been designed to leverage our expertise in both our LUNAR lipid delivery platform and STARR self-amplifying mRNA technology.
The claims of these patents and pending applications include compositions of matter, methods of use, manufacturing process and drug product formulations.
The claims of these patents and pending applications include compositions of matter, methods of use, manufacturing processes and drug product formulations.
This platform has been shown to deliver effective protection against COVID-19 and has been optimized to elicit robust immunogenicity with acceptable reactogenicity at a lower dose than conventional mRNA vaccines with the objective of creating a highly effective influenza vaccine for use in general and high-risk populations.
These technologies have been shown to deliver effective protection against COVID-19 and has been optimized to elicit robust immunogenicity with acceptable reactogenicity at a lower dose than conventional mRNA vaccines, with the objective of creating a highly effective influenza vaccine for use in general and high-risk populations.
Within a cell, DNA carries the blueprint, in the form of genes, from which all proteins necessary for life are encoded. Each gene’s code is transcribed into a nucleic acid molecule called mRNA, which informs the cell’s own machinery how to organize amino acid building blocks to make one or more proteins needed for normal biological function.
Within a cell, DNA carries the blueprint, in the form of genes, which encode critical proteins necessary for life. Each gene’s code is transcribed into a nucleic acid molecule called mRNA, which informs the cell’s own machinery how to organize amino acid building blocks to make one or more proteins needed for normal biological function.
Figure 3: shows the clearance of the LUNAR lipids from the mouse liver 48 hours after administration of 0.1mg/kg and 0.3 mg/kg RNA doses. C9G, C9H and C9I yielded much higher expression levels of EPO than B2G, the positive control for both doses tested.
Figure 2: shows the clearance of the ATX lipids from the mouse liver 48 hours after administration of 0.1mg/kg and 0.3 mg/kg RNA doses. C9G, C9H and C9I yielded much higher expression levels of hEPO than B2G, the positive control for both doses tested.
The process required by the FDA before a drug or biological product may be marketed in the United States generally involves the following: • completion of nonclinical laboratory tests, animal studies and formulation and stability studies according to good laboratory practices (“GLP”) or other applicable regulations; • submission to the FDA of an application for an IND, which must become effective before human clinical trials may begin; • performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as current good clinical practices (“GCPs”) to establish the safety and efficacy of the proposed drug for its intended use; • submission to the FDA of a new drug application (“NDA”) or biologics license application (“BLA”) for a new drug or biologics; • satisfactory completion of FDA inspections of the manufacturing facility or facilities where the drug is produced to ensure compliance with the FDA’s current good manufacturing practice standards (“cGMP”), to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • potential FDA audit of the nonclinical and clinical trial sites that generated the data in support of the NDA or BLA; and • FDA review and approval of the NDA or BLA.
The process required by the FDA before a drug or biological product may be marketed in the United States generally involves the following: • completion of nonclinical laboratory tests, animal studies and formulation and stability studies according to good laboratory practices (“GLP”) or other applicable regulations; • submission to the FDA of an application for an IND, which must become effective before human clinical trials may begin; • performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as current good clinical practices (“GCPs”) to establish the safety and efficacy of the proposed drug for its intended use; • submission to the FDA of a new drug application (“NDA”) or biologics license application (“BLA”) for a new drug or biologics; • satisfactory completion of FDA inspections of the manufacturing facility or facilities where the drug is produced to ensure compliance with the FDA’s current good manufacturing practice standards (“cGMP”), to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; • potential FDA inspection of the nonclinical and clinical trial sites that generated the data in support of the NDA or BLA; and • FDA review and approval of the NDA or BLA. 28 The lengthy process of seeking required approvals and the continuing need for compliance with applicable statutes and regulations require the expenditure of substantial resources and approvals are inherently uncertain.
This portfolio is generally directed to specially designed RNA constructs, specific nucleotide and amino acid sequences, and lipid formulations comprising the same under the STARR technology.
This portfolio is generally directed to specially designed RNA constructs, specific nucleotide and amino acid sequences, and lipid formulations comprising the same.
Neither entity nor the collaboration has achieved health authority approval for flu and/or COVID-19 mRNA vaccine products. Both the flu and COVID-19 assets are in Phase II clinical development; COVID-19/flu combo is in Phase I.
Neither entity nor the collaboration has achieved health authority approval for flu and/or COVID-19 mRNA vaccine products. Both the flu and COVID-19 assets are in Phase 2 clinical development; the COVID-19/flu combo is in Phase 1.
Pandemic Avian Influenza Program (H5N1 Influenza) Our LUNAR-H5N1 program, which is part of the CSL Collaboration Agreement, continues to progress under the award from BARDA that we obtained in 2022 to advance through Phase 1 a vaccine to protect against disease caused by H5N1 highly-pathogenic avian influenza. H5N1 influenza is a significant concern in animal health.
Pandemic Avian Influenza Program (H5N1 Influenza) Our LUNAR-H5N1 program continues to progress under the award from BARDA that we obtained in 2022 to advance through Phase 1 a vaccine to protect against disease caused by H5N1 highly-pathogenic avian influenza. H5N1 influenza is a significant concern in animal health.
Human Capital As of December 31, 2024, we had approximately 176 employees, of which 174 were full-time and 2 were part-time. Additionally, we are supported by contractors and scientific consultants in most areas of the business. None of our employees are represented by a labor union or covered by a collective bargaining agreement.
Human Capital As of December 31, 2025, we had approximately 111 employees, of which 106 were full-time and 5 were part-time. Additionally, we are supported by contractors and scientific consultants in most areas of the business. None of our employees are represented by a labor union or covered by a collective bargaining agreement.
STARR Our STARR technology is our proprietary self-amplifying mRNA (or sa-mRNA) technology platform. When combined with a delivery system, such as our lipid-mediated delivery system LUNAR, the STARR technology has the potential to generate a protective immune response or drive therapeutic protein expression to prevent against or treat a variety of diseases.
When combined with a delivery system, such as our lipid-mediated delivery system LUNAR, the STARR technology has the potential to generate a protective immune response or drive therapeutic protein expression to prevent against or treat a variety of diseases.
Most of the confirmed human infections are due to exposure of U.S. dairy and poultry workers to infected dairy cows and poultry. We are working diligently with our partners, BARDA and CSL Seqirus, to clinically validate our low-dose STARR mRNA technology for H5N1 to assist towards pandemic preparedness.
Most of the confirmed human infections are due to exposure of U.S. dairy and poultry workers to infected dairy cows and poultry. We are working diligently with our partners, BARDA and CSL Seqirus, to clinically validate our low-dose STARR mRNA technology for H5N1 to assist towards pandemic preparedness. In April 2025, the FDA granted Fast Track Designation for ARCT-2304.
Phase 3 Study of Bivalent Version of KOSTAIVE (COVID-19 Vaccine) Candidate in Japan In September 2023, Meiji initiated a Phase 3 clinical study with ARCT-2301, a bivalent version of KOSTAIVE (ancestral strain and Omicron BA.4/5) to further support immunogenicity and safety data for our self-amplifying mRNA platform, which may facilitate the timely release of future seasonal updates of our COVID-19 vaccine against evolving variants of concern.
Pivotal Phase 3 Study of Bivalent Version of KOSTAIVE (ARCT-2301) in Japan (jRCT2031230340) This Meiji-sponsored study of a bivalent version of KOSTAIVE (ancestral strain and Omicron BA.4/5) to further support immunogenicity and safety data for the self-amplifying mRNA platform and facilitate the timely release of future seasonal updates of our COVID-19 vaccine against evolving variants of concern.
Preclinical tests, also referred to as nonclinical studies, include discovery and target identification, in vitro testing to assess biological activity, mechanism of action, and potential toxicity, as well as animal studies to assess the potential safety, pharmacokinetics, and pharmacological activity of the drug candidate. The conduct of the animal studies must comply with federal regulations and requirements including GLP.
Preclinical tests, also referred to as nonclinical studies, include discovery and target identification, in vitro testing to assess biological activity, mechanism of action, and potential toxicity, as well as animal studies to assess the potential safety, pharmacokinetics, and pharmacological activity of the drug candidate.
The approval of KOSTAIVE in Japan in 2023, followed by the approval of an updated version of KOSTAIVE (JN.1 Omicron subvariant) and initiation of commercial sales in Japan in 2024, all as further described below, are significant milestones in the advancement of our vaccines franchise.
The licensure of KOSTAIVE in Japan in 2023, followed by the approval of an updated version of KOSTAIVE (JN.1 Omicron subvariant) and initiation of commercial sales in Japan in 2024 are significant milestones in the advancement of our vaccine franchise.
We initiated dosing in a Phase 1 clinical trial of a novel seasonal influenza sa-mRNA vaccine candidate under our collaboration with CSL Seqirus in January 2024. In December 2024, we initiated dosing of an sa-mRNA vaccine candidate against pandemic avian influenza (bird flu) in a Phase 1 trial funded by the Biomedical Advanced Research and Development Authority (“BARDA”).
In December 2024, we initiated dosing of an sa-mRNA vaccine candidate against pandemic avian influenza (bird flu) in a Phase 1 trial funded by the Biomedical Advanced Research and Development Authority (“BARDA”).
We continue to expand our library of proprietary synthetic lipids, termed ATX, with over 300 to date. Our preclinical studies have shown that formulations can be customized for the indication and target cell type of interest, and we have also demonstrated that our proprietary formulation process is scalable and reproducible. Our LUNAR platform is described in more detail below.
We continue to expand our library of proprietary synthetic lipids, known as ATX, to over 300 to date. Our 5 preclinical studies have shown that formulations can be customized for the indication and target cell type of interest, and we have also demonstrated that our proprietary formulation process is scalable and reproducible.
From an infectious disease perspective, beyond Spikevax, Moderna is developing respiratory (e.g., seasonal flu, pandemic flu, COVID-19/flu combo, RSV, etc.), enteric (Norovius), bacterial (Lyme), latent (e.g., CMV, EBV, HSV, etc.), and other virus vaccine candidates which are in the clinical stage of development; ranging from Phase I to Phase III stages of development.
Moderna’s pipeline includes both infectious disease and rare disease assets. From an infectious disease perspective, beyond Spikevax, Moderna is developing respiratory (e.g., seasonal flu, pandemic flu, COVID-19/flu combo, RSV, etc.), enteric (Norovius), bacterial (Lyme), latent (e.g., EBV, HSV, etc.), and other virus vaccine candidates ranging from Phase I to Phase III stages of development.
Figure 2: The luciferase expression from an optimized sa-mRNA, STARR Technology (Green), a non-optimized sa-mRNA (Blue) and the conventional RNA (Purple). The STARR Technology was shown to yield at least a 30-fold greater expression level than conventional RNA.
Figure 6: The luciferase expression from an optimized sa-mRNA, STARR Technology (Green), a non-optimized sa-mRNA (Blue) and the conventional RNA (Purple). The STARR Technology was shown to yield at least a 30-fold greater expression level than conventional RNA. The STARR Technology also demonstrated a longer duration of expression compared to the conventional RNA and also the non-optimized self-amplifying RNA.
Potential competitors include, but are not limited to, Ultragenyx which is advancing a gene therapy program for OTC in clinical development, and Moderna which has a therapeutic candidate in pre-clinical development.
Potential competitors include, but are not limited to, Ultragenyx and iECURE which are advancing a gene therapy program for OTC in clinical development.
ARCT-810 was generally safe and well tolerated at doses ranging from 0.1- 0.5mg/kg and no serious or severe adverse events were observed. Sporadic infusion-related reactions (IRRs) were managed with symptomatic treatment and appeared to be less frequent with slower infusion rates.
The trial assessed safety, tolerability, and pharmacokinetics of a single dose of ARCT-810, and exploratory biomarkers of drug activity. ARCT-810 was generally safe and well tolerated at doses ranging from 0.1- 0.5mg/kg and no serious or severe adverse events were observed. Sporadic infusion-related reactions (IRRs) were managed with symptomatic treatment and appeared to be less frequent with slower infusion rates.
We consider relations with our employees to be good. Available Information The Company was founded in 2013 as Arcturus Therapeutics, Inc., and we have maintained our principal executive offices in San Diego, California since that time. In November 2017, Alcobra Ltd., an Israeli limited company, merged with our company, changed its name to Arcturus Therapeutics Ltd.
We have initiated a comprehensive search for a new Chief Financial Officer. Available Information The Company was founded in 2013 as Arcturus Therapeutics, Inc., and we have maintained our principal executive offices in San Diego, California since that time. In November 2017, Alcobra Ltd., an Israeli limited company, merged with our company, changed its name to Arcturus Therapeutics Ltd.
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.
This study is supported by safety and tolerability data collected in healthy volunteers (N = 32) and the 7 two-administration Phase 1b study in CF adults. The initial three dose cohorts are fully enrolled, with each participant in the Phase 2 CF study (NCT06747858) receiving daily treatments of ARCT-032 over a period of 28 days.
ATX Lipid Design and In Vivo Screening Process As mentioned above, we have generated a growing library of more than 300 proprietary ATX lipids. ATX lipids are rationally designed to fit their respective applications and vary depending on the target cell type and route of administration.
Through the above efforts, our versatile LUNAR platform continues to drive internal and partner programs. ATX Lipid Design and In Vivo Screening Process As mentioned above, we have generated a growing library of more than 300 proprietary ATX lipids. ATX lipids are rationally designed to fit different applications and vary depending on the target cell type and route of administration.
Current non-curative therapies for CF lung disease are directed towards disease severity and to prevent the progression of the disease. These treatments include aerosolized mucolytics, antibiotics, and airway clearance techniques that are time-consuming and represent a significant treatment burden for people with CF. Many CF patients ultimately suffer from a critical decline in lung function and require lung transplants.
These treatments include aerosolized mucolytics, antibiotics, and airway clearance techniques that are time-consuming and represent a significant treatment burden for people with CF. Many CF patients ultimately suffer from a critical decline in lung function and require lung transplants.
This investment has led to key innovations ensuring that our LUNAR formulated drug product candidates have optimal characteristics for therapeutic use, which we believe sets us apart from other nucleic acid therapeutics and lipid-mediated delivery platforms.
This investment has led to key innovations ensuring that our LUNAR formulated drug product candidates have optimal characteristics for therapeutic use, which we believe sets us apart from other nucleic acid therapeutics and lipid-mediated delivery platforms. As such, we consider ourselves a leader in the research and development of mRNA therapeutics for multiple indications.
CF is caused by one of more than 2,000 known mutations in the CFTR gene. These mutations have been grouped into several different classes based on the mechanism by which they cause reduction in the production and/or function of the CFTR protein.
These mutations have been grouped into several different classes based on the mechanism by which they cause reduction in the production and/or function of the CFTR protein.
As with the monovalent vaccine, the bivalent sa-mRNA formulation demonstrated superior immunogenicity over the conventional bivalent mRNA vaccine COMIRNATY, a higher immune response persisting up to six months after a booster dose, and improved breadth, supporting the robustness of the sa-mRNA vaccine platform for future vaccine strain updates.
As with the monovalent vaccine, the bivalent sa-mRNA formulation demonstrated superior immunogenicity compared with the conventional bivalent mRNA vaccine COMIRNATY, with a higher immune response persisting up to six months after a booster dose, and broader variant coverage, supporting the robustness of the sa-mRNA vaccine platform for future vaccine strain updates. The study results were published in March 2025.
As such, we consider ourselves a leader in the research and development of mRNA therapeutics for multiple indications. 14 We continue to conduct exploratory platform development activities, including the evaluation of genome editing, and new targeting approaches, where our LUNAR and STARR platforms could potentially be useful for identification and development of additional products for our portfolio.
We continue to conduct exploratory platform development activities, including the evaluation of genome editing, and new targeting approaches, where our LUNAR and STARR platforms could potentially be useful for identification and development of additional products for our portfolio.
RNA formulations meeting all acceptance criteria are first screened for protein expression in mice. Active candidates are then tested for tolerability and preliminary tissue clearance rates following administration. Active candidates are further verified by evaluating protein expression in non-human primates.
The ATX lipid formulated RNAs must meet specific chemical and biophysical acceptance criteria before being tested for biological activity. RNA formulations meeting all acceptance criteria are first screened for protein expression in mice. Active candidates are further verified by evaluating protein expression in non-human primates. Active candidates are then tested for tolerability and preliminary tissue clearance rates following administration.
We expect that the validation attained for the inhaled LUNAR platform in the CF program will serve as a translatable approach to support other respiratory approaches where targeting airway epithelium is needed. 18 LUNAR delivery to airways epithelium demonstrated in vivo across species (rodents, ferrets, NHPs) Alternate Liver Targeting As proof of concept for augmenting LUNAR liver-targeting capabilities, we have developed data on LUNAR formulations containing a propriety hepatocyte targeting agent.
We expect that the validation attained for the inhaled LUNAR platform in the CF program will serve as a translatable approach to support other respiratory approaches where targeting airway epithelium is needed. 18 LUNAR delivery to airway epithelium demonstrated in vivo across species (rodents, ferrets, NHPs).
STARR vaccine expressing a tumor antigen led to a significant reduction of the tumor growth rate of a colorectal cancer cell line, CT26. B.
STARR vaccine expressing a tumor antigen led to a significant reduction of the tumor growth rate of a colorectal cancer cell line, CT26. B. T cell responses elicited by conventional mRNA cancer vaccine by various LUNAR formulations.
Published market reports indicate that there are 1,000+ RNA assets in development with approximately 90% in pre-clinical and Phase I. Assets in development are across a broad therapeutic range making for a diffused therapeutic focus across the field.
Competition Our Business in General The RNA pipeline across the biopharma industry is expansive, with mostly early-stage assets. Published market reports indicate that there are 1,000+ RNA assets in development with approximately 90% in pre-clinical and Phase 1 studies RNA assets in development are across a broad therapeutic range making for a diffused therapeutic focus across the field.
Despite recent progress, there is more work to be done to overcome the scientific, operational and financial challenges that arise. 11 We believe our technology should provide an excellent platform to address genetically inherited rare diseases. Specifically, we are focusing on developing medicines to treat people with rare respiratory and liver diseases who currently have limited or no treatment options.
We believe our technology should provide an excellent platform to address genetically inherited rare diseases. Specifically, we are focusing on developing medicines to treat people with rare respiratory and liver diseases who currently have limited or no treatment options.
However, the majority of these companies use conventional mRNA (not self-amplifying) and egg-based vaccine technology as the basis for their COVID-19 vaccines. LUNAR-FLU Vaccine We have partnered our influenza vaccine franchise with CSL Seqirus. We consider the following companies as some of the competitors or future competitors to our partnered LUNAR-Flu vaccine franchise: Pfizer, BioNTech, Moderna, Novavax, and Sanofi.
Dozens of other companies are continuing to develop COVID-19 vaccines. However, the majority of these companies use conventional mRNA (not self-amplifying) and protein-based vaccine technology as the basis for their COVID-19 vaccines. LUNAR-FLU Vaccine We have partnered our influenza vaccine franchise with CSL Seqirus.
The FDA has approved several CFTR modulator therapies (Kalydeco®, Orkambi®, Symdeko®, and Trikafta®) that assist certain classes of abnormal CFTR protein to reach the cell membrane and/or increase functional ion channel activity. The CFTR modulators, while effective in many patients, are mutation-specific and therefore are not effective in all persons with CF.
The FDA has approved several CFTR modulator therapies (Kalydeco ® , Orkambi ® , Symdeko ® , Trikafta ® , and Alyftrek ® ) that assist certain classes of abnormal CFTR protein to reach the cell membrane and/or increase functional ion channel activity.
We have conducted, and will continue to conduct, efforts to explore potential new drugs through our discovery and enabling technologies programs, though we are prioritizing our later stage programs.
We have conducted, and will continue to conduct, efforts to explore potential new drugs through our discovery and enabling technologies programs, though we are prioritizing our later stage programs. Discovery Programs – HPV Arcturus is advancing the development of a post-exposure HPV therapeutic vaccine candidate.
ARCT-032 has received Orphan Drug Designation by the FDA and Orphan Medicinal Product Designation by the EMA. The FDA also granted Rare Pediatric Disease Designation for ARCT-032. The Rare Pediatric Disease Designation is designed to recognize rare pediatric diseases in which the serious or life-threatening manifestations primarily affect patients from birth to 18 years of age.
The Rare Pediatric Disease Designation is designed to recognize rare pediatric diseases in which the serious or life-threatening manifestations primarily affect patients from birth to 18 years of age.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDespite the approval of KOSTAIVE in Europe, KOSTAIVE has not, and might never, achieve commercialization in Europe. • There is significant competition in the development of a vaccine against COVID-19, some competitors’ vaccines are already widely accepted in the market, and many of our competitors have substantially greater financial, scientific and other resources than we have. • If we are unable to generate successful results from preclinical and clinical studies of our product candidates, or experience significant delays in doing so, our business may be materially harmed. 34 • Our platform focuses on nucleic acid technology, and mRNA drug products in particular, which are relatively new and any adverse results from nucleic acid or mRNA technologies in the industry could significantly impact our ability to develop and commercialize marketable products. • Changes to our drug product format could significantly impact our timeline to commercialize our products. • We may not be successful in our efforts to identify or discover potential product candidates. • We may find it difficult to identify and enroll patients in our clinical studies, and the limited number of patients who have the diseases for which certain of our product candidates are being studied could delay or prevent clinical studies of certain of our product candidates. • If any of our product candidates cause undesirable side effects or have other properties impacting safety, their regulatory approval could be prevented, delayed or limited. • Even if we obtain regulatory approval for a product candidate, we will still face extensive regulatory requirements and our products may face future development and regulatory difficulties. • If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business. • Manufacturing issues may arise that could increase product and regulatory approval costs or delay or hinder commercialization. • The commercial success of our product candidates will depend in part upon the acceptance of our product candidates by the medical community, including physicians, patients and healthcare payors. • If our strategic alliances are unsuccessful or are terminated, we may be unable to commercialize certain product candidates and generate revenues. • If the contract manufacturers we rely on to produce the supply of our preclinical and clinical product candidates, including materials for the manufacture of our product candidates, do not timely deliver adequate quantities of quality materials, development and commercialization of our product candidates would be hindered. • Any disruption in the supply chain of raw materials for, or in the manufacturing capacity and timing for the manufacture of drug substance or drug product for, our product candidates may cause a delay in developing and commercializing these product candidates and limit the revenues that we could generate. • If the contract research organizations and clinical trial sites we rely on to conduct, supervise and monitor our clinical trials perform in an unsatisfactory manner, it may harm our business. • If we are unable to obtain or protect intellectual property rights related to our products and product candidates, we may not be able to compete effectively in our markets. • Claims that we infringe the intellectual property rights of others, especially in the crowded and competitive field of mRNA patents, may prevent or delay our development and commercialization efforts. • If we fail to obtain licenses to necessary intellectual property or do not comply with our obligations in license agreements, we could lose important rights. • We may be involved in lawsuits to protect or enforce our patents or to defend against third party intellectual property claims, which could be expensive, time consuming and unsuccessful. • U.S.
Biggest changeDespite the approval of KOSTAIVE in Europe, KOSTAIVE has not, and might never, achieve commercialization in Europe. • There is significant competition in the development of a vaccine against COVID-19, some competitors’ vaccines are already widely accepted in the market, and many of our competitors have substantially greater financial, scientific and other resources than we have. • If we are unable to generate successful results from preclinical and clinical studies of our product candidates, or experience significant delays in doing so, our business may be materially harmed. • Our platform focuses on nucleic acid technology, and mRNA drug products in particular, which are relatively new and any adverse results from nucleic acid or mRNA technologies in the industry could significantly impact our ability to develop and commercialize marketable products. • Changes to our drug product format could significantly impact our timeline to commercialize our products. • We may not be successful in our efforts to identify or discover potential product candidates. • We may find it difficult to identify and enroll patients in our clinical studies, and the limited number of patients who have the diseases for which certain of our product candidates are being studied could delay or prevent clinical studies of certain of our product candidates. • If any of our product candidates cause undesirable side effects or have other properties impacting safety, further clinical trials may be denied or delayed and regulatory approval could be prevented, delayed or limited. • Even if we obtain regulatory approval for a product candidate, we will still face extensive regulatory requirements and our products may face future development and regulatory difficulties. • If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business. • Manufacturing issues may arise that could increase product and regulatory approval costs or delay or hinder commercialization. • The commercial success of our product candidates will depend in part upon the acceptance of our product candidates by the medical community, including physicians, patients and healthcare payors. • If our strategic alliances are unsuccessful or are terminated, we may be unable to commercialize certain product candidates and generate revenues. • CSL Limited’s recent financial report included a significant write-down related to our licensed assets; a potential separation of CSL Seqirus could disrupt our collaboration and materially harm our business. • If the contract manufacturers we rely on to produce the supply of our preclinical and clinical product candidates, including materials for the manufacture of our product candidates, do not timely deliver adequate quantities of quality materials, development and commercialization of our product candidates would be hindered. • Any disruption in the supply chain of raw materials for, or in the manufacturing capacity and timing for the manufacture of drug substance or drug product for, our product candidates may cause a delay in 33 developing and commercializing these product candidates and limit the revenues that we could generate. • If the contract research organizations and clinical trial sites we rely on to conduct, supervise and monitor our clinical trials perform in an unsatisfactory manner, it may harm our business. • If we are unable to obtain or protect intellectual property rights related to our products and product candidates, we may not be able to compete effectively in our markets. • Claims that we infringe the intellectual property rights of others, especially in the crowded and competitive field of mRNA patents, may prevent or delay our development and commercialization efforts. • If we fail to obtain licenses to necessary intellectual property or do not comply with our obligations in license agreements, we could lose important rights. • We may be involved in lawsuits to protect or enforce our patents or to defend against third party intellectual property claims, which could be expensive, time consuming and unsuccessful. • We have filed a lawsuit alleging trade secret misappropriation and breach of contract, and any unfavorable outcome or related proceedings could materially and adversely affect our business, financial condition, results of operations, and reputation. • U.S.
If the COVID-19 vaccines of our competitors are shown to be are safer, more effective against multiple variants, have fewer or less severe side effects, have broader market acceptance, are more convenient or are less expensive than any vaccine candidate than KOSTAIVE, then KOSTAIVE may not achieve any commercial success even where approved.
If the COVID-19 vaccines of our competitors are shown to be safer, more effective against multiple variants, have fewer or less severe side effects, have broader market acceptance, are more convenient or are less expensive than any vaccine candidate than KOSTAIVE, then KOSTAIVE may not achieve any commercial success even where approved.
FCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties. • The civil monetary penalties statute, which imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent. • The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which imposes civil and criminal penalties for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private), knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a healthcare offense and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare. • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and its implementing regulations, which imposes certain requirements on certain types of individuals and entities, such as healthcare providers, health plans and healthcare clearing houses, known as “covered entities,” as well as their “business associates,” independent contractors or agents of covered entities that receive or obtain individually identifiable health information in connection with providing a service on behalf of a covered entity, relating to the privacy, security and transmission of individually identifiable health information. • The federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS, information related to payments or other transfers of value made to physicians, and further requires applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and 58 investment interests held by physicians and their immediate family members.
FCA liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties. • The civil monetary penalties statute, which imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent. • The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which imposes civil and criminal penalties for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private), knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a healthcare offense and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare. • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and its implementing regulations, which imposes certain requirements on certain types of individuals and entities, such as healthcare providers, health plans and healthcare clearing houses, known as “covered entities,” as well as their “business associates,” independent contractors or agents of covered entities that receive or obtain individually identifiable health information in connection with providing a service on behalf of a covered entity, relating to the privacy, security and transmission of individually identifiable health information. • The federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to CMS, information related to payments or other transfers of value made to physicians, and further requires applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members.
Events which may result in a delay or unsuccessful completion of clinical development include: • delays in reaching an agreement with the FDA or other regulatory authorities on final trial design; • delays in submitting or acceptance of, an application for authorization to administer an investigational new drug product to humans through the submission or acceptance of an IND application to the FDA, or foreign regulatory authority; • imposition of a clinical hold of our clinical trial operations or trial sites by the FDA or other regulatory authorities; • delays in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites; • our inability to adhere to clinical trial requirements directly or with third parties such as CROs; • clinical trial site or CRO non-compliance with GCPs, GLPs, or other regulatory requirements; • inability or failure of clinical trial sites to adhere to the clinical trial protocol; • delays in obtaining required IRB approval at each clinical trial site, or an IRB suspending or terminating a trial; • delays in recruiting suitable patients to participate in a trial; • delays in the testing, validation, manufacturing and delivery of the product candidates to the clinical sites; • delays in having patients complete participation in a trial or return for post-treatment follow-up; • delays caused by patients dropping out of a trial due to protocol procedures or requirements, product side effects or disease progression; • clinical sites dropping out of a trial to the detriment of enrollment; • time required to add new clinical sites; or • delays by our contract manufacturers to produce and deliver sufficient supply of clinical trial materials.
Events which may result in a delay or unsuccessful completion of clinical development include: • delays in reaching an agreement with the FDA or other regulatory authorities on final trial design; • delays in submitting or acceptance of, an application for authorization to administer an investigational new drug product to humans through the submission or acceptance of an IND application to the FDA, or foreign regulatory authority; • imposition of a clinical hold of our clinical trial operations or trial sites by the FDA or other regulatory authorities; • delays in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites; • our inability to adhere to clinical trial requirements directly or with third parties such as CROs; • clinical trial site or CRO non-compliance with GCPs, GLPs, or other regulatory requirements; • inability or failure of clinical trial sites to adhere to the clinical trial protocol; 41 • delays in obtaining required IRB approval at each clinical trial site, or an IRB suspending or terminating a trial; • delays in recruiting suitable patients to participate in a trial; • delays in the testing, validation, manufacturing and delivery of the product candidates to the clinical sites; • delays in having patients complete participation in a trial or return for post-treatment follow-up; • delays caused by patients dropping out of a trial due to protocol procedures or requirements, product side effects or disease progression; • clinical sites dropping out of a trial to the detriment of enrollment; • time required to add new clinical sites; or • delays by our contract manufacturers to produce and deliver sufficient supply of clinical trial materials.
In addition, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “ACA”), amended the Social Security Act to provide that the United States government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil FCA penalties for which are described below. • Federal civil and criminal false claims laws and civil monetary penalty laws, including the FCA, which imposes criminal or civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, claims for payment to the federal government, including Medicare or Medicaid, that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
In addition, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “ACA”), amended the Social Security Act to provide that the United States government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil FCA penalties for which are described below. • Federal civil and criminal false claims laws and civil monetary penalty laws, including the FCA, which imposes criminal or civil penalties, including through civil whistleblower or qui tam actions, against 55 individuals or entities for, among other things, knowingly presenting, or causing to be presented, claims for payment to the federal government, including Medicare or Medicaid, that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government.
Our share price could be subject to wide fluctuations in response to a variety of factors, including but not limited to the following factors: • adverse results or delays in preclinical studies or clinical trials; • inability to obtain additional funding; • any delay in filing an application for authorization to commence a clinical trial of, or for authorization or approval to market, any of our product candidates and any adverse development or perceived adverse development with respect to the FDA’s review of that IND or BLA; • failure to maintain our existing strategic alliances or enter into new alliances; • failure of our strategic alliance partners to elect to develop and commercialize product candidates under our alliance agreements or the termination of any programs under our alliance agreements; • failure by us or our licensors and strategic alliance partners to prosecute, maintain or enforce our intellectual property rights; • failure to successfully and timely develop and commercialize our product candidates; • failure to successfully and timely develop and validate manufacturing processes and product presentations; • changes in laws or regulations applicable to our preclinical and clinical development activities, product candidates or future products; • inability to obtain adequate product supply for our product candidates or the inability to do so at acceptable prices; • adverse regulatory decisions; • introduction of new products, services or technologies by our competitors; 63 • failure to meet or exceed financial projections we may provide to the public; • failure to meet or exceed the estimates and projections of the investment community; • disappointing commercial sales, or profit share or royalty revenue amounts; • the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community; • announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our strategic alliance partners or our competitors; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • additions or departures of key scientific or management personnel; • significant lawsuits, including patent or licensing matters; • changes in the market valuations of similar companies; • sales of our common stock by us or our shareholders in the future; and • trading volume of our common stock.
Our share price could be subject to wide fluctuations in response to a variety of factors, including but not limited to the following factors: 60 • adverse results or delays in preclinical studies or clinical trials; • inability to obtain additional funding; • any delay in filing an application for authorization to commence a clinical trial of, or for authorization or approval to market, any of our product candidates and any adverse development or perceived adverse development with respect to the FDA’s review of that IND or BLA; • failure to maintain our existing strategic alliances or enter into new alliances; • failure of our strategic alliance partners to elect to develop and commercialize product candidates under our alliance agreements or the termination of any programs under our alliance agreements; • failure by us or our licensors and strategic alliance partners to prosecute, maintain or enforce our intellectual property rights; • failure to successfully and timely develop and commercialize our product candidates; • failure to successfully and timely develop and validate manufacturing processes and product presentations; • changes in laws or regulations applicable to our preclinical and clinical development activities, product candidates or future products; • inability to obtain adequate product supply for our product candidates or the inability to do so at acceptable prices; • adverse regulatory decisions; • introduction of new products, services or technologies by our competitors; • failure to meet or exceed financial projections we may provide to the public; • failure to meet or exceed the estimates and projections of the investment community; • disappointing commercial sales, or profit share or royalty revenue amounts; • the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community; • announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our strategic alliance partners or our competitors; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • additions or departures of key scientific or management personnel; • significant lawsuits, including patent or licensing matters; • changes in the market valuations of similar companies; • sales of our common stock by us or our shareholders in the future; and • trading volume of our common stock.
The degree of market acceptance of any product candidates will depend on a number of factors, including: • demonstration of clinical safety and efficacy compared to other products; • the relative convenience, ease of administration and acceptance by physicians, patients and healthcare payors; • the prevalence and severity of any adverse events; • limitations or warnings contained in the FDA-approved label for such products; • availability of alternative treatments; • pricing and cost-effectiveness; • the commercial packaging and product presentation preferences; • the effectiveness of our, or any of our collaborators’, sales and marketing strategies; • our ability to obtain hospital or payor formulary approval; 48 • our ability to obtain and maintain sufficient coverage from healthcare payors and adequate reimbursement; and • the willingness of patients to pay out-of-pocket in the absence or inadequacy of coverage by healthcare payors.
The degree of market acceptance of any product candidates will depend on a number of factors, including: • demonstration of clinical safety and efficacy compared to other products; • the relative convenience, ease of administration and acceptance by physicians, patients and healthcare payors; • the prevalence and severity of any adverse events; • limitations or warnings contained in the FDA-approved label for such products; • availability of alternative treatments; • pricing and cost-effectiveness; • the commercial packaging and product presentation preferences; • the effectiveness of our, or any of our collaborators’, sales and marketing strategies; • our ability to obtain hospital or payor formulary approval; • our ability to obtain and maintain sufficient coverage from healthcare payors and adequate reimbursement; and • the willingness of patients to pay out-of-pocket in the absence or inadequacy of coverage by healthcare payors.
Our ability to recognize revenues from strategic alliances may be impaired by several factors, including: • an alliance partner may shift its priorities and resources away from our programs due to a change in its business strategies whether or not permitted under agreement with them, or a merger, acquisition, sale or downsizing of its company or business unit; • an alliance partner may cease development in therapeutic areas which are the subject of our strategic alliances; • an alliance partner may change the success criteria for a particular program or potential product candidate thereby delaying or ceasing development of such program or candidate; 51 • a significant delay in initiation of certain development activities by an alliance partner will also delay payment to us of milestones tied to such activities, thereby impacting our ability to fund our own activities; • an alliance partner with commercialization obligations may not commit sufficient financial or human resources to the marketing, distribution or sale of a product; • an alliance partner with manufacturing responsibilities may encounter regulatory, resource or quality issues and be unable to meet demand requirements; • an alliance partner may exercise its rights under the agreement to terminate a strategic alliance; • a dispute may arise between us and an alliance partner concerning the research, development or commercialization of a program or product candidate resulting in a delay in payments of milestones or royalties, or the termination of a program, and possibly resulting in costly litigation or arbitration which may divert management attention and resources; and • an alliance partner may use our proprietary information or intellectual property in such a way as to invite litigation from a third party or fail to maintain or prosecute intellectual property rights such that our rights in such property are jeopardized.
Our ability to recognize revenues from strategic alliances may be impaired by several factors, including: • an alliance partner may shift its priorities and resources away from our programs due to a change in its business strategies whether or not permitted under agreement with them, or a merger, acquisition, sale or downsizing of its company or business unit; • an alliance partner may cease development in therapeutic areas which are the subject of our strategic alliances; • an alliance partner may change the success criteria for a particular program or potential product candidate thereby delaying or ceasing development of such program or candidate; 48 • a significant delay in initiation of certain development activities by an alliance partner will also delay payment to us of milestones tied to such activities, thereby impacting our ability to fund our own activities; • an alliance partner with commercialization obligations may not commit sufficient financial or human resources to the marketing, distribution or sale of a product; • an alliance partner with manufacturing responsibilities may encounter regulatory, resource or quality issues and be unable to meet demand requirements; • an alliance partner may exercise its rights under the agreement to terminate a strategic alliance; • a dispute may arise between us and an alliance partner concerning the research, development or commercialization of a program or product candidate resulting in a delay in payments of milestones or royalties, or the termination of a program, and possibly resulting in costly litigation or arbitration which may divert management attention and resources; and • an alliance partner may use our proprietary information or intellectual property in such a way as to invite litigation from a third party or fail to maintain or prosecute intellectual property rights such that our rights in such property are jeopardized.
As a result, we are and expect that we will be subject to additional risks related to entering into international business relationships, including: • different regulatory requirements for drug approvals in foreign countries; • differing payor reimbursement regimes, governmental payors or patient self-pay systems and price controls; • reduced protection for intellectual property rights; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; 49 • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • workforce uncertainty in countries where labor unrest is more common than in the United States; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
As a result, we are and expect that we will be subject to additional risks related to entering into international business relationships, including: • different regulatory requirements for drug approvals in foreign countries; • differing payor reimbursement regimes, governmental payors or patient self-pay systems and price controls; • reduced protection for intellectual property rights; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation, or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign taxes, including withholding of payroll taxes; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; • workforce uncertainty in countries where labor unrest is more common than in the United States; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and 47 • business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
It is also still unclear if the vaccines will enable adequate long-term protection, as (i) many vaccinated individuals have become ill due to “breakthrough infections” and have transmitted the virus to many others, (ii) there are millions of individuals who refuse to be vaccinated or who cannot be vaccinated due to pre-existing 40 conditions, (iii) it is unclear how long the vaccine protection will last, and (iv) genetic mutations or variants of the virus already have had, and are expected to continue to have, an adverse impact on the efficacy of available vaccines.
It is also still unclear if the vaccines will enable adequate long-term protection, as (i) many vaccinated individuals have become ill due to “breakthrough infections” and have transmitted the virus to many others, (ii) there are millions of individuals who refuse to be vaccinated or who cannot be vaccinated due to pre-existing conditions, (iii) it is unclear how long the vaccine protection will last, and (iv) genetic mutations or variants of the virus already have had, and are expected to continue to have, an adverse impact on the efficacy of available vaccines.
If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may 47 relinquish valuable rights to that product candidate through strategic alliance, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate, or we may allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangement.
If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through strategic alliance, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate, or we may allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangement.
Our existing competitors and new market entrants may respond more quickly to or integrate new or emerging technologies such as artificial intelligence and machine learning, undertake more extensive marketing campaigns, have greater access to clinical information to support ongoing product position in the market, have greater financial, marketing and other resources or be more successful in attracting potential customers, employees and strategic partners.
Our existing competitors and new market entrants may respond more quickly to or integrate new or 39 emerging technologies such as artificial intelligence and machine learning, undertake more extensive marketing campaigns, have greater access to clinical information to support ongoing product position in the market, have greater financial, marketing and other resources or be more successful in attracting potential customers, employees and strategic partners.
Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our and our partners’ ability to further develop and commercialize products based on our platform. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee and financial resources from our business.
Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our and our partners’ ability to further develop and commercialize products based on our platform. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of 52 employee and financial resources from our business.
In such event, it could become more difficult to dispose of, or obtain accurate price quotations for our common stock and there would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our common stock to decline further. 65 Item 1B. Unresolve d Staff Comments None.
In such event, it could become more difficult to dispose of, or obtain accurate price quotations for our common stock and there would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our common stock to decline further. Item 1B. Unresolve d Staff Comments None.
We expect our research and development expenses to substantially increase in connection with our ongoing activities, particularly as we advance our product candidates towards and through clinical trials. We expect that we will need to raise additional capital to support our operations and such funding may not be available to us on acceptable terms, or at all.
We expect our research and development expenses to substantially increase in connection with our ongoing activities, particularly as we advance our product candidates towards and through clinical trials. We expect that we 35 will need to raise additional capital to support our operations and such funding may not be available to us on acceptable terms, or at all.
If our vendors fail to supply materials or to manufacture substances or products in the required quantities on a timely basis and at commercially reasonable prices, and we are unable to secure one or more replacement vendors in a timely manner at a substantially equivalent cost, our clinical trials may be delayed, and our commercialization prospects could be materially diminished.
If our vendors fail to supply materials or to manufacture 50 substances or products in the required quantities on a timely basis and at commercially reasonable prices, and we are unable to secure one or more replacement vendors in a timely manner at a substantially equivalent cost, our clinical trials may be delayed, and our commercialization prospects could be materially diminished.
We are highly dependent on principal members of our executive team, and any reduction or loss of their services may adversely impact the achievement of our objectives. While we have entered into employment agreements with each of our executive officers, any of them could leave our employment at any time, as all of our employees are “at will” employees.
We are highly dependent on principal members of our executive team, and any reduction or loss of their services may adversely impact the achievement of our objectives. While we have entered into employment 54 agreements with each of our executive officers, any of them could leave our employment at any time, as all of our employees are “at will” employees.
As a publicly traded company, we have incurred, and will continue to incur, significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), as well as rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies.
As a publicly traded company, we have incurred, and will continue to incur, significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002 (the 61 "Sarbanes-Oxley Act"), as well as rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies.
Furthermore, if any competitors are successful in producing a more efficacious vaccine or other treatment for COVID-19, or if any competitors are able 41 to manufacture and distribute any such vaccines or treatments with greater efficiency, there may be a diversion of potential governmental and other funding away from us and toward such other parties.
Furthermore, if any competitors are successful in producing a more efficacious vaccine or other treatment for COVID-19, or if any competitors are able to manufacture and distribute any such vaccines or treatments with greater efficiency, there may be a diversion of potential governmental and other funding away from us and toward such other parties.
We also may not be able to identify, recruit, and enroll a sufficient number of appropriate patients to complete our clinical studies because of demographic criteria for prospective patients, the perceived risks and benefits of the product candidate under study, the proximity and availability of clinical study sites for prospective patients, and the patient referral practices of physicians.
We also may not be able to identify, recruit, and enroll a sufficient number of appropriate patients to complete our clinical studies because of demographic criteria for prospective patients, the 42 perceived risks and benefits of the product candidate under study, the proximity and availability of clinical study sites for prospective patients, and the patient referral practices of physicians.
We currently rely and expect to continue to rely on outside contractors to conduct some aspects of our preclinical and clinical studies and formulation development, but we remain responsible for ensuring that each of our IND-enabling studies and clinical trials are conducted in accordance with the study plan and protocols for the trial.
We currently rely and expect to continue to rely on outside 49 contractors to conduct some aspects of our preclinical and clinical studies and formulation development, but we remain responsible for ensuring that each of our IND-enabling studies and clinical trials are conducted in accordance with the study plan and protocols for the trial.
These and other competitive pressures could have a material adverse effect our business. If we are unable to generate successful results from preclinical and clinical studies of our product candidates, or experience significant delays in doing so, our business may be materially harmed.
These and other competitive pressures could have a material adverse effect on our business. If we are unable to generate successful results from preclinical and clinical studies of our product candidates, or experience significant delays in doing so, our business may be materially harmed.
We evaluate and implement the product presentation attributes based on our considerations of regulatory and commercial potential, along with scientific feasibility. There can be no assurance that the product presentation or characteristics of any of our products will be sufficient to achieve regulatory approval or commercialization per planned timelines.
We evaluate and implement the product presentation attributes based on our considerations of regulatory and commercial potential, along with scientific feasibility. There can be no assurance that the product presentation or characteristics of any of 40 our products will be sufficient to achieve regulatory approval or commercialization per planned timelines.
In addition, if our alliance partners elect to control manufacturing for certain programs, we may lose control over the manufacturing activities for the product candidate, which would reduce our level of manufacturing process 53 development and would make the success of such programs dependent on our partners’ ability to manufacture timely and properly.
In addition, if our alliance partners elect to control manufacturing for certain programs, we may lose control over the manufacturing activities for the product candidate, which would reduce our level of manufacturing process development and would make the success of such programs dependent on our partners’ ability to manufacture timely and properly.
We anticipate that over time we may expand our business operations to include additional operations in the EU, including potentially conducting preclinical and clinical trials. With such expansion, we would be subject to increased governmental regulation in the EU countries in which we might operate, including regulation due to the GDPR.
We anticipate that over time we may expand our business operations to include additional operations in the EU, including potentially conducting preclinical and clinical trials. With such expansion, we would be subject to 56 increased governmental regulation in the EU countries in which we might operate, including regulation due to the GDPR.
We anticipate that our expenses will increase substantially if and as we: • continue our research and development of our product candidates, both independently and under our strategic alliance agreements; • seek to identify additional targets and product candidates; • acquire or in-license other products and technologies; • advance product candidates into and through clinical trials; • seek marketing approvals for any product candidates that successfully complete clinical trials; • establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; • maintain, expand and protect our intellectual property portfolio; • hire additional clinical, regulatory, research, executive and administrative personnel; and 36 • create additional infrastructure to support our operations and our product development and planned future commercialization efforts.
We anticipate that our expenses will increase substantially if and as we: 34 • continue our research and development of our product candidates, both independently and under our strategic alliance agreements; • seek to identify additional targets and product candidates; • acquire or in-license other products and technologies; • advance product candidates into and through clinical trials; • seek marketing approvals for any product candidates that successfully complete clinical trials; • establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; • maintain, expand and protect our intellectual property portfolio; • hire additional clinical, regulatory, research, executive and administrative personnel; and • create additional infrastructure to support our operations and our product development and planned future commercialization efforts.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our 45 operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products.
These laws may impact, among other things, our proposed sales, marketing and education 57 programs. In addition, we may be subject to patient privacy regulation by the federal government and by the U.S. states and foreign jurisdictions in which we conduct our business.
These laws may impact, among other things, our proposed sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by the federal government and by the U.S. states and foreign jurisdictions in which we conduct our business.
Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or could allow our competitors to bring products to market 44 before we do, which would impair our ability to successfully commercialize our product candidates.
Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or could allow our competitors to bring products to market before we do, which would impair our ability to successfully commercialize our product candidates.
If we fail to obtain any of 55 these licenses at a reasonable cost and on reasonable terms, we would be unable to further develop and commercialize one or more of our product candidates, which could harm our business significantly.
If we fail to obtain any of these licenses at a reasonable cost and on reasonable terms, we would be unable to further develop and commercialize one or more of our product candidates, which could harm our business significantly.
Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed 43 their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for their products.
Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for their products.
KOSTAIVE could face increased research and development costs, including for clinical trials, non-clinical studies and CMC, when updating COVID-19 vaccines containing new variants of concern based on WHO and FDA recommendations.
KOSTAIVE could face increased research and development costs, including 38 for clinical trials, non-clinical studies and CMC, when updating COVID-19 vaccines containing new variants of concern based on WHO and FDA recommendations.
Therefore, even if we and CSL Seqirus can get through the extremely costly, long and risky process of developing and obtaining regulatory approval to market a vaccine globally, it may not be commercially successful. This failure could be due to reduced demand for COVID-19 vaccines, lower prices, distribution problems, competitors’ products or many other reasons.
Therefore, even if we and CSL Seqirus can get through the extremely costly, long and risky process of developing and obtaining regulatory approval to market a vaccine globally, it may not be commercially successful. This failure could be due to reduced demand for COVID-19 vaccines, increased regulatory hurdles, lower prices, distribution problems, competitors’ products or many other reasons.
Such increased competition may decrease any future potential revenue for future product candidates due to increasing pressure for lower pricing and higher discounts in the commercialization of our product.
Such increased competition 46 may decrease any future potential revenue for future product candidates due to increasing pressure for lower pricing and higher discounts in the commercialization of our product.
Our defense of a patent or 54 patent application in such a proceeding may not be successful and, even if successful, may result in substantial costs and distract our management and other employees.
Our defense of a patent or patent application in such a proceeding may not be successful and, even if successful, may result in substantial costs and distract our management and other employees.
On August 7, 2023, we entered into Amendment No. 1 to the Sales Agreement with Cantor, Wells Fargo and William Blair & Company (“William Blair”).
On August 7, 2023, we entered into Amendment No. 1 to the Sales 62 Agreement with Cantor, Wells Fargo and William Blair & Company (“William Blair”).
We may also experience ownership changes in the future as a result of subsequent shifts in our share ownership. As a result, if we earn net taxable income, our ability to use our pre-change NOL carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.
We may also experience ownership changes in the future as a result of subsequent shifts in our share ownership. As a result, if we earn net taxable income, our ability to use our pre-change NOL carryforwards to offset U.S. federal or state taxable income may be subject to limitations, which could potentially result in increased future tax liability to us.
These agencies review, among other things, a contractor’s performance under its contracts, incurred costs, cost structure and compliance with applicable laws, regulations and standards. 61 The DCAA also reviews the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems.
These agencies review, among other things, a contractor’s performance under its contracts, incurred costs, cost structure and compliance with applicable laws, regulations and standards. 59 The DCAA also reviews the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems.
The European General Data Protection Regulation (“GDPR”) took effect on May 25, 2018, which contains new provisions specifically directed at the processing of health information, higher sanctions and extra-territoriality measures intended to bring non-E companies under the regulation.
The European General Data Protection Regulation (“GDPR”) took effect on May 25, 2018, which contains new provisions specifically directed at the processing of health information, higher sanctions and extra-territoriality measures intended to bring non-EU companies under the regulation.
If we cannot 59 successfully defend against product liability claims, we could incur substantial liability and costs.
If we cannot successfully defend against product liability claims, we could incur substantial liability and costs.
The extent and timing of any product revenue is highly unpredictable because regulatory authorities may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approval for many reasons including: • regulatory authorities disagreeing with the design or implementation of our clinical trials; • such authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • such authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States, such as our phase 1/2/3 clinical trial of ARCT-154 conducted in Vietnam; • unfavorable or unclear results from our clinical trials or results that may not meet the level of statistical significance required by the FDA or foreign regulatory agencies for approval; • serious and unexpected drug-related side effects experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates; • the population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which we seek approval; • we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; • such authorities may not agree that the data collected from clinical trials of our product candidates are acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere, and such authorities may impose requirements for additional preclinical studies or clinical trials; • such authorities may disagree regarding the formulation, labeling and/or the specifications of our product candidates; • such authorities may find deficiencies in the manufacturing processes or facilities of manufacturers with which we contract for clinical and commercial supplies; or • regulations or interpretations of such authorities may significantly change in a manner rendering our or any of our potential future collaborators’ clinical data insufficient for approval. 46 Additional delays may result if an FDA advisory committee recommends restrictions on approval or recommends non-approval.
The extent and timing of any product revenue is highly unpredictable because regulatory authorities may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approval for many reasons including: 43 • regulatory authorities disagreeing with the design or implementation of our clinical trials; • such authorities may disagree with our interpretation of data from preclinical studies or clinical trials; • such authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of care is potentially different from that of the United States, such as our phase 1/2/3 clinical trial of ARCT-154 conducted in Vietnam; • unfavorable or unclear results from our clinical trials or results that may not meet the level of statistical significance required by the FDA or foreign regulatory agencies for approval; • serious and unexpected drug-related side effects experienced by participants in our clinical trials or by individuals using drugs similar to our product candidates; • the population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full population for which we seek approval; • we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; • such authorities may not agree that the data collected from clinical trials of our product candidates are acceptable or sufficient to support the submission of an NDA or other submission or to obtain regulatory approval in the United States or elsewhere, and such authorities may impose requirements for additional preclinical studies or clinical trials; • such authorities may disagree regarding the formulation, labeling and/or the specifications of our product candidates; • such authorities may find deficiencies in the manufacturing processes or facilities of manufacturers with which we contract for clinical and commercial supplies; or • regulations or interpretations of such authorities may significantly change in a manner rendering our or any of our potential future collaborators’ clinical data insufficient for approval.
Consequently, any predictions about our future success or viability, or any evaluation of our business and prospects, is difficult and may not be accurate. In 2024 we recognized a significant portion of our revenue from non-recurring milestone payments and license revenue under our collaboration agreement with CSL Seqirus.
Consequently, any predictions about our future success or viability, or any evaluation of our business and prospects, is difficult and may not be accurate. In 2025 we recognized a significant portion of our revenue from non-recurring milestone payments and license revenue under our collaboration agreement with CSL Seqirus. We may not receive any future milestone payments from CSL Seqirus.
We are subject to a number of risks associated with our dependence on our relationships with our collaboration partners, including: • our collaboration partners may terminate their collaboration agreements with us for reasons specified in the collaboration agreements, including our breach; • the need for us to identify and secure on commercially reasonable terms the services of third parties to perform key activities, including development and commercialization activities, currently performed by our collaboration partners in the event that a collaboration partner was to terminate its collaboration with us; • disagreements with our collaboration partners regarding the satisfaction of milestones; • adverse decisions by a collaboration partner regarding the amount and timing of resource expenditures for the commercialization, distribution, and sale of our drug products; • failure by a collaboration partner to perform its duties under its collaboration agreement with us (e.g., its failure to comply with regulatory requirements); • failure by a collaboration partner to timely deliver accurate and complete financial information to us or to maintain adequate and effective internal control over its financial reporting may negatively affect our ability to meet our financial reporting obligations as required by the SEC; • collaboration partners’ and their affiliates’ development and commercialization of products that compete directly or indirectly with our products or products candidates; • decisions by a collaboration partner to prioritize other of its current or future products more highly than our drug products or our product candidates; • possible disagreements with a collaboration partner as to the timing, nature and extent of our development plans or distribution and sales and marketing plans; and • the financial returns to us, if any, under our collaboration agreements depend in large part on the achievement of milestones and generation of product sales, and if our partners fail to perform or satisfy their obligations under the collaboration agreement, the development and commercialization of our drug products could be delayed, hindered or may not occur and our business and prospects could be materially and adversely affected. 38 Due to these factors and other possible disagreements with our collaboration partners, we may be delayed or prevented from further developing, manufacturing or commercializing our drug products or our product candidates or we may become involved in litigation or arbitration, which would be time consuming and expensive.
We are subject to a number of risks associated with our dependence on our relationships with our collaboration partners, including: • our collaboration partners may terminate their collaboration agreements with us for reasons specified in the collaboration agreements, including our breach; • the need for us to identify and secure on commercially reasonable terms the services of third parties to perform key activities, including development and commercialization activities, currently performed by our collaboration partners in the event that a collaboration partner was to terminate its collaboration with us; • disagreements with our collaboration partners regarding the satisfaction of milestones; • adverse decisions by a collaboration partner regarding the amount and timing of resource expenditures for the development, commercialization, distribution, and sale of our drug products; • failure by a collaboration partner to perform its duties under its collaboration agreement with us (e.g., its failure to comply with regulatory requirements); • failure by a collaboration partner to timely deliver accurate and complete financial information to us or to maintain adequate and effective internal control over its financial reporting may negatively affect our ability to meet our financial reporting obligations as required by the SEC; 36 • collaboration partners’ and their affiliates’ development and commercialization of products that compete directly or indirectly with our products or products candidates; • decisions by a collaboration partner to prioritize other of its current or future products more highly than our drug products or our product candidates; • possible disagreements with a collaboration partner as to the timing, nature and extent of our development plans or distribution and sales and marketing plans; and • the financial returns to us, if any, under our collaboration agreements depend in large part on the achievement of milestones and generation of product sales, and if our partners fail to perform or satisfy their obligations under the collaboration agreement, the development and commercialization of our drug products could be delayed, hindered or may not occur and our business and prospects could be materially and adversely affected.
You should carefully consider the fuller risk factor disclosure set forth in this Annual Report, in addition to the other information herein, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes. • We have a limited operating history, have incurred significant losses since our inception (with the exception of fiscal year 2022) and anticipate that we will continue to incur significant losses for the foreseeable future. • We have not generated any revenue from product sales, have generated only limited collaboration and grant revenue since inception, and may never be profitable in the long term. • We expect that we will need to raise additional capital in the future, which may not be available on acceptable terms, or at all. • We are dependent upon relationships with our collaboration partners, and the failure of these relationships could negatively affect our business and results of operations. • We are exposed to interest rate risk, including under our loan agreements. • Our debt contains customary default clauses, a breach of which may result in acceleration of the repayment of some or all of this debt. • We are highly dependent upon our relationship with CSL Seqirus to further research, manufacture and commercialize self-amplifying mRNA vaccines against COVID-19, influenza and three other infectious diseases. • KOSTAIVE might not have a profitable commercial market. • KOSTAIVE only has marketing approval in Japan and Europe and may never achieve marketing approval in any other countries. • Regulatory authorities may change views and recommendations, which could lead to more challenging regulatory paths to approvals and to more expensive clinical and commercial efforts. • Even with the commercialization of KOSTAIVE in Japan, there might not be meaningful sales in Japan.
You should carefully consider the fuller risk factor disclosure set forth in this Annual Report, in addition to the other information herein, including the section of this report titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes. • We have a limited operating history, have incurred significant losses since our inception (with the exception of fiscal year 2022) and anticipate that we will continue to incur significant losses for the foreseeable future. • We have not generated any revenue from product sales, have generated only limited collaboration and grant revenue since inception, and may never be profitable in the long term. • We expect that we will need to raise additional capital in the future, which may not be available on acceptable terms, or at all. • We are dependent upon relationships with our collaboration partners, and the failure of these relationships could negatively affect our business and results of operations. • We are highly dependent upon our relationship with CSL Seqirus to further research, manufacture and commercialize self-amplifying mRNA vaccines against COVID-19, influenza and three other infectious diseases; CSL Seqirus has announced a significant write-down of the licensed collaboration programs. 32 • KOSTAIVE might not have a profitable commercial market. • KOSTAIVE only has marketing approval in Japan and Europe and may never achieve marketing approval in any other countries. • Regulatory authorities may change views and recommendations, which could lead to more challenging regulatory paths to approvals and to more expensive clinical and commercial efforts. • Even with the commercialization of KOSTAIVE in Japan, there might not be meaningful sales in Japan.
A variety of risks associated with international operations could materially adversely affect our business. KOSTAIVE has received marketing approval in Japan and Europe, and we intend to make efforts to expand into other countries outside of the United States for such product and for future potential products.
A variety of risks associated with international operations could materially adversely affect our business. KOSTAIVE has received marketing approval in Japan and Europe and may expand into other countries outside of the United States for such product and for future potential products.
If the prevalence of COVID-19 and public concern about the virus continues to decline, the potential market opportunity will shrink for KOSTAIVE under our collaboration with CSL Seqirus. As further COVID-19 vaccines are approved, production of existing COVID-19 vaccines improves and the COVID-19 impact transitions from pandemic to endemic stage, there may be downward pressure on prices.
If the prevalence of COVID-19 and public concern about the virus continues to decline, the potential market opportunity will shrink for KOSTAIVE under our collaboration with CSL Seqirus. Further, as additional COVID-19 vaccines are approved and production of existing COVID-19 vaccines improves, there may be downward pressure on prices.
With a limited number of patients and limited duration of exposure in such trials, rare and severe side effects of our product candidates may not be uncovered until a significantly larger number of patients are exposed to the product candidate. 45 If any of our product candidates receives marketing approval, and causes serious, unexpected, or undesired side effects, a number of potentially significant negative consequences could result after we begin commercialization, including: • regulatory authorities may withdraw, suspend, or limit their approval of the product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy; • regulatory authorities may require the addition of labeling statements, such as warnings or contraindications; • we may be required to change the way the product is administered or conduct additional clinical trials or post-marketing surveillance; • we could be sued and held liable for harm caused to patients; or • our reputation may suffer.
If any of our product candidates receives marketing approval, and causes serious, unexpected, or undesired side effects, a number of potentially significant negative consequences could result after we begin commercialization, including: • regulatory authorities may withdraw, suspend, or limit their approval of the product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy; • regulatory authorities may require the addition of labeling statements, such as warnings or contraindications; • we may be required to change the way the product is administered or conduct additional clinical trials or post-marketing surveillance; • we could be sued and held liable for harm caused to patients; or • our reputation may suffer.
Government agencies have special contracting authority that gives them the ability to terminate and/or modify their contracts with us. 35 • Our business is subject to audit by the U.S.
Government agencies have special contracting authority that gives them the ability to terminate and/or modify their contracts with us. • Our business is subject to audit by the U.S. Government, and a negative audit could adversely affect our business.
Any exercise by the government of any of the foregoing rights could harm our business, financial condition, results of operations and prospects. 56 RISKS RELATED TO OUR BUSINESS OPERATIONS AND INDUSTRY We may need to expand our organization and may experience difficulties in managing this growth, which could disrupt our operations.
Any exercise by the government of any of the foregoing rights could harm our business, financial condition, results of operations and prospects. RISKS RELATED TO OUR BUSINESS OPERATIONS AND INDUSTRY We may need to expand our organization and may experience difficulties in managing this growth, which could disrupt our operations. As of December 31, 2025, we had approximately 111 employees.
As of December 31, 2024, we had unrestricted cash and cash equivalents of $237.0 million, which we expect should be sufficient to fund currently planned operations for the near future. But if our plans change or we face unexpected circumstances, our capital resources may be depleted more rapidly than we currently anticipate.
As of December 31, 2025, we had unrestricted cash and cash equivalents of $230.9 million, which we expect should be sufficient to fund currently planned operations for the near future, at least the next 12 months. But if our plans change or we face unexpected circumstances, our capital resources may be depleted more rapidly than we currently anticipate.
We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.
We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.
If the contract manufacturers we rely on to produce the supply of our preclinical and clinical product candidates, including materials for the manufacture of our product candidates do not timely deliver adequate quantities of quality materials, development and commercialization of our product candidates would be hindered. 52 We rely on outside contractors to produce the supply of our preclinical and clinical product candidates, and we intend to rely on outside contractors to produce future clinical supplies of product candidates and commercial supplies of any approved product candidates.
If the contract manufacturers we rely on to produce the supply of our preclinical and clinical product candidates, including materials for the manufacture of our product candidates do not timely deliver adequate quantities of quality materials, development and commercialization of our product candidates would be hindered.
In addition, we or our strategic alliance partners may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical trials and the review process.
Additional delays may result if an FDA advisory committee recommends restrictions on approval or recommends non-approval. In addition, we or our strategic alliance partners may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical trials and the review process.
Thus, even if we succeed in bringing a product to market, it may not be considered medically necessary or cost-effective, and the amount reimbursed for any products may be insufficient to allow us to sell our products on a competitive basis. 50 In addition, we cannot be certain if and when we will obtain formulary approval to allow us to sell any products into our target markets.
Thus, even if we succeed in bringing a product to market, it may not be considered medically necessary or cost-effective, and the amount reimbursed for any products may be insufficient to allow us to sell our products on a competitive basis.
If our existing shareholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline significantly.
Sales of a substantial number of shares of our common stock in the public market by our existing shareholders could cause our share price to fall. If our existing shareholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline significantly.
It is uncertain if and to what extent various states will conform to the Tax Cuts and Jobs Act. To the extent that we continue to generate taxable losses for United States federal income tax purposes, unused NOLs will carry forward to offset future taxable income (subject to any applicable limitations), if any.
To the extent that we continue to generate taxable losses for United States federal income tax purposes, unused NOLs will carry forward to offset future taxable income (subject to any applicable limitations), if any.
Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities. It is likely that there will be side effects associated with use of our product candidates.
Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials, or to deny or delay approvals to proceed with further clinical trials, and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities.
If such relationship is unsuccessful, or if CSL Seqirus terminates its collaboration agreement with us, it would negatively impact our ability to conduct our business and generate net product revenue. Failure by CSL Seqirus to perform its duties under its collaboration agreement with us may negatively affect us.
If such relationship is unsuccessful, if CSL Seqirus terminates its collaboration agreement with us, or if we determine it is in our best interests to terminate the agreement, it could negatively impact our ability to generate net product revenue. Failure by CSL Seqirus to perform its duties under its collaboration agreement with us may negatively affect us.
In order to maintain this listing, we must satisfy minimum financial and other continued listing requirements and standards, including a minimum closing bid price requirement for our common stock of $1.00 per share. There can be no assurance that we will be able to comply with the applicable listing standards.
We may be unable to comply with the applicable continued listing requirements of Nasdaq. Our common stock is currently listed on Nasdaq. In order to maintain this listing, we must satisfy minimum financial and other continued listing requirements and standards, including a minimum closing bid price requirement for our common stock of $1.00 per share.
Our patents could be prevented from issuing or be invalidated after issuance for many reasons, including: • relevant prior art relating to our patents and patent applications; or • third party challenges to their validity, enforceability or scope, which may result in patents being narrowed or invalidated.
The patent applications that we own or in-license may fail to result in patents with claims that cover our products or methods in the United States or in other countries. 51 Our patents could be prevented from issuing or be invalidated after issuance for many reasons, including: • relevant prior art relating to our patents and patent applications; or • third party challenges to their validity, enforceability or scope, which may result in patents being narrowed or invalidated.
If any of our product candidates cause undesirable side effects or have other properties impacting safety, their regulatory approval could be prevented, delayed or limited.
If any of our product candidates cause undesirable side effects or have other properties impacting safety, approvals to proceed with further clinical trials may be denied or delayed and regulatory approval could be prevented, delayed or limited.
RISKS RELATED TO THE DEVELOPMENT AND COMMERCIALIZATION OF PRODUCT CANDIDATES We are highly dependent upon our relationship with CSL Seqirus to further research, manufacture and commercialize self-amplifying mRNA vaccines against COVID-19, influenza and three other infectious diseases.
RISKS RELATED TO THE DEVELOPMENT AND COMMERCIALIZATION OF PRODUCT CANDIDATES We are highly dependent upon our relationship with CSL Seqirus to further research, manufacture and commercialize self-amplifying mRNA vaccines against COVID-19, influenza and three other infectious diseases; CSL Seqirus has announced a significant write-down of the licensed collaboration programs. 37 In November 2022, we entered into the CSL Collaboration Agreement with CSL Seqirus, for the research, manufacture and global commercialization of self-amplifying mRNA vaccines against COVID-19, influenza and three other infectious diseases.
For example, if we were to fail to meet the minimum bid price requirement for 30 consecutive business days, we could become subject to delisting. Although Nasdaq may provide us with a compliance period in which to regain compliance with the minimum bid price requirement, we may not be able to regain compliance within the period provided by Nasdaq.
Although Nasdaq may provide us with a compliance period in which to regain compliance with the minimum bid price requirement, we may not be able to regain compliance within the period provided by Nasdaq.
Any of these events would have a material adverse effect on our results of operations and financial condition. If the outside contractors we rely on to conduct some aspects of our compound formulation, research and studies do not perform satisfactorily and meet deadlines, development of our product candidates could be delayed or precluded.
If the outside contractors we rely on to conduct some aspects of our compound formulation, research and studies do not perform satisfactorily and meet deadlines, development of our product candidates could be delayed or precluded. We do not independently conduct all aspects of our drug discovery activities, compound formulation research or preclinical and clinical studies of product candidates.
Future growth would impose significant additional responsibilities on our management, including the need to identify, recruit, maintain, motivate and integrate additional employees, consultants and contractors. Also, our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities.
Also, our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities.
If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully complete the development or commercialization of our product candidates, which would materially harm our business. 42 Our platform focuses on nucleic acid technology, and mRNA drug products in particular, which are relatively new and any adverse results from nucleic acid or mRNA technologies in the industry could significantly impact our ability to develop and commercialize marketable products.
If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully complete the development or commercialization of our product candidates, which would materially harm our business.
Those shareholders are eligible to sell those shares in the public market without restriction, except for shareholders who are deemed our “affiliates” under Rule 144 under the Securities Act.
As of December 31, 2025, 2,048,139 shares of our common stock may be sold pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”). Those shareholders are eligible to sell those shares in the public market without restriction, except for shareholders who are deemed our “affiliates” under Rule 144 under the Securities Act.
To the extent that our hardware or software malfunctions or access to our data by internal research personnel is interrupted, our business could suffer. The integrity and protection of our employee and company data is critical to our business and our employees and participants in our clinical trials have a high expectation that we will adequately protect their personal information.
The integrity and protection of our employee and company data is critical to our business and our employees and participants in our clinical trials have a high expectation that we will adequately protect their personal information. The regulatory environment governing information, security and privacy laws is increasingly demanding and continues to evolve.
Although our computer and communications hardware is protected through physical and software safeguards, it is still vulnerable to fire, storm, flood, power loss, earthquakes, telecommunications failures, physical or software break-ins, software viruses, and similar events. These events could lead to the unauthorized access, disclosure and use of non-public information.
Maintaining compliance with applicable security and privacy regulations may increase our operating costs. Although our computer and communications hardware is protected through physical and software safeguards, it is still vulnerable to fire, storm, flood, power loss, earthquakes, telecommunications failures, physical or software break-ins, software viruses, and similar events.
We have devoted most of our financial resources to research and development, including our preclinical and clinical development activities. To date, we have funded our operations primarily through upfront payments, research funding and milestone payments from strategic alliances and collaborations, and through the sale of equity and convertible securities.
To date, we have funded our operations primarily through upfront payments, research funding and milestone payments from strategic alliances and collaborations, and through the sale of equity and convertible securities. We expect to continue to incur substantial and increased expenses, losses and negative cash flows as we expand our development activities and advance our programs.
In addition, we rely on a global enterprise software system to operate and manage our business. We also maintain personally identifiable information about our employees and participants in our clinical trials. Our business therefore depends on the continuous, effective, reliable, and secure operation of our computer hardware, software, networks, Internet servers, and related infrastructure.
Our business requires manipulating, analyzing and storing large amounts of data. In addition, we rely on a global enterprise software system to operate and manage our business. We also maintain personally identifiable information about our employees and participants in our clinical trials.
RISKS RELATED TO OUR COMMON STOCK We do not intend to pay dividends on our common stock so any returns to investors will be limited to the value of our shares. We have never declared or paid any cash dividends on our common stock.
Accordingly, the current federal government shutdown, or uncertainty regarding the continuity of government operations could have a material adverse effect on our business, results of operations, and stock price. RISKS RELATED TO OUR COMMON STOCK We do not intend to pay dividends on our common stock so any returns to investors will be limited to the value of our shares.
In the past, medicines, biotechnology and pharmaceutical companies have experienced significant stock price volatility, particularly when associated with binary events such as clinical trials results and product approvals.
In the past, medicines, biotechnology and pharmaceutical companies have experienced significant stock price volatility, particularly when associated with binary events such as clinical trials results and product approvals. If we face such litigation, it could result in substantial costs, divert management’s attention and resources, and have a very material adverse effect on our business, operating results and prospects.
Cyber security risks and the failure to maintain the confidentiality, integrity, and availability of our computer hardware, software, and Internet applications and related tools and functions could result in damage to our reputation and/or subject us to costs, fines or lawsuits. Our business requires manipulating, analyzing and storing large amounts of data.
A successful product liability claim or series of claims brought against us could cause our share price to decline and, if judgments exceed our insurance coverage, could adversely affect our results of operations and business. 57 Cyber security risks and the failure to maintain the confidentiality, integrity, and availability of our computer hardware, software, and Internet applications and related tools and functions could result in damage to our reputation and/or subject us to costs, fines or lawsuits.
As of December 31, 2024, we had approximately 176 employees. In the future we may expand our employee base to increase our managerial, scientific, operational, commercial, financial and other resources and we may hire more consultants and contractors.
In the future we may expand our employee base to increase our managerial, scientific, operational, commercial, financial and other resources and we may hire more consultants and contractors. Future growth would impose significant additional responsibilities on our management, including the need to identify, recruit, maintain, motivate and integrate additional employees, consultants and contractors.
In addition, the new presidential administration may institute policies, communications or programs that could negatively impact the biotechnology industry, vaccine products and our ability to raise additional financing. Even if we obtain regulatory approval for a product candidate, we will still face extensive regulatory requirements and our products may face future development and regulatory difficulties.
Even if we obtain regulatory approval for a product candidate, we will still face extensive regulatory requirements and our products may face future development and regulatory difficulties.
A portion of our current cash balance is expected to be utilized during 2024 to fund our continued preclinical and clinical development activities for our pipeline, including manufacturing activities to support such development activities. 37 Any additional fundraising efforts may divert our management from our day-to-day activities, which may delay and hinder our ability to develop and commercialize future product candidates.
Any additional fundraising efforts may divert our management from our day-to-day activities, which may delay and hinder our ability to develop and commercialize future product candidates.
The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be highly uncertain. The patent applications that we own or in-license may fail to result in patents with claims that cover our products or methods in the United States or in other countries.
The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be highly uncertain.
If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock. If we are subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties, we could incur substantial expenses.
As a result, this litigation and any related proceedings could materially and adversely affect our business, financial condition, cash flows, and results of operations. 53 If we are subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties, we could incur substantial expenses.
Even if KOSTAIVE continues to be commercialized in Japan, there might not be meaningful sales, due to competition, pricing, product profile or other factors. Japanese regulatory agencies and purchasers might require involvement of Japanese companies in the domestic production of our COVID-19 vaccine, and our Japanese partners and contract manufacturers might not be able to scale up to commercial quantities.
Even if KOSTAIVE continues to be commercialized in Japan, there might not be meaningful sales, due to competition, pricing, product profile, vaccine uptake by the public or other factors. To date, demand for KOSTAIVE in Japan has been weak, and future sales may decrease and our partners may decide to cease commercialization.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis ensures that The Board has oversight and effective governance in managing risks associated with cybersecurity threats. Board of Directors Oversight The Audit Committee of the Board (the “Audit Committee”) is central to the Board’s oversight of cybersecurity risks and bears the primary responsibility for this domain.
Biggest changeWe have also implemented standard operating procedures to define the channels by which cybersecurity threats are communicated to the Company's Board of Directors (the “Board”). This ensures that the Board has oversight and effective governance in managing risks associated with cybersecurity threats.
This group works to identify and assess risks from cybersecurity threats by monitoring and evaluating our threat environment and the Company’s risk profile using various methods in certain contexts, including, for example, manual tools, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threat actors, conducting scans of certain environments, evaluating certain threats reported to us, conducting threat and vulnerability assessments, using external intelligence feeds, and using third parties to conduct tabletop incident response exercises and other tests.
This group works to identify and assess risks from cybersecurity threats by monitoring and evaluating our threat environment and the Company’s risk profile using various methods in certain contexts including for example, manual tools, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threat actors, conducting scans of certain environments, evaluating certain threats reported to us, conducting threat and vulnerability assessments, using external intelligence feeds, and using third parties to conduct tabletop incident response exercises among other tests.
These briefings encompass a broad range of topics, including: • Current cybersecurity landscape and emerging threats; • Status of ongoing cybersecurity initiatives and strategies; • Incident reports and learnings from any cybersecurity events; and • Compliance with regulatory requirements and industry standards.
These briefings encompass a broad range of topics, including: 64 • Current cybersecurity landscape and emerging threats; • Status of ongoing cybersecurity initiatives and strategies; • Incident reports and learnings from any cybersecurity events; and • Compliance with regulatory requirements and industry standards.
Risk Management Personnel Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with the Vice President of IT and the Director of IT Infrastructure and Security. Our IT Leadership team oversees our governance programs, tests our compliance with standards, remediates known risks, stays informed of significant developments in the cybersecurity domain, and leads our employee training program.
Risk Management Personnel Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with Director, IT Security and Infrastructure. Our IT Leadership team oversees our governance programs, tests our compliance with standards, remediates known risks, stays informed of significant developments in the cybersecurity domain, and leads our employee training program.
The Audit Committee receives briefings on cybersecurity risks from the Vice President of IT or the Chief Legal Officer as described below in “Management’s Role Managing Risk.” Management’s Role Managing Risk The Vice President of IT, Chief Legal Officer (“CLO”) and the Director of IT Infrastructure and Security, play a pivotal role in informing the Audit Committee on cybersecurity risks.
The Audit Committee receives briefings on cybersecurity risks from the Director, IT Security and Infrastructure or the Chief Legal Officer as described below in “Management’s Role Managing Risk.” Management’s Role Managing Risk The Director, IT Security and Infrastructure and Chief Legal Officer (“CLO”) play a pivotal role in informing the Audit Committee on cybersecurity risks.
The current Vice President of IT, who is responsible for assessment and management of cybersecurity risks, has over 20 years of experience in information and technology security, including senior roles at several companies in the pharmaceutical industry, and possesses the requisite education, skills, experience, and industry certifications expected of an individual assigned to these duties .
The current Director, IT Security and Infrastructure, who is responsible for assessment and management of cybersecurity risks, has over 20 years of experience in information and technology security, including senior roles at several companies in the pharmaceutical industry, and possesses the requisite education, skills, experience, and industry certifications expected of an individual assigned to these duties.
Monitor Cybersecurity Incidents The Vice President of IT is continually informed about the latest developments in cybersecurity, including potential threats and innovative risk management techniques. This ongoing knowledge acquisition is crucial for the effective prevention, detection, mitigation, and remediation of cybersecurity incidents.
Monitor Cybersecurity Incidents The Director, IT Security and Infrastructure is continually informed about the latest developments in cybersecurity, including potential threats and innovative risk management techniques. This ongoing knowledge acquisition is crucial for the effective prevention, detection, mitigation, and remediation of cybersecurity incidents.
Oversee Third-party Risk Because we are aware of the risks associated with third-party service providers, we conduct thorough security assessments of all determined high-risk third-party providers as deemed necessary, before engagement to ensure compliance with industry cybersecurity standards and frameworks. This includes assessments performed by our Vice President of IT, who oversees the Company's cybersecurity function.
Oversee Third-party Risk Because we are aware of the risks associated with third-party service providers, we conduct thorough security assessments of certain high-risk third-party providers as deemed necessary, before engagement to ensure compliance with industry cybersecurity standards and frameworks. This includes assessments performed by our Director, IT Security and Infrastructure, who oversees the Company's cybersecurity function.
In cooperation with the Vice President of IT, the Director of IT Infrastructure and Security implements and oversees processes for the regular monitoring of our information systems. This includes the deployment of advanced security measures and regular system audits to identify potential vulnerabilities.
In cooperation with other cybersecurity and IT staff, the Director of IT Security and Infrastructure implements and oversees processes for the regular monitoring of our information systems. This includes the deployment of advanced security measures and regular system audits to identify potential vulnerabilities.
In the event of a cybersecurity incident, the Vice President of IT is equipped with a well-defined incident response plan. This plan includes immediate actions to mitigate the impact and long-term strategies for remediation and prevention of future incidents.
In the event of a cybersecurity incident, the security team is equipped with a well-defined incident response plan. This plan includes immediate actions to mitigate the impact and long-term strategies for remediation and prevention of future incidents.
Reporting to Board of Directors The Vice President of IT and the Director of IT Infrastructure and Security, in their respective capacity, inform the Chief Financial Officer (CFO) and Chief Legal Officer (CLO) of cybersecurity risks and incidents.
Reporting to Board of Directors The Director of IT Security and Infrastructure, in their respective capacity, inform the Chief Legal Officer (CLO) and other members of senior leadership as needed, of cybersecurity risks and incidents.
The Audit Committee is composed of board 66 members with diverse expertise including, risk management, and finance, equipping them to oversee cybersecurity risks effectively.
Board of Directors Oversight The Audit Committee of the Board (the “Audit Committee”) is central to the Board’s oversight of cybersecurity risks and bears the primary responsibility for this domain. The Audit Committee is composed of board members with diverse expertise including, risk management, and finance, equipping them to oversee cybersecurity risks effectively.
Our information security function and our Vice President of Information Technology help identify, assess and manage the Company’s cybersecurity threats and risks.
Our information security function led by the Director, IT Security and Infrastructure, help to identify, assess and manage the Company’s cybersecurity threats and risks.
Risks from Cybersecurity Threats We have not encountered cybersecurity challenges that have materially affected or are reasonably likely to materially affect our operations or financial standing. Governance We have implemented standard operating procedures to define the channels by which cybersecurity threats are communicated to the Company's Board of Directors (the “Board”).
Risks from Cybersecurity Threats We have not encountered cybersecurity challenges that have materially affected or are reasonably likely to materially affect our operations or financial standing.
Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our information systems and data, including, for example: incident detection and response, disaster recovery/business continuity policies, encryption of certain data, network security controls and data segmentation for certain systems, access controls, physical security, asset management and tracking, systems monitoring, annual mandated employee training, penetration testing, cybersecurity insurance, and dedicated cybersecurity staff.
These policies, processes and standards are based on recognized frameworks established by the National Institute of Standards and Technology and include, for example: incident detection and response, disaster recovery/business continuity policies, encryption of certain data, network security controls and data segmentation for certain systems, access controls, physical security, system change control, asset management and tracking, systems monitoring, annual mandated employee training, penetration testing, 63 cybersecurity insurance, and dedicated cybersecurity staff.
Removed
They provide briefings to the Audit Committee on a regular basis, with a minimum frequency of once per year.
Added
Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our information systems and data.
Added
Technical safeguards are evaluated and upgraded over time to address risks identified through vulnerability assessments and cybersecurity threat analysis. Our employees and contractors receive regular cybersecurity awareness training, including topics relating to social engineering and email fraud, to communicate our evolving information security policies, procedures, and standards.
Added
Employee training includes periodic phishing exercises to provide our employees with a heightened level of awareness to cybersecurity threats, and to equip them with relevant information to prevent cybersecurity incidents.
Added
In the event of a future cybersecurity incident, we have procedures in place to identify whether an incident or associated cybersecurity risks have materially affected or are reasonably likely to materially affect us, help to ensure that any required disclosures are made when required under applicable law or regulation.
Added
However, the safeguards might not provide adequate to prevent a material adverse impact from a cybersecurity attack. Governance Our policies and procedures provide for the prompt escalation and communication of significant cybersecurity incidents so that Company management can make decisions regarding the handling, disclosure, and reporting of such incidents in a timely and effective manner.
Added
They provide briefings to the Audit Committee on a regular basis, and at least annually, and more frequently as circumstances warrant (including in connection with incidents, significant changes in the threat landscape, or significant program initiatives).

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Pro perties We have two properties located in San Diego, California. Our principal place of business is located at 10628 Science Center Drive, Suite 250, and consists of approximately 24,700 square feet of office space and laboratory space leased through March 2027.
Biggest changeItem 2. Pro perties We have two properties located in San Diego, California. Our principal place of business is located at 10285 Science Center Drive, San Diego, California. The property consists of approximately 43,234 square feet and is leased through September 2032.
Removed
On September 29, 2021, we entered into a lease agreement for office, research and development, engineering and laboratory space located at 10285 Science Center Drive, San Diego, California. The additional space of approximately 43,234 square feet is leased for a term of 10 years and 8 months.
Added
Our other property is located at 10628 Science Center Drive, Suite 250, San Diego, California and consists of approximately 24,700 square feet of office space and laboratory space, which was vacated in December 2025 and is leased through March 2027. We believe that our property is suitable for the conduct of our business.
Removed
We believe that our properties are suitable for the conduct of our business. 67

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings From time to time, we may be involved in various legal proceedings and subject to claims that arise in the ordinary course of business, and the results of litigation and claims are inherently unpredictable and uncertain. We are not currently a party to any material legal proceedings. Item 4. Mine Saf ety Disclosures Not applicable.
Biggest changeItem 3. Legal Proceedings From time to time, we may be involved in various legal proceedings and subject to claims that arise in the ordinary course of business, and the results of litigation and claims are inherently unpredictable and uncertain. Other than as set forth below, we are not currently a party to any material legal proceedings.
Added
On September 23, 2025, we filed a lawsuit against AbbVie Inc., Capstan Therapeutics, Inc. and other defendants in the United States District Court for the Southern District of California, asserting claims for trade secret misappropriation and breach of contract.
Added
The defendants filed a motion to discuss the complaint in December 2025, and we filed an opposition to that motion in January 2026. The Court has not set a case schedule.
Added
On May 30, 2025, we initiated an arbitration against CSL Seqirus before the International Chamber of Commerce, seeking payment of a milestone under the CSL Collaboration Agreement based on the European Commission’s grant of marketing authorization for a presentation of KOSTAIVE ® in the European Union.
Added
On July 25, 2025, CSL Seqirus submitted an Answer in the arbitration contending that it does not have a current obligation to pay the milestone. The arbitration is ongoing with a hearing scheduled to occur in the third quarter of 2026. 65 Item 4. Mine Saf ety Disclosures Not applicable. PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 68 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 68 Item 6. Reserved 69 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 70 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 78 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 66 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 66 Item 6. Reserved 67 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 68 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 77 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities Market for our Common Stock Our common stock is listed on the Nasdaq under the symbol “ARCT”. Holders of Common Stock As of March 3, 2025, there were nine registered holders of record of our common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities Market for our Common Stock Our common stock is listed on the Nasdaq under the symbol “ARCT”. Holders of Common Stock As of February 27, 2026, there were eight registered holders of record of our common stock.
The graph is based on the assumption that $100 had been invested in Company common stock. 68 Securities Authorized for Issuance under Equity Compensation Plans Information about our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report. Recent Sales of Unregistered Securities None.
The graph is based on the assumption that $100 had been invested in Company common stock. 66 Securities Authorized for Issuance under Equity Compensation Plans Information about our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report. Recent Sales of Unregistered Securities None.
Stock Performance Graph The following graph compares the Company’s cumulative stockholder return since December 31, 2019 with the Nasdaq Composite Index, and the Nasdaq Biotechnology Index.
Stock Performance Graph The following graph compares the Company’s cumulative stockholder return since December 31, 2020 with the Nasdaq Composite Index, and the Nasdaq Biotechnology Index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur future funding requirements are difficult to forecast and will depend on many factors, including but not limited to the following: • the development of our LUNAR-COV19 and LUNAR-FLU vaccine candidates; • the achievement of milestones under our strategic alliance agreements; • maintaining and/or expanding our manufacturing network and capabilities; • the terms and timing of any other strategic alliance, licensing and other arrangements that we may establish, including those with CSL Seqirus and CSL Seqirus’ arrangement with Meiji, and any related payments thereunder; • the initiation, progress, timing and completion of preclinical studies and clinical trials for our product candidates; • the number and characteristics of product candidates that we pursue; • the outcome, timing and cost of regulatory approvals; • delays that may be caused by changing regulatory requirements; • the cost and timing of hiring new employees to support our continued growth; • the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims; • the costs and timing of procuring clinical and commercial supplies of our product candidates; • the costs and timing of establishing sales, marketing and distribution capabilities; • the costs associated with legal proceedings; • the costs associated with potential litigation related to collaboration agreements; and • the extent to which we acquire or invest in businesses, products or technologies. 73 The following table shows a summary of our cash flows for the years ended December 31, 2024 and 2023: Year Ended December 31, (in thousands) 2024 2023 Cash provided by (used in): Operating activities $ (59,747 ) $ (18,099 ) Investing activities (648 ) (2,901 ) Financing activities 5,418 (24,087 ) Net decrease in cash and restricted cash $ (54,977 ) $ (45,087 ) Operating Activities Net cash used in operating activities was $59.7 million for the year ended December 31, 2024, compared to $18.1 million for the year ended December 31, 2023.
Biggest changeOur future funding requirements are difficult to forecast and will depend on many factors, including but not limited to the following: • the development of our cystic fibrosis and OTC deficiency therapeutic candidates; • the achievement of milestones under our strategic alliance agreements; • maintaining and/or expanding our manufacturing network and capabilities; • the terms and timing of any other strategic alliance, licensing and other arrangements that we may establish, including those with CSL Seqirus and CSL Seqirus’ arrangement with Meiji, and any related payments thereunder; • the initiation, progress, timing and completion of preclinical studies and clinical trials for our product candidates; 71 • the number and characteristics of product candidates that we pursue; • the outcome, timing and cost of regulatory approvals; • delays that may be caused by changing regulatory requirements; • the cost and timing of hiring new employees to support our continued growth; • the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims; • the costs and timing of procuring clinical and commercial supplies of our product candidates; • the costs and timing of establishing sales, marketing and distribution capabilities; • the costs associated with legal proceedings; • the costs associated with potential litigation related to collaboration agreements; and • the extent to which we acquire or invest in businesses, products or technologies.
We have extensive expertise in the design and optimization of mRNA constructs, including with respect to a type of mRNA technology known as self-amplifying mRNA (sa-mRNA). Our proprietary self-amplifying mRNA technology platform, or STARR® (“STARR”), has been demonstrated to induce a longer-lasting and broader humoral immune response at lower dose levels than conventional mRNA-based vaccines.
We have extensive expertise in the design and optimization of mRNA constructs, including with respect to a type of mRNA technology known as self-amplifying mRNA (sa-mRNA). Our proprietary self-amplifying mRNA technology platform, or STARR ® (“STARR”), has been demonstrated to induce a robust, longer-lasting and broader humoral immune response at lower dose levels than conventional mRNA-based vaccines.
Our collaboration agreements typically contain promised goods and services, including technology licenses or options to obtain technology licenses, research and development and regulatory services. Upon entering into a collaboration agreement, we are required to make the following judgments: 76 Identifying the performance obligations and measuring progress Our assessment of what constitutes a separate performance obligation requires us to apply judgment.
Our collaboration agreements typically contain promised goods and services, including technology licenses or options to obtain technology licenses, research and development and regulatory services. Upon entering into a collaboration agreement, we are required to make the following judgments: Identifying the performance obligations and measuring progress Our assessment of what constitutes a separate performance obligation requires us to apply judgment.
We estimate the incremental borrowing rate using observable inputs (such as market interest rates) when available and are required to make certain entity and asset-specific estimates. The incremental borrowing rate used in the calculation of the present value of lease payments in calculating lease liabilities and the corresponding ROU requires the use of significant judgment by management.
We estimate the incremental borrowing rate using observable inputs (such as market interest rates) when available and are required to make certain entity and asset-specific estimates. The incremental borrowing rate used in the calculation of the present 76 value of lease payments in calculating lease liabilities and the corresponding ROU requires the use of significant judgment by management.
Grant from the Biomedical Advanced Research and Development Authority On August 31, 2022, we entered into a cost reimbursement contract (the “BARDA Contract”) with the Biomedical Advanced Research and Development Authority (“BARDA”), a division of the Office of the Assistant Secretary for Preparedness and Response (“ASPR”) within the U.S.
Grant from the Biomedical Advanced Research and Development Authority 70 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.
Our proprietary LNP delivery system, LUNAR® (“LUNAR”), is intended to address the major hurdle in RNA drug development, namely the effective and safe delivery of RNA therapeutics to disease-relevant target tissues. LUNAR may enable multiple nucleic acid medicines.
Our proprietary LNP delivery system, LUNAR ® (“LUNAR”), is intended to address the major hurdle in RNA drug development, namely the effective and safe delivery of RNA to disease-relevant target tissues. LUNAR may enable multiple nucleic acid medicines.
Amortization from Upfront Payments For certain agreements, we recognize revenue from the amortization of upfront payments as we perform research and development, technology transfer and consulting services. We use an input method to estimate the amount of revenue to recognize each period.
Amortization from Upfront Payments 75 For certain agreements, we recognize revenue from the amortization of upfront payments as we perform research and development, technology transfer and consulting services. We use an input method to estimate the amount of revenue to recognize each period.
General Financial Resources A portion of our current cash balance is expected to be utilized during fiscal year 2025 to fund (i) the continued Phase 2 trial of ARCT-810, our LUNAR-OTC candidate, (ii) advances to our LUNAR-CF program in clinical trials, (iii) expenses incurred prior to customer payments under the CSL Collaboration Agreement and BARDA agreement and (iv) continued exploratory activities related to our platform and other general administrative activities.
General Financial Resources A portion of our current cash balance is expected to be utilized during fiscal year 2026 to fund (i) advances to our LUNAR-CF program in clinical trials, (ii) the continued Phase 2 trial of ARCT-810, our LUNAR-OTC candidate, (iii) expenses incurred prior to customer payments under the CSL Collaboration Agreement and BARDA agreement and (iv) continued exploratory activities related to our platform and other general administrative activities.
We discuss the estimates we make related to the relative stand-alone selling price of a license in detail above under “Allocating the transaction price to our performance obligations.” 77 Research and Development Expenses, Including Clinical Trial Accruals/Expenses Research and development costs consist of salaries and benefits, including share-based compensation, laboratory supplies and facility costs, as well as fees paid to other entities that conduct certain research and development activities on our behalf, such as clinical research organizations, or CROs, and contract manufacturing organizations, or CDMOs.
We discuss the estimates we make related to the relative stand-alone selling price of a license in detail above under “Allocating the transaction price to our performance obligations.” Research and Development Expenses, Including Clinical Trial Accruals/Expenses Research and development costs consist of salaries and benefits, including share-based compensation, laboratory supplies and facility costs, as well as fees paid to other entities that conduct certain research and development activities on our behalf, such as clinical research organizations, or CROs, and contract manufacturing organizations, or CMOs.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found within Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found within Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024.
Borrowings under the agreement will bear interest at a rate of 1.00% above either the Daily Simple SOFR or Term SOFR (as such terms are defined in the Wells Fargo Loan), with “SOFR” being the rate per annum equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York.
Borrowings under the agreement bore interest at a rate of 1.00% above either the Daily Simple SOFR or Term SOFR (as such terms are defined in the Wells Fargo Loan), with “SOFR” being the rate per annum equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York.
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.
There was no penalty for terminating the agreement and no penalty for terminating the facility prior to the maturity date of the Wells Fargo Loan. As collateral, the Company had 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.
General and Administrative Expenses General and administrative expenses consist primarily of salaries and related benefits for our executive, administrative and accounting functions and professional service fees for legal and accounting services as well as other general and administrative expenses. General and administrative expenses were $52.8 million and $52.9 million for the years ended December 31, 2024 and 2023, respectively.
General and Administrative Expenses General and administrative expenses consist primarily of salaries and related benefits for our executive, administrative and accounting functions and professional service fees for legal and accounting services as well as other general and administrative expenses. General and administrative expenses were $46.1 million and $52.8 million for the years ended December 31, 2025 and 2024, respectively.
As of December 31, 2024, we had an accumulated deficit of $448.8 million. Liquidity and Capital Resources From the Company’s inception through the year ended December 31, 2024, 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.
As of December 31, 2025, we had an accumulated deficit of $514.6 million. Liquidity and Capital Resources From the Company’s inception through the year ended December 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.
If an Event of Default (as defined in the credit agreement) occurs, then all Wells Fargo Loans shall bear interest at a rate equal to 2.00% above the interest rate applicable immediately prior to the occurrence of the Event of Default.
If an Event of Default (as defined in the credit agreement) had occurred, then all Wells Fargo Loans would bear interest at a rate equal to 2.00% above the interest rate applicable immediately prior to the occurrence of the Event of Default.
The original term of the agreement is two years, with an option for one-year renewals subject to Wells Fargo approval and 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.
The original term of the agreement was 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.
It provides for reimbursement by BARDA of our permitted costs up to $63.2 million. As of December 31, 2024, the remaining available funding net of revenue earned was $40.0 million.
It provides for reimbursement by BARDA of our permitted costs up to $63.2 million. As of December 31, 2025, the remaining available funding net of revenue earned was $26.7 million.
We initiated dosing in a Phase 1 clinical trial of a novel seasonal influenza sa-mRNA vaccine candidate under our collaboration with CSL Seqirus in January 2024. In December 2024, we initiated dosing of an sa-mRNA vaccine candidate against pandemic avian influenza (bird flu) in a Phase 1 trial funded by the Biomedical Advanced Research and Development Authority (“BARDA”).
In December 2024, we initiated dosing of an sa-mRNA vaccine candidate against pandemic avian influenza (bird flu) in a Phase 1 trial funded by the Biomedical Advanced Research and Development Authority (“BARDA”).
Investing Activities Net cash used in investing activities of $0.6 million in 2024 and $2.9 million in 2023 reflected the acquisition of property and equipment. Financing Activities Net cash provided by financing activities was $5.4 million for the year ended December 31, 2024, compared to a net cash outflow of $24.1 million in 2023 ,representing a $29.5 million increase.
Investing Activities Net cash used in investing activities of $0.2 million in 2025 and $0.6 million in 2024 reflected the acquisition of property and equipment. Financing Activities Net cash provided by financing activities was $13.4 million for the year ended December 31, 2025, compared to $5.4 million in 2024.
The decrease was primarily offset by an increase in the revenue of $4.8 million related to the increase in reimbursable research and development expenses for the grant agreement with BARDA. Operating Expenses Our operating expenses consist of research and development and general and administrative expenses.
The decrease was partially offset by an increase in grant revenue of $0.9 million related to the reimbursable research and development expenses for the agreements with BARDA and the Gates Foundation. Operating Expenses Our operating expenses consist of research and development and general and administrative expenses.
We will be eligible to receive development milestones totaling more than $1.3 billion if all products are registered in the licensed fields. We will also be entitled to receive up to $3.0 billion in commercial milestones based on “net sales” of vaccines in the various fields.
We received an up-front payment of $200.0 million, with the potential to receive development milestones totaling more than $1.3 billion if all products are registered in the licensed fields. We also are entitled to potentially receive up to $3.0 billion in commercial milestones based on “net sales” of vaccines in the various fields.
On June 26, 2024, the parties entered into 71 Amendment No. 1 to the Wells Fargo Loan, whereby the term was extended by one year to April 2026. As of December 31, 2024, no borrowings were made against the Wells Fargo Loan.
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.
We also improved our platform technologies and advanced our early-stage research activities and manufacturing process development and operations. We conducted exploratory platform development activities, including the evaluation of genome editing, and new targeting approaches, where our LUNAR and STARR platforms could potentially be useful for identification and development of additional products for our portfolio.
We conducted exploratory platform development activities, including the evaluation of genome editing, and new targeting approaches, where our LUNAR and STARR platforms could be useful for identification and development of additional products for our portfolio.
In addition, we are entitled to receive a 40% share of net profits from COVID-19 vaccine sales and up to low double-digit royalties of annual net sales for vaccines against influenza and the other three specified infectious disease pathogens, as well as royalties on revenues from vaccines that may be developed for pandemic preparedness.
In addition, we are entitled to receive a 40% share of net profits from COVID-19 vaccine sales and up to low double-digit royalties of annual net sales for vaccines against influenza, pandemic preparedness and three additional infectious diseases.
Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements included in this Annual Report. Our historical results of operations and the year-to-year comparisons of our results of operations that follow are not necessarily indicative of future results.
Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements included in this Annual Report.
Revenues We enter into arrangements with pharmaceutical and biotechnology partners and government agencies that may contain upfront payments, license fees for research and development arrangements, research and development funding, milestone payments, option exercise and exclusivity fees and royalties on future sales.
Our historical results of operations and the year-to-year comparisons of our results of operations that follow are not necessarily indicative of future results. 72 Revenues We enter into arrangements with pharmaceutical and biotechnology partners and government agencies that may contain upfront payments, license fees for research and development arrangements, research and development funding, milestone payments, option exercise and exclusivity fees and royalties on future sales.
Although such expenses increased during 2024 as compared to 2023, we expect that they will not increase over the next twelve months due to reduced share-based compensation. 75 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.
We expect that payroll and benefits costs will not increase over the next twelve months 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.
Years Ended December 31, Change 2024 vs 2023 (in thousands) 2024 2023 Change % Operating expenses: Research and development, net $ 195,156 $ 192,133 $ 3,023 2 % General and administrative 52,823 52,871 (48 ) 0 % Total $ 247,979 $ 245,004 $ 2,975 1 % The following table presents our total research and development expenses by category: Research and Development Expenses, net Year Ended December 31, Change 2024 vs 2023 (in thousands) 2024 2023 Change % LUNAR-COVID $ 70,464 $ 81,262 $ (10,798 ) -13 % LUNAR-OTC 9,509 9,315 194 2 % BARDA 7,807 5,465 2,342 43 % LUNAR-CF, net 17,227 14,666 2,561 17 % Early-stage programs 16,096 12,460 3,636 29 % Discovery technologies 6,278 6,405 (127 ) -2 % Payroll and benefits 57,474 50,924 6,550 13 % Facilities and equipment 10,301 11,636 (1,335 ) -11 % Total research and development expenses, net $ 195,156 $ 192,133 $ 3,023 2 % 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.
Years Ended December 31, Change 2025 vs 2024 (in thousands) 2025 2024 Change % Operating expenses: Research and development, net $ 112,212 $ 195,156 $ (82,944 ) -43 % General and administrative 46,079 52,823 (6,744 ) -13 % Total $ 158,291 $ 247,979 $ (89,688 ) -36 % The following table presents our total research and development expenses by category: Research and Development Expenses, net Year Ended December 31, Change 2025 vs 2024 (in thousands) 2025 2024 Change % LUNAR-COVID $ 16,115 $ 70,464 $ (54,349 ) -77 % LUNAR-OTC 5,748 9,509 (3,761 ) -40 % BARDA 8,366 7,807 559 7 % LUNAR-CF, net 17,489 17,227 262 2 % Early-stage programs 594 16,096 (15,502 ) -96 % Discovery technologies 8,016 6,278 1,738 28 % Payroll and benefits 43,987 57,474 (13,487 ) -23 % Facilities and equipment 11,897 10,301 1,596 15 % Total research and development expenses, net $ 112,212 $ 195,156 $ (82,944 ) -43 % 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.
Critical Accounting Policies and Estimates Our significant accounting policies are summarized in “Note 2 Summary of Significant Accounting Policies,” included in our consolidated financial statements included elsewhere in this annual report on Form 10-K.
The decrease in interest income from 2024 to 2025 was the result of lower interest rates during the year ended 2025 and a decrease in cash and cash equivalents. 74 Critical Accounting Policies and Estimates Our significant accounting policies are summarized in “Note 2 Summary of Significant Accounting Policies,” included in our consolidated financial statements included elsewhere in this annual report on Form 10-K.
(“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. We made significant progress in 2024.
In our vaccine program, we have partnered with CSL Seqirus, 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.
There can be no assurance that we will be able to obtain additional needed financing on acceptable terms or at all.
There can be no assurance that we will be able to obtain additional needed financing on acceptable terms or at all. Additionally, equity or debt financings may have a dilutive effect on the holdings of our existing shareholders.
ARCT-810 has 70 received Orphan Drug Designation from the FDA and Orphan Medicinal Product Designation from the European Medicines Agency (the “EMA”) for treatment of OTC deficiency, as well as Fast Track Designation and Rare Pediatric Disease Designation from the FDA.
ARCT-810 has received Orphan Drug Designation from the FDA and Orphan Medicinal Product Designation from the EMA for treatment of OTC deficiency, as well as Fast Track Designation and Rare Pediatric Disease Designation from the FDA. Commercial sales of KOSTAIVE began in October 2024 in Japan by Meiji Seika Pharma, Ltd.
During fiscal year 2024, we received milestone payments totaling $96.0 million from CSL Seqirus. We expect to receive future payments from CSL Seqirus primarily by meeting future milestones related to the CSL Collaboration Agreement. At December 31, 2024, the Company’s balance of cash and cash equivalents, including restricted cash, was $293.9 million. CSL Seqirus, Inc.
During fiscal year 2025, we received milestone payments totaling $39.1 million from CSL Seqirus. At December 31, 2025, the Company’s balance of cash and cash equivalents, including restricted cash, was $232.8 million. CSL Seqirus, Inc.
The following table summarizes our total revenues for the periods indicated: Years Ended December 31, Change 2024 vs 2023 (in thousands) 2024 2023 Change % Collaboration revenue $ 138,389 $ 157,748 $ (19,359 ) -12 % Grant revenue 13,921 9,051 4,870 54 % Total $ 152,310 $ 166,799 $ (14,489 ) -9 % Revenue decreased by $14.5 million during the year ended December 31, 2024 as compared to the year ended December 31, 2023.
The following table summarizes our total revenues for the periods indicated: Years Ended December 31, Change 2025 vs 2024 (in thousands) 2025 2024 Change % Collaboration revenue $ 67,221 $ 138,389 $ (71,168 ) -51 % Grant revenue 14,810 13,921 889 6 % Total $ 82,031 $ 152,310 $ (70,279 ) -46 % Revenue decreased by $70.3 million during the year ended December 31, 2025 as compared to the year ended December 31, 2024.
In our CF program, we initiated dosing in December 2024 in a Phase 2 multiple ascending dose study of ARCT-032 designed to identify a safe and effective dose in people with Class I (null) CFTR mutations and other CF patients who do not benefit from CFTR modulators.
This study was initiated in December 2024 and was designed to identify a safe and effective dose regimen in those with Class I (null) CFTR mutations and people with CF who do not benefit from CFTR modulators. In the study, six CF adults with Class I CFTR mutations inhaled 10 mg doses of ARCT-032 daily over 28 days.
The decrease during 2024 primarily relates to a $15.9 million decrease in revenue related to the CSL collaboration agreement, primarily due to an $82.0 million decrease in milestone achievements during 2024 as compared to 2023, offset by a $23.4 million increase in revenue related to CSL commercial supply agreements and increased revenue recognition from amortization due to the progress of the CSL development programs during 2024.
The decrease during 2025 primarily relates to a $72.2 million decrease in revenue related to the CSL collaboration agreement, primarily due to a $33.1 million decrease in milestone achievements during 2025 as compared to 2024, and a $15.8 million decrease in revenue related to CSL commercial supply agreements, along with decreased revenue recognition from amortization during 2025 as a result of reduced development activities.
Finance income (expense), net Years Ended December 31, Change 2024 vs 2023 (in thousands) 2024 2023 Change % Interest income $ 15,195 $ 17,359 $ (2,164 ) -12 % Interest expense - (768 ) 768 -100 % Total $ 15,195 $ 16,591 $ (1,396 ) -8 % Interest income is generated on cash and cash equivalents.
Finance income (expense), net Years Ended December 31, Change 2025 vs 2024 (in thousands) 2025 2024 Change % Interest income $ 10,104 $ 15,195 $ (5,091 ) -34 % Interest expense (9 ) — (9 ) 100 % Total $ 10,095 $ 15,195 $ (5,100 ) -34 % Interest income is generated on cash and cash equivalents.
KOSTAIVE is the brand name approved in Japan and Europe for ARCT-154, which is the version of the sa-mRNA COVID vaccine encoding the ancestral strain of SARS-CoV-2, and also for updated variant-specific versions of this vaccine. We may use KOSTAIVE or the specific internally generated name, such as ARCT-154, ARCT-2301 and ARCT-2303, to identify a version of the vaccine.
Food and Drug Administration (the “FDA”) and Orphan Medicinal Product Designation by the European Medicines Agency (the “EMA”) for the treatment of CF, and Rare Pediatric Disease Designation from the FDA. 68 KOSTAIVE is the brand name approved in Japan and Europe for ARCT-154, which is the version of the sa-mRNA COVID vaccine encoding the ancestral strain of SARS-CoV-2, and also for updated variant-specific versions of this vaccine.
Sales of KOSTAIVE began in Japan in October 2024, marking our transition to a commercial stage company. We have several key platform technologies that we leverage to develop and advance a pipeline of mRNA-based vaccines and therapeutics for infectious diseases and for rare genetic disorders with significant unmet medical needs.
We have several key platform technologies that we leverage to develop and advance a pipeline of mRNA-based therapeutics for rare genetic disorders with significant unmet medical needs and vaccines for infectious diseases. Current mRNA medicines have two critical components: the messenger RNA (“mRNA”) constructs and the lipid nanoparticles (“LNP”) which help deliver the mRNA to disease-relevant target tissues.
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.
We also have significant expertise and valuable know-how in the development and scalability of complex and robust manufacturing processes required to deliver the next generation of nucleic acid medicines. Our internal pipeline includes RNA therapeutic candidates to potentially treat ornithine transcarbamylase (OTC) deficiency and cystic fibrosis (CF), both rare diseases.
Collaboration and License Agreement In 2022, we entered into the CSL Collaboration Agreement with CSL Seqirus, a part of CSL Limited, one of the world’s leading influenza vaccine providers, for the global exclusive rights to research, develop, manufacture and commercialize mRNA vaccines.
Collaboration and License Agreement In November 2022, we entered into the CSL Collaboration Agreement with CSL Seqirus for the global exclusive rights to research, develop, manufacture and commercialize self-amplifying mRNA vaccines. The CSL Collaboration Agreement became effective on December 8, 2022, following clearance under the Hart-Scott-Rodino Antitrust Improvements Act.
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.
We expect to continue to incur additional losses in the long term, and we will need to 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, and identifying and developing other successful mRNA drug and vaccine candidates.
The CSL Collaboration Agreement sets forth how CSL Seqirus and we shall collaborate to research and develop vaccine candidates. In the COVID-19 field, we will lead activities for certain regulatory filings for ARCT-154 in the US and Europe and for research and development activities of a next-generation COVID vaccine candidate.
In the COVID-19 field, we undertake activities for certain regulatory filings for our leading 69 self-amplifying mRNA vaccine candidate in COVID-19, ARCT-154, in the United States and Europe and for research and development activities of a next-generation COVID vaccine candidate. CSL Seqirus leads and is responsible for all other research and development in COVID-19, influenza and the other fields.
Research and development expenses were $195.2 million for the year ended December 31, 2024, compared with $192.1 million for the year ended December 31, 2023, primarily reflecting increased payroll and benefits costs due to share-based compensation expense, progress within our BARDA, LUNAR-CF, and LUNAR-FLU programs, and clinical trial costs for the LUNAR-COVID program.
Research and development expenses were $112.2 million for the year ended December 31, 2025, compared with $195.2 million for the year ended December 31, 2024. The decrease was primarily driven by lower manufacturing and clinical costs related to the LUNAR‑COVID program, reflecting the program’s transition from a development program to the commercial phase.
Overview 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.
We developed the world’s first approved self-amplifying messenger RNA (sa-mRNA) vaccine, KOSTAIVE ® (“KOSTAIVE”), which we have partnered with Seqirus, Inc. (“CSL Seqirus”), a part of CSL Limited. KOSTAIVE has achieved approval in Japan, the European Union and the United Kingdom as a vaccine against COVID-19, and sales of KOSTAIVE began in Japan in October 2024.
CSL Seqirus received exclusive global rights to our technology for vaccines against SARS-CoV-2 (COVID-19), influenza and three other infectious diseases with non-exclusive rights to pandemic pathogens. We received an up-front payment of $200.0 million during the fourth quarter of 2022.
Under the CSL Collaboration Agreement, CSL Seqirus receives global exclusive rights to our technology for vaccines against SARS-CoV-2 (COVID-19), influenza and three other infectious diseases. Specifically, the collaboration agreement grants CSL Seqirus a license to our STARR mRNA technology and LUNAR lipid-mediated delivery, as well as mRNA drug substance and drug product manufacturing expertise.
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Current mRNA medicines have two critical components: the messenger RNA (“mRNA”) constructs and the lipid nanoparticles (“LNP”) which help deliver the mRNA to disease-relevant target tissues. We believe we are among the world leaders in both areas.
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Overview We are a messenger RNA medicines company focused on the development of liver and respiratory rare disease therapeutics. We have ongoing Phase 2 clinical studies for our RNA therapeutic candidates to potentially treat ornithine transcarbamylase (OTC) deficiency and cystic fibrosis (CF).
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The approval of KOSTAIVE in Japan was a significant milestone which validates our LUNAR and STARR platforms, as well as sa-mRNA more generally as a meaningful modality. Finally, we have significant expertise and valuable know-how in the development and scalability of complex and robust manufacturing processes required to deliver the next generation of nucleic acid medicines.
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In CSL Limited’s half-year results presented on February 11, 2026, CSL Limited reported an accounting write-down of approximately $430 million attributable to our collaboration agreement with CSL Seqirus, citing declining COVID-19 disease burden and more onerous U.S. regulatory requirements.
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Commercial sales of KOSTAIVE began in October 2024 in Japan by Meiji Seika Pharma (“Meiji”), CSL Seqirus’ exclusive partner in Japan, marking the first commercial sales of an Arcturus-developed product. In February 2025, we received approval of KOSTAIVE from the European Commission (EC), which provided further validation of our platform by another significant regulatory authority.
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In our CF program, we enrolled and completed dosing in the three initially planned cohorts of our Phase 2 multiple ascending dose study of ARCT-032, confirming the safety and tolerability of ARCT-032 dosed daily for four weeks.
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In our OTC program, we completed dosing of eight subjects in August 2024 in a Phase 2 double-blind multiple-dose study of ARCT-810. In the second quarter of 2024, we expanded the Phase 2 clinical program of ARCT-810 with an open-label, multiple-dose study which initiated dosing in December 2024.
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Interim results released in October 2025 demonstrated that the treatment was generally safe and well tolerated. Treatment-related adverse events (AEs) that were identified in the single-dose Phase 1 study were also observed in some participants for the first few doses but ceased with continued dosing.
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In July 2024, we completed dosing and follow-up visits for seven participants in a safety and tolerability Phase 1b clinical study in New Zealand of ARCT-032 in adults with CF. ARCT-032 has received Orphan Drug Designation by the FDA and Orphan Medicinal Product Designation by the EMA for the treatment of CF, and Rare Pediatric Disease Designation from the FDA.
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Bronchospasm has not been reported in this study thus far, neither with nor without albuterol pretreatment. One serious adverse event (SAE) occurred in a participant after the end of the dosing period. The safety review committee found no convincing evidence that the SAE is related to ARCT-032 and approved the study to proceed.
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Also, with our sourcing partners, we manufactured cGMP (current good manufacturing practices) batches yielding significant quantities of clinical trial materials for global studies of our candidates, and with our collaborator, CSL Seqirus, we have established commercial production processes for the COVID-19 vaccine program.
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We intend to initiate a 12-week safety and preliminary efficacy study in up to 20 CF participants in the first half of 2026, after the third cohort completes treatment. ARCT-032 has received Orphan Drug Designation by the U.S.
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CSL Seqirus will lead and be responsible for all other research and development in COVID-19, influenza and the other fields.
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We may use KOSTAIVE or the specific internally generated name, such as ARCT-154, ARCT-2301 and ARCT-2303, to identify a version of the vaccine. In our OTC program, we have continued to conduct a Phase 2 double-blind multiple-dose study of ARCT-810. Five patients with OTC deficiency have now completed dosing, and a sixth patient has initiated dosing.
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Vinbiocare Agreement During 2021, we entered into a technology license and technical support agreement and the framework drug substance supply agreement with Vinbiocare, a member of Vingroup Joint Stock Company (collectively, the “Vinbiocare License & Supply Agreements”), whereby we would provide technical expertise and support services to Vinbiocare to assist in the build out of an mRNA drug product manufacturing facility in Vietnam.
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A type C meeting with the FDA to discuss our plans for a proposed future pediatric study under the RDEP (Rare Disease Evidence Principles) is scheduled for the first half of 2026.
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We received an upfront payment in aggregate of $40.0 million as part of the Vinbiocare License and Supply Agreements.
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(“Meiji”), CSL Seqirus’ exclusive partner in Japan, marking the first commercial sales of an Arcturus-developed product. In September 2025, Meiji launched a new presentation of KOSTAIVE in Japan. The product is a 2-dose vial lyophilized presentation incorporating the updated XEC variant strain.
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In October 2022, in association with the termination of the Vinbiocare License and Supply Agreements, we signed the Vinbiocare Support Agreement with Vinbiocare which continues Vinbiocare’s clinical obligations and reserved a portion of the original $40.0 million upfront payment received from the License and Supply Agreements to be paid over the future periods.
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Approval for offshore manufacturing of the 2-dose vial lyophilized presentation was granted by Japan in August 2025, followed by approval for onshore manufacturing in January 2026. KOSTAIVE was approved by the European Commission (EC) in February 2025 and by the United Kingdom in January 2026, providing further validation of our platform by additional significant regulatory authorities.
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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.
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The study results were received in the second half of 2025, indicating a favorable tolerability and safety profile and the ability to induce a robust and durable humoral immune response in young and older adults. We also improved our platform technologies and advanced our early-stage research activities and manufacturing process development and operations.
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Additionally, equity or debt financings may have a dilutive effect on the holdings of our existing shareholders. 72 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.
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CSL has also been granted global non-exclusive rights in the field of pandemic preparedness (i.e., pathogens identified as priority diseases by the WHO), with the right to convert to an exclusive license. The CSL Collaboration Agreement sets forth how the parties will collaborate to research and develop vaccine candidates.
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The $41.6 million increase in cash used was primarily driven by a $93.8 million year-over-year impact from deferred revenue, as 2023 benefited from a $38.6 million deferred revenue inflow, while 2024 saw a $55.2 million outflow due to revenue recognition exceeding new milestone payments under the CSL collaboration agreement.
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Entitlement to all such payments is subject to the strict conditions, requirements, royalty reduction provisions and other limitations set forth in the CSL Collaboration Agreement. Either party may terminate the CSL Collaboration Agreement on a field-by-field basis for material breach by the other party, following notice and opportunity to cure.
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Additionally, the increase in cash outflows was due to a higher net loss and the absence of a $34.0 million debt extinguishment gain recognized in 2023.
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CSL Seqirus may also terminate the collaboration agreement in its entirety or on a field-by-field basis for any reason or no reason whatsoever, with certain limitations. The CSL Collaboration Agreement may also be terminated by CSL Seqirus for safety reasons, clinical data nonviability, commercial nonviability and other specified reasons.
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These impacts were partially offset by a $57.4 million improvement in accounts receivable, as payments from CSL and BARDA were received in 2024 and a $6.5 million increase in accrued liabilities, primarily due to the timing of bonus accruals.
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In March 2024, we entered into Amendment Number Two to the CSL Collaboration Agreement to reflect updates to the development program and other adjustments consistent with our prior disclosures regarding the Collaboration and License Agreement (“Amendment Number Two”).
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The primary drivers of this increase were the repayments of the Singapore Loan and the Loan and Security Agreement with Western Alliance Bank during 2023, with no similar debt repayments occurring in 2024.
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Amendment Number Two, among other things, adjusts (i) the development plans for certain product candidates, (ii) various development milestones related to such product candidates, (iii) provisions of the CSL Collaboration Agreement related to specific royalty payments, (iii) provisions of the CSL Collaboration Agreement related to distributors, and (iv) proprietary payment calculations related to the foregoing.
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The remaining decrease is primarily due to a decrease of $1.8 million related to the completion of the amortization of the upfront payment during 2023 from the 2015 Research Collaboration and License Agreement with Ultragenyx 74 Pharmaceuticals, Inc., as well as $0.7 million less revenue in 2024 due the termination of the 2017 Research Collaboration and License Agreement with Janssen Pharmaceuticals, Inc.
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On May 30, 2025, we initiated an arbitration against CSL Seqirus before the International Chamber of Commerce, seeking payment of a milestone under the CSL Collaboration Agreement based on the European Commission’s grant of marketing authorization for a presentation of KOSTAIVE ® in the European Union.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe do not hold a material balance in foreign currencies or engage in derivative financial instruments that could materially impact our financial position. 78
Biggest changeWe do not hold a material balance in foreign currencies or engage in derivative financial instruments that could materially impact our financial position.

Other ARCT 10-K year-over-year comparisons