ARCT — Q2 2026 Financial Report Analysis

Overview

Arcturus Therapeutics' revenue fell 90% in the second quarter of 2026, to $3.0 million from $28.3 million a year earlier. The cause is the wind-down of its vaccine partnership with CSL Seqirus: revenue from that deal fell from $24.4 million to $0.9 million. Arcturus cut research and development (R&D) spending by 41%, but that did not make up the gap, so the net loss more than doubled to $23.8 million ($0.84 per share). The bigger news came after the quarter ended. On August 3, 2026, Arcturus and CSL Seqirus agreed to end the collaboration. Arcturus received a one-time $12.0 million payment, was released from about $16.0 million in obligations, and got back control of KOSTAIVE, the world's first approved self-amplifying mRNA vaccine. The company is now a rare-disease drug developer with $191.5 million in cash, and for the time being it has almost no partner revenue.

At a glance

• $2.96 million total revenue (-90%): The partner income that made up most of last year's revenue is nearly gone. CSL Seqirus contributed $874 thousand, compared with $24.4 million a year ago.
• $17.5 million R&D spend (-41%): Spending fell on every program line. Management attributes this to fewer clinical trial and manufacturing costs and a smaller headcount, so the cuts are real, not just a matter of timing.
• $191.5 million cash, $39.4 million burned in the first half: At the first half's pace, that covers several years. Management only commits to "at least the next twelve months" and expects losses to grow.

Results

n/m = not meaningful: a percentage change between two losses doesn't say much. In plain terms, the net loss grew by $14.6 million.

Where the revenue went

Arcturus has no product sales of its own. Its revenue comes from two places: partners who pay it under development deals ("collaboration revenue") and government or foundation grants that reimburse research costs ("grant revenue").

• CSL Seqirus: $874 thousand vs $24.4 million. The 10-Q says the drop reflects "reduced supply agreement revenue and decreased amortization of deferred revenue as KOSTAIVE transitions from development to the commercial phase." Deferred revenue is cash a partner paid upfront that the company counts as revenue gradually, as it does the work. Only $5.2 million of it was left at June 30.
• BARDA: $1.37 million vs $3.79 million. BARDA is the US government agency funding Arcturus' low-dose pandemic flu vaccine. It reimburses costs as they are incurred, and $24.6 million of that contract's funding was still unused at quarter-end.
• Gates Foundation: $710 thousand vs nothing a year ago. This comes from two new cost-reimbursement grants, which partly offset the BARDA decline.

For the first half, total revenue was $5.0 million, down from $57.7 million, a 91% decline.

Where the R&D money goes

R&D fell to $17.5 million from $29.6 million. The 10-Q breaks spending out by program:

Management attributes the decrease to "lower clinical trial expenses associated with the BARDA, LUNAR-CF, and LUNAR-OTC programs, as well as reduced manufacturing costs related to the LUNAR-COVID and LUNAR-OTC programs," along with lower stock-based pay and "a reduction in headcount." Half of all R&D spending is now payroll. The direct spending on the two programs the company calls its "primary area of focus" (cystic fibrosis and OTC deficiency) totalled only $4.5 million this quarter.

The CSL Seqirus breakup (after quarter-end)

These events took place after June 30, so none of them appear in Q2 figures. All of them will show up in Q3:

• Cash: a one-time $12.0 million payment from CSL Seqirus.
• Liabilities removed: Arcturus "was released from a liability and from repayment of an R&D credit with an aggregate value of approximately $16.0 million."
• Revenue: the remaining ~$5.2 million of CSL deferred revenue is expected to be recognized in Q3 2026.
• Dispute ended: Arcturus had taken CSL Seqirus to arbitration at the International Chamber of Commerce to claim a milestone payment linked to KOSTAIVE's EU approval. Both sides dropped their claims, so that milestone will not be paid separately.
• What Arcturus gets back: KOSTAIVE and its flu, pandemic flu, RSV and Epstein-Barr virus vaccine programs. In return it owes CSL "single-digit royalties and revenue-sharing payments" on any future sales of those products, plus a share of upfront fees from any new licensees. Meiji continues to sell KOSTAIVE in Japan through the 2026-27 season (ending about June 30, 2027). After that, Arcturus has to make its own arrangement with Meiji or another distributor.

Through Q2, CSL Seqirus had paid Arcturus about $514.3 million in total upfronts and milestones. That income stream has now ended. From here on, any vaccine revenue depends on Arcturus finding a new partner or selling the products itself.

What the headline numbers hide

• Cash burn is smaller than the loss. The first-half net loss was $50.7 million, but operating cash outflow was $39.4 million. Most of the gap is $8.6 million of stock-based compensation, which is a real cost to shareholders through dilution but uses no cash. Collections also helped: accounts receivable fell by $3.8 million. Last year's first half shows how much timing can matter. Its net loss was only $23.3 million, yet cash burn was $40.9 million, because partner revenue was being recognized from cash received in earlier periods. In cash terms, the business burns about the same as a year ago. The accounting loss looks worse mainly because that deferred revenue has run out.
• Q3 will look better than it really is. The $12.0 million payment, the ~$5.2 million deferred revenue release and the ~$16.0 million liability release all come from a single settlement. The filing doesn't say how the $16.0 million release will be accounted for. Even so, a smaller Q3 loss would not mean the business has improved.
• Partners will pay for some manufacturing. On June 26, 2026, Thermo Fisher agreed to provide up to $40.0 million of clinical manufacturing for ARCT-032. In exchange, Arcturus will buy up to $40.0 million of clinical trial services from Thermo Fisher's PPD unit, and Thermo Fisher gets exclusive commercial manufacturing rights if the drug is approved. Management says this "may reduce our future cash requirements." It is not cash coming in. Arcturus avoids some costs, but it also gives up flexibility on who manufactures the drug later.
• No going-concern warning. Management says current cash will cover needs "through at least the next twelve months." It also says it will "need to raise additional debt or equity financing or enter into additional partnerships to fund development," and expects losses "to increase."

Takeaway: The 90% revenue drop matters less than it looks, because CSL revenue was always set to fade. What changed this quarter is the company itself. Arcturus has given up its main source of partner money and kept the vaccine assets. It now runs two mid-stage rare-disease programs on $191.5 million in cash, plus $12 million from the settlement. Its value now depends on the cystic fibrosis and OTC deficiency data, and on whether it can re-license KOSTAIVE on better terms than CSL offered.

Outlook

Management's guidance: The company gives no revenue or expense guidance. Its stated cash uses for 2026 are the ARCT-032 cystic fibrosis trial, the ARCT-810 Phase 2 study, BARDA-related costs, costs of the CSL transition, and platform work. Spending on early-stage programs and discovery work is "expected to increase slightly over the next twelve months."

Upcoming milestones from the filing:

• ARCT-032 (cystic fibrosis): a fourth group of up to 20 patients began enrolling in March 2026, testing 10 mg once daily by inhalation for 12 weeks in the US and Israel. The longer dosing period is meant to give "early evidence of clinical efficacy." The first three groups (28 days at 5, 10 and 15 mg) found the drug "generally safe and well tolerated" with no bronchospasm.
• ARCT-810 (OTC deficiency, a rare inherited disorder in which the liver can't clear ammonia): all patients have finished dosing in the Phase 2 study. The company is preparing for an End-of-Phase 2 meeting with regulators.
• KOSTAIVE in Japan: in June 2026, Meiji filed to update the vaccine for the NB.1.8.1 variant for the 2026-27 season.

Our read: Operating cash burn was about $20 million a quarter in the first half. At that pace, $191.5 million plus the $12.0 million settlement would last about ten quarters, into late 2028, well beyond management's 12-month statement. Two things could shorten that. Losses are expected to rise as programs advance, and BARDA reimbursement is shrinking. KOSTAIVE could also start costing money once Arcturus takes over its regulatory files and supply. Before then, investors should get the ARCT-032 12-week results and news from the ARCT-810 regulatory meeting, and both readouts are likely to shape how much Arcturus can raise and at what price. With only about 28.4 million shares outstanding, any raise at current levels would noticeably dilute existing holders. Watch for a vaccine licensing deal in the next few quarters: it would be the main source of cash that doesn't dilute shareholders.