Shares of Arcturus Therapeutics Holdings Inc. (NASDAQ: ARCT) tumbled by more than 56% on Wednesday after the company reported interim results from its Phase 2 study of ARCT-032, an inhaled mRNA therapy for cystic fibrosis (CF), that failed to show meaningful improvement in lung function.
The sharp selloff reflects investor disappointment with the preliminary efficacy data despite the company’s emphasis on encouraging safety and mucus reduction trends.
Mixed interim data from Phase 2 trial
The San Diego-based biotechnology company, which focuses on mRNA medicines, announced that ARCT-032 was generally safe and well-tolerated in the second cohort of its ongoing mid-stage trial.
The cohort included six adults with Class I cystic fibrosis, who received 10 mg daily doses over a 28-day period.
According to the company, the primary analysis comparing lung function (FEV₁) from Day 1 to Day 28 did not demonstrate meaningful improvement.
FEV₁, or forced expiratory volume, is a key measure of lung function used to assess the effectiveness of CF treatments.
However, Arcturus highlighted that high-resolution CT scans revealed encouraging signs of improvement, with reductions in mucus burden observed in four of the six participants.
The company interpreted this as a potential signal of the drug’s biological activity, even if it did not translate to measurable lung function gains in the short term.
Post hoc findings show limited but encouraging signals
A post hoc exploratory analysis provided additional insight into the therapy’s potential effects.
When comparing pre-treatment values with Day 42 measurements, four of the six participants showed modest gains in lung function, with an average absolute increase of 3.8% and a relative increase of 5.1% in percent predicted FEV₁.
Despite these findings, Arcturus acknowledged that the changes fell within the range of natural variability for FEV₁, meaning the results could not be considered statistically significant or definitive evidence of efficacy.
The company also noted that one serious adverse event occurred after the dosing period ended.
However, the Data Monitoring Committee determined there was no convincing evidence linking the event to ARCT-032 and approved the trial to continue.
Next steps and market reaction
Arcturus is now expanding its trial to include a third cohort of up to six additional participants, who will receive a higher 15 mg dose of ARCT-032.
Looking ahead, the company plans to initiate a 12-week safety and preliminary efficacy study involving up to 20 cystic fibrosis patients in the first half of 2026.
Despite these plans, investors reacted sharply to the interim results. Arcturus shares fell 56% to $10.24 in premarket trading, erasing much of the company’s earlier 2025 gains — the stock had been up 36.5% year-to-date prior to the announcement.
The market’s response underscores concerns that while ARCT-032 appears safe and biologically active, its clinical benefit remains uncertain.
Cystic fibrosis, a genetic disorder characterized by thick, sticky mucus buildup, remains a challenging disease to treat, especially in patients with Class I mutations.
Arcturus’s management remains optimistic that longer-term studies and higher dosing could yield stronger efficacy signals.
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