Arcturus Therapeutics Holdings Inc. (ARCT) stock intrinsic value fair value estimate & owner earnings analysis

Arcturus Therapeutics develops messenger RNA medicines and vaccines. Its lead product, KOSTAIVE, is the first approved self-amplifying mRNA COVID-19 vaccine. It is approved in Japan, the European Union and the United Kingdom, and it is partnered with CSL Seqirus. Commercial sales in Japan began in October 2024 through Meiji Seika Pharma. The pipeline includes a cystic fibrosis program and influenza vaccine work. What the business earns today. The company is not profitable. Annual owner earnings (operating cash flow, less swings in working capital, less stock compensation, less maintenance capital spending) were about negative $2.38 per share in 2023, negative $2.84 in 2024 and negative $2.24 in 2025. We anchor on the median of those three years, about negative $2.38 per share. 2022 is excluded because it was lifted by an unusually high $206 million of revenue that has not recurred. Revenue then fell to $167 million in 2023, $152 million in 2024 and $82 million in 2025, and to about $5 million in the first half of 2026 (versus $58 million in the first half of 2025). Operating cash flow in the first half of 2026 was negative $39 million. Stock compensation is treated as a real cost. Deferred-revenue swings are stripped out of earnings because they are timing, not repeatable income. The trailing owner-earnings change in 2025 was an improvement from negative $2.84 to negative $2.24; we assume no improvement in year one, because the first half of 2026 shows revenue collapsing while cash burn was similar to the year before. Why the cases are built around the cash on hand. At December 31, 2025 the company held $230.9 million of unrestricted cash and had no borrowings on its balance sheet, against total liabilities of $57 million (including about $21 million of long-term operating lease obligations and $8 million of deferred revenue). Roughly 27 million shares are outstanding, so cash is about $8.4 per share before liabilities. Because the business currently consumes cash rather than producing it, a valuation of its earnings alone would be negative. We do not credit the pipeline or future CSL milestones, because none is contracted to arrive on a known date; the CSL agreement offers over $1.3 billion of possible development milestones and $3.0 billion of possible sales milestones, plus a 40% share of COVID-19 vaccine profits, but these depend on conditions that have not occurred, so they are worth nothing in the base case. What we can value is how much of the cash survives management's spending. Cash used in operations was $74 million in 2025 and about $79 million annualized in the first half of 2026. A drug developer can stop spending, so the shares are worth no less than what remains if it does; the cases differ in how much cash is left when the spending ends. Bear case, $0.50 per share. Programs keep consuming about $75 million a year and produce nothing that can be sold; revenue stays near the $5 million a half-year seen in 2026. Cash is largely exhausted in about three years, leaving little after lease obligations and wind-down costs. This is the outcome if the self-amplifying mRNA franchise proves a one-product story: CSL commercial supply revenue already fell $15.8 million in 2025 and CSL milestone revenue fell $33.1 million. Base case, $2.40 per share. Spending continues at recent levels for about two years, roughly $140 million, and then a decision point is reached where spending is cut back. The remaining cash, after lease obligations and other liabilities, is worth about $66 million, discounted at 6%. We credit no product launches, milestones or royalties beyond what is already being recognized. Bull case, $5.80 per share. CSL milestones, of the kind that contributed to 2024 revenue, and grant funding (the BARDA and Gates Foundation agreements) offset enough of the burn that net cash use is about $50 million before spending is cut, leaving about $160 million of cash after lease obligations and other liabilities. We still do not add value for the pipeline itself. What would make this wrong. Upside: a large CSL milestone or a profit share from COVID-19 vaccine sales, or successful cystic fibrosis program data, would be worth more than any of these cases and is deliberately not assumed. Downside: management could keep spending at the current rate for longer than we assume, leaving less cash than the base case. We tested the case against the cash figure: the 2025 balance of $230.9 million comes straight from the annual report, and first-half 2026 operating cash flow of negative $39.4 million implies roughly $190 million by mid-2026, which is consistent with the cases above but is our own estimate, not a reported balance. The margin-of-safety price is set well below the base case because the company is burning about a third of its cash every year and the outcome depends on management's decisions.