Wave Life Sciences Ltd. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Wave is a clinical-stage RNA medicines company; it has not generated product revenue and continues to incur operating losses.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Revenue | $12.9 million | $1.8 million; up $11.2 million, primarily from the GSK collaboration |
| Research and development expense | $31.0 million | $27.5 million |
| General and administrative expense | $12.2 million | $12.4 million |
| Operating loss | $30.3 million | $38.1 million |
| Net loss | $27.4 million | $37.8 million |
| Net loss per ordinary share | $0.27 | $0.62 |
| Net cash from operating activities | $85.5 million | Used $39.9 million |
- Cash and cash equivalents were $207.6 million at March 31, 2023, compared with $88.5 million at December 31, 2022. Restricted cash was an additional $4.7 million.
- Operating cash flow was substantially supported by a $126.4 million increase in deferred revenue, largely related to GSK; it should not be read as recurring cash generation from operations.
- Financing activities provided $35.1 million, primarily from GSK’s equity investment. Investing activities used $0.5 million.
- Total liabilities were $294.1 million, including $237.8 million of deferred revenue and $36.6 million of operating lease liabilities. No interest-bearing borrowings are identified in the presented balance sheet.
- Accumulated deficit was $994.7 million. Shareholders’ equity was a deficit of $34.7 million. Outstanding ordinary shares increased to 98.1 million from 86.9 million at year-end 2022; the GSK investment issued 10.7 million shares for $34.6 million.
- Wave reported no income tax provision. Gross profit and gross margin are not separately presented in the filing.
Material changes and collaboration agreements
- Revenue growth reflects the GSK collaboration, effective January 27, 2023, which provided a $120.0 million upfront payment. Wave recognized approximately $12.3 million of GSK revenue in Q1 and reported $127.1 million allocated to unsatisfied or partially unsatisfied GSK performance obligations at March 31.
- The GSK agreement grants GSK an exclusive global license to WVE-006 and establishes discovery programs for both parties. Wave is responsible for WVE-006 through the initial Phase 1/2 study; GSK is expected to assume subsequent development and commercialization responsibilities.
- Takeda collaboration revenue was approximately $0.7 million, compared with $1.6 million in Q1 2022. Takeda-related deferred revenue was $110.7 million at March 31, 2023.
- Research and development expense increased $3.5 million year over year, including higher spending on the HD, ALS/FTD and AATD programs. General and administrative expense was broadly stable.
- Net loss narrowed by $10.4 million year over year, reflecting higher collaboration revenue and other income, partly offset by increased research and development expense.
Outlook, management commentary and risks
- Management expects cash and cash equivalents to fund operations for at least the next 12 months, while cautioning that forecasts depend on assumptions and spending may need to be reduced if results or financing conditions differ from expectations.
- Wave expects to continue significant research and development spending and operating losses. It may seek additional financing; future equity financing could dilute shareholders, and debt or collaboration financing could impose restrictions or require rights to be shared.
- Program milestones described by management included planned WVE-N531 Phase 2 dosing in 2023 and data in 2024; WVE-006 clinical trial applications expected in the second half of 2023; and additional WVE-003 single- and multiple-dose biomarker and safety data expected in the second half of 2023.
- Timing of additional WVE-003 single-dose data shifted after a cyberattack at the company’s mHTT assay vendor in April 2023. Wave said its data and patient samples were not affected and it remained in contact with the vendor.
- For WVE-004, additional single- and multiple-dose data were expected in the first half of 2023. Clinical, regulatory, manufacturing, competitive and financing uncertainties could affect program progress and cash needs.
- Wave reported no material legal proceedings and stated that disclosure controls and procedures were effective as of March 31, 2023. It also disclosed approximately $45.2 million of operating lease commitments, including $6.8 million related to 2023.
Important facts for investors to verify
- Whether the collaboration-driven cash balance and management’s at-least-12-month runway remain adequate as clinical and manufacturing costs evolve.
- How GSK upfront proceeds and deferred revenue convert into recognized revenue, and the timing and conditions of potential future collaboration payments.
- Progress, safety, efficacy and timing of WVE-N531, WVE-006, WVE-003 and WVE-004 trials, including resolution of the WVE-003 assay-vendor disruption.
- Share dilution and potential securities issuance: ordinary shares rose substantially in Q1, and the filing reported $430.0 million available under the 2022 shelf registration, including approximately $132.0 million under the at-the-market program.
- That reported Q1 operating cash flow was driven mainly by deferred collaboration revenue and working-capital movements, rather than product sales or profitability.