Wave Life Sciences Ltd. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; financial statements are unaudited. Wave is a clinical-stage RNA medicines biotechnology company. It has not generated product revenue; reported revenue comes from collaboration agreements, primarily with GSK and Takeda.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | $12.5 million | $12.9 million; down $0.4 million |
| Research and development expense | $33.4 million | $31.0 million; up $2.5 million |
| General and administrative expense | $13.5 million | $12.2 million; up $1.3 million |
| Operating loss | $34.5 million | $30.3 million |
| Net loss | $31.6 million | $27.4 million |
| Net loss per ordinary share | $0.24 | $0.27 |
| Net cash from/(used in) operations | $(33.4) million | $85.5 million |
| Cash and cash equivalents at period end | $180.9 million | $200.4 million at Dec. 31, 2023 |
Cash, cash equivalents and restricted cash totaled $184.6 million at March 31, 2024. Operating cash use reflected the net loss and decreases in deferred revenue and accrued liabilities, partly offset by collection of a $20 million GSK milestone receivable. Q1 2023 operating cash inflow was driven largely by the GSK collaboration’s upfront-related deferred revenue. Investing cash use was $0.4 million; financing provided $14.5 million, including $14.0 million net proceeds from an underwriters’ option exercise.
Total assets were $235.3 million and shareholders’ equity was $25.4 million at quarter end. The filing reports no borrowings; liabilities include operating lease obligations of approximately $30.5 million and deferred revenue of approximately $153.1 million. Deferred revenue represents collaboration consideration not yet recognized as revenue, not reported debt. Wave expects existing cash and cash equivalents to fund operations for at least the next 12 months, but warns actual cash use could be faster. It reports no product sales and recurring operating losses.
Material changes and business developments
- Revenue was broadly stable year over year: GSK collaboration revenue was $12.3 million in each quarter, while Takeda collaboration revenue was approximately $0.3 million versus $0.7 million.
- R&D spending rose, principally from increased AATD and DMD program costs and other research spending; lower HD and discontinued ALS/FTD program costs partly offset the increases.
- Ordinary shares issued and outstanding increased from 119.2 million at year-end to 122.3 million at March 31, including 3.0 million shares issued through the offering option exercise. The filing also reports 7.1 million pre-funded warrants, subject to exercise limitations.
- After quarter end, GSK selected two hepatology programs for development-candidate advancement, triggering an aggregate $12 million initiation payment to Wave.
Outlook, programs and risks
- Wave expected proof-of-mechanism data for WVE-006 in AATD patients during 2024. Wave retains development responsibility through the RestorAATion-2 study; GSK is expected to assume development and commercial responsibilities afterward. Wave may receive up to $505 million in additional WVE-006 milestones and tiered royalties, contingent on development and sales.
- Wave expected data from the WVE-N531 DMD trial, including 24-week dystrophin results, in Q3 2024; it expected to report WVE-003 HD cohort data in Q2 2024. These are forward-looking expectations, not reported outcomes.
- Wave expected to initiate a clinical trial for its INHBE obesity candidate in Q1 2025 and select five new clinical candidates by the end of 2025.
- Funding beyond the stated 12-month runway may require equity or debt financing, collaboration payments, or other sources. Financing may be unavailable or dilutive; Wave says it may need to reduce, delay, or terminate programs if it cannot obtain funds.
- Key risks include clinical or preclinical failure, regulatory delays, manufacturing and trial execution, competition, intellectual-property challenges, dependence on collaboration partners and milestone achievement, and uncertainty about raising capital. The company maintains a full valuation allowance on deferred tax assets and recorded no income tax provision. It reported no material legal proceedings and no material change in disclosure controls.
Investor verification points
- Confirm subsequent receipt and accounting for the $12 million GSK initiation payment, and the status of the two selected programs.
- Check whether the expected WVE-006, WVE-N531 and WVE-003 clinical updates occurred and whether results support continued development.
- Monitor quarterly cash burn, collaboration revenue recognition, deferred revenue, and management’s cash-runway estimate.
- Assess potential dilution from future financing, the at-the-market program, outstanding options and pre-funded warrants.
- Review the timing and terms of any transfer of WVE-006 development responsibilities to GSK and the conditions attached to future milestones and royalties.