Wave Life Sciences Ltd. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Wave is a clinical-stage genetic medicines company developing stereopure oligonucleotide therapies; it has no product sales and relies primarily on collaboration revenue and external financing.
Key financial metrics
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $0.3 million | $36.4 million | $2.4 million | $39.2 million |
| Research and development expense | $27.6 million | $31.1 million | $84.8 million | $96.1 million |
| General and administrative expense | $11.6 million | $12.9 million | $36.8 million | $34.0 million |
| Net loss | $39.0 million | $6.2 million | $118.1 million | $87.5 million |
| Net loss per share | $0.42 | $0.12 | $1.60 | $1.75 |
| Cash used in operations | Not separately provided | Not separately provided | $94.3 million | $82.0 million |
All dollar amounts are U.S. dollars. Gross margin is not meaningful for this development-stage business; the filing does not present a product gross margin. At September 30, cash and cash equivalents were $97.0 million, short-term investments $25.0 million, and restricted cash $3.7 million. Total current assets were $131.4 million and current liabilities $64.3 million. Total liabilities were $178.2 million, including $112.6 million of deferred revenue and lease liabilities; the filing reports no borrowings or conventional debt balance. Accumulated deficit was $923.6 million.
Material changes versus prior period
- Revenue fell sharply year over year, principally because a 2021 Takeda collaboration amendment ended the Category 2 program and led to recognition of previously constrained revenue, including an additional $22.5 million for related services. 2022 revenue remained primarily Takeda collaboration revenue.
- Q3 net loss increased to $39.0 million from $6.2 million, despite lower operating expenses, as the prior-year quarter included substantially higher collaboration revenue.
- Nine-month operating cash use increased by $12.4 million year over year. The company also invested in short-term deposits and received $67.1 million of financing cash, primarily from its June 2022 offering.
- The June offering generated approximately $65.5 million net proceeds and included ordinary shares and pre-funded warrants. Ordinary shares issued and outstanding rose to 86.8 million at quarter-end from 59.8 million at year-end 2021; the warrants add potential dilution.
- R&D expense declined year to date, mainly due to reduced spending on discontinued earlier Huntington’s disease programs; spending increased on DMD and AATD programs. G&A expense increased, including share-based compensation tied to an achieved performance milestone.
Outlook, management commentary and risks
- Management expects cash, cash equivalents and short-term investments to fund operations for at least the next 12 months, while cautioning that assumptions could prove incorrect. It expects continued significant R&D and manufacturing costs and may seek further financing; additional capital may be unavailable or dilutive.
- Management expected to report additional WVE-004 and WVE-003 single-dose safety and biomarker data in the first half of 2023, and WVE-N531 clinical data, including muscle biopsies, in Q4 2022. WVE-006 clinical trial applications were expected in 2023.
- WVE-004 showed durable CSF poly(GP) biomarker reductions in early trial data. Some patients had CSF neurofilament light chain (NfL) elevations; one serious or severe adverse event was reported as study-drug-related. The dataset was not sufficient to assess clinical benefit.
- WVE-003 early data showed CSF mutant huntingtin reduction with wild-type huntingtin preserved at studied doses. NfL increases were observed in some participants; the company said clinical effects could not yet be assessed.
- Key risks include clinical and regulatory uncertainty, failure to demonstrate efficacy or safety, manufacturing and supply challenges, competition, intellectual-property protection, financing needs, and potential effects of COVID-19 and market conditions. The company reported no material change to previously disclosed risk factors and no material legal proceedings.
- Operating lease commitments totaled approximately $48.8 million. The Cambridge lease was extended through March 2028, increasing recorded right-of-use assets and lease liabilities by $12.0 million in 2022.
Important facts for investors to verify
- Whether clinical follow-up confirms the early WVE-004 and WVE-003 biomarker findings, and clarifies the NfL observations and safety profile.
- Whether the stated 12-month cash runway remains achievable given operating cash use, trial plans, and future financing needs.
- The timing and amount of Takeda collaboration revenue recognition, including the remaining $112.6 million deferred revenue balance and the terms of any future program options or payments.
- The dilution impact of the June 2022 share issuance, pre-funded warrants, equity compensation, and any future capital raises.