Wave Life Sciences Ltd. — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020; the filing is an annual report, not a standalone fourth-quarter report. Wave is a Singapore-incorporated, clinical-stage genetic medicines company developing stereopure oligonucleotide therapies. It had no product sales.
Financial results and liquidity
| Metric | 2020 | 2019 |
|---|---|---|
| Collaboration revenue | $20.1 million | $16.0 million |
| Research and development expense | $130.9 million | $175.4 million |
| General and administrative expense | $42.5 million | $48.9 million |
| Operating loss | $153.4 million | $208.3 million |
| Net loss | $149.9 million | $193.6 million |
| Net loss per share | $3.82 | $5.72 |
| Net cash used in operating activities | $116.0 million | $188.2 million |
| Cash and cash equivalents at year-end | $184.5 million | $147.2 million |
Revenue came from Pfizer and Takeda collaboration services, not product sales. Total other income fell to $2.6 million from $14.7 million, mainly reflecting lower refundable tax-credit income and dividend income. The company reported an $0.8 million income tax benefit in 2020. Accumulated deficit was $683.3 million.
Current assets were $230.0 million and current liabilities $121.0 million at year-end. Restricted cash was $3.7 million. The balance sheet reports no borrowing debt; liabilities included deferred collaboration revenue and operating lease liabilities. Operating lease liabilities totaled $29.3 million, with $43.8 million of lease commitments disclosed including the newly exercised Cambridge space option. Management said cash and cash equivalents should fund operations for at least 12 months, while cautioning that estimates depend on assumptions and spending could exceed expectations.
Material changes versus 2019
- Net loss narrowed by $43.7 million and operating cash use declined by $72.2 million. Management attributed lower operating expenses largely to the prior discontinuation of the suvodirsen DMD program and a February 2020 cost-reduction plan.
- R&D expense decreased $44.5 million overall, including a $45.7 million reduction in DMD program expense. HD and ALS/FTD program expenses increased by $12.7 million and $5.0 million, respectively.
- Collaboration revenue increased $4.1 million, driven primarily by Takeda activity and partly offset by lower Pfizer revenue; the Pfizer research term ended in May 2020.
- Cash rose by $37.3 million, supported by $154.5 million of financing cash flow, including $93.7 million net proceeds from a September public offering and $59.9 million from the at-the-market program. Ordinary shares outstanding increased from 34.3 million to 48.8 million during 2020.
Business outlook, commentary and risks
- Wave expected 2021 dosing to begin in three PN-chemistry programs: WVE-003 for Huntington’s disease, WVE-004 for C9orf72 ALS/FTD, and WVE-N531 for exon-53-amenable DMD. It expected a WVE-N531 CTA by the end of Q1 2021 and in-vivo AATD data in the first half of 2021.
- The company expected biomarker and safety data from the PRECISION-HD1 and PRECISION-HD2 Huntington’s trials, including extension data, at the end of Q1 2021. Previously reported PRECISION-HD2 data showed a 12.4% CSF mutant-HTT reduction versus placebo; this was an earlier interim result, not a 2020 year-end readout.
- The FDA had allowed U.S. single-dose portions of the two Huntington’s trials but required an additional preclinical study before U.S. multiple-dose portions could proceed. Higher U.S. PRECISION-HD1 single doses also required FDA review of monitoring plans.
- Management reported that COVID-19 affected some discovery work, clinical operations, enrollment, vendor capacity and supply chains; the timing and full impact remained uncertain.
- Key risks include continued losses and need for additional capital; uncertain clinical and regulatory outcomes; manufacturing scale-up and third-party supply dependence; competition; collaboration execution; and intellectual-property challenges. Wave also disclosed approximately 40 patent applications awaiting a Singapore IPOS decision concerning compliance with Singapore foreign-filing requirements.
- The independent auditor issued an unmodified opinion on the financial statements. Its critical audit matter concerned estimating costs to complete certain R&D collaboration obligations for revenue recognition. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not provide an ICFR attestation.
Important facts for investors to verify
- Whether subsequent clinical data supported the anticipated timelines and showed meaningful safety, biomarker and efficacy results, especially for the Huntington’s programs.
- Whether the FDA’s additional preclinical requirements affected U.S. Huntington’s trial progress or dosing.
- Current cash runway, operating burn, financing needs and dilution after the year-end equity issuance activity.
- Takeda collaboration funding, remaining research-term obligations, option decisions and the timing of deferred-revenue recognition.
- Manufacturing readiness for clinical expansion, COVID-related operational effects, and developments in the Singapore patent-filing matter.