Wave Life Sciences Ltd. — Q1 2017 Form 10-Q
Reporting period: Three months ended March 31, 2017; unaudited, U.S. GAAP. The filing describes a pre-commercial genetic medicines company developing stereopure nucleic acid therapeutics. The registrant is named Wave Life Sciences Ltd. in the filing, although the request metadata says Wave Life Sciences, Inc.
Financial results and liquidity
| Metric | Q1 2017 | Q1 2016 / comparison |
|---|---|---|
| Revenue | $0.7 million | $0; Q1 2017 revenue was under the Pfizer collaboration |
| Research and development | $14.7 million | $4.7 million |
| General and administrative | $5.9 million | $3.2 million |
| Total operating expenses | $20.6 million | $8.0 million |
| Operating loss | $19.9 million | $8.0 million |
| Net loss | $21.0 million | $7.8 million |
| Net loss per ordinary share | $0.89 | $0.36 |
| Operating cash used | $17.4 million | $7.1 million |
| Cash and cash equivalents at quarter-end | $129.5 million | $150.3 million at Dec. 31, 2016 |
Cash used in investing activities was $3.6 million, primarily for property and equipment; financing activities provided $0.2 million. Cash decreased by $20.8 million during the quarter. Operating expenses and losses rose as development programs, staffing, share-based compensation and facilities expanded. The largest R&D increases were for the DMD program and other discovery/platform work. No product revenue was generated, and the company reported no product-sale revenue expected in the foreseeable future. Gross margin was not separately reported, and a meaningful product margin is not provided.
Total liabilities were $26.5 million at March 31, including $10.3 million of deferred revenue. Capital lease obligations were small: $0.1 million current and no long-term balance reported. Restricted cash was $3.6 million. The filing does not present a conventional debt total beyond the disclosed lease obligation.
Material developments, outlook and risks
- After quarter-end, on April 18, 2017, the company closed a public offering of 4,166,667 ordinary shares for $100.0 million gross proceeds, with approximately $93.4 million expected net proceeds. It planned to fund lead programs, advance additional candidates, expand internal cGMP manufacturing, invest in its platform and support general corporate purposes.
- Management stated that cash at March 31, proceeds from the April offering and anticipated Pfizer collaboration milestones were expected to fund operating and capital needs into mid-2019. This estimate depends on assumptions that may prove incorrect; additional financing may be required.
- The company expected to initiate clinical development of two Huntington’s disease candidates in mid-2017 and a Duchenne muscular dystrophy candidate in the second half of 2017, and expected to select three additional development candidates by year-end 2017. It targeted six development programs by the end of 2018. These are forward-looking plans, not assured outcomes.
- The Pfizer collaboration covered up to five hepatic-target programs. Pfizer had nominated three targets and could nominate two more by November 5, 2017; it could elect to license programs at the clinical-candidate stage. Potential milestone payments and royalties are contingent on program progress and commercial success.
- Key risks include preclinical or clinical failure, safety or regulatory delays, uncertain product commercialization, dependence on additional capital, competition, and the ability to protect intellectual property and scale manufacturing. The company had never been profitable and expected expenses and operating losses to increase. No material changes to previously disclosed risk factors were reported; no material legal proceedings or off-balance-sheet arrangements were reported.
Investor facts to verify
- Confirm receipt and actual net proceeds of the April 2017 offering, and subsequent share-count dilution.
- Track cash burn, capital spending and progress against the stated mid-2019 runway assumption.
- Verify clinical-trial initiation and development milestones for the Huntington’s disease and DMD programs, as well as selection of additional candidates.
- Monitor Pfizer target nominations, program elections and any milestone payments; the cited potential collaboration economics are conditional.
- Review R&D and share-based compensation growth, tax expense, and the company’s ability to finance ongoing development.