Wave Life Sciences Ltd. — FY 2018 Form 10-K
Reporting period: Year ended December 31, 2018; the filing also provides unaudited fourth-quarter results. Wave is a Singapore-incorporated clinical-stage genetic medicines company developing stereopure oligonucleotides using its PRISM platform. It had no product sales; revenue came from Pfizer and Takeda collaborations.
Financial results and liquidity
| Metric | FY 2018 | FY 2017 |
|---|---|---|
| Revenue | $14.4 million | $3.9 million |
| Research and development expense | $134.4 million | $79.3 million |
| General and administrative expense | $39.5 million | $27.0 million |
| Operating loss | $159.5 million | $102.4 million |
| Net loss | $146.7 million | $102.0 million |
| Basic and diluted loss per share | $5.06 | $3.85 |
| Net cash used in operations | $22.9 million | $83.7 million |
Revenue increased by $10.5 million, reflecting Takeda collaboration revenue and increased Pfizer research services. Operating expenses rose $67.7 million, primarily from higher R&D and workforce, platform, and facility costs. Net loss widened by $44.7 million. No meaningful product gross margin is reported because the company had no product revenue.
FY 2018 cash and cash equivalents were $174.8 million, with $3.6 million restricted cash; working capital was $72.2 million, down from $132.3 million. Total assets were $295.9 million and total liabilities $214.7 million, including $169.1 million of deferred revenue. The filing reports no material conventional debt; operating lease commitments totaled $49.9 million. Operating cash use was lower than net loss mainly because Takeda upfront and committed funding increased deferred revenue, partly offset by collaboration receivables. Investing cash use was $9.9 million, mainly property and equipment; financing provided $65.1 million, principally Takeda’s $60.0 million equity investment.
After year-end, Wave raised approximately $161.6 million net in a January–February 2019 public offering. Management stated that available cash and cash equivalents were expected to fund operations for at least 12 months, while cautioning that assumptions could prove wrong. The company expects ongoing losses and increasing expenses and will require substantial additional funding to advance its programs.
Programs, outlook, and material developments
- Duchenne muscular dystrophy: Management reported Phase 1 safety and tolerability findings for suvodirsen (exon 51) sufficient to support a planned Phase 2/3 trial; it selected a dose and expected trial initiation in 2019. It targeted second-half 2019 interim dystrophin data from the open-label extension for a potential accelerated-approval submission. The planned Phase 2/3 trial was selected for the FDA’s complex innovative trial design pilot program.
- Huntington’s disease: WVE-120101 and WVE-120102 were in Phase 1b/2a trials, with topline data expected in the first half of 2019. U.S. multiple-dose trial portions could not proceed pending additional preclinical work and FDA review; higher-dose escalation in one U.S. single-dose portion also required FDA review of monitoring plans. A micronucleus assay result prompted additional nonclinical studies.
- Other pipeline: WVE-N531 (DMD exon 53) and WVE-3972-01 (C9ORF72 for ALS/FTD) were in development, with clinical data projected for the second half of 2020 subject to applications and regulatory clearance. Ophthalmology candidate announcement was expected in the second half of 2019. Pfizer had selected the maximum five hepatic targets; Takeda collaboration covered CNS programs and additional preclinical targets.
- Partnership funding and economics: Takeda provided a $110 million upfront payment, $60 million of committed research funding, and a $60 million equity investment in 2018. The collaboration includes options, potential milestones, profit sharing, and royalties; future partner options and milestones were not assured. Pfizer’s agreement similarly includes partner licensing options and potential milestones and royalties.
Management’s outlook depended on preclinical and clinical results, regulatory decisions, manufacturing scale-up, collaboration-partner choices, and access to financing. The filing highlights the uncertainty of translating preclinical results to humans, trial delays or failure, safety concerns, manufacturing and supply constraints, competition, intellectual-property challenges, reimbursement and pricing uncertainty, and dependence on collaborators. Wave noted no material legal proceedings. Auditors issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded disclosure controls were effective.
Most important facts for investors to verify
- Subsequent clinical results and regulatory developments for suvodirsen and both Huntington’s programs, including resolution of the FDA’s additional-study requirements.
- Actual cash burn, runway, and use of the approximately $161.6 million net proceeds raised after year-end; assess dilution from the offering.
- Timing and recognition of collaboration funding: $169.1 million of deferred revenue and $60.0 million of collaboration receivables were reported at year-end, with revenue dependent on performance and partner options.
- Whether expected clinical timelines, manufacturing capacity, and collaboration milestones were achieved; these were forward-looking expectations, not established outcomes.
- Potential impact of operating leases, tax-credit assumptions, and the full valuation allowance on deferred tax assets; the filing reported a $99.4 million valuation allowance.