Wave Life Sciences Ltd. (Nasdaq: WVE) — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Wave is a clinical-stage genetic medicines company developing stereopure oligonucleotide therapies; it reported no product sales. Amounts below are in U.S. dollars.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $2.8m | $3.0m | $2.8m | $7.2m |
| Research and development | $31.6m | $31.5m | $65.0m | $72.6m |
| General and administrative | $11.0m | $10.2m | $21.0m | $23.2m |
| Operating loss | $39.8m | $38.7m | $83.3m | $88.6m |
| Net loss | $38.8m | $40.5m | $81.2m | $88.0m |
| Basic and diluted loss per share | $0.78 | $1.15 | $1.65 | $2.53 |
- Revenue was collaboration revenue, principally from Takeda in 2021. No product revenue was reported. The filing identifies no meaningful product gross margin; Wave remained loss-making.
- For the first half, operating cash use was $53.8m, versus $64.4m a year earlier. Investing cash use was $0.4m; financing provided $13.7m, primarily from at-the-market share sales. Cash, cash equivalents and restricted cash declined $40.7m to $147.5m, including $143.8m of unrestricted cash and cash equivalents.
- At June 30, current assets were $159.4m and current liabilities were $46.7m. Total liabilities were $176.7m, including $130.3m of deferred revenue; the filing does not provide a clear separate debt balance. Shareholders’ equity was $21.8m and accumulated deficit was $764.5m.
- Management expected existing cash and cash equivalents, together with committed cash from the existing collaboration, to fund operations for at least 12 months. The estimate depends on assumptions and could prove optimistic. The company reported $40.8m in operating lease commitments and anticipated an additional $5.4m of future commitments for expanded Cambridge space.
Changes versus comparable periods
- First-half revenue fell $4.4m year over year, reflecting lower Takeda collaboration revenue and no Pfizer collaboration revenue after that research term ended in May 2020. Q2 revenue declined $0.3m.
- First-half operating expenses fell $9.8m, including a $7.6m reduction in R&D and a $2.2m reduction in G&A. Lower spending on discontinued DMD and Huntington’s programs contributed; ALS/FTD program spending increased.
- First-half net loss narrowed by $6.8m. Q2 net loss narrowed by $1.8m, helped by a $2.9m year-over-year improvement in other income/expense, including the comparison with a 2020 reduction in expected U.K. refundable tax credits.
- Ordinary shares outstanding increased from 48.8m at December 31, 2020 to 50.6m at June 30, 2021. The company sold approximately 1.56m shares through its at-the-market program for $13.1m net proceeds during the first half.
Outlook, commentary and risks
- Wave expected to continue incurring significant R&D expenses and operating losses, and said it may need additional financing. Future equity financing could dilute shareholders; debt or collaboration financing could impose restrictions or require concessions.
- Clinical and pipeline updates in the filing: dosing began in the WVE-004 FOCUS-C9 trial in July 2021, with clinical data expected through 2022. As of the filing’s August 5 date, SELECT-HD and WVE-N531 sites were activated and recruiting, with dosing expected to begin in 2021. These are forward-looking expectations, not reported trial outcomes.
- Key risks include clinical safety, efficacy and timing; regulatory decisions; manufacturing and supply; competition; intellectual-property protection; ability to raise capital; and COVID-19 effects on trials, research, supply and staff. Management said the pandemic had affected or could affect some early discovery work and clinical trials.
- Takeda deferred revenue was $130.3m at quarter-end, of which $24.2m was current. Revenue recognition depends on continued performance and, for certain amounts, future option exercise or expiry. Milestone payments and additional reimbursement-related variable consideration were not included where constrained.
- The company reported no material legal proceedings and no material changes to its previously disclosed risk factors. Management concluded disclosure controls were effective as of June 30, 2021.
Important facts for investors to verify
- Whether cash burn and collaboration receipts remain consistent with management’s stated minimum 12-month funding outlook.
- Trial enrollment, dosing, safety and data timing for WVE-004, WVE-003 and WVE-N531, and whether stated 2021–2022 milestones were achieved.
- Takeda program progress, remaining research funding, option decisions and the pace at which deferred revenue is recognized.
- Further ATM or other equity issuance, resulting dilution, and changes in cash, lease commitments and operating costs.
- The effects of discontinued earlier programs and continuing COVID-19, regulatory, manufacturing and financing risks on spending and pipeline plans.