Wave Life Sciences Ltd. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed March 3, 2022. This is an annual report, not a standalone fourth-quarter filing. Wave is a Singapore-incorporated, clinical-stage genetic medicines company developing stereopure oligonucleotide therapeutics using its PRISM platform.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Collaboration revenue | $41.0 million | $20.1 million |
| Research and development expense | $121.9 million | $130.9 million |
| General and administrative expense | $46.1 million | $42.5 million |
| Operating loss | $(127.0) million | $(153.4) million |
| Net loss | $(122.2) million | $(149.9) million |
| Net loss per ordinary share, basic and diluted | $(2.36) | $(3.82) |
| Net cash used in operating activities | $(89.0) million | $(116.0) million |
| Net cash used in investing activities | $(0.6) million | $(1.3) million |
| Net cash provided by financing activities | $55.8 million | $154.5 million |
- Wave reported no product sales; revenue came from collaboration arrangements. Gross margin is not applicable to product sales, which had not begun.
- At year-end, cash and cash equivalents were $150.6 million, restricted cash was $3.7 million, total current assets were $162.6 million, and current liabilities were $64.2 million. Management expected existing cash and cash equivalents to fund operations for at least 12 months, subject to assumptions that may prove incorrect.
- Total liabilities were $166.6 million. The balance sheet reports no borrowings; liabilities include deferred collaboration revenue and operating leases. Lease liabilities totaled $29.9 million, with $37.5 million of undiscounted minimum lease payments remaining.
- Accumulated deficit was $805.5 million. The company had no material legal proceedings and did not anticipate product revenue in the foreseeable future.
Changes versus FY2020
- Revenue increased $20.9 million, primarily because Wave recognized a $22.5 million Takeda payment for research and preclinical expenses under an October 2021 amendment. Pfizer collaboration revenue ceased after that agreement ended in May 2020.
- R&D expense fell $9.1 million, mainly as spending declined on discontinued first-generation DMD and Huntington’s disease programs; spending increased on WVE-004 and platform/ADAR editing work. G&A expense rose $3.6 million.
- Net loss narrowed by $27.7 million, while operating cash use fell by $27.0 million. Cash and cash equivalents declined from $184.5 million to $150.6 million.
- Wave issued 10.7 million ordinary shares through its at-the-market program in 2021, generating approximately $54.9 million net proceeds; shares outstanding rose to 59.8 million at year-end.
Pipeline, outlook and significant developments
- Clinical programs were WVE-004 for C9orf72-associated ALS/FTD, WVE-003 for Huntington’s disease, and WVE-N531 for Duchenne muscular dystrophy. Dosing began in the FOCUS-C9 trial in July 2021, SELECT-HD in September 2021, and an open-label WVE-N531 trial in September 2021.
- Management expected clinical data from these programs in 2022. It also expected to select an AATD RNA-editing candidate and begin IND-enabling toxicology studies in the third quarter of 2022. These are forward-looking plans, not reported outcomes.
- The Takeda collaboration’s Category 1 programs remained in effect, including HD, ALS/FTD and SCA3 options. The parties discontinued Category 2 preclinical programs; Takeda paid $22.5 million, and Wave said it could advance other CNS programs independently or seek partners.
- Management described preclinical results for its PN-modified oligonucleotides and AIMers as promising, but clinical benefit and safety had not been established. Wave’s first three clinical programs, which used earlier chemistry, had been discontinued after negative clinical data.
Principal risks and unusual items
- Wave is loss-making, has no marketed products, and expects substantial ongoing R&D costs and a need for additional financing. Future equity issuance could dilute shareholders; financing may not be available on acceptable terms.
- Clinical-stage risks include failure to demonstrate safety or efficacy, trial delays or enrollment challenges, and uncertainty about whether preclinical findings predict human outcomes. COVID-19 had disrupted or could continue to disrupt trials, research, suppliers and operations.
- Manufacturing depends on internal capacity, third-party manufacturers and external raw-material suppliers; scaling, quality, supply-chain or regulatory issues could delay development or increase costs.
- In Singapore, patent filings made abroad without prior authorization may have implicated Section 34 of the Patents Act. Wave reported submitting approximately 140 applications to IPOS following requests and was awaiting its decision; penalties or prosecution remained possible.
- The auditor issued an unqualified opinion on the financial statements and identified revenue recognition for certain R&D services as a critical audit matter because estimates of remaining contract costs required significant judgment. Management considered disclosure controls and internal control over financial reporting effective; the auditor did not attest to ICFR.
Important facts for investors to verify
- Whether 2022 clinical updates for WVE-004, WVE-003 and WVE-N531 demonstrated acceptable safety, target engagement and meaningful benefit.
- Actual cash runway and subsequent financing, including whether the planned new shelf registration and remaining at-the-market capacity were used; the filing’s runway estimate depended on management assumptions.
- Takeda option decisions, future collaboration receipts and the revenue recognition schedule for the $114.6 million of deferred revenue at year-end.
- Progress and regulatory feedback on the AATD AIMer program, and whether the planned candidate selection and toxicology timeline was achieved.
- IPOS’s resolution of the Singapore patent-filing matter, along with any resulting costs or effects on patent protection.
- Future share dilution and the distinction between deferred collaboration revenue, lease obligations and debt; the filing reported no borrowings at year-end.