Wave Life Sciences Ltd. (NASDAQ:WVE) Q2 2023 Earnings Call Transcript

Wave Life Sciences Ltd. (NASDAQ:WVE) Q2 2023 Earnings Call Transcript August 6, 2023

Operator: Good morning, and welcome to the Wave Life Sciences Second Quarter 2023 Financial Results Conference Call. [Operator Instructions] As a reminder, this call is being recorded and webcast. I’ll now turn the call over to Kate Rausch, Vice President of Investor Relations and Corporate Affairs. Please go ahead.

Kate Rausch: Thank you, Haley. Good morning, and thank you for joining us today to discuss our recent business progress and review Wave’s second quarter 2023 financial results. Joining me today are: Dr. Paul Bolno, President and Chief Executive Officer; Anne-Marie Li-Kwai-Cheung, Chief Development Officer; Kyle Moran, Chief Financial Officer; and Dr. Chandra Vargeese, Chief Technology Officer. The press release issued this morning is available on the Investors section of our website, www.wavelifesciences.com. Before we begin, I would like to remind you that discussions during this conference call will include forward-looking statements. These statements are subject to several risks and uncertainties that could cause our actual results to differ materially from those described in these forward-looking statements.

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The factors that could cause actual results to differ are discussed in the press release issued today and in our SEC filings, including our annual report on Form 10-K for the year ended December 31, 2022, and our quarterly report on Form 10-Q for the quarter ended June 30, 2023. We undertake no obligation to update or revise any forward-looking statements for any reason. I’d now like to turn the call over to Paul.

Paul Bolno: Thanks, Kate. Good morning, and thank you all for joining us on today’s call. Today, I’ll share a highlight on our progress during the second quarter and then turn the call to Kyle to review our financials. Then we’ll open up the call for questions. Ann-Marie and Chandra are on the line today and will be available for Q&A. In the second quarter, we continued to execute on our vision of pioneering transformational RNA medicines using our multimodal platform. We remain on track to submit CTAs for our AATD program, and the first RNA editing medicine to enter human clinical trials. We’re accelerating work on a number of compelling targets in our collaboration with GSK, and we continue to advance our clinical programs in DMD and HD.

Today, I’ll begin with AATD and RNA editing, then review our progress with GSK in building a sustainable pipeline. And finally, we’ll end with an update on our clinical trial. As I speak with you today, we are preparing for the imminent submission of our first clinical trial applications or CTAs for WVE-006, the first RNA editing clinical candidate for the treatment of AATD. This milestone is important on multiple fronts. First, WVE-006 signifies an entirely new modality moving into the clinic. We are incredibly excited about this milestone, which is an important advancement for the nucleic acid field and for all patients who stand to benefit from RNA editing therapeutics. With AATD, our ability to utilize validated biomarkers in the clinic is expected to enable rapid delivery of proof-of-concept data for 006.

This early clinical data set would increase the probability of success with Wave’s future RNA editing programs in the liver and beyond. Second, our path from target to the clinic with 006 reflects the translational speed of our platform. Upon first human dosing, we will demonstrate that we have expediently advanced this clinical candidate with a novel modality from the bench to patients at a remarkably fast pace. As we build our pipeline, we expect to drive further efficiencies with each new RNA editing clinical candidate. Importantly, 006 is not only first-of-its-kind, but it’s also best-in-class in AATD as supported by our robust preclinical data package. We are able to achieve remarkable potency and durability of editing with convenient subcutaneous dosing because of our unique fully chemically modified oligonucleotides.

006 is also compatible with GalNAc conjugation, a highly specific and elegant delivery tool that is well-validated through multiple approved silencing therapeutics on the market. For AATD, it is a significant advantage to have a stable and optimized candidate that can leverage GalNAc and thereby avoid lipid nanoparticles, which require intravenous dosing. Among the AATD field, we continue to generate excitement for our RNA editing approach, which is a first-in-class therapy designed for restoration of both healthy hepatic and pulmonary function with a reversible redeemable therapeutic agent. Our team is far — out of the enthusiasm, first-hand from the community to the Alpha-1 National Conference in Dallas, Texas in June. There is a major unmet need in AATD with current therapies largely confined at treating either pulmonary or in the future, hepatic manifestations of the disease.

Despite the limitations of current therapy, AATD already represents a substantial pharmaceutical market with augmentation therapy alone currently accounting for about $1.3 billion in annual pharmaceutical revenue worldwide, and this market is expected to grow. Our collaboration with GSK puts us in a strong position to execute on bringing our novel therapeutic option to this market. GSK has a long history and clear leadership in respiratory medicine, development and commercialization. And under the terms of our deal, Wave is eligible to receive substantial development, launch and sales milestone payments, including meaningful near-term clinical milestones as well as significant royalties. As with AATD, our internal discovery work on the next wave of RNA medicine is substantially focused on first-in-class RNA editing therapeutics designed to repair and restore protein.

With ADAR editing, we have a versatile modality that allows us to impact target biology in novel ways. As we look at the universe of genetic mutations driving disease, the majority of these mutations lead to a loss of protein function, meaning they can’t be addressed with silencing tools such as siRNA or antisense. Wave is best positioned to capitalize on this loss of function disease targets using our protein restoration and repair tools, including our leading RNA editing modality and validated pharmacological platform. We are not constrained by therapeutic areas, and have previously shown robust editing in extrahepatic tissues, including CNS, kidney and lung. Beyond rare monogenic disorders, there is also a growing opportunity for RNA medicines with prevalent diseases.

With genetic insights being unlocked from large genome-wide association studies, new druggable targets are rapidly becoming available. These targets have existing biological validation rooted in human genetics. GSK is at the forefront of investing in genetic discovery. Through our strategic collaboration, we are benefiting from their proprietary genetic insights, which augments our own internal data sets and are informing and accelerating our next wave of programs, including partnered and wholly-owned programs. We are rapidly building momentum within our collaboration and the Wave and GSK teams are already actively working on multiple targets. Importantly, GSK pays 100% of the cost and expenses related to target validation for these partner programs.

As a reminder, the GSK deal includes meaningful near-term milestone payment opportunities beyond the clinical development milestones related to WVE-006, which has the potential to add substantially to our balance sheet in 2023 and beyond. We are planning to hold a virtual R&D Day on September 28, 2023, during which we will demonstrate how we are continuing to extend our leadership in RNA editing. We will also discuss how we are uniquely translating genetic insights into internal wholly-owned programs for both rare and more prevalent diseases. During the event, we will share new preclinical data for both hepatic and extra-hepatic disease indications, highlighting the potential depth and breadth of our next wave of pipeline programs. Moving on to DMD.

We are on track to initiate Part B, a potentially registrational Phase 2 study of WVE-N531, our exon 53 skipping candidate. This open-label study will evaluate doses of 10 milligrams per kilogram of N531 administered every other week, and we plan to assess dystrophin protein after 24 and 48 weeks of treatment. Since our last update, our clinical development team has filed the clinical trial protocol with regulatory authorities and identified additional trial sites. We expect to share clinical data inclusive of dystrophin protein in 2024. If these data are supportive, we intend to use them to file for accelerated approval in the U.S. As a reminder, our excitement for N531 is grounded in the proof-of-concept data from Part A of the study, which showed 53% exon skipping after just 3 biweekly doses, high muscle tissue concentration and a favorable safety profile.

We presented these results to the DMD community at the PPMD conference in June, where they were met with excitement and optimism. With the extended dosing period in the forthcoming trial, we expect these high levels of skip transcript to result in downstream accumulation of substantial fully functional dystrophin protein. We know the DMD community is waiting for additional and better therapeutic options. With N531, we aim to provide a treatment option that delivers convenient, safe production of endogenous functional dystrophin and ultimately meaningful clinical benefit for all patients amenable to exon 53 skipping. We are also planning a broad strategy to expand the number of exons we can address, which we would accelerate rapidly following positive dystrophin data for N531 to build the wholly-owned DMD franchise.

Turning to WVE-003, our first-in-class, allele-selective candidate for Huntington’s Disease, or HD. HD patients have no disease-modifying therapies available to them today, and we believe 003 is the most promising HD compound in development. 003 takes advantage of broad delivery to the CNS, thereby reaching the variety of brain regions implicated in HD. We’ve now confirmed the ability of oligonucleotide to distribute in the CNS in multiple NHP studies with our partner, including relevant concentrations in the cortex and strata. Therefore, we are confident that 003 is getting to the right part of the brain. It is also the most advanced approach designed to selectively knock down the toxic-mutant Huntington protein while sparing the healthy wild-type HTT protein.

Wild-type HDT is essential and played several critical roles in the CNS, including regulation of the synaptic and protein transport, promoting neuronal survival and formation and function of cilia, which are essential to regulate CSF flow and reabsorption. Dysfunction in any of these pathways could be expected to adversely impact response, and can potentially cause the clients. With only single doses of WVE-003, we have already demonstrated positive initial Huntington reductions of approximately 35% as compared to placebo in the CSF with wild-type HTT level appearing consistent with allele-selectivity. The SELECT-HD trial has continued to progress. And in the second quarter of 2023, we initiated the multi-ascending dose phase of the trial dosing at 30 milligrams every 8 weeks.

Given our robust and durable knockdown data observed in the multi-dose cohorts of the FOCUS-C9 clinical trial of WVE-004, we believe the multi-dose data for 003 will be most important to informing our next phase development. In the second half of 2023, we intend to share additional single-dose biomarker and safety data along with any available multi-dose data. With that, I’ll now turn the call over to Kyle Moran, our CFO, for our financial update.

Kyle Moran: Thanks, Paul. Turning to the financials. Our net loss for the second quarter of 2023 was $21.1 million as compared to $41.3 million in the prior year quarter. The decrease in net loss was primarily driven by revenue recognized under our collaboration with GSK — under the GSK and Takeda collaborations in the second quarter of 2023 was $22.1 million. In the prior year quarter, revenue of $0.4 million was recognized under the Takeda collaboration. Research and development expenses were $33.3 million for the second quarter of 2023 as compared to $29.7 million in the prior year quarter. This increase in R&D expenses was primarily due to increased external expenses related to our clinical program. GSK expenses slightly declined in the second quarter — sorry, G&A expenses slightly declined in the second quarter to $12.3 million as compared to $12.8 million in the prior year quarter, primarily due to a decrease in share-based compensation.

We ended the second quarter with $173 million in cash and cash equivalents as compared to $88.5 million as of December 31, 2022. The increase is primarily attributable to the upfront cash and equity investment of $170 million received in the first quarter from our strategic collaboration with GSK. We expect that our cash and cash equivalents will be sufficient to fund operations into 2025. As a reminder, we do not include future milestones or opt-in payments under our GSK and Takeda collaboration in our cash runway. As Paul stated earlier, we have the potential to receive meaningful near-term milestone payments in 2023 and beyond, including clinical development milestones related to WVE-006, our RNA editing candidate in the treatment of AATD.

I’ll now turn the call back over to Paul. Paul?

Paul Bolno: Thanks, Kyle. We are well positioned to execute on multiple upcoming milestones across our pipeline in 2023 and beyond. I look forward to seeing many of you at upcoming investor conferences and to speaking with you at our R&D Day event in September. And with that, I’ll turn it over to the operator for Q&A. Operator?

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Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Steven Seedhouse from Raymond James.

Steven Seedhouse: Yes, god morning, thanks so much for taking the questions and broad update. Paul, you mentioned rapid delivery of proof-of-concept data from the AATD study. I was hoping if you could just expand on that comment on sort of the initial doses you’ll be in the clinic with when gene editing went into the clinic in vivo, there were pretty profound editing rates already even at the lowest doses. Just curious, if that’s the type of thing you’re expecting to sort of manifest here at the early doses in the study? And what other, other than editing — what other sort of proof-of-concept features do you think you can generate pretty quickly?

Paul Bolno: Wonderful. I’ll take the question, Steven, and then hand the call to Anne-Marie. But I think when we talk about rapid proof-of-concept, our goal is, as stated, as quickly as possible to get to a measurement of protein both through, as we stated before, the study’s rapid healthy human volunteer section and then treatment section. But the goal here is you bring up measuring editing efficiency. I think, what’s unique and really special about the Alpha-1 antitrypsin indication is that we can measure the most important contribution of editing, which is protein formation. And so, the biomarker we’ll be able to measure in that study is the Alpha-1 antitrypsin protein, and we’ll also be able to characterize how much of it is fixed/corrected protein.

So I think it gives us a really unique way of confirming preclinical studies in the clinic, both in the magnitude of production but also the quality of production. Anne-Marie, I don’t know if you have other comments you want to make to the clinical trial design here.

Anne Cheung: No. Well, I would perhaps add that in the final stages before submitting ready — almost ready to submit the CTAs and we’ll comment further on the design once we’re locked and loaded there.

Steven Seedhouse: Okay. And just when you think about assessing off-target RNA editing, can you just describe — is this much different than you would do for an siRNA, — for instance, is it any more onerous? What’s your understanding of the sort of regulatory landscape for establishing an off-target margin for RNA editing therapeutics?

Paul Bolno: Yes. I mean I think what’s exciting about RNA editing as we think about a standardized oligonucleotide approach and looking at our experience in siRNA and antisense is the ability to assess normal — what are their potential off targets in the same way we would do that for others. As you know and as we’ve shared previously, we’ve done the characterization to look for bystander edits and others on the transcript come with a highly specific editing, and therefore, we didn’t see bystander edits. So in preparation for the submission, we obviously did a lot of that work to preempt that in terms of demonstrating a new modality that we don’t see bystander edits as highly specific and behaves the same way as other oligonucleotides.

And so, I think we’re excited about the prospect of thinking about this like others as opposed to, as you alluded to, kind of as the more onerous work that needs to be done on DNA editing. I mean, I think to the other point is, I think it really reflects the ability and the importance of reversible editing. The idea that we’re working on the transcript and not inducing permanent genetic mutations on DNA. And so, I think as we approach this, particularly as we think about prevalent diseases. We think it’s an important contribution that we get to make to the space of really thinking about how do you go after not just devastating rare diseases, but actually apply these technologies to broad chronic diseases, which is important, obviously, to ourselves and to our partner, GSK.

Steven Seedhouse: Yes. And just lastly for me, I appreciate that. This is maybe thinking a little bit ahead. But as you think about initial patient selection for AATD, how broad is that demographic going to be? And like will you be looking for patients with lung and liver involvement, right away, to sort of show the power of this approach and specific genotypes that would be early targets? Any comments there would be appreciated.