Wave Life Sciences Ltd. (NASDAQ:WVE) Q3 2023 Earnings Call Transcript

Wave Life Sciences Ltd. (NASDAQ:WVE) Q3 2023 Earnings Call Transcript November 10, 2023

Operator: Good morning and welcome to Wave Life Sciences Third Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this call is being recorded and webcast. Now I’ll turn the call over to Kate Rausch, Vice President, Investor Relations and Corporate Affairs. Please go ahead.

Kate Rausch: Thank you, operator. Good morning and thank you for joining us today to discuss our recent business progress and review the third quarter 2023 financial results. Joining me today are Dr. Paul Bolno, President and Chief Executive Officer; Kyle Moran, Chief Financial Officer; Anne-Marie Li-Kwai-Cheung, Chief Development Officer; Dr. Ginnie Yang, SVP Translational Medicine; 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.

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 September 30, 2023. We undertake no obligation to update or revise any forward-looking statement 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. I will begin with opening remarks. Next Anne-Marie will provide an update on our clinical trials. And finally, Kyle will review our financials. We will then open up the call for questions. Chandra and Ginnie will also be available for questions. In the third quarter our team made tremendous progress advancing our pipeline of novel RNA medicine. Since our last update we have brought our first-in-class RNA editing therapeutic program WVE-006 for AATD into the clinic. We outlined our strategy for growth at our Annual R&D Day including announcing a new wholly-owned siRNA program targeting INHBE for metabolic disorders including obesity and we continue to advance our clinical trials in DMD and HD.

Looking ahead to 2024, we are approaching a transformative year for Wave where we will deliver key data sets for all three of our clinical programs and SELECT and INHBE clinical candidate. Starting with WVE-006, today we are announcing the approval of multiple clinical trial applications or CTAs and the initiation of our restoration program, which will investigate WVE-006 the industry’s first ever clinical RNA editing candidate for alpha-1 antitrypsin deficiency or AATD. This is another significant milestone for Wave patients and the field of nucleic acids. We remain on track to begin dosing healthy volunteers this quarter and as Anne-Marie will describe in more detail later the restoration program is designed to enable a highly efficient path to prove the mechanism.

Our excitement for WVE-006 is grounded in the strong preclinical profile we have observed to-date. We have achieved remarkable potency and durability of editing with convenient subcutaneous dosing in our preclinical studies because of our unique fully chemically modified oligonucleotides and their ability to effectively recruit data enzyme. WVE-006 precisely corrects the PiZ mutation on the transcript with no bystander editing. In contrast, genome editing technologies rely on hyperactive exogenously delivered artificial enzymes that can result in significant and irreversible collateral bystander editing with DNA yielding not only the potential for permanent off-target edits to DNA, but isoforms of protein with differential function. 006 contains a GalNAc conjugate, 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 avoid lipid nanoparticles, which have their own challenges and require intravenous dosing. With current therapies largely confined to treating either pulmonary or in the future hepatic manifestations of the disease the unmet need in AATD remains high. Even with the limitations of available therapies the pharmaceutical market for AATD is substantial with augmentation therapy alone accounting for over $1 billion in sales per year. Our partner GSK has a long history and clear leadership in respiratory medicine, development and commercialization and together with WVE-006’s differentiated profile we believe this program is in a strong position and we look forward to delivering proof of mechanism data next year.

As a reminder, under the terms of our collaboration Wave is also eligible to receive meaningful near-term clinical milestones starting this year which have the potential to add substantially to our balance sheet. Clinical proof of mechanism with 006 would serve to meaningfully derisk this novel modality and will continue to unlock value for our emerging pipeline of RNA editing programs. As we shared at our R&D Day, we are actively building a pipeline of wholly owned therapeutic candidates designed to either correct or upregulate mRNA across a range of high-impact targets. We presented both in vivo and in vitro data on several of these targets which all offer efficient path to clinical proof of concept and represent meaningful commercial opportunities for both rare and common disease indications.

We look forward to continuing to share data on these exciting programs over the course of 2024. Beyond WVE-006, our strategic collaboration with GSK continues to make meaningful progress. The Wave and GSK teams continue to work to advance multiple targets. And as our partner shared during our R&D day this work spans multiple modalities beyond RNA editing including silencing using siRNA. As a reminder, GSK pays 100% of the costs related to target validation of these partner programs and Wave is eligible for up to $2.8 billion in milestones not inclusive of 006 and additional tier royalty payments. At R&D Day, we also announced our first wholly owned program to emerge from the collaboration, a GalNAc conjugated siRNA program targeting INHBE to treat metabolic disorders including obesity.

INHBE is a particularly exciting target given its strong supporting genetic evidence. INHBE loss-of-function heterozygous carriers exhibit a healthy metabolic profile including reduced hip-to-waist ratio, improved lipid profile, reduce odds of coronary artery disease and type two diabetes. GLP-1 therapeutics have established a substantial market opportunity for weight loss therapeutics. We estimate there are more than 47 million people in the United States and Europe with metabolic disorders including obesity. While GLP-1s are becoming standard of care for weight loss, they come with several drawbacks including loss of muscle mass suppression of the general reward system and poor tolerability. With discontinuation rates as high as 70%, there is a need for more therapeutic options including long-term maintenance.

We believe a therapeutic approach for obesity that improves metabolism increases fat loss while maintaining muscle mass, offers the potential for infrequent dosing and does not affect the general reward system would be ideal. This is what we aim to achieve with our INHBE Program. At R&D Day, we presented the first in vivo data supporting preclinical proof of concept for this target. We achieved INHBE silencing well beyond the 50% therapeutic threshold, which led to substantially lower body weight a substantial reduction of visceral fat in DIO mice as compared to control. These are the first in vivo data to demonstrate in INHBE silencing and is consistent with the phenotype of heterozygous loss-of-function carriers. Since R&D Day, we have identified potent and highly specific leads using our new chemistry format and are rapidly advancing towards our goal of selecting an INHBE clinical candidate by the fourth quarter of 2024.

Notably, because the levels of INHBE protein and other relevant clinical biomarkers can be readily measured in serum, we believe the path to assessing target engagement and clinical efficacy can be straightforward and achieved in a relatively short period of time. As a reminder, our collaboration allows way to leverage GSK’s genetically validated targets to advance at least three programs, meaning we have an additional two slots open for new wholly owned programs beyond the individual. Turning to WVE-N531 and WVE-003, we continue to advance our clinical DMD and HD programs and are on track to deliver key data from both programs in 2024. For DMD with WVE-N531, we aim to provide a treatment option that delivers convenient safe production of endogenous functional effector-like dystrophin, and ultimately meaningful clinical benefit for all patients amenable to exon 53 skipping.

There remain significant questions around the functional benefit of micro- or mini-dystrophin and we recognize the urgency to deliver more therapeutic options to these patients. We look forward to evaluating the translation of our best-in-class exon skipping to functional dystrophin protein in 2024. In Huntington’s disease, we believe WVE-003 is the most promising asset in the field. To date, we have demonstrated a successful translation of our compelling preclinical data to the clinic with the reduction of mutant huntingtin and preservation of wild-type huntingtin after a single dose in humans. We have robust evidence from multiple preclinical studies including NHP studies that support the ability of our oligonucleotide to achieve significant exposure levels throughout the CNS.

As we look ahead to the first multi-dose data from our SELECT-HD clinical trial next year, we anticipate potent and durable knockdown of mutant huntingtin, while sparing wild-type protein similar to what we observed in poly(GP) reduction in our WVE-004 program when we transitioned from single to multi-dose. Anne-Marie will speak more on SELECT-HD and our other clinical development programs. And I’d now like to turn the call over to her. Anne-Marie?

Anne-Marie Li-Kwai-Cheung: Thank you, Paul. It’s a really exciting time to be at Wave as we are continuing to validate the translation of our platform in the clinic. I’ll begin with WVE-006, our GalNAc conjugated AIMer or RNA editing oligonucleotide for AATD. We have now received approval for multiple clinical trial applications or CTA. This accomplishment affirms that RNA editing oligonucleotide can leverage established regulatory pathways and WVE-006 has officially become the first RNA editing oligonucleotide to enter the clinical trial. Today, we are announcing the initiation of our RestorAATion clinical program, which is comprised of two interconnected portions. RestorAATion-1 for healthy volunteers and RestorAATion-2 for individuals with AATD who have the homozygous PiZZ mutation.

The healthy volunteer cohorts along with our PD modeling can inform dose that can rapidly enable initiation in DD patients at the level expected to engage target, thereby, enabling efficient delivery of proof-of-mechanism as defined by detection of additive protein in serum. In RestorAATion-2 patients will have multiple assessments of serum M-AAT throughout the low, medium and high dose cohorts, meaning it is possible to achieve proof-of-mechanism before completion of the whole trial and potentially prior to completion of the first cohort. RestorAATion-1 is now underway and we can expect to initiate dosing in healthy volunteers this quarter and delivery of proof-of-mechanism data in patients with AATD in 2024. Moving on to DMD. I’ll start with a quick reminder of the clinical data that drives our excitement in this program.

In patient muscle biopsies collected from our proof-of-concept study, we observed the mean 53% exon skipping at six weeks, following three doses of WVE-N531 every other week. Since exon skipping and results in dystrophin production improve the cellular environment to enable more skipping and dystrophin, significant nonlinear increases in dystrophin may be expected given the amount of exon skipping we see. This non-linear relationship between exon skipping and dystrophin production has been observed with other skippers. Furthermore high tissue concentrations of WVE-N531 [indiscernible] at myoblast and especially in satellite cells, which is important cell to new myoblast speak to promise of achieving best-in-class dystrophin protein expression.

We are advancing FORWARD-53, our potentially registrational Phase 2 trial of N531. This open-label trial is evaluating 10 mg per kg doses of N531 and limited every other week and is powered to assess functional indulgence dystrophin expression after 24 and 48 weeks of treatment, which will be the trial’s primary endpoint. The trial will also evaluate safety and tolerability, pharmacokinetics and digital and functional endpoints. We remain on track to deliver dystrophin protein data in 2024, which is positive and would support our plans to file for accelerated approval in the US. This data would also accelerate our clinical development plan to build a wholly-owned multi-exon DMD franchise beyond exon 53. We have generated in vitro dystrophin restoration data for follow-on excellent skipping compounds that together would address up to 40% of the DMD population.

These follow-on compounds are all defined with PN chemistry and have demonstrated high levels of exon skipping and dystrophin production restoration in, in vitro studies. Turning to WVE-003, our first-in-class allele-selective candidate for Huntington’s disease or HD. Phase 3 is a devastating disease and where 003 offers an optimal treatment approach and reduces the toxic mutant huntingtin protein while preserving the healthy wild-type huntingtin protein. As a reminder this program is part of an active collaboration with Takeda. In the third quarter, we achieved a milestone from this collaboration, which pertained to the positive results from a non-clinical study of 003 in nonhuman primates. This study showed significant tissue exposure levels of 003 in the deep brain regions including striatum and bolstered our existing data sets that confirm the ability of our oligonucleotides to distribute to the areas of CNS important for HD.

Coupled with the already demonstrated mean mutant Huntington’s CSF single dose reduction of approximately 35% compared to placebo, these new NHP results further reinforce our confidence in this program. I’m excited to share that we’ve now completed enrollment for the 30-milligram multi-dose Q8 week cohort comprised of 24 HD patients. Having enrolled patients from the single-dose cohorts and fully enrolled the multi-dose cohort, which is critical to inform further decisions on this program, we will now evaluate the completed single-dose and multi-dose cohorts simultaneously. We expect to report the 30-milligram multi-dose data with extended follow-up along with all single-dose data in the second quarter of 2024. We also expect these data to enable decision-making on the program and support our option package for Takeda.

In summary, I’m proud of our team’s accomplishments this year and truly look to the year ahead, during which we will have high-impact data readouts across all three of our clinical trials. And with that, I’d like to turn the call over to our CFO, Kyle Moran to provide an update on our financials.

Kyle Moran: Thanks Anne-Marie. We recorded $7.3 million of net income for the third quarter of 2023 as compared to a net loss of $39.0 million in the prior year quarter. This year-over-year change was primarily driven by increased revenue under both our GSK and Takeda collaborations. Under the Takeda collaboration, we earned $7.0 million for the achievement of a non-clinical milestone for WVE-003. Additionally, we recognized $28.0 million from Takeda related to the discontinuation of WVE-004 and $14.3 million under the GSK collaboration. Research and development expenses in the third quarter of 2023 were $31.6 million as compared to $27.6 million in the prior year quarter. This increase was primarily driven by increased external expenses related to all three of our clinical programs.

SG&A expenses in the third quarter were $13.1 million as compared to $11.6 million in the prior year quarter, primarily due to increased spending on professional and consulting expenses. We ended the third quarter with $139.9 million in cash and cash equivalents. Subsequent to the end of the quarter, we received $7.0 million for the achievement of the previous discussed milestone. We expect that our cash and cash equivalents will be sufficient to fund operations into 2025. As a reminder, we do not include any future milestones and are cash friendly. But we do have the potential to receive meaningful near-term milestone payments this year and beyond including clinical development milestones related to WVE-006. I’ll turn the call back over to Paul.

Paul Bolno: Thank you, Kyle. With the most versatile RNA medicine platform in the industry, best-in-class chemistry and a pipeline of transformative medicines, Wave is approaching an exciting inflection point. As we approach 2024, I’d like to recap the many near-term milestones we expect to deliver next year. We expect to deliver and share the first ever clinical proof of mechanism data for RNA editing with WVE-006. We expect to deliver dystrophin data from our potentially registrational FORWARD-53 clinical trial and we expect to deliver data from the multi-dose SELECT-HD cohort with extended follow-up along with all single-dose data. We also expect to select a clinical candidate for INHBE by the fourth quarter of 2024, thereby supporting our goal of selecting five new clinical candidates by year-end 2025.

Together, we are reimagining with possible concession and we look forward to continuing to share our progress with you. And with that, we’ll turn it over to the operator for Q&A.

Operator: Certainly. [Operator Instructions] Our first question comes from the line of Steve Seedhouse from Raymond James. Your question, please.

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Q&A Session

Steve Seedhouse: Hi. Good morning. Thanks for taking the questions. I wanted to first ask about the satellite cell histology that you spoke about and showed at R&D Day for the 531 program, of course. I’m curious if that’s something that — like can you look for dystrophin protein as well directly in those cells by IHC or something? And is that something that you would do in the ongoing Phase 2 clinical study? And lastly, do you think DMD experts or regulators would view that as a meaningful clinical biomarker at this point? Or is it still sort of academic and speculative what the meaning of that is?

Paul Bolno: Thank you for the question. So I think if we think about the importance of the satellite cell data we do think it helps to drive dystrophin production along the full muscle. So muscles are composed of the myoblasts but also the satellite cells which repopulate those muscle cells. So if we do think about looking for dystrophin and in terms of assessing immunohistochemistry staining for dystrophin that will obviously be something we look for in the next study. However, the most important meaningful biomarker for us will be Western blot dystrophin and we can quantitatively assess against our peers. But I think in the totality of the treatment and I think this is what’s really important around the satellite cell production is with newborn screening growing in the US, we now know newborn screening is growing in Europe.

If you think about screening patients much earlier in the disease process or before the loss of ambulation and before the point before the disease would historically have been diagnosed anyone who treats those boys earlier and get exposure to the repopulating cells in the body, we think is a critical part of the treatment paradigm. So it’s I think it’s an exciting piece because it demonstrates the potential of our N531 and PN chemistry distribute broadly in the muscle not just the select cells. We think long term it treats to the totality of the treatment of the disease. But it will obviously, be something that will be assessed in the subsequent study. And I think it’s important that it was also identified in all three boys. So this wasn’t a unique finding in a particular boy in the original study.

So I think it’s going to be compelling as we look at it in the FORWARD-53 study.

Steve Seedhouse: Okay. That’s great. And I want to ask separately also about the alpha-1 antitrypsin program. Just to preface the question I noticed [indiscernible] development of their knockout approach targeting liver phenotype. They’re advancing their lung phenotype program only. And then of course the RNAi approach is focused on liver. So it seems like there’s an opportunity here for Wave and for RNA editing to really demonstrate that you can hit two birds with one stone so to speak and treat both lung and liver phenotype maybe even within the same patient. So I’m curious if that’s a focus of maybe the initial patients you would enroll if that’s even possible to sort of enrich for that? And really in general thinking about the market how many patients kind of fit into this category where they could benefit from a therapy that addresses both lung and liver phenotypes at once?

Paul Bolno: No. It’s a phenomenal question. Obviously, an interesting update today. I think the other interesting nuance that we’re also trying to expect from that and then the announcement today of our regulatory filings where we can say actually we think RNA editing is being treated very similarly to other oligonucleotide with a shift from an IND filing to a CTA filing for lung. So I think there’s a lot of questions still around DNA editing versus RNA editing. But to your point on liver versus lung I think we agree from the beginning your important point that it’s about the totality of treatment for AATD. We don’t want to exclude patients they go on particularly AATD [ph] patients to have both manifestations of the disease.

So obviously there’s a protein expression threshold. So again beating two birds with the same hand, being able to elevate that restored protein function lets us protect lung. But obviously, as we’ve shown over time too that wild-type protein allows the Z protein to come out of the liver and improve liver function. The other thing we’ve seen and I think this is an important point again for the repeat dosing that comes with RNA editing is we have shown that cells get healthier. And so visibility when you repeat dose that you don’t have to try to capture all of the cells on that single infusion and then watch the other hepatocytes necrose as they’re injured you get to restore healthy hepatocytes over time, which continues to make more protein and improve the production over time as well.

So I think if we think about again, the totality of the treatment for this important disease so there are 100000 patients in the US and Europe, having a treatment that singularly treats both liver and lung and we’re going after I think is a really exciting promise for these patients.

Steve Seedhouse: Thanks so much.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Salim Syed from Mizuho. Your question, please.

Salim Syed: Great. Good morning, Paul. Thanks for the update and the question. A little one for me on DMD since it’s an important year for you next year 2024 in this space. Just curious to get your views just generally on the DMD space as a whole, just given everything that we’ve seen lately with – if you can talk about – to the time you talked about the Sarepta compound I leave it as the accelerated approval, we had a controversial AdCom and it failed to hit on the primary embark and then it does $70 million in sales in quarter one, right? Just curious, any implications there or nuances to your updated thoughts on either regulatory or commercial as it relates to the space?

Paul Bolno: I mean, I think this is an important point you bring up which is that patients need new treatment, whether or not that was gene therapy coming to market I think over the existing skippers, I think patients need new treatments and recognized that they are underserved. We had very interesting discussions with the DMD, with the patient community and I think there is a hunger for improved functional dystrophin. And so I think as we look at the space I obviously can’t comment on Sarepta’s individual regulatory discussions. But what I can say is we are resolutely focused on driving as much functional dystrophin protein as possible and seeing that translate to functional benefit for these boys not just in the US. And I think that’s another thing we routinely hear is the frustration outside the United States where we’re engaged with the patient community who watched in the US as these accelerated approvals from medicines as you point out are getting on to market.

But because they haven’t finished the complete study are not going to treat patients outside the United States. So as we think about the totality of our program both a US strategy but ultimately delivering functional protein so that we can see that translation to boys globally not just those that are amenable to 53, but again our thesis of being able to expand that beyond 53 across 40% of DMD, I think that’s our core focus. So we’ve seen that with the initial data. We’re excited about FORWARD-53 in terms of delivering protein data and really providing substantial opportunities for these boys with DMD.

Salim Syed: Go it. Thanks Paul.

Operator: Thank you. One moment for our next question. And our next question comes from the line of Joon Lee from Truist Securities. Your question please.