Wave Life Sciences Ltd. (NASDAQ:WVE) Q1 2024 Earnings Call Transcript May 9, 2024

Wave Life Sciences Ltd. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, and welcome to Wave Life Sciences' First Quarter 2024 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. I will now turn the call over to Kate Rausch, Vice President, Investor Relations and Corporate Affairs. Please go ahead.

Kate Rausch: Thank you, Kevin. Good morning and thank you for joining us today to discuss our recent business progress and review Wave's first quarter 2024 financial results. Joining me today with prepared remarks are Dr. Paul Bolno, President and Chief Executive Officer, Kyle Moran, Chief Financial Officer, and Anne-Marie Li-Kwai-Cheung, Chief Development 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. 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 open with comments on our recent progress and continued execution on our strategy. Next, Anne-Marie will provide an update on our three ongoing clinical trials; and before opening up the call for questions, Kyle will review our financials. Chandra and Ginnie will also be available for questions. The start of the year has been marked by steady execution for Wave. First, we've continued to advance our three ongoing clinical trials towards key data updates. This includes our RestorAATion program, which is underway, evaluating WVE-006, our RNA editing candidate for patients with AATD, our potentially registrational FORWARD-53 clinical trial with WVE-N531 for boys with exon 53 amenable DMD, and select HD, our trial evaluating WVE-003, our first-in-class allele-selective investigational therapy for patients with HD.

We also continue to advance our inhibit lead clinical candidate for obesity towards CTA filing as early as the end of this year and expect to initiate a clinical trial in the first quarter of next year. Last month, we announced meaningful progress in our research collaboration with GSK as they selected their first two programs following achievement of target validation. Before diving deeper into each program, I'll pause to acknowledge an exciting leadership update. As announced this morning, Dr. Erik Ingelsson has joined Wave as Chief Scientific Officer. In this role, he will drive our emerging therapeutic portfolio strategy, including growing our genetics and genomics capability for identifying new high-impact targets and leveraging our best-in-class multimodal platform to continue to advance novel RNA medicines.

Dr. Ingelsson comes to us from GSK, where he most recently held positions of SVP, Head of Target Discovery and SVP of Genomic Sciences, leading activities across all therapeutic areas. He was responsible for harnessing the latest method of technologies and genomics to discover and validate novel drug targets and accelerate the development of next-generation medicine. Prior to GSK, he is Professor of Medicine at Stanford University and obtained his MD and PhD at Uppsala University. You will have the opportunity to hear directly from Erik in the very near future. Turning to our pipeline in RNA editing, our RestorAATion-2 clinical trial of WVE-006 for Alpha-1 Antitrypsin Deficiency or AATD, is now underway, and we continue to advance our wholly-owned RNA editing pipeline behind it.

WVE-006 is the industry's first-ever clinical RNA editing candidate, which aims to correct AATD causing the Z-mutation to increase circulating levels of wild-type AAT protein and reduce mutant AAT protein aggregation in the liver. 006 is designed to address the root cause of AATD to provide a solution to patients with AAT lung disease, liver disease or both. Other treatment approaches are often confined to either lung or liver manifestations not both. The current standard of care treatment weekly IV augmentation therapy is limited to treating only lung disease. siRNA treatments in development are confined at treating only liver disease and could exacerbate lung injury. By targeting RNA, 006 differs from DNA editing technologies that rely on hyperactive exogenously delivered artificial enzymes that can result in irreversible collateral bystander edits and indels.

In fact, in preclinical studies, the majority of edits observed using DNA base editing were bystander event that yielded isoforms of AAT protein with lower functional activity, while the indels have the potential to create lots of function variants. WVE-006 does not use complex delivery systems such as LMPs. 006 contains GalNAc conjugate, a highly specific and elegant delivery tool that is well validated with multiple approved silencing therapeutics on the market. GalNAc enables the ease and convenience of subcutaneous dosing effective and selective delivery to hepatocytes as well as a high degree of confidence of preclinical to clinical translation since the entire dose is delivered reliably to the target organ. Our proprietary chemistry enabled WVE-006 to effectively recruit endogenous ADAR enzyme and achieve potent and durable editing in preclinical studies.

We've shown AAT protein levels that exceed the thresholds for both MZ and healthy MM populations, and we confirm the functionality of this protein with the neutrophil elastase assay. Additionally,we saw decreases of lobular inflammation and reduction of liver aggregates. WVE-006 also prevents increases in mitoses or turnover of hepatocytes, indicating improved hepatocyte survival. As Anne-Marie will speak to momentarily, we recently received approval for our first CTA for restoration 2 and continue to make significant progress in our trial of WVE-006 with proof of mechanism data from restoration 2 in patients with AATD expected later this year. Proof of mechanism for 006 would not only meaningfully derisk our AATD program, but would also serve as proof of concept for our growing pipeline of wholly owned editing candidates, which are designed to either correct or upregulate mRNA in both rare and prevalent diseases.

GSK was early to recognize the potential of our differentiated RNA editing capability at our multimodal platform more broadly. Their leadership in respiratory medicine and development and commercialization makes them an ideal partner for 006, and they continue to bring substantial value to Wave through their significant investments in deep genetic insights. The collaboration included $525 million of milestones related to 006, of which we received $20 million in the first quarter due to the advancement into the clinic. Development and commercialization responsibilities transferred to GSK at their sole cost after we complete our restoration 2 study. Wave is also eligible for double-digit tiered royalties as a percentage of net sales of 006 up to the high teens.

Additionally, in the discovery part of the collaboration, GSK selected their first 2 programs to advance following achievement of target validation, marking a transition to the next phase of the research collaboration and triggering a $12 million payment to Wave. Both of these programs utilize Wave's next-gen GalNAc-siRNA format and are in hepatology. The discovery component of the collaboration encompasses all of Wave's modalities, including RNA editing and GSK is eligible to advance up to 8 programs in total during the initial research term. For these 8 collaboration programs, Wave is eligible for total potential milestone payments of up to $2.8 billion, as well as royalties on net sales. As a reminder, GSK pays 100% of the costs related to target validation of these partnered programs.

The collaboration also expands our wholly-owned pipeline as we are able to leverage GSK's genetically validated targets to advance of the three programs 004-WVE. nhibin βE was the first target we selected, and we plan to focus our remaining thoughts on high-impact targets based on strong clinical genetics, novel biology with measurable biomarkers and best in first-in-class potential. Our Inhibin βE program aims to be a next-generation obesity therapeutic. Using GalNAc-siRNA silencing, we aim to recapitulate the protective phenotype of Inhibin βE loss of function, heterozygous carriers who have a favorable cardiometabolic profile, including reduced abdominal obesity, reduce odds of type 2 diabetes and coronary artery disease. Inhibin βE mRNA is expressed in the liver with its corresponding receptor on adipocytes, which controls fat storage.

Silencing Inhibin βE promotes back burning or lipolysis and decreases fat accumulation. While GLP-1s have become the standard of care for weight loss, these therapies come with several limitations, namely frequent dosing, loss of muscle mass, tolerability and high discontinuation rate. With our Inhibin βE program, we have demonstrated highly potent silencing with an ED50 of less than one milligram per kilogram in the diet-induced obesity or DIO mice model, and durable silencing following one, low-single-digit dose, which supports the potential for subcutaneous dosing interval of every six months or annually. We've also demonstrated weight loss and reductions in fat mass with a preferential effect on visceral fat with no loss of muscle mass.

The DIO mice model has been used with many weight loss therapeutics in the market, including semaglutide, and there is a good precedent for weight loss translation into the clinic. As the Inhibin βE mechanism of action is distinct from GLP-1, we also see the opportunity to use Inhibin βE siRNA as a frontline or potentially maintenance therapy following GLP-1 weight loss induction. And we now have emerging preclinical data to further support this use. In an ongoing head-to-head study in DIO mice, we observed that the weight loss effect from a single dose of our Inhibin βE siRNA was similar to semaglutide. In addition, treatment with our Inhibin βE siRNA upon cessation of semaglutide treatment curtailed expected rebound weight gain. We expect to share new preclinical data from our Inhibin βE program later this year.

We remain on track to file our CTA as early as the end of the year and to initiate our clinical trial in the first quarter of 2025. We believe clinical proof-of-concept can be achieved with just a single dose of our Inhibin βE siRNA in a study of healthy overweight volunteers. In DMD and HD, we are on track to deliver clinical data from each of these programs in the coming months. With our potentially registrational FORWARD-53 clinical trial of WVE-N531 in boys with DMD, our goal is to demonstrate that we can restore endogenous functional or Becker-like dystrophin to provide a meaningful clinical benefit for patients amenable to exon 53 skipping. Significant scientific gaps on the functional benefit of micro or mini dystrophin remain in addition to an unknown safety risk associated with AAV [ph] gene therapies, and there is an urgent need to deliver more therapeutic options to patients, especially those which can achieve access to the heart and diaphragm; two areas where we have seen substantial distribution in our preclinical studies, including NHPs. Our clinical data for N531 after only three doses every other week, position it as potentially best-in-class.

We've demonstrated industry leading exon skipping of 53%, muscle tissue concentrations of 42,000 nanograms per gram, the first clinical demonstration of uptake in myogenic stem cells and a half-life that supports the potential for monthly dosing. We continue to make strong progress in our trial and remain on track to deliver 24-week dystrophin protein expression data in the third quarter of this year. In HD, we continue to advance our first-in-class allele-selective therapeutic WVE-003. In this space of extremely high unmet need as HD patients have no disease modifying treatments available, there are approximately 30,000 patients in the U.S. with HD and over 200,000 at risk of developing HD. 003 is designed to reduce mutant Huntington protein, while also preserving the healthy wild-type Huntington protein, which is critical to the health and function of neurons.

Having the ability to preserve this important protein is a clear advantage over pan-silencing approaches that non-selectively lower mutant throughout that protein, especially as HD patients already start with a lower wild-type reserve. We have already demonstrated successful translation of our compelling preclinical data to the clinic with reduction of mutant Huntington and preservation of wild-side after a single dose in humans, and we are looking to replicate these biomarker data with the first multi-dose data from our Select-HD clinical trial in the second quarter. In addition, we will be looking closely to see if we can differentiate on safety signals seen by the pan-silencing approaches, including ventricular enlargement. Now to discuss the progress we've made on our clinical programs in more detail.

I'd like to turn the call over to Anne-Marie.

Anne-Marie Li-Kwai-Cheung : Thank you, Paul. With our continued execution across modalities and multiple data sets planned for the months ahead, it's certainly an exciting time to be at Wave. I'll start by covering the progress we've made in RNA editing where we are advancing our GalNAc-conjugated AIMer WVE- 006 in our ongoing restoration clinical program for AATD. As a reminder, our clinical program is comprised of RestorAATion-1, which is a dose-escalation study in healthy volunteers and RestorAATion-2 which is a Phase Ib/IIa open-label study designed to evaluate the safety, tolerability, Pharmacodynamics and Pharmacokinetics of WVE- 006, in individuals with AATD who have the Homozygous PiZZ Mutation. We have rapidly progressed dose escalation in the RestorAATion-1 trial of healthy volunteers and consistent with our last update, we've observed safety and Pharmacokinetic data, translating as expected for a GalNAc conjugated molecule.

Just last week, we were pleased to announce that our first CTA for RestorAATion-2 has been approved. And we expect additional approvals to follow. Using the data from healthy volunteers, we identified a starting dose level for RestorAATion-2, that's expected to engage target based on preclinical data. RestorAATion-2 is now underway and includes both Single Ascending Dose and Multiple Ascending Dose portion. And we have the ability to make adjustments at the dose level and frequency as the trial progresses and data emerges. We will be taking multiple assessments of serum M-AAT throughout the three dose cohorts, enabling us to quickly detect the potential presence of wild-type healthy M-AAT protein in the serum which would indicate that WVE- 006 is successfully editing RNA and represent the achievement of proof of mechanism.

We are currently initiating clinical trial sites and remain on track proof of mechanism data from RestorAATion-2 in patients with AATD this year which will be an important step, as we work towards study and defining future dose and regimen. Turning to DMD, dosing continues in our fully enrolled open-label FORWARD-53 trial, boys with exon 53 amenable DMD. This Phase 2 study is evaluating doses of WAVE N531 administered every other week with the primary endpoint of endogenous dystrophin expression, which will be evaluated after 24 and 48 weeks of treatment. The trial will also evaluate digital and functional endpoints for a safety and tolerability. For dystrophin protein, we are looking for greater than 5%, which exceeds the level of standard of care, which is approximately 1% to 5% with approved weekly exon skipping therapeutics.

We know KOLs are very focused on functional dystrophin restoration. Also extended dosing intervals beyond the current weekly infusions would be very meaningful to patients and families. And ultimately, we think monthly dosing could be an option with N531. Our compelling preclinical data supports our excitement for this program, and it's the transformative for patients. Specifically in Part A of our clinical trial, WAVE N531 demonstrated industry-leading mean 53% exon skipping which was driven by muscle tissue concentrations of 43 micrograms per gram, which is far above what other excellent skipping companies have reported. We're also excited by the clinical evidence of myogenic stem cell or satellite cell uptake of WAVE N531. This is particularly notable as myogenic stem cells are the progenitor cell for new myblu, and we're not aware of any other clinical data for exon skippers or gene therapies that have been able to demonstrate myogenic stem cell uptake.

Our preclinical data indicates that WAVE N531 concentrations in the heart and diaphragm exceeds than in skeletal muscle, which could speak to the promise of addressing what remains unmet need in DMD impacting respiratory and cardiac involvement. In our FORWARD-53 study, we are monitoring cardiac and respiratory markets. However, our programs are early in the disease course and as such have normal baseline parameters. This is something we plan to explore in future studies. We look forward to the opportunity to build on this compelling data set as we plan to deliver potentially registrational 24 weeks with expression data in the third quarter. If positive, these data would support our plans to file for accelerated approval in the US and would accelerate our clinical development plans to build a multi exon DMD franchise beyond exon 53.

As you may recall, we've generated data on compounds that would together address up to 40% of the DMD population, all of which utilize our PN chemistry and have demonstrated high levels of skipping and protein restoration in in-vitro studies. Now moving to Huntington's disease, or HD, where we continue to advanced WAVE-003 in our SELECT HD study. WAVE-003 is our first-in-class allele-selective candidate for HD designed to reduce toxic mutant Huntington protein while preserving the healthy wild-type Huntington protein. Preservation of healthy wild-type protein is increasingly becoming an area of focus due to its critical role in neuronal function. New preclinical data in adult mice continue to demonstrate the need for a cautious approach in pan-silencing studies as complete lots of Huntington and mice has been associated with progressive subcortical calcification and neurodegeneration.

In the multi-dose portion of our ongoing SELECT HD studies, patients have been receiving WAVE-003 or placebo every eight weeks. We remain on track to report data from this multi-dose cohort with extended follow-up along with single-dose data in the second quarter. With multi-dosing, we are looking for durable mutant HD knockdown of at least 30% and with preservation of the wild-type protein. We will also be looking at safety and tolerability, including brain imaging. In particular, we will be monitoring for signs of ventricular enlargement, which have been identified both with pan-silencing molecules in transgenic HD mouse models and on HD clinical trials of pan-silencing therapeutics, such as branaplam and already administered small molecule tominersen, an IT-administered huntingtin [indiscernible] with additional SAEs of hydrocephalus reported in that program.

If WAVE-003 of old such ventricular enlargement, it will be an important differentiator and clearly support the benefit of a wild-type huntingtin approach. Altogether, these upcoming data will form the basis for decision-making for advancement of our program, including supporting an opt-in package for Takeda. We're actively planning for the next steps that pending positive data would enable efficient and accelerated path to bring WAVE-003 patients. In the HD community, we're seeing growing support for short-term, more efficient development path to registration and novel biomarkers such as imaging. Specifically, the use of MRI imaging for cordate volume loss has recently been shown to correlate well with clinical outcomes and work conducted by IXIQ on behalf of the Huntington's Disease Image Harmonization Consortium, which were founded last year to conduct an unprecedented harmonization analysis and more than 6,000 participant visit MRI images acquired over 2,000 research participants.

These markets are sensitive enough to enable highly efficient studies to allow us to establish the biological plausibility of the benefit of mutant huntingtin knockdown with wild-type antitrypsin. Here, we can link of confirmatory studies more in the range of 80 patient treatment arms. We've seen examples of imaging biomarkers used for accelerated approval in therapeutic areas such as multiple sclerosis. We look forward to delivering our HTT data this quarter. With that, I'd like to turn the call to our CFO, Kyle Moran, to provide an update on our financials.

Kyle Moran: Thanks, Anne-Marie. We recognized revenue of $12.5 million in the first quarter of 2024 as compared to $12.9 million in the prior year quarter. This slight decrease was a result of lower revenue from our Takeda collaboration. Revenue from the GSK collaboration was relatively consistent, the current and prior year quarters. Research and development expenses were $33.4 million for the first quarter of 2024 as compared to $31 million in the prior year quarter. Increased spending for our clinical programs as well as our Inhibin program was the driver behind this increase and was slightly offset by the decrease in spending in our discontinued WVE-004 program. Our G&A expenses were $13.5 million in the first quarter of 2024 as compared to $12.2 million in the prior year quarter.

This increase was primarily driven by professional fees and other external expenses. As a result, our net loss was $31.6 million in the first quarter as compared to $27.4 million in the prior year. We ended the first quarter with $180.9 million in cash and cash equivalents. Subsequent to the end of the quarter, GSK selected their first two programs to advance the development candidates following target validation, triggering a $12 million payment to Wave, which is not included in our Q1 cash balance. We expect that our current cash and cash equivalents will be sufficient to fund operations into the fourth quarter of 2025. As a reminder, we do not include any future milestone or opt-in payments under our DSK or Takeda collaboration in our cash runway.

But we do have the potential to receive meaningful near-term milestone payments this year and beyond. Notably, over the past 12 months, we've achieved milestones representing $39 million in non-dilutive cash from these collaborations. I'll now turn the call back over to Paul for closing remarks.

Paul Bolno: Thank you, Kyle. With INHBE rapidly advancing toward the clinic and meaningful data updates for all three of our clinical programs expected this year, we are well positioned to deliver program and platform value. Positive clinical data would validate our best-in-class editing, splicing and silencing capabilities and would serve to unlock our robust preclinical pipeline. Taking a look at our upcoming milestones, we plan to deliver the first ever clinical proof of mechanism data for RNA editing with WVE-006 this year and share new preclinical data on our advancing RNA editing programs. Submit a CTA for our INHBE siRNA obesity program as early as the end of this year and initiate a clinical trial in the first quarter of 2025.

Delivered data, including dystrophin protein from our potentially registrational FORWARD-53 clinical trial in the third quarter and deliver HD data from the multi-dose select HD trial with extended follow-up along with all single-dose data in the second quarter. We look forward to sharing our progress with you along the way as we reimagine what's possible for patients and continue on our journey towards building a leading RNA medicines company. With that, I'll turn over the call to the operator for Q&A. Operator?

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