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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-37627

 

WAVE LIFE SCIENCES LTD.

(Exact name of registrant as specified in its charter)

 

 

Singapore

(State or other jurisdiction of incorporation or organization)

 

Not applicable

(I.R.S. Employer Identification No.)

 

 

 

7 Straits View #12-00, Marina One East Tower

Singapore

(Address of principal executive offices)

 

018936

(Zip Code)

 

+65 6236 3388

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading symbol

Name of each exchange on which registered

$0 Par Value Ordinary Shares

WVE

The Nasdaq Global Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No   

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

 

The number of outstanding ordinary shares of the registrant as of August 1, 2019 was 34,280,578.

 

 

 


WAVE LIFE SCIENCES LTD.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

 

 

Page

PART I - FINANCIAL INFORMATION

 

5

Item 1. Financial Statements

 

5

Unaudited Consolidated Balance Sheets

 

5

Unaudited Consolidated Statements of Operations and Comprehensive Loss

 

6

Unaudited Consolidated Statements of Series A Preferred Shares and Shareholders' Equity

 

7

Unaudited Consolidated Statements of Cash Flows

 

8

Notes to Unaudited Consolidated Financial Statements

 

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

18

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

29

Item 4. Controls and Procedures

 

30

PART II - OTHER INFORMATION

 

30

Item 1. Legal Proceedings

 

30

Item 1A. Risk Factors

 

30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

30

Item 3. Defaults Upon Senior Securities

 

30

Item 4. Mine Safety Disclosures

 

30

Item 5. Other Information

 

30

Item 6. Exhibits

 

31

 


2


As used in this Quarterly Report on Form 10-Q, unless otherwise stated or the context otherwise indicates, references to “Wave,” the “Company,” “we,” “our,” “us” or similar terms refer to Wave Life Sciences Ltd. and our wholly-owned subsidiaries.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that relate to future events or to our future operations or financial performance. Any forward-looking statement involves known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statement. In some cases, forward-looking statements are identified by the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “future,” “goals,” “intend,” “likely,” “may,” “might,” “ongoing,” “objective,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “will” and “would” or the negative of these terms, or other comparable terminology intended to identify statements about the future, although not all forward-looking statements contain these identifying words. Forward-looking statements include statements, other than statements of historical fact, about, among other things: our ability to fund our future operations; our financial position, revenues, costs, expenses, uses of cash and capital requirements; our need for additional financing or the period for which our existing cash resources will be sufficient to meet our operating requirements; the success, progress, number, scope, cost, duration, timing or results of our research and development activities, preclinical studies and clinical trials, including the timing for initiation or completion of or availability of results from any preclinical studies and clinical trials or for submission, review or approval of any regulatory filing; the timing of, and our ability to, obtain and maintain regulatory approvals for any of our product candidates; the potential benefits that may be derived from any of our product candidates; our strategies, prospects, plans, goals, expectations, forecasts or objectives; the success of our collaborations with third parties; any payment that our collaboration partners may make to us; our ability to identify and develop new product candidates; our intellectual property position; our commercialization, marketing and manufacturing capabilities and strategy; our ability to develop sales and marketing capabilities; our estimates regarding future expenses and needs for additional financing; our ability to identify, recruit and retain key personnel; our financial performance; developments and projections relating to our competitors in the industry; our liquidity and working capital requirements; and the expected impact of new accounting standards.

Although we believe that we have a reasonable basis for each forward-looking statement contained in this report, we caution you that these statements are based on our estimates or projections of the future that are subject to known and unknown risks and uncertainties and other important factors that may cause our actual results, level of activity, performance or achievements expressed or implied by any forward-looking statement to differ. These risks, uncertainties and other factors include, among other things, our critical accounting policies and: the ability of our preclinical studies to produce data sufficient to support the filing of global clinical trial applications and the timing thereof; our ability to continue to build and maintain the company infrastructure and personnel needed to achieve our goals; the clinical results and timing of our programs, which may not support further development of our product candidates; actions of regulatory agencies, which may affect the initiation, timing and progress of clinical trials; our effectiveness in managing current and future clinical trials and regulatory processes; the success of our platform in identifying viable candidates; the continued development and acceptance of nucleic acid therapeutics as a class of drugs; our ability to demonstrate the therapeutic benefits of our stereopure candidates in clinical trials, including our ability to develop candidates across multiple therapeutic modalities; our ability to obtain, maintain and protect intellectual property; our ability to enforce our patents against infringers and defend our patent portfolio against challenges from third parties; our ability to fund our operations and to raise additional capital as needed; and competition from others developing therapies for similar uses, as well as other risks and uncertainties under the caption “Risk Factors” contained in this Quarterly Report on Form 10-Q and in other filings we make with the SEC.

Each forward-looking statement contained in this report is based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, these statements should not be regarded as representations or warranties by us or any other person that we will achieve our objectives and plans in any specified timeframe, or at all. We caution you not to place undue reliance on any forward-looking statement.

In addition, any forward-looking statement in this report represents our views only as of the date of this report and should not be relied upon as representing our views as of any subsequent date. We anticipate that subsequent events and developments may cause our views to change. Although we may elect to update these forward-looking statements publicly at some point in the future, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

 

3


The Wave Life Sciences Ltd. and Wave Life Sciences Pte. Ltd. names, the Wave Life Sciences mark, PRISM and the other registered and pending trademarks, trade names and service marks of Wave Life Sciences Ltd. appearing in this Form 10-Q are the property of Wave Life Sciences Ltd. This Form 10-Q also contains additional trade names, trademarks and service marks belonging to Wave Life Sciences Ltd. and to other companies. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties. Solely for convenience, the trademarks and trade names in this Form 10-Q are referred to without the ® and ™ symbols, but such reference should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

4


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

WAVE LIFE SCIENCES LTD.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

 

 

 

June 30, 2019

 

 

December 31, 2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

252,906

 

 

$

174,819

 

Current portion of accounts receivable

 

 

20,000

 

 

 

10,000

 

Prepaid expenses and other current assets

 

 

16,685

 

 

 

17,454

 

Total current assets

 

 

289,591

 

 

 

202,273

 

Long-term assets:

 

 

 

 

 

 

 

 

Accounts receivable, net of current portion

 

 

30,000

 

 

 

50,000

 

Property and equipment, net

 

 

38,363

 

 

 

39,931

 

Operating lease right-of-use assets

 

 

18,937

 

 

 

 

Restricted cash

 

 

3,637

 

 

 

3,625

 

Other assets

 

 

5,019

 

 

 

111

 

Total long-term assets

 

 

95,956

 

 

 

93,667

 

Total assets

 

$

385,547

 

 

$

295,940

 

Liabilities, Series A preferred shares and shareholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

11,464

 

 

$

13,089

 

Accrued expenses and other current liabilities

 

 

11,632

 

 

 

14,736

 

Current portion of deferred rent

 

 

 

 

 

115

 

Current portion of deferred revenue

 

 

97,964

 

 

 

100,945

 

Current portion of lease incentive obligation

 

 

 

 

 

1,156

 

Current portion of operating lease liability

 

 

3,024

 

 

 

 

Total current liabilities

 

 

124,084

 

 

 

130,041

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Deferred rent, net of current portion

 

 

 

 

 

5,132

 

Deferred revenue, net of current portion

 

 

60,483

 

 

 

68,156

 

Lease incentive obligation, net of current portion

 

 

 

 

 

9,247

 

Operating lease liability, net of current portion

 

 

30,985

 

 

 

 

Other liabilities

 

 

1,897

 

 

 

2,142

 

Total long-term liabilities

 

 

93,365

 

 

 

84,677

 

Total liabilities

 

$

217,449

 

 

$

214,718

 

Series A preferred shares, no par value; 3,901,348 shares issued and

   outstanding at June 30, 2019 and December 31, 2018

 

$

7,874

 

 

$

7,874

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Ordinary shares, no par value; 34,266,260 and 29,472,197 shares issued

   and outstanding at June 30, 2019 and December 31, 2018, respectively

 

$

538,537

 

 

$

375,148

 

Additional paid-in capital

 

 

47,270

 

 

 

37,768

 

Accumulated other comprehensive income

 

 

280

 

 

 

153

 

Accumulated deficit

 

 

(425,863

)

 

 

(339,721

)

Total shareholders’ equity

 

$

160,224

 

 

$

73,348

 

Total liabilities, Series A preferred shares and shareholders’ equity

 

$

385,547

 

 

$

295,940

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

 

5


WAVE LIFE SCIENCES LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

$

7,628

 

 

$

4,879

 

 

$

10,654

 

 

$

6,301

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

41,605

 

 

 

32,547

 

 

 

81,718

 

 

 

61,743

 

General and administrative

 

 

11,640

 

 

 

8,905

 

 

 

22,541

 

 

 

16,906

 

Total operating expenses

 

 

53,245

 

 

 

41,452

 

 

 

104,259

 

 

 

78,649

 

Loss from operations

 

 

(45,617

)

 

 

(36,573

)

 

 

(93,605

)

 

 

(72,348

)

Other income, net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend income

 

 

1,544

 

 

 

934

 

 

 

2,968

 

 

 

1,290

 

Interest income, net

 

 

8

 

 

 

4

 

 

 

19

 

 

 

11

 

Other income (expense), net

 

 

2,123

 

 

 

(259

)

 

 

4,476

 

 

 

84

 

Total other income, net

 

 

3,675

 

 

 

679

 

 

 

7,463

 

 

 

1,385

 

Loss before income taxes

 

 

(41,942

)

 

 

(35,894

)

 

 

(86,142

)

 

 

(70,963

)

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

(172

)

Net loss

 

$

(41,942

)

 

$

(35,894

)

 

$

(86,142

)

 

$

(71,135

)

Net loss per share attributable to ordinary

   shareholders—basic and diluted

 

$

(1.22

)

 

$

(1.23

)

 

$

(2.58

)

 

$

(2.49

)

Weighted-average ordinary shares used in

   computing net loss per share attributable to

   ordinary shareholders—basic and diluted

 

 

34,260,298

 

 

 

29,144,466

 

 

 

33,433,322

 

 

 

28,535,149

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(41,942

)

 

$

(35,894

)

 

$

(86,142

)

 

$

(71,135

)

Foreign currency translation

 

 

30

 

 

 

36

 

 

 

127

 

 

 

85

 

Comprehensive loss

 

$

(41,912

)

 

$

(35,858

)

 

$

(86,015

)

 

$

(71,050

)

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

 

6


WAVE LIFE SCIENCES LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF SERIES A PREFERRED SHARES AND SHAREHOLDERS’ EQUITY

 

(In thousands, except share amounts)

 

 

 

Series A

Preferred Shares

 

 

 

Ordinary Shares

 

 

Additional

Paid-In-

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Shareholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balance as of January 1, 2018

 

 

3,901,348

 

 

$

7,874

 

 

 

 

27,829,079

 

 

$

310,038

 

 

$

22,172

 

 

$

116

 

 

$

(192,716

)

 

$

139,610

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,430

 

 

 

 

 

 

 

 

 

4,430

 

Vesting of RSUs

 

 

 

 

 

 

 

 

 

38,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Option exercises

 

 

 

 

 

 

 

 

 

125,664

 

 

 

1,553

 

 

 

 

 

 

 

 

 

 

 

 

1,553

 

Impact of 2016-16 adoption

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(352

)

 

 

(352

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49

 

 

 

 

 

 

49

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,241

)

 

 

(35,241

)

Balance at March 31, 2018

 

 

3,901,348

 

 

$

7,874

 

 

 

 

27,993,337

 

 

$

311,591

 

 

$

26,602

 

 

$

165

 

 

$

(228,309

)

 

$

110,049

 

Issuance of ordinary shares

 

 

 

 

 

 

 

 

 

1,096,892

 

 

 

60,000

 

 

 

 

 

 

 

 

 

 

 

 

60,000

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,545

 

 

 

 

 

 

 

 

 

3,545

 

Option exercises

 

 

 

 

 

 

 

 

 

203,121

 

 

 

1,560

 

 

 

 

 

 

 

 

 

 

 

 

1,560

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36

 

 

 

 

 

 

36

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,894

)

 

 

(35,894

)

Balance at June 30, 2018

 

 

3,901,348

 

 

$

7,874

 

 

 

 

29,293,350

 

 

$

373,151

 

 

$

30,147

 

 

$

201

 

 

$

(264,203

)

 

$

139,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A

Preferred Shares

 

 

 

Ordinary Shares

 

 

Additional

Paid-In-

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Shareholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balance as of January 1, 2019

 

 

3,901,348

 

 

$

7,874

 

 

 

 

29,472,197

 

 

$

375,148

 

 

$

37,768

 

 

$

153

 

 

$

(339,721

)

 

$

73,348

 

Issuance of ordinary shares

 

 

 

 

 

 

 

 

 

4,542,500

 

 

 

161,785

 

 

 

 

 

 

 

 

 

 

 

 

161,785

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,345

 

 

 

 

 

 

 

 

 

4,345

 

Vesting of RSUs

 

 

 

 

 

 

 

 

 

110,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Option exercises

 

 

 

 

 

 

 

 

 

130,522

 

 

 

1,481

 

 

 

 

 

 

 

 

 

 

 

 

1,481

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

97

 

 

 

 

 

 

97

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(44,200

)

 

 

(44,200

)

Balance at March 31, 2019

 

 

3,901,348

 

 

$

7,874

 

 

 

 

34,255,406

 

 

$

538,414

 

 

$

42,113

 

 

$

250

 

 

$

(383,921

)

 

$

196,856

 

Issuance of ordinary shares

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

7

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,157

 

 

 

 

 

 

 

 

 

5,157

 

Option exercises

 

 

 

 

 

 

 

 

 

10,854

 

 

 

116

 

 

 

 

 

 

 

 

 

 

 

 

116

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

30

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41,942

)

 

 

(41,942

)

Balance at June 30, 2019

 

 

3,901,348

 

 

$

7,874

 

 

 

 

34,266,260

 

 

$

538,537

 

 

$

47,270

 

 

$

280

 

 

$

(425,863

)

 

$

160,224

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

7


WAVE LIFE SCIENCES LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(86,142

)

 

$

(71,135

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Amortization of lease incentive obligation

 

 

 

 

 

(269

)

Amortization of right-of-use assets

 

 

776

 

 

 

 

Depreciation of property and equipment

 

 

3,637

 

 

 

2,409

 

Share-based compensation expense

 

 

9,502

 

 

 

7,975

 

Net loss on disposal of property and equipment

 

 

 

 

 

54

 

Deferred rent

 

 

 

 

 

670

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

10,000

 

 

 

(64,000

)

Prepaid expenses and other current assets

 

 

142

 

 

 

(4,258

)

Other non-current assets

 

 

(4,908

)

 

 

(10

)

Accounts payable

 

 

(960

)

 

 

(312

)

Accrued expenses and other current liabilities

 

 

(3,104

)

 

 

(769

)

Deferred revenue

 

 

(10,654

)

 

 

168,699

 

Operating lease liabilities

 

 

(1,354

)

 

 

 

Other non-current liabilities

 

 

(245

)

 

 

(86

)

Net cash (used in) provided by operating activities

 

 

(83,310

)

 

 

38,968

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(2,107

)

 

 

(3,086

)

Net cash used in investing activities

 

 

(2,107

)

 

 

(3,086

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of ordinary shares, net of offering costs

 

 

161,792

 

 

 

60,000

 

Payments on capital lease obligation

 

 

 

 

 

(16

)

Proceeds from the exercise of share options

 

 

1,597

 

 

 

3,