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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 September 30, 2020

     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 November 1, 2020 was 48,777,824.

 

 


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

 

9

Notes to Unaudited Consolidated Financial Statements

 

10

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

 

19

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

32

Item 4. Controls and Procedures

 

32

PART II - OTHER INFORMATION

 

33

Item 1. Legal Proceedings

 

33

Item 1A. Risk Factors

 

33

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

 

33

Item 3. Defaults Upon Senior Securities

 

33

Item 4. Mine Safety Disclosures

 

33

Item 5. Other Information

 

33

Item 6. Exhibits

 

34

 


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; the expected impact of new accounting standards; and our expectations regarding the impact of COVID-19 on our research and development activities, preclinical studies and clinical trials, supply of drug product, and our workforce.

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; competition from others developing therapies for similar uses; the severity and duration of the COVID-19 pandemic; the COVID-19 pandemic may negatively impact the conduct of, and the timing of enrollment, completion and reporting with respect to, our clinical trials; any other impacts on our business as a result of or related to the COVID-19 pandemic, 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 Securities and Exchange Commission.

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.

3


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.

 

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)

 

 

 

September 30, 2020

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

216,363

 

 

$

147,161

 

Current portion of accounts receivable

 

 

30,000

 

 

 

20,000

 

Prepaid expenses

 

 

7,966

 

 

 

9,626

 

Other current assets

 

 

4,101

 

 

 

8,689

 

Total current assets

 

 

258,430

 

 

 

185,476

 

Long-term assets:

 

 

 

 

 

 

 

 

Accounts receivable, net of current portion

 

 

 

 

 

30,000

 

Property and equipment, net

 

 

31,116

 

 

 

36,368

 

Operating lease right-of-use assets

 

 

16,725

 

 

 

18,101

 

Restricted cash

 

 

3,650

 

 

 

3,647

 

Other assets

 

 

140

 

 

 

10,658

 

Total long-term assets

 

 

51,631

 

 

 

98,774

 

Total assets

 

$

310,061

 

 

$

284,250

 

Liabilities, Series A preferred shares and shareholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

9,699

 

 

$

9,073

 

Accrued expenses and other current liabilities

 

 

10,182

 

 

 

16,185

 

Current portion of deferred revenue

 

 

86,192

 

 

 

89,652

 

Current portion of operating lease liability

 

 

3,591

 

 

 

3,243

 

Total current liabilities

 

 

109,664

 

 

 

118,153

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Deferred revenue, net of current portion

 

 

56,288

 

 

 

63,466

 

Operating lease liability, net of current portion

 

 

26,574

 

 

 

29,304

 

Other liabilities

 

 

1,420

 

 

 

1,721

 

Total long-term liabilities

 

$

84,282

 

 

$

94,491

 

Total liabilities

 

$

193,946

 

 

$

212,644

 

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

   outstanding at September 30, 2020 and December 31, 2019

 

$

7,874

 

 

$

7,874

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Ordinary shares, no par value; 48,769,049 and 34,340,690 shares issued

   and outstanding at September 30, 2020 and December 31, 2019, respectively

 

$

694,066

 

 

$

539,547

 

Additional paid-in capital

 

 

68,354

 

 

 

57,277

 

Accumulated other comprehensive income

 

 

301

 

 

 

267

 

Accumulated deficit

 

 

(654,480

)

 

 

(533,359

)

Total shareholders’ equity

 

$

108,241

 

 

$

63,732

 

Total liabilities, Series A preferred shares and shareholders’ equity

 

$

310,061

 

 

$

284,250

 

 

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 September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

$

3,450

 

 

$

2,929

 

 

$

10,638

 

 

$

13,583

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

28,275

 

 

 

44,585

 

 

 

100,911

 

 

 

126,303

 

General and administrative

 

 

9,590

 

 

 

12,523

 

 

 

32,791

 

 

 

35,064

 

Total operating expenses

 

 

37,865

 

 

 

57,108

 

 

 

133,702

 

 

 

161,367

 

Loss from operations

 

 

(34,415

)

 

 

(54,179

)

 

 

(123,064

)

 

 

(147,784

)

Other income (expense), net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend income

 

 

40

 

 

 

1,208

 

 

 

560

 

 

 

4,176

 

Interest income (expense), net

 

 

(17

)

 

 

6

 

 

 

(16

)

 

 

25

 

Other income, net

 

 

1,292

 

 

 

2,239

 

 

 

1,399

 

 

 

6,715

 

Total other income, net

 

 

1,315

 

 

 

3,453

 

 

 

1,943

 

 

 

10,916

 

Loss before income taxes

 

 

(33,100

)

 

 

(50,726

)

 

 

(121,121

)

 

 

(136,868

)

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(33,100

)

 

$

(50,726

)

 

$

(121,121

)

 

$

(136,868

)

Net loss per share attributable to ordinary

   shareholders—basic and diluted

 

$

(0.86

)

 

$

(1.48

)

 

$

(3.36

)

 

$

(4.06

)

Weighted-average ordinary shares used in

   computing net loss per share attributable to

   ordinary shareholders—basic and diluted

 

 

38,364,224

 

 

 

34,281,203

 

 

 

36,021,256

 

 

 

33,719,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(33,100

)

 

$

(50,726

)

 

$

(121,121

)

 

$

(136,868

)

Foreign currency translation

 

 

23

 

 

 

2

 

 

 

34

 

 

 

129

 

Comprehensive loss

 

$

(33,077

)

 

$

(50,724

)

 

$

(121,087

)

 

$

(136,739

)

 

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 at December 31, 2018

 

 

3,901,348

 

 

$

7,874

 

 

 

 

29,472,197

 

 

$

375,148

 

 

$

37,768

 

 

$

153

 

 

$

(339,721

)

 

$

73,348

 

Issuance of ordinary shares,

   net of offering costs

 

 

 

 

 

 

 

 

 

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

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,020

 

 

 

 

 

 

 

 

 

5,020

 

Option exercises

 

 

 

 

 

 

 

 

 

17,957

 

 

 

253

 

 

 

 

 

 

 

 

 

 

 

 

253

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(50,726

)

 

 

(50,726

)

Balance at September 30, 2019

 

 

3,901,348

 

 

$

7,874

 

 

 

 

34,284,217

 

 

$

538,790

 

 

$

52,290

 

 

$

282

 

 

$

(476,589

)

 

$

114,773

 

7


WAVE LIFE SCIENCES LTD.

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

 

(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 at December 31, 2019

 

 

3,901,348

 

 

$

7,874

 

 

 

 

34,340,690

 

 

$

539,547

 

 

$

57,277

 

 

$

267

 

 

$

(533,359

)

 

$

63,732

 

Issuance of ordinary shares

   pursuant to the at-the-market

   equity program, net

 

 

 

 

 

 

 

 

 

59,690

 

 

 

604

 

 

 

 

 

 

 

 

 

 

 

 

604

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,999

 

 

 

 

 

 

 

 

 

3,999

 

Vesting of RSUs

 

 

 

 

 

 

 

 

 

198,202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Option exercises

 

 

 

 

 

 

 

 

 

3,000

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

10

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

6

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(47,493

)

 

 

(47,493

)

Balance at March 31, 2020

 

 

3,901,348

 

 

$

7,874

 

 

 

 

34,601,582

 

 

$

540,161

 

 

$

61,276

 

 

$

273

 

 

$

(580,852

)

 

$

20,858

 

Issuance of ordinary shares

   pursuant to the at-the-market

   equity program, net

 

 

 

 

 

 

 

 

 

1,123,156

 

 

 

11,372

 

 

 

 

 

 

 

 

 

 

 

 

11,372

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,794

 

 

 

 

 

 

 

 

 

3,794

 

Vesting of RSUs

 

 

 

 

 

 

 

 

 

3,569

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Option exercises

 

 

 

 

 

 

 

 

 

3,847

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

10

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

5

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(40,528

)

 

 

(40,528

)

Balance at June 30, 2020

 

 

3,901,348

 

 

$

7,874

 

 

 

 

35,732,154

 

 

$

551,543

 

 

$

65,070

 

 

$

278

 

 

$

(621,380

)

 

$

(4,489

)

Issuance of ordinary shares,

   net of offering costs

 

 

 

 

 

 

 

 

 

8,333,334

 

 

 

93,744

 

 

 

 

 

 

 

 

 

 

 

 

93,744

 

Issuance of ordinary shares

   pursuant to the at-the-market

   equity program, net

 

 

 

 

 

 

 

 

 

4,400,176

 

 

 

47,906

 

 

 

 

 

 

 

 

 

 

 

 

47,906

 

Share-based compensation