wve-10q_20190630.htm

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.

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.

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.

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.

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.

	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.

	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.

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

	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.

	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			3,113
Net cash provided by financing activities		163,389			63,097
Effect of foreign exchange rates on cash, cash equivalents and restricted cash		127			(45	)
Net increase in cash, cash equivalents and restricted cash		78,099

Title of each class	Trading symbol	Name of each exchange on which registered
$0 Par Value Ordinary Shares	WVE	The Nasdaq Global Market

		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

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐