Wave Life Sciences Ltd. Q1 FY2020 Earnings Call

Good morning and welcome to the Wave Life Sciences First Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this call is being recorded and webcast. I'll now turn the call over to Kate Rausch, Head of Investor Relations at Wave Life Sciences. Please go ahead.

Thank you, operator. Good morning and thank you for joining us today to discuss our recent business progress and review Wave's first quarter 2020 operating results. On the call with me here today are Dr. Paul Bolno, our President and CEO; David Gaiero, Interim CFO; Dr. Mike Panzara, our Chief Medical Officer; and Dr. Chandra Vargeese, Senior Vice President, Drug Discovery. This morning we issued a news release detailing our first quarter results. Please note that this news release is available in the Investors section of our website www.wavelifesciences.com. The slide presentation that accompanies this webcast will also be available on our website following this call. 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 a number of 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, 2019 and our quarterly report on Form 10-Q for the quarter ended March 31, 2020. 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 Dr. Paul Bolno, President and CEO of Wave Life Sciences. Paul?

Thanks Kate. Good morning and thank you for joining us today. I'll start today's call with a few introductory remarks. Next, Dave Gaiero will discuss our financial results; Mike Panzara will provide an update on the progress of our neurology pipeline; and finally, Chandra Vargeese will provide an exciting update on our emerging RNA-editing platform capability. During the first quarter, I am proud that our team's commitment along with the close partnership and support of our clinical trial sites has allowed both PRECISION-HD clinical trials to continue despite the challenges presented by the COVID-19 global pandemic. We have also continued to progress work that will allow us to submit clinical trial applications for two additional neurology programs in the second half of this year: our SNP3 program for Huntington's disease and our C9orf72 program for ALS and frontotemporal dementia. And today, we are announcing our first in vivo RNA-editing data, delivering on one of our key corporate goals for 2020. Like everyone else, we are operating in the midst of the COVID-19 pandemic — an evolving and dynamic situation. While the unknown duration of the pandemic makes it difficult to predict or plan for potential longer-term impact to our business, we have leaned into the challenge and maintained a consistently proactive approach. We quickly established an internal COVID-19 response team that includes expertise from across all areas of our organization. This team meets on a regular basis and has facilitated our ongoing operations by focusing on three priorities. First, we are safeguarding the health and wellbeing of our employees as well as patient caregivers and clinicians. The majority of our team has been working from home since mid-March and we have implemented strict protective measures for the small number of employees whose work requires them on-site in our lab and manufacturing facilities. Second, we are focused on advancing our programs while adapting to new challenges in the current environment. Importantly, even before the pandemic we had been actively investing in our manufacturing facility, managing our supply chain, vendors, and inventory levels to limit the potential for disruption. As a result we have sufficient materials stored locally to enable us to continue to manufacture our products for at least 12 months. Mike Panzara will share more details on how we've been able to maintain momentum with our two global clinical trials. Finally, we are working to create opportunities in this new environment. For example we have found ways to creatively engage with our stakeholders including virtual meetings with researchers, clinicians, advocates, and broader patient communities, all while maintaining social distancing. Additionally, we are working to get ahead of future opportunities and challenges including planning for an expansion of on-site activities in our labs and manufacturing suites as well as remaining prepared for a second wave of coronavirus outbreak. For patients and families with devastating neurodegenerative diseases, progress cannot come fast enough. Knowing that they are counting on us has kept us going and continues to motivate everyone at Wave. Our innovative pipeline is focused on neurology. Notably, we continue to make excellent progress on the multiple preclinical CNS programs we are advancing with our partner Takeda. In the first quarter, we achieved target validation in vivo with a lead compound for a second program and we expect to achieve target validation for a third program later in 2020. Takeda is excited about the progress we are making and we look forward to sharing further updates on these programs. Beyond neurology, our platform capabilities offer opportunities for us to help more patients including those living with genetically defined diseases of the liver and eye. To that end, we continue exploring opportunities to advance our two preclinical ophthalmology programs: USH2A for Usher syndrome type 2A and RhoP23H for retinitis pigmentosa, both of which have demonstrated positive preclinical data. Within hepatic diseases, while the collaboration with Pfizer concluded earlier this month, we are today announcing our initial ADAR-mediated RNA-editing data in the liver of non-human primates and we expect our initial disease target for ADAR to be focused in hepatic disease. We are building our RNA-editing technology as a platform capability and see opportunity to apply this to other therapeutic areas over time, or in collaboration with potential partners. I will now turn this call over to Dave Gaiero for a review of our financials. Dave?

Thanks, Paul. For the first quarter of 2020, we reported a net loss of $47.5 million compared to $44.2 million for the same period in 2019. Research and development expenses were $41.2 million in the first quarter of 2020 compared to $40.1 million for the same period in the prior year. The increase in research and development expenses in the first quarter was primarily due to increased external expenses related to our clinical and preclinical activities including our HD programs and our C9orf72 program for ALS and FTD and separation costs associated with the workforce reduction implemented in February 2020, partially offset by decreased external expenses related to our DMD programs, due to our December 2019 decision to discontinue the suvodirsen program and to cease development of our other DMD programs. General and administrative expenses were $13 million for the first quarter of 2020 compared to $10.9 million for the same period in the prior year. The increase in general and administrative expenses in the first quarter was mainly driven by separation costs associated with the workforce reduction implemented in February 2020. We ended the first quarter of 2020 with approximately $121 million in cash and cash equivalents, including $20 million in research support funding received from Takeda in the first quarter under our collaboration. As a reminder, we expect to begin to realize the results of our overall cost reduction efforts, including our February 2020 workforce reduction in the second quarter of 2020. We expect that our existing cash and cash equivalents together with expected and committed cash from our existing collaboration will enable us to fund our operating and capital expenditure requirements into the third quarter of 2021. I will now turn the call over to Dr. Michael Panzara, our Chief Medical Officer, who will provide an update on our clinical development programs. Mike?

Thanks, Dave. Today, I will be giving an update on where things stand with our clinical development programs. However, I'd like to begin with yet another publication that highlights the importance of what we are doing in Huntington's disease by working to develop allele-selective treatments. This recent publication by Poplawski et al. in Nature adds to a growing body of evidence that observing wild-type huntingtin will be essential to impacting clinical outcomes of this disease, demonstrating that huntingtin is at the center of the regeneration transcriptome and plays an essential role in neuroplasticity after injury. Turning to an update on our PRECISION-HD clinical trials. Since the start of the pandemic in the first quarter, we have been keenly focused on ensuring the safety of our study teams, patients and investigators while continuing to advance our trials and mitigate future potential risks. As you know, this is a dynamic situation that we have been monitoring vigilantly and proactively doing what we can to enable our patients to continue treatment, while ensuring the data quality required to enable definitive results. As a reminder, PRECISION-HD1 and PRECISION-HD2 are evaluating the safety, tolerability, pharmacokinetics and pharmacodynamics of single and multiple doses of WVE-120101 and WVE-120102 in adult patients with early manifest HD who carry SNP1 or SNP2 respectively. WVE-120101 and WVE-120102 are the first and only compounds in clinical development designed to selectively target the mutant allele of the huntingtin gene transcript while leaving the wild-type huntingtin relatively intact. Both studies have continued to progress. We have benefited from the prioritization of disease-modifying studies by health authorities, the infrequent dosing regimen and the global distribution of our clinical trial sites. Most importantly, the commitment of our patients and investigators has remained steadfast, speaking to the importance of the work we are doing and the high unmet needs of those suffering from Huntington's disease. As all health care systems are currently under significant stress, some PRECISION-HD trial sites have been impacted by the pandemic. However, I'm pleased to report that we currently remain on track to deliver data from both PRECISION-HD trials in the second half of the year. Specifically, for PRECISION-HD2 we expect to report data from the 32-milligram cohort, which was initiated in January as well as data from each of the previous individual cohorts. Similarly, for the PRECISION-HD1 trial, which remains blinded, we initiated the 32-milligram cohort in March as planned and we expect to report results from the individual cohorts in this trial including 32 milligram in the second half also. Of course, should global restrictions continue or worsen the ability to evaluate patients as planned in each of these studies has the potential to be impacted. For both PRECISION-HD trials, we continue to assess the ability to advance to a next higher dose, which will be determined by single-dose safety results of the 32-milligram cohorts and available pharmacokinetic data as well as our preexisting preclinical package. Our third allele-selective HD program, our SNP3 program, continues to advance towards clinical development. As a quick reminder, approximately 40% of the HD population has SNP3 and with overlap up to 80% of the HD population contains at least one of SNP1, SNP2 and/or SNP3. Our SNP3 program is designed with novel chemistry advancements from our PRISM platform and we are particularly excited by the in vivo data we have seen to date in preclinical models. We expect to initiate clinical development, meaning submission of a clinical trial application or CTA for SNP3 in the second half of this year. Turning now to our C9orf72 program, which is also approaching the clinic. This program aims to address amyotrophic lateral sclerosis and frontotemporal dementia caused by mutations in the C9orf72 gene. This is the most common cause of familial ALS and FTD and a strong genetic risk factor for the sporadic forms of the disease. This program is designed to selectively and potently silence the transcripts that contain the hexanucleotide repeat, which drive the formation of toxic RNA and abnormal proteins in brain tissue. Similar to our SNP3 program, our C9 program also uses new chemistry off of our platform and we have demonstrated proof-of-principle in transgenic animal models. In these in vivo studies, we've shown potent knockdown of both the repeat-containing transcripts and the associated peptides while avoiding a reduction in wild-type protein. We expect to submit a CTA for our C9orf72 program also in the second half of the year. And with that, I'll hand over the call to Chandra Vargeese.

Thank you, Mike. Good morning, everyone. Today, I'll provide an exciting update on our RNA-editing platform. RNA editing is a new modality to come off of our PRISM platform, adding significant capabilities to the advancement that we have made in RNA splicing and silencing. As with our other modalities, by focusing on RNA, we feel that this approach offers several distinct benefits over gene editing, including the ability to use endogenous proteins, ease of delivery, titratable dosing and reversible effects. The endogenous protein we harness, ADAR, or adenosine deaminases acting on RNA, leads to effective A-to-G editing, providing ample opportunity across a wide variety of diseases. As you see on the right, the landscape of genetic variants amenable to A-to-G is very large — in the tens of thousands — which represents a rich source for discovery and identification of potential clinical targets. In an analysis of pathogenic human SNPs, it has been published that nearly half could be corrected with A-to-G editing. Beyond offering advantages over gene editing, this technology is unique among other players in RNA editing. Endogenous ADAR-mediated editing technology has emerged relatively recently and beyond the obvious strength of developing this technology for potential therapeutic use, we use endogenous proteins, which avoids the risk of immunogenicity from exogenous proteins such as Cas13 or chimeric ADAR and the related potential off-target effects of these proteins. Our oligonucleotides are fully chemically modified, which increases stability and duration of activity, and typically they are 30 bases or fewer. Importantly, our ability to precisely control the chirality of the backbone enables us to maximize the endogenous ADAR activity. Lastly, we use a simplified delivery strategy, meaning no AAV vectors or no nanoparticles. In our initial therapeutic investigations, we are using simple GalNAc-conjugated oligonucleotides for hepatic targets. However, we also continue to build our RNA-editing capability on our PRISM platform and expect this RNA technology could be used across various therapeutic indications. As we have previously defined, we have achieved very efficient RNA editing in vitro with our oligonucleotides across a variety of cell lines, including non-human primate and human primary hepatocytes. As shown here in this slide, we have observed potent and durable dose-dependent RNA editing with three chemically distinct stereopure oligonucleotides via GalNAc-mediated uptake. Having achieved this in vitro, our next task was to determine whether these in vitro results translate to an in vivo system, which they did. For the first time we are sharing in vivo RNA-editing results in non-human primates. For this study, we dosed six non-human primates in three groups subcutaneously once a day for five days with three chemically distinct RNA-editing oligonucleotides. We took liver biopsy samples at baseline and two days post last dose and evaluated sequencing of the targeted site. As you can see on the chart on the left, we detected up to 50% editing as compared to baseline in vivo. On the right you can see a Sanger sequencing plot for the targeted oligonucleotide, showing clear editing at the target site. While this is an ongoing proof-of-concept study, we are very excited by these results and to our knowledge, these are the first successful RNA-editing results in non-human primates. Importantly, we have achieved these results using our endogenous ADAR technology, which we believe makes them more compelling. I would like to add that I'm proud of our team for delivering these results amidst a very challenging environment, as we continue to adapt our work streams as a result of the ongoing pandemic. Now, looking ahead, we have previously demonstrated successful RNA editing in vitro across multiple transcripts, which supports the potential of this technology to be applied across a variety of disease targets. Our in vitro data will also be presented in a poster tomorrow at the American Society of Gene & Cell Therapy Annual Meeting which is being held virtually. Later this year, we expect to share additional in vivo ADAR-mediated RNA-editing data and we also expect to announce our first RNA-editing program in a hepatic indication. Now, with that, I'll turn the call back to Paul for closing remarks.

Thanks, Chandra. In closing, we've had a solid start to the year. We have already delivered on our first milestone and are on track to achieve several more this year, including multiple CTA submissions and data from both our PRECISION-HD clinical trials. I want to close by taking the time to thank the entire Wave team, as well as our partners in these endeavors, namely our investigators and patients, without whose steadfast commitment we could never be where we are today. The Wave team has worked tirelessly to keep our clinical trials ongoing, our preclinical programs and our discovery work on track, all while supporting each other and our communities in this difficult time. Whether working from home or working in our labs and manufacturing suites, the entire organization has come together to adapt to our new reality. I am grateful our team has risen to this challenge and for their dedication to bring potential new therapeutics to patients living with devastating diseases. With that, we'll open up the line for questions. Operator?

And our first question comes from Debjit/Debjit's representative with H.C. Wainwright. You may proceed.

I'm standing in for Debjit. I just have a couple of questions. The Phase I study of tominersen was halted due to infections from the device that was used to collect some CSF. Can you tell us if you're using a similar device or how you might be mitigating that risk?

Yes, this is Mike. That study that was halted was a frequent PK study, to our knowledge, where they had a device in place to take frequent lumbar puncture CSF samples. We're not using that device in our studies. These are monthly lumbar punctures for CSF collection and for administration of drug.

Okay, great. Thank you. And so the RNA-editing platform looks interesting. My concern would be that systemic administration could induce immunogenic responses, similar to what we saw from suvodirsen. Could you tell us about any steps you have taken to mitigate that risk, especially if there are differences from the precautions that you took with suvodirsen?

Yes. I'll take the first part of this and then hand it to Mike and Chandra. I think the first steps were really in understanding the utilization of subcutaneous administration of GalNAc and lower doses in non-IV administration. In addition, I think, as we've learned from suvodirsen, continuing to characterize those drugs preclinically is important. As Mike can share, with repeat administration, even systemically, the suvodirsen studies were inconclusive not because of safety, but ultimately because of efficacy. Mike, do you have anything you want to add to that?

I'd just add that as we learn more and more about administration and distribution and getting the oligonucleotides to the target, suvodirsen was about getting enough oligonucleotide to target with the profile that enabled us to do that. Right now, this approach is using GalNAc. We are in the very early stages here, and as we learn more about this approach and optimize the oligonucleotide, immune activation is one of the criteria we're going to use in our screening of future candidates.

Okay, great. Excellent. Thanks for the color.

And our next question comes from Salim Syed with Mizuho. You may proceed.

Very nice to hear your voice on an earnings call. A couple of questions on the COVID-related impacts. One is how are you collecting these CSF samples? Are you seeing patients still coming into the sites, or what's been the impact there? Second, do you define impact differently between site activation and enrollment versus the already enrolled patient population? And lastly, for any sites that have been particularly hit hard during the COVID-19 crisis, have you seen the enrollment tick back up at all in the last couple of weeks as some of your peers have noted? Thank you.

Thanks, Salim. I'll turn it over to Mike.

Salim, first of all, one of the things we were most worried about was whether patients would come in. We have been very encouraged that patients are wanting to come in for their visits, for CSF collections and for administration. The monthly visits allow flexibility to schedule around what's happening at the site, so we've been fortunate in that situation. Having a very dedicated patient population has mitigated much of the potential for patients to defer visits out of concern. In terms of site activation versus enrollment, different sites around the world have different challenges and different health authorities have different rules. We have approached each site individually and developed plans that work for them in terms of recruitment and monitoring of patients, while remaining consistent with our protocols and ensuring data quality. We've been fortunate that the sites we've chosen and the disease indication itself, combined with the infrequent dosing and monitoring required, allow us to pivot between sites if needed. To your last point, over the last several weeks things have been loosening up around the world and we have seen improvement, and that optimism is being conveyed from our sites.

Okay. Thanks so much, guys.

And our next question comes from Ravinda in for Mani with SVB Leerink. You may proceed.

Just a quick question. Following up on the COVID impact on the HD program, have you had any problems with enrollment or treatment from the 32-milligram cohort for the PRECISION-HD1 and HD2 programs? Can you guide how many patients have been treated at this point? And can we anticipate data from all 12 patients in each cohort from the HD1 program moving forward?

Mike, do you want to take that?

So our guidance is that when we present these data in the second half, it will include all patients in the cohort. In terms of individual enrollment, we do not comment on individual enrollment numbers. Our diversity of sites, the disease indication itself and the infrequent dosing and monitoring allow us to pivot if a given site reduces activity. Our intention is to share complete cohort data in the second half.

Great. Thanks for that.

And our next question comes from Eun Yang with Jefferies. You may proceed.

For PRECISION-HD1 and HD2, regarding the selection of a higher dose beyond 32 milligrams, are you going to be announcing that before the data that we expect in the second half of this year or at the same time?

This is Paul. At this point we're guiding to the clinical trials and that we're assessing moving to a higher dose. We haven't yet announced when we would be announcing next cohorts publicly. As we continue to progress and assess we will give updates.

Just to be clear, the data that will be released in the second half will be the 32-milligram cohort that you're asking about.

Okay. And on RNA-editing therapeutics, in non-human primates you showed up to 50% editing efficiency. For clinical benefit, what kind of editing efficiency do you think you would need to achieve?

I think a lot depends on target selection. These are unoptimized starting points, so this is not yet the preclinical data around clinical programs which continue to be progressed. For heterozygous diseases, 50% correction can restore a normal phenotype. There are diseases where restoration of 50% or less could change disease. So the goal does not necessarily have to be 100% editing, although we will try to achieve as much as possible. We feel like the initial exploratory data show we can cross the hurdle needed to pursue a number of disease targets. We will provide more updates as we move through the year about target selection and program development.

What Paul said is correct. In some diseases with a heterozygous patient population, 50% editing will restore a full phenotype.

And the partner programs with Pfizer, are you also utilizing RNA-editing technology in that collaboration?

No. The RNA-editing technology came outside of the Pfizer collaboration. Pfizer was only using very early chemistry out of Wave and not applying to our more recent RNA-editing programs. RNA editing is outside the scope of the Pfizer collaboration.

Okay. Thank you very much.

And our next question comes from Whitney Ijem with Guggenheim Securities. You may proceed.

Thanks for taking the question. On the PRECISION-HD trials, are you in any way limited on the ability to dose higher based on previous data or preclinical data?

Based on our preclinical data we definitely have clearance to go higher. We have the window to go higher. We will look at all the clinical data in terms of safety and PK to determine the safety window and whether to escalate the dose. The preclinical data supports dose escalation.

In terms of the data we'll see in the second half, can you go over what we can expect to see? Will it be similar to the top-line we got in December?

Yes, it will be similar to what you've seen there except that what you'll be seeing is the individual cohorts. That prior release was an interim analysis of an ongoing study. At the end of this year you'll be seeing the complete data set of the individual cohorts.

Thanks. One last question: Do you expect to receive any more cash payments or upfronts from collaborations this year as we think about cash runway?

We always contemplate business development and potential opportunities. Those could bring in additional capital through pipeline programs or platform collaborations. There are opportunities. Our cash runway statements are based on existing committed payments; additional collaborations could provide further inflows.

And our next question comes from Paul Matteis with Stifel. You may proceed.

Just a couple of questions. For the SNP3 program, will initiation be gated at all by the topline from the HD1 and HD2 readouts? Along with that, do you expect to start at higher doses pending those data? Also, any updates on the presentation of the full suvodirsen data?

I'll take the beginning and then Mike will follow up. SNP3 is a different scenario than advancing within DMD. Our commitment to Huntington's disease remains steadfast. SNP3 represents a different opportunity with different data sets. We have a preclinical in vivo model that supports development and we remain committed to advancing SNP3 independently from the PRECISION-HD1 and 2 data.

As Paul said, we have a data set on SNP3 using new chemistry from the platform that makes this a different molecule. SNP1 and SNP2 data will not influence our interest in moving forward here given our commitment to HD and the fact that these SNP3 data stand on their own. In terms of dosing, we are in a very different place than we were with SNP1 and SNP2 where we did not have models to look at target engagement in vivo. Here we do, and our dosing paradigm will be driven by what we've learned from knockdown in the in vivo models as well as our preclinical data. Regarding suvodirsen, there's not much more to report than what we presented at the MDA meeting where we clearly saw that regardless of how we looked for target engagement we did not see it in those muscle biopsies. It appears the drug was present but primarily in the extracellular matrix rather than getting to the target. We believe that represents the complete story of what happened with suvodirsen, and there is not anything new to report.

Okay. Great. Thanks.

And our next question comes from Yaron Werber with Cowen. You may proceed.

Moving into ALS and FTD is exciting. How are you thinking about the timing of these clinical programs? When do you think you'll file these CTAs or INDs? Will you need separate filings for each indication, and will you pursue them in parallel?

Thank you. This program targets a single gene and can affect two important diseases. We expect to submit the initial CTA in the second half of the year as we have said. The strategy is being devised with health authorities and our intent is to rapidly get into both disease indications. I'm not prepared to get into the procedural details here, but our intent is to move quickly into both ALS and FTD indications targeting this single gene. We are unlikely to go into healthy volunteers for an intrathecally administered drug; the initial studies will be in a population that sets us up to go into either indication.

Okay. Thanks so much.

Ladies and gentlemen, this now concludes our Q&A portion of today's conference. I will now turn the call back over to Dr. Paul Bolno for any closing remarks.

Thanks everyone for joining the call this morning to review our first quarter update. And thanks again to our employees for their hard work and commitment to patients. We look forward to updating you in the future on our ongoing progress. Stay safe and have a nice day. Thank you.

Ladies and gentlemen, thank you for attending today's conference. This now concludes our program and you may all disconnect. Everyone have a great day.