Earnings Call Transcript - WVE Q2 2022

Operator, Operator

Good morning and welcome to the Wave Life Sciences’ Second Quarter 2022 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this call is being recorded and webcast. I will now turn the call over to Kate Rausch, VP of Investor Relations and Corporate Affairs at Wave Life Sciences. Please go ahead.

Kate Rausch, VP of Investor Relations and Corporate Affairs

Thank you, operator. Good morning and thank you for joining us today to discuss our recent business progress and review Wave's second quarter 2022 financial results. Joining me today are Dr. Paul Bolno, President and Chief Executive Officer; Dr. Mike Panzara, Chief Medical Officer and Head of Therapeutics Discovery and Development; Dr. Chandra Vargeese, Chief Technology Officer and Head of Platform Discovery Sciences; and Kyle Moran, Chief Financial Officer. The press release this morning and slide presentation to accompany this webcast are available in the Investors Section of our website www.wavelifesciences.com. Before we begin, I would like to remind you that discussions during this conference call will include forward-looking statements. These statements are subject to several risks and uncertainties that could cause our actual results to differ materially from those described in the 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, 2021, and our quarterly report on Form 10-Q for the quarter ended June 30, 2022. We undertake no obligation to update or revise any forward-looking statements for any reason. And now I’d like to turn the call over to Paul. Paul?

Paul Bolno, CEO

Thanks, Kate. Good morning. And thank you all for joining us. In the second quarter, we continue to make meaningful progress both on our therapeutic program and our platform. I will start with the recent highlights. I'll then turn the call over to Mike who will provide updates on our innovative pipeline. Chandra will then share some examples of how we continue to expand the addressable biological targets with our unique RNA-based editing platform. And finally, Kyle will discuss our financials. I'm excited to begin today's call by announcing the selection of WVE-006 as our first RNA editing development candidate for Alpha-1 antitrypsin deficiency or AATD. We're also announcing that we expect to initiate clinical development of 006 in 2023. 006 is a first-in-class RNA editing candidate and the most advanced therapeutic program currently in development to harness an endogenous enzyme for editing. There are approximately 200,000 people carrying homozygous ZZ mutations in the US and Europe, and WVE-006 has the potential to transform how these patients are treated, demonstrating clinical proof-of-concept in AATD with 006 will serve to de-risk RNA editing for additional monogenic diseases, as well as open opportunities to address larger disease indications, new modulation of proteins such as disruption of Protein-Protein interaction, and upregulation. Continued investment in our PRISM platform has positioned us as leaders in oligonucleotide innovation, and we continue to be encouraged by the translation of our guide strands across multiple modalities. Earlier this year, we shared positive target engagement data from our ongoing FOCUS-C9 clinical trial in C9-ALS and FTD, which demonstrated how our preclinical data are now translating in patients. New pharmacokinetic data from our ongoing DMD and HD studies, which Michael will share today, further support this clinical translation of differentiated pharmacology. We remain on track to share data from all three of our clinical studies this year. In June, we completed a successful follow-on offering which put Wave in a strong well-capitalized position entering the second half of 2022. We continue to execute on multiple pillars of value creation, including delivering clinical updates, and rapidly advancing our novel RNA-based editing pipeline led by WVE-006. We also continue to advance discussions with potential strategic partners who share our vision for broad applications of Wave's platform and support the expansion of our pipeline for unlocking value in GMP manufacturing. I'll now turn the call over to Mike to provide an update on our pipeline. Mike?

Mike Panzara, CFO

Thank you, Paul. And good morning to everyone on the call. Today, I will discuss the continued progress of our therapeutic portfolio beginning with our CNS progress. The focus on clinical trials for WVE-004 in patients with C9orf72 ALS and FTD continues with the administration of single and multiple doses underway. Back in April of this year, we announced the first data update from our FOCUS-C9 program which demonstrated robust dose-related target engagement, confirming translation of our preclinical work into the clinic. I shared these data with the ALS community in June in an oral session at the conference of the European Network to Cure ALS or ENCALS in Scotland. The presentation highlighted not only the clinical data seen here but the wealth of information illustrating the differentiated preclinical profile of WVE-004. We anticipate delivering an update with additional single and multi-dose data for 004 in the second half of 2022, and are on track to initiate an open-label trial in the same timeframe. Moving on to Huntington's disease, WVE-003 is our allele-selective oligonucleotide currently being evaluated in the SELECT-HD study targeting a polymorphism SNP3 associated with the standard CAG transcript in certain patients with HD. The goal, as we have said many times, is to preserve the production of wild-type Huntington given the importance of this critical protein. Preservation of wild-type Huntington continues to be a key objective that is supported by the HD community, and by emerging preclinical and possibly clinical data. 003 is the only allele-selective program currently in clinical development. Similar to WVE-004, we were able to leverage preclinical in vivo models to establish a starting dose of 003 that was predicted to achieve CSF concentrations needed to engage the target, and we designed and implemented an adaptive trial with the goal of accelerating time to prove the concept. The SELECT-HD study is progressing well and is already yielding interesting information from blinded assessments. On the right-hand side of slide 9, you can see the concentrations of 003 measured in patients' cerebrospinal fluid or CSF and the first cohort of patients dosed in the trial. On the same graph, we have plotted the CSF concentration observed following the administration of 32 milligrams of WVE-120101 and WVE-120102 which were the highest doses used in the precision HD studies where we evaluated these first-generation PSPO compounds for HD. Lastly, one month post this single starting dose, we are seeing CSF concentrations 20-fold greater than the maximum observed with these previous compounds. You may recall the time we discontinued the precision HD program, we said the primary reason for doing so was modeling that indicated that we could not achieve CSF concentrations needed to engage the target with those first-generation compounds. The profile of 003 appears quite different. Dose escalation continues in this SELECT-HD and we expect to share clinical data in the second half of 2022. In Duchenne muscular dystrophy, our open-label clinical trial of WVE-N531 for DMD patients with mutations amenable to exon 53 skipping is progressing well as well. You will recall in our preclinical studies and detail on our double knockout mouse, treatment with an exon 23 surrogate of N531 resulted in significantly prolonged survival at dose levels and frequencies achievable in studies. Of course, after converting guesstimated human equivalent dose levels. These data guided our target dose selection and escalation planning in our open-label clinical trial. On the right-hand side of slide 10, you can see some preliminary pharmacokinetic data from this study compared with data from Suvodirsen, our first-generation PSPO compounds. The figure shows plasma concentrations following single doses of N531 at three dose levels compared with the top dose of Suvodirsen used in our discontinued Phase 2/3 study. What's clear is that approximately one week following dosing, plasma concentrations of N531 were already fourfold greater than those achieved with Suvodirsen, and dose escalation has yet to be completed. Dosing is underway at dose level 4 and we look forward to data for muscle biopsies in the fourth quarter of this year. I'll now give you an update on our newest candidate WVE-006 for AATD. WVE-006 is designed to address therapeutic goals essential when developing a novel therapy for AATD, namely restoration of circulating wild-type M-AAT to address lung disease and reducing Z-AAT protein aggregation in the liver to address liver disease. Our hypothesis is that through RNA editing in homozygous patients, one can shift the phenotype towards a heterozygous phenotype, lowering the risk of disease. In the second quarter, we shared data using one of our lead AATD AIMer to restore functional AATD protein. At 19 weeks, restored AAT protein was determined to be functional as measured by robust inhibition of neutrophil elastase as well as histological staining of liver biopsies demonstrating reduced accumulation of Z-AAT aggregates over the duration of the study. The selection of 006 to take forward into IND enabling toxicology studies followed a thorough evaluation of multiple lead compounds, each with potent editing capability in preclinical studies in mice and non-human primates in order to choose the molecule with the best overall profile. Slide 13 showed the efficacy of 006 and the NSG-PiZ mouse model, which is well established in this space. 006 was administered subcutaneously following an initial loading dose. At week 13, SERPINA1 mRNA editing was approximately 50%. And serum AAT protein restoration ranged from four to seven-fold higher than control remaining above an 11 micromolar level throughout the dosing interval. Additional data supporting the favorable preclinical profile of 006 are shown on slide 14. Protein concentration-dependent editing of SERPINA1 was observed in primary human hepatocytes derived from a donor with the MZ genotype reaching as high as 80% with the highest concentrations tested. So where are we now with 006? IND enabling activities are underway, and we expect CTA submissions next year. In summary, Wave’s diverse portfolio of therapeutic candidates continues to advance through development as we begin to see our preclinical observations translate into the clinic. The data generated with each candidate continue to demonstrate the potential when principles of rational design and chemistry innovations are applied to oligonucleotides, enabling novel approaches to complex disease biology. With that, I'll turn the call over to Chandra. Chandra?

Chandra Vargeese, CTO

Thanks Mike. This substantial service today with our WVE-006 program for AATD demonstrates the potential of AIMer technology for precise correction of GTA driver mutations. We like to think of our AIMer as a Swiss army knife, and restoring or correcting protein functions is only one example of how we can use the AIMer to potentially treat diseases. Recently, we have generated multiple proof-of-concept datasets that demonstrate how AIMer can activate gene pathways by modulating Protein-Protein interactions, and upregulate RNA expression by editing RNA binding protein motifs. These applications demonstrate the potential to design therapeutics to precisely control gene upregulation by titrating RNA editing levels and AIMer dose. I'll review these in vitro and in vivo editing datasets on the next few slides. Here we used the NRF KEAP1 system. This system shows the potential theory of a single side to activate a transcription factor and upregulate downstream genes. As shown on the right-hand side of slide 17 using AIMer, we achieve efficient editing, resulting in a dose-dependent upregulation of the NQO1, a gene regulated by the NRF2 transcription factor in vitro. We recently repeated the study in vivo, and again saw efficient editing with multiple AIMer in the liver of mice, which resulted in downstream gene upregulation. If it properly disrupted the NRF2 protein interaction, we would expect upregulation of a key set of genes that are regulated by NRF2, which we successfully confirmed by RNAseq transcriptome analysis, as shown on the bottom right side of slide 18. Another potentially disruptive application of AIMer is to upregulate RNA to treat haploinsufficient diseases or diseases that require overexpression of target genes. We have now demonstrated the ability to upregulate several different targets, including both metabolic and immune targets by editing RNA motifs to regulate RNA half-life in vitro. While much of the presentation today has focused on GalNAc-conjugated design, we also have achieved substantial RNA editing with systemic delivery of unconjugated AIMer. We do not need to use complex delivery vehicles, such as lipid nanoparticles or viral vectors. In vivo mice studies, we have seen the editing of EGP2 targets across multiple tissues, including kidney, adipose tissue, and a range of liver cells with a single subcutaneous dose of unconjugated AIMer. I'll now turn the call over to Kyle Moran, our CFO. Kyle?

Kyle Moran, CFO

Thanks, Chandra. Net loss for the three months ended June 30, 2022, was $41.3 million. We reported $0.4 million in revenue for the second quarter of 2022. R&D expenses were $29.7 million for the second quarter of 2022 as compared to $31.6 million for the same period in 2021. This is primarily due to decreased external expenses related to our previously discontinued clinical program, partially offset by increased share-based compensation expense, and increased external expenses related to our AATD program. G&A expenses were $12.8 million in the second quarter of 2022, as compared to $11 million last year, primarily due to increases in compensation, mainly from share-based compensation, offset by decreases in other external general and administrative expenses. We ended the second quarter with $148.2 million in cash, cash equivalents, and short-term investments. This includes net proceeds of $65.5 million from our financing in June 2022. For this financing, we extended our cash runway and we currently expect that our existing cash, cash equivalents, and short-term investments will enable us to fund our operating capital expenditures to the end of 2023. As a reminder, we do not include potential milestones for option payments under our Takeda collaboration in our cash runway. I'll now turn the call back over to Paul. Paul?

Paul Bolno, CEO

Thanks, Kyle. Over the past decade, we have established a disruptive oligonucleotide platform and are now seeing these innovations translated in the clinic. Our unique guide strands enable us to target diverse biology with multiple therapeutic modalities. In addition to what we have shared today around antisense, splicing, and RNA editing, we have previously demonstrated how PRISM can significantly improve siRNA silencing in vivo over industry state-of-the-art and advanced DSD plus chemistry. These capabilities, together with our GMP manufacturing position us to become a leading genetic medicines company. Looking ahead, we expect several milestones in the second half of the year, including data from all three of our ongoing clinical trials. We achieved our goal of selecting an AATD development candidate and initiating IND enabling studies in the third quarter, and we expect to submit multiple clinical trial applications for WVE-006 in 2023. Importantly, we are well capitalized to execute on all these milestones. And with that, we'll open up the call for questions. Operator?

Operator, Operator

Our first question comes from Salim Syed with Mizuho.

Salim Syed, Analyst

Great. Good morning, guys. Congrats on the progress. And thanks for the question Paul, so I guess there's a lot of data coming in between now and year-end. So I was hoping if you could just tick through the three programs here, the DMD program, the HD program, and the ALS program in terms of what do you perceive to be winning scenarios for these three programs, biopsy, how much dystrophin production you expect to see on the knockdown data for Huntington's, how much mutant Huntingtin knockdown do we expect to see? And then specifically, on Huntington's are we going to be getting single dose data or multi-dose data for the two programs that you didn't specify whether it's third quarter or fourth quarter, are we thinking more the Pumpkin Spice Latte time or egg nog time for the HD and C9 north? Thank you so much.

Paul Bolno, CEO

Thank you, Salim. I will start and then transition to Mike, addressing everything in no specific order. It's crucial as we outline our progress. To begin with SNP3, since you mentioned it, I want to highlight that SNP3 will involve single-dose data. Looking at the broader context, these data sets are significant because they may provide further insights similar to what we observed earlier this year with C9 regarding its single dose, which demonstrated strong and lasting target engagement. As we consider the progression from preclinical to clinical translation, we hope to see our preclinical data continuing into clinical data outcomes. SNP3 is a single-dose study, similar to the evaluation we conducted with C9. This will allow us to assess target engagement in terms of the mutant protein and the preservation of the wild type, which Mike referred to earlier and remains a critical metric to investigate, along with other clinical biomarkers. Our study will be driven by these biomarkers. Regarding C9, we will have ongoing data from both multi-dose and single-dose treatments, enabling us to analyze pharmacokinetics and target engagement. For DMD, this will be our first opportunity to assess the translation from preclinical to clinical data, as we discussed today, based on tissue concentrations and exposure related to the DKL mouse model. We observed a restoration of phenotype, which will let us examine tissue exposure and target engagement through muscle biopsies. I will pass it to Mike for any further comments, but this is going to be essential. The comprehensive data across multiple programs, all concerning pharmacokinetics, will address key questions regarding target engagement in various tissues, whether it's CNS versus muscle, as well as allowing us to evaluate individual disease indications for cross-silencing and splicing.

Mike Panzara, CFO

And I’d say nothing much, nothing really much other than to address the other question is the DMD study, we've said the fourth quarter that says that's open label, the patients are within dose escalation, we have a good sense of when that's going to happen. The other studies, as you know, are adaptive. They're driven by recruitment, timing of data collection, and basically the timing of the reviews by the independent committee. So that's why we've been a little bit more less definitive on the timing there. But it just really depends upon those factors because those are the blind and adaptive stuff.

Salim Syed, Analyst

If I could follow up, thank you for the information. Regarding DMD, do you have a specific target for dystrophin production that you're aiming for with this readout? I understand it's a single study.

Paul Bolno, CEO

For this particular readout, yes, at this point in time, the target right now is being able to evaluate the translation. I think the study is really determined to see, can we see the preclinical data and exposure from the double knockout translate in the human? So this time, we're not laying out what a target exposure is, we'll continue to evaluate where we are based, as Mike said, we're now into dose four. So there'll be more modeling as we get closer.

Mike Panzara, CFO

And the big factor, Salim is, does it look different from Suvodirsen, right? Because you remember what Suvodirsen and we just couldn't get into cells, we couldn't engage targets, we couldn't even see any transcript production at all with Suvodirsen. And here we have very different concentrations, as we've highlighted, and then we're going to be looking at distribution. And if we see dystrophin, it'd be quite exciting. So that's sort of how we are looking at that one.

Operator, Operator

Our next question comes from Joon Lee with Truist.

Mary Hodge, Analyst

Hi, good morning. And congratulations on the quarter. This is Mary on for Joon. So my question is related to the PN chemistry. Recent studies in Angelman published they show that the traditional POPs backbones have sort of relatively limited penetration into deep brain tissues. So could you provide some data on the function of PN chemistry in your studies and which type of tissues and which type of distribution you got with these versus the traditional POPS backbones? Thank you.

Paul Bolno, CEO

Yes, I mean, yes, it's a great question, because I think it's data that we've shared, and we're happy to continue to share more. Well, we have shared in the past is with the PN edition of PN chemistry, we do see much deeper, broader penetration across the CNS. So that's translating the uptake across tissues, the data that we share, related to Huntington reduction from the backaged D model, it’s in the corporate deck, is striatal data. So what we've seen differently with the application of PN is broader, deeper penetration. But ultimately, that's why Salim’s earlier question is going to be interesting, because one of the things that we tend to do is C9, we're going to be looking at primarily cortex, spinal cord, and whether it relates to HD we know that that's cortex and the gray structures like striatum. So these data continue to help, will help clarify for us preclinical, or clinical translation as we measure this, but we've seen that it's not tissue-specific either. We've seen deep penetration, as Mike was talking about, we're looking at tissue concentrations in DMD and muscle. And so we think not only is it helping the distribution and helping with retention, stability, and we believe that's why we're seeing target engagement at low single doses that's also durable. And so I think these data being able to translate it from preclinical to clinical is going to be important. I think, to your point as well, being able to dose with lower doses we think we has a lot of advantages as we're going forward to be able to explore a multitude of diseases. And as we shared today, 006, our first AIMer for Alpha-1 antitrypsin deficiency, we shared that one of the advantages to being able to get hold and durable editing was a function of being able to apply PN chemistry on top of our coyote control molecules.

Mary Hodge, Analyst

Thank you. If I may, a very quick follow-up question. Is that, could you provide any high-level plans that you have for the design of WVE-006? How this trial would be designed?

Paul Bolno, CEO

I mean, we'll do is, as we said, we're engaging in the IND enabling studies, planning will be underway as we think about 2023 clinical trial updates, and we'll definitely provide a full update on the Alpha-1 antitrypsin clinical program, yes.

Mike Panzara, CFO

And the only other thing I'd say to that is we've been really engaging outside experts in the community to sort of help us in that regard in terms of how we approach this and how we can do it in a way that accelerates time to proof-of-concept as we have for each of our CNS programs.

Paul Bolno, CEO

We will share and there'll be more opportunities. I think about the second half of the year, the clinical community is extraordinarily excited about an RNA editing approach to being able to treat and restore protein function and protect the liver. So it's an exciting time, I think, for the field to now have a candidate to be able to start exploring clinical trial designs.

Operator, Operator

Our next question comes from Paul Massoud with Stifel.

Unidentified Analyst, Analyst

Great, thanks. This is James on for Paul. Maybe a quick one ADAR and AAT. Give a sense of how much endogenous ADAR is expressed in your animal model? And how does that compare to what we know about endogenous expression levels of ADAR in humans? Thanks so much.

Paul Bolno, CEO

I mean, the model, we've seen this across now multiple models, we're using the Standard Model, I don't know, Chandra, if you have a specific answer on the amount of ADAR expressed in the animal model.

Chandra Vargeese, CTO

So in the mouse model, we're using the mouse endogenous data. And in the human ADAR mouse model that we described before, the expression levels are very similar to what you've seen in humans. And we have actually provided the data in the previous presentation.

Paul Bolno, CEO

I believe there was a previous question about whether the human model had truly amplified the results. We have demonstrated and presented that data. There was no overexpression detected. In fact, the amount of ADAR correlates. We have also shown that ADAR is not exhausted, indicating that there is neither an overexpression nor exhaustion of the endogenous enzyme.

Operator, Operator

Our next question comes from Luca Issi with RBC.

Luca Issi, Analyst

Oh, great. Thanks so much for taking my question. Congrats on the progress. Maybe on ALS, we've also seen tofersen NDA getting accepted by the FDA based on NFL as a surrogate biomarker, wondering what was your reaction to that news? And how are you thinking about implications for you and maybe for the field more broadly? And then second on AATD circling back on a prior question, again, I know super early days. But how do you think about the Phase 1 site design? What are the efficacy endpoints that you will be focused on in order to potentially capture benefits for both liver and lungs? Thanks so much.

Paul Bolno, CEO

So I'll start with AATD and then transition to Mike for your ALS question. But as it relates to AATD, obviously, for the Phase 1 study and Phase 1/2, our goal will be to establish dose frequency, like we have done for others, driven primarily on the plasma biomarkers. So we're going to have the opportunity, I think, to do two things. One is validation of editing in the production of protein, and to see how that correlates again with our preclinical data. That data again, as we shared on the call, I think serves two purposes. One, obviously incredibly exciting for the alpha-1 community in terms of advancing a therapeutic program and designing a program for both lung and liver. We'll also be looking at biopsies, that important point to the study of liver and editing. And then secondly, that really does unlock for us and once we've established that preclinical to clinical translation, opens up modeling for us to be thinking much more broadly. About our AIMer across multiple therapeutic areas. I'll turn the call over to Mike now for the question related to ALS.

Mike Panzara, CFO

Yes. Whenever the FDA in a CNS disease now is starting to pay attention to biomarkers like this, it’s a positive development, these are very bad diseases, these are diseases that progress and progress has been limited. So the idea that there is the potential of easily measurable biomarker that they may now be viewing as relevant from the standpoint, I should say, reasonably likely to predict clinical outcomes is encouraging and we'll be watching to see how this plays out both for us but for the community at large.

Operator, Operator

Our last question comes from Mani Foroohar of SVB Securities.

Unidentified Analyst, Analyst

Hi, good afternoon, sorry, good morning, this is Lenin Sango on for Mani. Just had a question regarding the novel 006 program. Would you be able to give us an overview of the expected commercial opportunity there? Thank you.

Paul Bolno, CEO

Yes, we’ll obviously be providing a lot more. But I mean, what's exciting for us is it is a consequential indication we have and one only needs to look at some of the programs that have faced challenges to see kind of what's the market reaction to that. So for us, our focus has been on the 200,000 patients in the US and Europe that are homozygous patients that are amenable. So not, we're not even looking yet at the broader population beyond that, but there's 200,000 ZZ patients that really have the opportunity to be corrected back to the MVP phenotype. So consequential patient population, we've seen this play out in terms of the translation and other substantial valuations, programs and other companies. And it's attractive, have a lot of interest, both on the patient communities, that's your community, and our potential partners. So we think it's a really interesting space for us to be able to think much more broadly and be able to do it, I should also remind people differently. So we've seen the silencing programs really focused on targeting siRNA in the liver. That's exciting to watch. I think we've seen the protein replacement side of companies generating commercial revenue in terms of protein replacement IV infusions. And I think our opportunity to supplant both with a single subcutaneous injection that treats both liver and lung will be consequential to the field.

Operator, Operator

I'd now like to turn the call back over to Dr. Paul Bolno, for our closing remarks.

Paul Bolno, CEO

Thank you. And thank you, everyone for joining the call this morning. It's an exciting time for our organization. And I'm grateful to every Wave employee for their dedication and unrelenting focus on our mission, and all the patients and families we serve. Have a great day.

Operator, Operator

Ladies and gentlemen, this concludes today's presentation. You may now disconnect. And have a wonderful day.