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~~June 30, ~~2021~~2022

☐ 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~~00-0000000 (I.R.S. Employer Identification No.)

7 Straits View #12-00, Marina OneEast Tower Singapore (Address of principal executive offices)		018936 (Zip Code)

+656236 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, 2021~~August 3, 2022 was ~~58,832,518.~~86,820,111
.

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 (Deficit)	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	17	20
Item 3. Quantitative and Qualitative Disclosures About Market Risk	30	33
Item 4. Controls and Procedures	31	33
PART II - OTHER INFORMATION	31	34
Item 1. Legal Proceedings	31	34
Item 1A. Risk Factors	31	34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31	34
Item 3. Defaults Upon Senior Securities	31	34
Item 4. Mine Safety Disclosures	31	34
Item 5. Other Information	31	34
Item 6. Exhibits	32	35

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 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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 and variants thereof on our business, including 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:~~policies; 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, and variants thereof, 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.

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.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

WAVE LIFE SCIENCES LTD.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)


	September 30, 2021			December 31, 2020			June 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	123,896		$	184,497		$	123,163		$	150,564
Accounts receivable		22,500			30,000
Short-term investments								25,000			—
Prepaid expenses		7,627			10,434			5,396			6,584
Other current assets		3,964			5,111			6,555			5,416
Total current assets		157,987			230,042			160,114			162,564
Long-term assets:
Property and equipment, net		24,020			29,198			19,808			22,266
Operating lease right-of-use assets		14,639			16,232			28,791			18,378
Restricted cash		3,651			3,651			3,651			3,651
Other assets		215			115			955			148
Total long-term assets		42,525			49,196			53,205			44,443
Total assets	$	200,512		$	279,238		$	213,319		$	207,007
Liabilities, Series A preferred shares and shareholders’ equity
Current liabilities:
Accounts payable	$	7,443		$	13,795		$	11,168		$	7,281
Accrued expenses and other current liabilities		11,364			11,971			11,085			14,861
Current portion of deferred revenue		8,736			91,560			37,466			37,098
Current portion of operating lease liability		4,097			3,714			4,363			4,961
Total current liabilities		31,640			121,040			64,082			64,201
Long-term liabilities:
Deferred revenue, net of current portion		107,606			41,481			75,256			77,479
Operating lease liability, net of current portion		22,477			25,591			35,160			24,955
Other liabilities		1,014			474
Total long-term liabilities	$	131,097		$	67,546			110,416			102,434
Total liabilities	$	162,737		$	188,586		$	174,498		$	166,635
Series A preferred shares, no par value; 3,901,348 shares issued and outstanding at September 30, 2021 and December 31, 2020	$	7,874		$	7,874
Series A preferred shares, 0 par value; 3,901,348 shares issued and outstanding at June 30, 2022 and December 31, 2021							$	7,874		$	7,874
Shareholders’ equity:
Ordinary shares, no par value; 51,998,032 and 48,778,678 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	$	716,118		$	694,085
Ordinary shares, 0 par value; 86,724,658 and 59,841,116 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively							$	802,449		$	749,851
Additional paid-in capital		84,254			71,573			113,169			87,980
Accumulated other comprehensive income		258			389
Accumulated other comprehensive income (loss)								(47	)		181
Accumulated deficit		(770,729	)		(683,269	)		(884,624	)		(805,514	)
Total shareholders’ equity	$	29,901		$	82,778		$	30,947		$	32,498
Total liabilities, Series A preferred shares and shareholders’ equity	$	200,512		$	279,238		$	213,319		$	207,007

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

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,						Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Revenue	$	36,423		$	3,450		$	39,199		$	10,638		$	375		$	2,776		$	2,125		$	2,776
Operating expenses:
Research and development		31,086			28,275			96,114			100,911			29,733			31,635			57,203			65,028
General and administrative		12,944			9,590			33,991			32,791			12,806			10,969			25,180			21,047
Total operating expenses		44,030			37,865			130,105			133,702			42,539			42,604			82,383			86,075
Loss from operations		(7,607	)		(34,415	)		(90,906	)		(123,064	)		(42,164	)		(39,828	)		(80,258	)		(83,299	)
Other income, net:
Dividend income and interest income, net		6			23			25			544			124			8			150			19
Other income, net		1,371			1,292			3,421			1,399			744			1,054			998			2,050
Total other income, net		1,377			1,315			3,446			1,943			868			1,062			1,148			2,069
Loss before income taxes		(6,230	)		(33,100	)		(87,460	)		(121,121	)		(41,296	)		(38,766	)		(79,110	)		(81,230	)
Income tax provision		—			—			—			—			—			—			—			—
Net loss	$	(6,230	)	$	(33,100	)	$	(87,460	)	$	(121,121	)	$	(41,296	)	$	(38,766	)	$	(79,110	)	$	(81,230	)
Net loss per share attributable to ordinary shareholders—basic and diluted	$	(0.12	)	$	(0.86	)	$	(1.75	)	$	(3.36	)	$	(0.62	)	$	(0.78	)	$	(1.25	)	$	(1.65	)
Weighted-average ordinary shares used in computing net loss per share attributable to ordinary shareholders—basic and diluted		50,709,877			38,364,224			50,017,521			36,021,256			66,479,293			49,973,185			63,514,426			49,220,140

Other comprehensive income (loss):
Other comprehensive loss:
Net loss	$	(6,230	)	$	(33,100	)	$	(87,460	)	$	(121,121	)	$	(41,296	)	$	(38,766	)	$	(79,110	)	$	(81,230	)
Foreign currency translation		(11	)		23			(131	)		34			(142	)		—			(228	)		(120	)
Comprehensive loss	$	(6,241	)	$	(33,077	)	$	(87,591	)	$	(121,087	)	$	(41,438	)	$	(38,766	)	$	(79,338	)	$	(81,350	)

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

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, 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

—

—

—

—

3,284

—

—

3,284

Vesting of RSUs

—

—

4,513

—

—

—

—

—

Option exercises

—

—

273,633

702

—

—

—

702

Issuance of ordinary shares
   under the ESPP

—

—

25,239

171

—

—

—

171

Other comprehensive income

—

—

—

—

—

23

—

23

Net loss

—

—

—

—

—

—

(33,100
)

(33,100
)
Balance at September 30, 2020

3,901,348

$
7,874

48,769,049

$
694,066

$
68,354

$
301

$
(654,480
)

$
108,241

~~WAVE LIFE SCIENCES LTD.~~

UNAUDITED CONSOLIDATED STATEMENTS OF SERIES A PREFERRED SHARES AND SHAREHOLDERS’ EQUITY ~~CONTINUED~~(DEFICIT)

(In thousands, except share amounts)


	Series A Preferred Shares				Ordinary Shares				Additional Paid-In-		Accumulated Other Comprehensive			Accumulated			Total Shareholders’			Series A Preferred Shares				Ordinary Shares				Additional Paid-In-		Accumulated Other Comprehensive			Accumulated			Total Shareholders’
	Shares		Amount		Shares		Amount		Capital		Income			Deficit			Equity			Shares		Amount		Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balance at December 31, 2020		3,901,348	$	7,874		48,778,678	$	694,085	$	71,573	$	389		$	(683,269	)	$	82,778			3,901,348	$	7,874		48,778,678	$	694,085	$	71,573	$	389		$	(683,269	)	$	82,778
Issuance of ordinary shares pursuant to the at-the-market equity program, net		—		—		844,796		8,028		—		—			—			8,028			—		—		844,796		8,028		—		—			—			8,028
Share-based compensation		—		—		—		—		4,063		—			—			4,063			—		—		—		—		4,063		—			—			4,063
Vesting of RSUs		—		—		155,184		—		—		—			—			—			—		—		155,184		—		—		—			—			—
Option exercises		—		—		31,957		200		—		—			—			200			—		—		31,957		200		—		—			—			200
Issuance of ordinary shares under the ESPP		—		—		44,036		336		—		—			—			336			—		—		44,036		336		—		—			—			336
Other comprehensive loss		—		—		—		—		—		(120	)		—			(120	)		—		—		—		—		—		(120	)		—			(120	)
Net loss		—		—		—		—		—		—			(42,464	)		(42,464	)		—		—		—		—		—		—			(42,464	)		(42,464	)
Balance at March 31, 2021		3,901,348	$	7,874		49,854,651	$	702,649	$	75,636	$	269		$	(725,733	)	$	52,821			3,901,348	$	7,874		49,854,651	$	702,649	$	75,636	$	269		$	(725,733	)	$	52,821
Issuance of ordinary shares pursuant to the at-the-market equity program, net		—		—		718,179		5,065		—		—			—			5,065			—		—		718,179		5,065		—		—			—			5,065
Share-based compensation		—		—		—		—		2,722		—			—			2,722			—		—		—		—		2,722		—			—			2,722
Vesting of RSUs		—		—		3,636		—		—		—			—			—			—		—		3,636		—		—		—			—			—
Net loss		—		—		—		—		—		—			(38,766	)		(38,766	)		—		—		—		—		—		—			(38,766	)		(38,766	)
Balance at June 30, 2021		3,901,348	$	7,874		50,576,466	$	707,714	$	78,358	$	269		$	(764,499	)	$	21,842			3,901,348	$	7,874		50,576,466	$	707,714	$	78,358	$	269		$	(764,499	)	$	21,842
Issuance of ordinary shares pursuant to the at-the-market equity program, net		—		—		1,345,830		8,082		—		—			—			8,082
Share-based compensation		—		—		—		—		5,896		—			—			5,896
Vesting of RSUs		—		—		7,485		—		—		—			—			—
Option exercises		—		—		20,000		50		—		—			—			50
Issuance of ordinary shares under the ESPP		—		—		48,251		272		—		—			—			272
Other comprehensive loss		—		—		—		—		—		(11	)		—			(11	)
Net loss		—		—		—		—		—		—			(6,230	)		(6,230	)
Balance at September 30, 2021		3,901,348	$	7,874		51,998,032	$	716,118	$	84,254	$	258		$	(770,729	)	$	29,901

WAVE LIFE SCIENCES LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF SERIES A PREFERRED SHARES AND SHAREHOLDERS’ EQUITY (DEFICIT) 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 (Loss)			Deficit			Equity (Deficit)
Balance at December 31, 2021		3,901,348	$	7,874		59,841,116	$	749,851	$	87,980	$	181		$	(805,514	)	$	32,498
Issuance of ordinary shares pursuant to the at-the-market equity program, net		—		—		458,092		1,167		—		—			—			1,167
Share-based compensation		—		—		—		—		3,971		—			—			3,971
Vesting of RSUs		—		—		468,226		—		—		—			—			—
Option exercises		—		—		15,000		37		—		—			—			37
Issuance of ordinary shares under the ESPP		—		—		77,534		174		—		—			—			174
Other comprehensive loss		—		—		—		—		—		(86	)		—			(86	)
Net loss		—		—		—		—		—		—			(37,814	)		(37,814	)
Balance at March 31, 2022		3,901,348	$	7,874		60,859,968	$	751,229	$	91,951	$	95		$	(843,328	)	$	(53	)
Issuance of ordinary shares, net of offering costs		—		—		25,464,483		51,220		—		—			—			51,220
Issuance of pre-funded warrants, net of offering costs		—		—		—		—		14,268		—			—			14,268
Share-based compensation		—		—		—		—		6,950		—			—			6,950
Vesting of RSUs		—		—		400,207		—		—		—			—			—
Other comprehensive loss		—		—		—		—		—		(142	)		—			(142	)
Net loss		—		—		—		—		—		—			(41,296	)		(41,296	)
Balance at June 30, 2022		3,901,348	$	7,874		86,724,658	$	802,449	$	113,169	$	(47	)	$	(884,624	)	$	30,947

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

WAVE LIFE SCIENCES LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


		Nine Months Ended September 30,							Six Months Ended June 30,
		2021			2020				2022			2021
Cash flows from operating activities
Net loss		$	(87,460	)	$	(121,121	)		$	(79,110	)	$	(81,230	)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:							Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of right-of-use assets			1,593			1,376				1,593			1,043
Depreciation of property and equipment			5,704			6,097				3,425			3,857
Share-based compensation expense			12,681			11,077				10,921			6,785
Changes in operating assets and liabilities:
Accounts receivable			7,500			20,000				—			30,000
Prepaid expenses			2,807			1,660				1,188			1,246
Other assets			1,047			15,106				(1,946	)		(3,475	)
Accounts payable			(6,335	)		562				3,264			(5,251	)
Accrued expenses and other current liabilities			(607	)		(6,003	)			(3,776	)		(2,048	)
Deferred revenue			(16,699	)		(10,638	)			(1,855	)		(2,776	)
Operating lease liabilities			(2,731	)		(2,382	)			(2,399	)		(1,792	)
Other non-current liabilities			540			(301	)			0			(135	)
Net cash used in operating activities			(81,960	)		(84,567	)			(68,695	)		(53,776	)
Cash flows from investing activities
Purchases of property and equipment			(545	)		(781	)			(700	)		(447	)
Proceeds from the sale of property and equipment										106			—
Purchase of short-term investments										(50,000	)		—
Proceeds from the maturity of short-term investments										25,000			—
Net cash used in investing activities			(545	)		(781	)			(25,594	)		(447	)
Cash flows from financing activities
Proceeds from issuance of ordinary shares, net of offering costs			—			93,744				51,464			—
Proceeds from issuance of ordinary shares pursuant to the at-the-market equity program, net			21,177			59,882
Proceeds from issuance pre-funded warrants, net of offering costs										14,336			—
Proceeds from issuance of ordinary shares pursuant to the at-the-market equity program, net of offering costs										1,105			13,150
Proceeds from the exercise of share options			250			722				37			200
Proceeds from the employee share purchase plan			608			171
Proceeds from the ESPP										174			336
Net cash provided by financing activities			22,035			154,519				67,116			13,686
Effect of foreign exchange rates on cash, cash equivalents and restricted cash			(131	)		34				(228	)		(120	)
Net increase (decrease) in cash, cash equivalents and restricted cash			(60,601	)		69,205
Net decrease in cash, cash equivalents and restricted cash										(27,401	)		(40,657	)
Cash, cash equivalents and restricted cash, beginning of period			188,148			150,808				154,215			188,148
Cash, cash equivalents and restricted cash, end of period		$	127,547		$	220,013			$	126,814		$	147,491
Supplemental disclosure of cash flow information:
Increase in operating lease right-of-use assets and lease liabilities related to lease extension									$	12,006		$	—
Offering costs in accounts payable at period end									$	311		$	57

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

Wave Life Sciences Ltd.

Notes to Unaudited Consolidated Financial Statements

1. THE COMPANY

Organization

Wave Life Sciences Ltd. (together with its subsidiaries, “Wave” or the “Company”) is a clinical-stage genetic medicines company committed to delivering life-changing treatments for people battling devastating diseases. PRISM, Wave’s proprietary discovery and drug development platform, enables the precise design, optimization and production of novel stereopure oligonucleotides. Wave has built a genetic toolkit comprised of multiple therapeutic modalities, including RNase-H mediated silencing, RNAi, splicing, and RNA base editing, all of which leverage learnings and optimizations from the PRISM platform and allow Wave to ~~target genetically defined diseases with stereopure oligonucleotides across multiple therapeutic modalities.~~design built-for-purpose molecules to optimally address disease biology.

The Company was incorporated in Singapore on July 23, 2012 and has its principal U.S. office in Cambridge, Massachusetts. The Company was incorporated with the purpose of combining two commonly held companies, Wave Life Sciences USA, Inc. (“Wave USA”), a Delaware corporation (formerly Ontorii, Inc.), and Wave Life Sciences Japan, Inc. (“Wave Japan”), a company organized under the laws of Japan (formerly Chiralgen., Ltd.), which occurred on September 13, 2012. On May 31, 2016, Wave Life Sciences Ireland Limited (“Wave Ireland”) was formed as a wholly-owned subsidiary of Wave Life Sciences Ltd. On April 3, 2017, Wave Life Sciences UK Limited (“Wave UK”) was formed as a wholly-owned subsidiary of Wave Life Sciences Ltd.

The Company’s primary activities since inception have been developing and evolving PRISM to design, develop and commercialize oligonucleotide therapeutics, advancing the Company’s differentiated neurology portfolio, as well as exploring other therapeutic areas of interest, building the Company’s research, development and ~~development~~manufacturing capabilities, advancing programs into the clinic, furthering clinical development of such clinical-stage programs, building the Company’s intellectual property, and assuring adequate capital to support these activities.

Liquidity

Since its inception, the Company has not generated any product revenue and has incurred recurring net losses. To date, the Company has primarily funded its operations through private placements of debt and equity securities, public and other registered offerings of its ~~ordinary shares~~equity securities and collaborations with third parties. Until the Company can generate significant revenue from product sales, if ever, the Company expects to continue to finance operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties. Adequate additional financing may not be available to the Company on acceptable terms, or at all. The inability to raise capital as and when needed would have a negative impact on the Company’s financial condition and ability to pursue its business strategy.

As of ~~September~~June 30, ~~2021,~~2022, the Company had cash, ~~and~~ cash equivalents and short-term investments of ~~$123.9~~$148.2 million. Subsequent to September 30, 2021, the Company received $22.5 million from Takeda (as defined in Note 5), which was included in accounts receivable as of September 30, 2021 related to the Amendment (as defined in Note 5) to the Takeda Collaboration Agreement (as defined in Note 5), and $29.6 million in net proceeds under the Company’s at-the-market equity program. The Company expects that its existing cash, ~~and~~ cash equivalents and short-term investments will be sufficient to fund its operations for at least the next twelve months. The Company has based this expectation on assumptions that may prove to be incorrect, and the Company may use its available capital resources sooner than it currently expects. If the Company’s anticipated operating results are not achieved in future periods, planned expenditures may need to be further reduced in order to extend the time period over which the then-available resources would be able to fund the Company’s operations. In addition, the Company may elect to raise additional funds before it needs them if the conditions for raising capital are favorable due to market conditions or strategic considerations, even if the Company expects it has sufficient funds for its current or future operating plans.

Risks and Uncertainties

The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, new technological innovations, protection of proprietary technology, maintaining internal manufacturing capabilities, dependence on key personnel, compliance with government regulations and the need to obtain additional financing. The Company’s therapeutic programs will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization of any product candidates. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance-reporting capabilities. There can be no assurance that the Company’s research and development efforts will be successful, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies.

Basis of Presentation

The Company has prepared the accompanying consolidated financial statements in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) and in U.S. dollars.

2. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies described in the Company’s audited financial statements as of and for the year ended December 31, ~~2020,~~2021, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the Securities and Exchange Commission (“SEC”) on March ~~4, 2021,~~3, 2022, as amended (the ~~“2020~~“2021 Annual Report on Form 10-K”), have had no material changes during the ~~three and nine~~six months ended ~~September~~June 30, ~~2021.~~2022, except as described below.

Fair Value of Financial Instruments

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy is a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the financial instrument based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the financial instrument and are developed based on the information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The hierarchy defines three levels of valuation inputs:

Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date of identical, unrestricted assets.

Level 2—Quoted prices for similar assets, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 2 includes investments valued at quoted prices adjusted for legal or contractual restrictions specific to the security.

Level 3—Pricing inputs are unobservable for the asset, that is, inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset. Level 3 includes private investments that are supported by little or no market activity.

Cash and Cash Equivalents

The Company considers all highly liquid securities with original final maturities of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents are comprised of funds in cash and money market accounts.

Short-Term Investments

The Company considers all time deposits with original maturities of more than three months from the date of purchase to be short-term investments.

Concentration of Credit Risk

Cash, cash equivalents, restricted cash and short-term investments are financial instruments that potentially subject the Company to concentration of credit risk. The Company uses several financial institutions to maintain its cash, cash equivalents, restricted cash and short-term investments, all of which are high quality, accredited financial institutions and, accordingly, such funds are subject to minimal credit risk. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company has no financial instruments with off-balance sheet risk of loss.

Unaudited Interim Financial Data

The accompanying interim consolidated balance sheet as of ~~September~~June 30, ~~2021,~~2022, the related interim consolidated statements of operations and comprehensive loss for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, the consolidated statements of Series A preferred shares and shareholders’ equity (deficit) for the three months ended March 31, and June 30, 2022 and ~~September 30,~~ 2021, ~~and 2020,~~ the consolidated statements of cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, and the related interim information contained within the notes to the unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the SEC for interim financial information. Accordingly, they do not include all of the information and the notes required by U.S. GAAP for complete financial statements. The financial data and other information disclosed in these notes related to the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 are unaudited. In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of the Company’s financial position and results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the year ending December 31, ~~2021~~2022 or any other interim period or future year or period.

3. FAIR VALUE MEASUREMENTS

The following table sets forth the Company’s financial assets that are measured at fair value on a recurring basis:

~~Principles~~


	Total		Level 1		Level 2		Level 3
	(in thousands)
June 30, 2022
Cash and cash equivalents	$	123,163	$	123,163	$	—	$	—
Short-term investments		25,000		—		25,000		—
Restricted cash		3,651		3,651		—		—
Total	$	151,814	$	126,814	$	25,000	$	—
December 31, 2021
Cash and cash equivalents	$	150,564	$	150,564	$	—	$	—
Short-term investments		—		—		—		—
Restricted cash		3,651		3,651		—		—
Total	$	154,215	$	154,215	$	—	$	—

There have been 0 transfers between fair value levels during the three months ended June 30, 2022.

Cash, cash equivalents and restricted cash are Level 1 assets which are comprised of ~~Consolidation~~

funds held in checking and money market accounts. Short-term investments are Level 2 assets which are comprised of time deposits with original maturities of more than three months. The ~~Company’s consolidated financial statements include~~Company determined that the ~~accounts~~fair value of its short-term investments is $25.0 million as of June 30, 2022, which approximates the carrying value of the ~~Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.~~

term deposits. There were ~~Recently Issued Accounting Pronouncements~~0

~~The recently issued accounting pronouncements described in~~ short-term investments as of December 31, 2021, as the term deposits that constitute the Company’s ~~audited financial statements as of and for the year ended December 31, 2020, and the notes thereto, which are included in the 2020 Annual Report on Form 10-K, have had no material changes~~short-term investments were purchased during the ~~nine~~six months ended ~~September~~June 30, ~~2021, except as described below.~~2022. The carrying amounts of accounts payable and accrued expenses approximate their fair values due to their short-term maturities.

~~Recently Adopted Accounting Pronouncements~~12

~~In December 2019, the Financial Accounting Standards Board finalized Accounting Standards Update No. 2019-12, Income Taxes (Topic 740):~~ ~~Simplifying the Accounting for Income Taxes~~ (“ASU 2019-12”). ASU 2019-12 eliminates certain exceptions in Accounting Standards Codification (“ASC”) 740 and generally simplifies existing guidance. The new guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, but may be adopted earlier by entities. The Company adopted ASU 2019-12 as of January 1, 2021 and it did not have an impact on the Company’s consolidated financial statements.

~~3. SHAREHOLDERS’ EQUITY~~

~~The Company entered into an~~ ~~open market sales agreement with Jefferies LLC in May 2019, as amended in March 2020, for its at-the-market equity program. During the nine months ended September 30, 2021,~~ the Company sold 2,908,805 ordinary shares under its at-the-market equity program for aggregate net proceeds of $21.2 million. Subsequent to September 30, 2021, the Company sold 6,832,110 ordinary shares under its at-the-market equity program for aggregate net proceeds of $29.6 million.

4. SHARE-BASED COMPENSATION

The Wave Life Sciences Ltd. 2021 Equity Incentive Plan (the “2021 Plan”) was approved by the Company’s shareholders and went into effect on August 10, 2021. The 2021 Plan serves as the successor to the Wave Life Sciences Ltd. 2014 Equity Incentive Plan, as amended (the “2014 Plan”), such that outstanding awards granted under the 2014 Plan continue to be governed by the terms of the 2014 Plan, but no awards may be made under the 2014 Plan after August 10, 2021. The aggregate number of ordinary shares authorized for issuance of awards under the 2021 Plan is 5,450,000 ordinary shares, plus the number of ordinary shares underlying any awards under the 2014 Plan that are forfeited, cancelled or otherwise terminated (other than by exercise or withheld by the Company to satisfy any tax withholding obligation) on or after August 10, 2021.

The 2021 Plan authorizes (and the 2014 Plan previously authorized) the Company’s board of directors or a committee of the board of directors to, among other things, grant non-qualified share options, restricted awards, which include restricted shares and restricted share units (“RSUs”), and performance awards to eligible employees and directors of the Company.

Options generally vest over periods of one to four years, and any options that are forfeited or cancelled are available to be granted again. The contractual life of options is generally five or ten years from the grant date. RSUs can be time-based or performance-based. Time-based RSUs generally vest over a period of one to four ~~years.~~years. The vesting of performance-based RSUs is contingent on the achievement of certain performance milestones. Any RSUs that are forfeited are available to be granted again.

In March 2021, the ~~Compensation Committee~~compensation committee of the Company’s board of directors approved an amendment and restatement of the Company’s outstanding 2019 performance-based RSUs to add an additional milestone to the existing milestones. In 2021, the Company also granted performance-based RSUs with the same terms to certain employees who did not receive the 2019 performance-based RSUs. This modification did not result in any incremental expense.

In April 2022, the Company determined that a performance-based RSU milestone was achieved and consequently 50% of the outstanding performance-based RSUs vested, which resulted in the issuance of 384,646 ordinary shares. During the three months ended June 30, 2022, the Company recorded share-based compensation expense ~~and~~of approximately $3.8 million, which represents all of the expense related to the achievement of this performance-based RSU milestone. The Company did not recognize any expense related to the other performance-based ~~RSUs during the nine months ended September 30, 2021,~~RSU milestones, as the ~~related~~remaining milestones were not considered probable of achievement as of ~~September~~June 30, ~~2021~~2022..

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, the Company granted ~~1,253,741~~2,037,175 options and 55,075 ~~and 1,078,959~~time-based RSUs to employees. ~~Of the RSUs granted during the nine months ended September 30, 2021, 908,059 were time-based RSUs and 170,900 were performance-based RSUs.~~

As of ~~September~~June 30, ~~2021, 5,277,236~~2022, 1,561,172 ordinary shares remained available for future grant under the 2021 Plan.

~~Employee Share Purchase Plan~~

The Wave Life Sciences Ltd. 2019 Employee Share Purchase Plan (“ESPP”)allows all full-time and certain part-time employees to purchase the Company’s ordinary shares at a discount to fair market value. Eligible employees may enroll in a six-month offering period beginning on or about January 15th and July 15th every year. Shares are purchased at a price equal to ~~85%~~85% of the lower of the fair market value of the Company’s ordinary shares on the first business day or the last business day of an offering period. During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, 77,534~~92,287~~ ordinary shares were issued under the ESPP. As of ~~September~~June 30, ~~2021~~,2022, there were ~~882,474~~804,940 ordinary shares available for issuance under the ESPP.

1213

5. COLLABORATION AGREEMENTS

~~Pfizer Collaboration and Equity Agreements~~

In May 2016, the Company entered into a Research, License and Option Agreement (as amended in November 2017, the “Pfizer Collaboration Agreement”) with Pfizer Inc. (“Pfizer”). The research term for the Pfizer Collaboration Agreement commenced in May 2016 and ended by its original terms in May 2020. Pursuant to the terms of the Pfizer Collaboration Agreement, the Company and Pfizer agreed to collaborate on the discovery, development and commercialization of stereopure oligonucleotide therapeutics for up to 5 programs, each directed at a genetically-defined hepatic target selected by Pfizer (the “Pfizer Collaboration”). The Company received $10.0 million as an upfront license fee under the Pfizer Collaboration Agreement. Subject to option exercises by Pfizer, the Company was entitled to earn potential research, development and commercial milestone payments.

Simultaneously with the entry into the Pfizer Collaboration Agreement, the Company entered into a Share Purchase Agreement (the “Pfizer Equity Agreement,” and together with the Pfizer Collaboration Agreement, the “Pfizer Agreements”) with C.P. Pharmaceuticals International C.V., an affiliate of Pfizer (the “Pfizer Affiliate”). Pursuant to the terms of the Pfizer Equity Agreement, the Pfizer Affiliate purchased 1,875,000 of the Company’s ordinary shares (the “Shares”) at a purchase price of $16.00 per share, for an aggregate purchase price of $30.0 million. The Company did not incur any material costs in connection with the issuance of the Shares.

~~Under the Pfizer Collaboration Agreement, the parties agreed to collaborate during a~~ ~~four-year~~ research term, which ended by its original terms in May 2020. During the research term, the Company was responsible to use its commercially reasonable efforts to advance up to five programs through to the selection of clinical candidates. Pfizer nominated two hepatic targets upon entry into the Pfizer Collaboration in May 2016. The Pfizer Collaboration Agreement provided Pfizer with options to nominate up to three additional programs by making nomination milestone payments. Pfizer nominated the third, fourth and fifth hepatic targets in August 2016, March 2018 and April 2018, respectively.

During the nine months ended September 30, 2020, the Company recognized revenue of $1.5 million under the Pfizer Collaboration Agreement. During the research term that ran from May 2016 to May 2020, the Company recognized revenue of $18.5 million under the Pfizer Collaboration Agreement.

Takeda Collaboration and Equity Agreements

In February 2018, Wave USA and Wave UK entered into a global strategic collaboration (the “Takeda Collaboration”) with Takeda Pharmaceutical Company Limited (“Takeda”), pursuant to which Wave USA, Wave UK and Takeda agreed to collaborate on the research, development and commercialization of oligonucleotide therapeutics for disorders of the Central Nervous System (“CNS”). The Takeda Collaboration provides the Company with at least ~~$230.0~~$230.0 million in committed cash and Takeda with the option to co-develop and co-commercialize the Company’s CNS development programs in (1) Huntington’s disease (“HD”); (2) amyotrophic lateral sclerosis (“ALS”) and frontotemporal dementia (“FTD”); and (3) the Company’s discovery-stage program targeting ATXN3 for the treatment of spinocerebellar ataxia 3 (“SCA3”) (collectively, “Category 1 Programs”). In addition, the Takeda Collaboration provided Takeda the right to exclusively license multiple preclinical programs for CNS disorders, including Alzheimer’s disease and Parkinson’s disease (collectively, “Category 2 Programs”). In April 2018, the Takeda Collaboration became effective and Takeda paid the Company ~~$110.0~~$110.0 million as an upfront payment. Takeda also agreed to fund the Company’s research and preclinical activities in the amount of ~~$60.0~~$60.0 million during the four-year research term and to reimburse the Company for any collaboration-budgeted research and preclinical expenses incurred by the Company that exceed that amount.

Simultaneously with Wave USA and Wave UK’s entry into the collaboration and license agreement with Takeda (the “Takeda Collaboration Agreement”), the Company entered into a share purchase agreement with Takeda (the “Takeda Equity Agreement,” and together with the Takeda Collaboration Agreement, the “Takeda Agreements”) pursuant to which it agreed to sell to Takeda 1,096,892 of its ordinary shares at a purchase price of ~~$54.70~~$54.70 per share. In April 2018, the Company closed the Takeda Equity Agreement and received aggregate cash proceeds of ~~$60.0~~$60.0 million. The Company did not incur any material costs in connection with the issuance of shares.

With respect to Category 1 Programs, the Company will be responsible for researching and developing products and companion diagnostics for Category 1 Programs through completion of the first proof of mechanism study for such products. Takeda will have an exclusive option for each target and all associated products and companion diagnostics for such target, which it may exercise at any time through completion of the proof of mechanism study. If Takeda exercises this option, the Company will receive an opt-in payment and will lead manufacturing and joint clinical co-development activities and Takeda will lead joint co-commercial activities in the United States and all commercial activities outside of the United States. Global costs and potential profits will be shared ~~50:~~50:50 and the Company will be eligible to receive development and commercial milestone payments. In addition to its 50% profit share, the Company is eligible to receive option exercise fees and development and commercial milestone payments for each of the Category 1 Programs.

With respect to Category 2 Programs, the Company granted Takeda the right to exclusively license multiple preclinical programs during a four-year research term (subject to limited extension for programs that were initiated prior to the expiration of the research term, in accordance with the Takeda Collaboration Agreement) (“Category 2 Research Term”). During that term, the Takeda

Collaboration provided that the parties may collaborate on preclinical programs for up to 6 targets at any one ~~time.~~time. The Company was responsible for researching and preclinically developing products and companion diagnostics directed to the agreed upon targets through completion of Investigational New Drug application (“IND”)-enabling studies in the first major market country. Thereafter, Takeda would have an exclusive worldwide license to develop and commercialize products and companion diagnostics directed to such targets, subject to the Company’s retained rights to lead manufacturing activities for products directed to such targets. Takeda agreed to fund the Company’s research and preclinical activities in the amount of ~~$60.0~~$60.0 million during the research term and reimburse the Company for any collaboration-budgeted research and preclinical expenses incurred by the Company that exceeded that amount. The Company was also eligible to receive tiered high single-digit to mid-teen royalties on Takeda’s global commercial sales of products from each Category 2 Program.

Under the Takeda Collaboration Agreement, each party granted to the other party specific intellectual property licenses to enable the other party to perform its obligations and exercise its rights under the Takeda Collaboration Agreement, including license grants to enable each party to conduct research, development and commercialization activities pursuant to the terms of the Takeda Collaboration Agreement.

The term of the Takeda Collaboration Agreement commenced on April 2, 2018 and, unless terminated earlier, will continue until the date on which: (i) with respect to each Category 1 Program target for which Takeda does not exercise its option, the expiration or termination of the development program with respect to such target; (ii) with respect to each Category 1 Program target for which Takeda exercises its option, the date on which neither party is researching, developing or manufacturing any products or companion diagnostics directed to such target; or (iii) with respect to each Category 2 Program target, the date on which royalties are no longer payable with respect to products directed to such target.

Takeda may terminate the Takeda Collaboration Agreement for convenience on 180 days’ notice, in its entirety or on a target-by-target basis. Subject to certain exceptions, each party has the right to terminate the Takeda Collaboration Agreement on a target-by-target basis if the other party, or a third party related to such party, challenges the patentability, enforceability or validity of any patents within the licensed technology that cover any product or companion diagnostic that is subject to the Takeda Collaboration Agreement. In the event of any material breach of the Takeda Collaboration Agreement by a party, subject to cure rights, the other party may terminate the Takeda Collaboration Agreement in its entirety if the breach relates to all targets or on a target-by-target basis if the breach relates to a specific target. In the event that Takeda and its affiliates cease development, manufacturing and commercialization activities with respect to compounds or products subject to the Takeda Collaboration Agreement and directed to a particular target, the Company may terminate the Takeda Collaboration Agreement with respect to such target. Either party may terminate the Takeda Collaboration Agreement for the other party’s insolvency. In certain termination circumstances, the Company would receive a license from Takeda to continue researching, developing and manufacturing certain products, and companion diagnostics.

The Takeda Collaboration is managed by a joint steering committee (“JSC”) in which both parties are represented equally. The JSC is tasked with overseeing the scientific progression of each Category 1 Program and, prior to the Amendment (discussed below), the Category 2 Programs.

The Company assessed this arrangement in accordance withASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) and concluded that the contract counterparty, Takeda, is a customer for Category 1 Programs prior to Takeda exercising its option, and for Category 2 Programs during the Category 2 Research Term. The Company identified the following material promises under the arrangement: (1) the non-exclusive, royalty-free research and development license for each Category 1 Program; (2) the research and development services for each Category 1 Program through completion of the first proof of mechanism study; (3) the exclusive option to license, co-develop and co-commercialize each Category 1 Program; (4) the right to exclusively license the Category 2 Programs; and (5) the research and preclinical development services of the Category 2 Programs through completion of IND-enabling studies. The research and development services for each Category 1 Program were determined to not be distinct from the research and development license and should therefore be combined into a single performance obligation for each Category 1 Program. The research and preclinical development services for the Category 2 Programs were determined to not be distinct from the exclusive licenses for the Category 2 Programs and should therefore be combined into a single performance obligation.

Additionally, the Company determined that the exclusive option for each Category 1 Program was priced at a discount, and, as such, provide material rights to Takeda, representing three separate performance obligations. Based on these assessments, the Company identified seven performance obligations in the Takeda Collaboration Agreement: (1) research and development services through completion of the first proof of mechanism and non-exclusive research and development license for HD; (2) research and development services through completion of the first proof of mechanism and non-exclusive research and development license for ALS and FTD; (3) research and development services through completion of the first proof of mechanism and non-exclusive research and development license for SCA3; (4) the material right provided for the exclusive option to license, co-develop and co-commercialize HD; (5) the material right provided for the exclusive option to license, co-develop and co-commercialize ALS and FTD; (6) the material right provided for the exclusive option to license, co-develop and co-commercialize SCA3; and (7) the research and preclinical development services and right to exclusively license the Category 2 Programs.

At the outset of the arrangement, the transaction price included the ~~$110.0~~$110.0 million upfront consideration received and the ~~$60.0~~$60.0 million of committed research and preclinical funding for the Category 2 Programs. The Company determined that the Takeda Collaboration Agreement did not contain a significant financing component. The option exercise fees to license, co-develop and co-commercialize each Category 1 Program that may be received are excluded from the transaction price until each customer option is exercised. The potential milestone payments were excluded from the transaction price, as all milestone amounts were fully constrained at the inception of the Takeda Collaboration Agreement. The Company will reevaluate the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur, if necessary, will adjust its estimate of the transaction price.

The Company allocated the transaction price to the performance obligations on a relative standalone selling price basis. For the performance obligations associated with the research and development services through completion of the first proof of mechanism and non-exclusive research and development license for HD; the research and development services through completion of the first proof of mechanism and non-exclusive research and development license for ALS and FTD; the research and development services through completion of the first proof of mechanism and non-exclusive research and development license for SCA3; and the research and preclinical development services and right to exclusively license the Category 2 Programs, the Company determined the standalone selling price using estimates of the costs to perform the research and development services, including expected internal and external costs for services and supplies, adjusted to reflect a profit margin. The total estimated cost of the research and development services reflected the nature of the services to be performed and the Company’s best estimate of the length of time required to perform the services. For the performance obligations associated with the material right provided for the exclusive option to license, co-develop and co-commercialize HD; the material right provided for the exclusive option to license, co-develop and co-commercialize ALS and FTD; and the material right provided for the exclusive option to license, co-develop and co-commercialize SCA3, the Company estimated the standalone fair value of the option to license each Category 1 Program utilizing an adjusted market assessment approach, and determined that any standalone fair value in excess of the amounts to be paid by Takeda associated with each option represented a material right.

Revenue associated with the research and development services for each Category 1 Program performance obligation is being recognized as the research and development services are provided using an input method, according to the costs incurred on each Category 1 Program and the total costs expected to be incurred to satisfy each Category 1 Program performance obligation. Revenue associated with the research and preclinical development services for the Category 2 Programs performance obligation is being recognized as the research and preclinical development services are provided using an input method, according to the costs incurred on Category 2 Programs and the total costs expected to be incurred to satisfy the performance obligation. The transfer of control for these performance obligations occurs over time and, in management’s judgment, this input method is the best measure of progress towards satisfying the performance obligations. The amount allocated to the material right for each Category 1 Program option will be recognized on the date that Takeda exercises each respective option, or immediately as each option expires unexercised. The amounts received that have not yet been recognized as revenue are recorded in deferred revenue on the Company’s consolidated balance sheet.

On October 15, 2021, Wave USA, Wave UK and Takeda entered into the Second Amendment to the Takeda Collaboration Agreement (the “Amendment”), which discontinued the Category 2 component of the Takeda Collaboration. Pursuant to the Amendment, Takeda agreed to pay the Company an additional ~~$22.5~~$22.5 million as full payment for reimbursable Category 2 Program collaboration-budgeted research and preclinical expenses. The Category 1 Programs under the Takeda Collaboration Agreement remain in effect and are unchanged by the Amendment. ~~The Company recognized collaboration revenue of $36.4 million for the three months ended September~~

Through June 30, ~~2021, as a result of unconstraining certain variable consideration and recognizing the reimbursement of collaboration-budgeted research and preclinical expenses.~~As of September 30, 2021, $22.5 million is recorded as accounts receivable on the consolidated balance sheet. Subsequent to September 30, 2021, the Company received full payment from Takeda for the accounts receivable.

~~Through September 30, 2021,~~2022, the Company had recognized revenue of approximately ~~$76.2~~$79.8 million as collaboration revenue under the Takeda Collaboration Agreement. During the three and ~~nine~~six months ended ~~September~~June 30, 2022, the Company recognized revenue of $0.3 million and $1.9 million under the Takeda Collaboration Agreement, respectively. During the three and six months ended June 30, 2021, the Company recognized revenue of ~~$36.4~~approximately $2.8 million ~~and $39.2 million, respectively,~~ under the Takeda Collaboration Agreement. ~~During~~

The aggregate amount of the ~~three~~transaction price allocated to the Company’s unsatisfied and ~~nine months ended September 30, 2020, the Company recognized~~partially unsatisfied performance obligations and recorded in deferred revenue as of ~~$3.4~~December 31, 2021 was $114.2 million, ~~and $9.1~~of which $37.1 million ~~respectively, under the Takeda Collaboration Agreement.~~

was included in current liabilities. The aggregate amount of the transaction price allocated to the Company’s unsatisfied and partially unsatisfied performance obligations and recorded in deferred revenue at ~~September~~June 30, ~~2021~~2022 is ~~$116.3~~$112.7 million, of which ~~$8.7~~$37.5 million is included in current ~~liabilities, all of which relates to Category 1 Programs.~~liabilities. The Company expects to recognize revenue for the portion of the deferred revenue that relates to the research and development services for each Category 1 Program as costs are incurred, over the remaining research term. The Company expects to recognize revenue for the portion of the deferred revenue that relates to the material right for each Category 1 Program option upon Takeda’s exercise of such option, or immediately as each option expires unexercised.

1516

6. SHAREHOLDERS’ EQUITY

June 2022 Offering

On June 16, 2022, the Company closed an underwritten offering (the “June 2022 Offering”) in which the Company issued and sold 25,464,483 of the Company’s ordinary shares at a price of $2.15 per share and pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 7,093,656 of the Company’s ordinary shares at an offering price of $2.1499 per Pre-Funded Warrant, which represents the per share offering price for the ordinary shares less the $0.0001 per share exercise price for each Pre-Funded Warrant. These Pre-Funded Warrants were recorded as a component of shareholders’ equity within additional paid-in capital. The gross proceeds to the Company were $70.0 million before deducting underwriting discounts and commissions and other offering expenses. The net proceeds of the June 2022 Offering were approximately $65.5 million.

The Pre-Funded Warrants are exercisable at any time after their original issuance and on or prior to the five-year anniversary of the original issuance date. A holder of Pre-Funded Warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 19.99% of the number of ordinary shares outstanding or more than 19.99% of the combined voting power of the Company’s securities outstanding immediately after giving effect to such exercise, unless and until shareholder approval is obtained.

7. NET LOSS PER ORDINARY SHARE

The Company applies the two-class method to calculate its basic and diluted net loss per share attributable to ordinary shareholders, as its Series A preferred shares are participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to ordinary shareholders.

As of June 30, 2022, there are 7,093,656 vested and exercisable Pre-Funded Warrants outstanding to purchase ordinary shares for the exercise price of $0.0001 per share. The Pre-Funded Warrants are included in the weighted-average shares outstanding used in the calculation of basic net loss per share as the exercise price is negligible and the warrants are fully vested and exercisable.

Basic loss per share is computed by dividing net loss attributable to ordinary shareholders and Pre-Funded Warrant holders by the weighted-average number of ordinary shares and Pre-Funded Warrants outstanding.

The Company’s potentially dilutive shares, which include outstanding share options to purchase ordinary shares, RSUs, and Series A preferred shares, are considered to be ordinary share equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

The following ordinary share equivalents, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to ordinary shareholders for the periods indicated because including them would have had an anti-dilutive effect:


	As of September 30,				As of June 30,
	2021		2020		2022		2021
Options to purchase ordinary shares		4,765,701		3,912,647		8,526,312		4,584,490
RSUs		1,974,767		1,179,380		979,850		2,027,019
Series A preferred shares		3,901,348		3,901,348		3,901,348		3,901,348

Additionally, for the periods presented, the two-class method does not impact the net loss per ordinary share as the Company was in a net loss position for each of the periods presented and holders of Series A preferred shares dodo not participate in losses.

7.8. INCOME TAXES

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, the Company recorded 0 income tax ~~provision~~.

provision. The Company maintained a full valuation allowance for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 in all jurisdictions due to uncertainty regarding future taxable income.

8.The Company’s utilization of its net operating loss carryforwards and general business credit carryforwards in the United States may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. As of June 30, 2022, the Company is evaluating whether an ownership change occurred during 2022. Should an ownership change have occurred or occur in the future, the Company’s ability to utilize its net operating losses and general business credit carryforwards may be limited.

9. GEOGRAPHIC DATA

Substantially all of the Company’s long-lived assets were located in the United States as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

9.10. RELATED PARTIES

The Company had the following related party transaction for the periods presented in the accompanying consolidated financial statements:

•

In 2012, the Company entered into a consulting agreement for scientific advisory services with Dr. Gregory L. Verdine, one of the Company’s founders and a member of the Company’s board of directors. The consulting agreement does not have a specific term and may be terminated by either party upon 14 days’ prior written notice. Pursuant to the consulting agreement, the Company pays Dr. Verdine approximately $13 thousand per month, plus reimbursement for certain expenses.•

In 2012, the Company entered into a consulting agreement for scientific advisory services with Dr. Gregory L. Verdine, one of the Company’s founders and a member of the Company’s board of directors. The consulting agreement does not have a specific term and may be terminated by either party upon 14 days~~’ prior written notice. Pursuant to the consulting agreement, the Company pays Dr. Verdine approximately $13 thousand per month, plus reimbursement for certain expenses.~~

~~10.~~11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:


	September 30, 2021		December 31, 2020		June 30, 2022		December 31, 2021
	(in thousands)				(in thousands)
Accrued compensation	$	7,485	$	9,003	$	6,574	$	10,181
Accrued expenses related to CROs and CMOs		3,384		2,143		3,473		3,571
Accrued expenses and other current liabilities		495		825		1,038		1,109
Total accrued expenses and other current liabilities	$	11,364	$	11,971	$	11,085	$	14,861

12. LEASES

Lease Arrangements

The Company enters into lease arrangements for its facilities. A summary of the arrangements is as follows:

Operating Leases

Lexington

On September 26, 2016, and as amended on December 31, 2016, the Company entered into a 10 year and 9-month lease , which includes two successive five-year renewal options, for its facility in Lexington, Massachusetts (the “Lexington Lease”), which the Company uses primarily for its current good manufacturing practices (“cGMP”) manufacturing, as well as for additional laboratory and office space. Throughout the term of the Lexington Lease, the Company is responsible for paying certain costs and expenses, in addition to the rent, as specified in the lease, including a proportionate share of applicable taxes, operating expenses and utilities. As required under the terms of the Lexington Lease, the Company had restricted cash of approximately $2.7 million in a separate bank account as of June 30, 2022 and December 31, 2021.

Cambridge

In April 2015, the Company entered into a lease agreement for an office and laboratory facility in Cambridge, Massachusetts (the “Cambridge Lease”), which commenced in October 2015 with a term of 7.5 years with a five-year renewal option to extend the lease. Throughout the term of the Cambridge Lease, the Company is responsible for paying certain costs and expenses, in addition to the rent, as specified in the lease, including a proportionate share of applicable taxes, operating expenses and utilities. As required under the terms of the Cambridge Lease, the Company had restricted cash of $1.0 million in a separate bank account as of June 30, 2022 and December 31, 2021.

In December 2020, the Company exercised its option under the Cambridge Lease to lease additional office and laboratory space at the adjoining facility. The combined space constitutes the entire building located at 733 Concord Avenue. The lease for the additional space commenced on October 1, 2021, with a term of five years and, for accounting purposes, is considered a separate lease from the Cambridge Lease (the “Additional Cambridge Lease”). On the commencement date of the Additional Cambridge Lease, the Company recorded a right-of-use asset and corresponding operating lease liability of $4.5 million and began recognizing straight-line rent expense under ASC 842. Throughout the term of the Additional Cambridge Lease, the Company is responsible for paying certain costs and expenses, in addition to the rent, as specified in the lease, including a proportionate share of applicable taxes, operating expenses and utilities.

In June 2022, the Company notified the landlord of its intention to exercise the five-year renewal option under the Cambridge Lease to extend the lease term through March 2028 (the “Cambridge Lease Extension”). In June 2022, the Company calculated an incremental borrowing rate of 10.53% and remeasured the right-of-use asset and the lease liabilities related to the Cambridge Lease Extension. As of June 30, 2022, the Company recorded an additional $12.0 million of operating right-of-use asset and corresponding operating lease liabilities relating to the Cambridge Lease Extension. In August 2022, the Company executed the second amendment to the Cambridge Lease with respect to the Cambridge Lease Extension.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the Securities and Exchange Commission (“SEC”) on March ~~4, 2021,~~3, 2022, as amended (the ~~“2020~~“2021 Annual Report on Form 10-K”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report on Form 10-Q or the “Risk Factor” section of our ~~2020~~2021 Annual Report on Form 10-K, our actual results could differ materially from the results described in, or implied by, these forward-looking statements.

Overview

We are a clinical-stage genetic medicines company committed to delivering life-changing treatments for people battling devastating diseases. Using PRISM™, our proprietary discovery and drug development platform that enables the precise design, optimization and production of novel stereopure oligonucleotides, we aspire to develop ~~best in class~~best-in-class medicines that ~~drug~~target the transcriptome to treat genetically defined diseases with a high degree of unmet need.

We are developing oligonucleotides that target ribonucleic acid (“RNA”) and harness existing cellular machinery to either reduce the expression of disease-promoting RNA or proteins, restore the production of functional proteins, or modulate protein expression. By intervening at the RNA level, we have the potential to address diseases that have historically been difficult to treat with small molecules or biologics, while retaining the ability to titrate dose, modulate duration of effect, and avoid risk of permanent off-target genetic changes and other challenges associated with DNA editing or gene therapy approaches. Oligonucleotides have additional advantages as a therapeutic class, including the ability to access multiple tissue types and the ability to modulate the frequency of dosing to ensure broad distribution within tissues over time. Oligonucleotides also have well-established manufacturing processes and validated test methods based on decades of improvements, as well as established regulatory, access and reimbursement pathways.

~~The~~Our approach is based on the scientific insight that the biological machinery necessary to address genetic diseases already exists in human cells ~~but it needs to~~and can be controlled with the right tools. We have built a genetic toolkit comprised of multiple therapeutic modalities, including RNase-H mediated silencing, RNAi, splicing, and RNA ~~editing.~~ base editing, all of which leverage learnings and optimizations from our PRISM platform and allow us to design built-for-purpose molecules to optimally address disease biology.

Our ~~leading~~A-to-I(G) RNA base editing ~~capability leverages widely expressed endogenous ADAR~~oligonucleotides (“AIMers”) represent our newest therapeutic modality. AIMers are designed to edit single base mutations on RNA transcripts, thereby avoiding permanent changes to the genome that occur with DNA-targeting approaches. Rather than using an exogenous editing enzyme, AIMers recruit proteins that exist in the body, called “ADAR” (adenosine deaminases acting on RNA) enzymes, which naturally possess the ability to ~~achieve highly specific A-to-I RNA~~change an adenine (A) to an inosine (I), which cells read as guanine (G). This approach enables simplified delivery and avoids the risk of irreversible off-target effects with DNA-targeting approaches. AIMers are short in length, fully chemically modified, and use novel chemistry, including proprietary PN backbone modifications and control of stereochemistry, which make them distinct from other ADAR-mediated editing ~~(“ADAR editing”)~~ approaches.

~~in vivo~~ using only short stereopure oligonucleotides, without the need for lipid nanoparticles (“LNPs”) or adeno-associated virus (“AAV”) vectors and without altering genomic DNA. We refer to our stereopure editing oligonucleotides as “AIMers.”

Our PRISM platform is built on the recognition that ~~there~~a significant opportunity exists ~~enormous opportunity~~ to tune the pharmacological properties of oligonucleotide therapeutics by leveraging three key features of these molecules: sequence, chemistry, and stereochemistry. ~~Stereochemistry~~Our unique ability to control stereochemistry, which is a reality of chemically modified oligonucleotides, ~~which~~ provides the resolution ~~that we believe is~~ necessary to ~~optimally~~optimize pharmacological profiles.

PRISM enables us to design ~~therapeutic oligonucleotides. By tuning these three key features, we are able to develop~~ stereopure oligonucleotides, which are comprised of molecules with atoms precisely and purposefully arranged in three-dimensional orientations at each linkage. These differ from the mixture-based oligonucleotides currently on the market or in development by others. ~~Based on our preclinical studies, we believe that controlling the stereochemistry of each backbone position will allow us~~Additionally, to ~~optimize the pharmacological profile of our oligonucleotides by maximizing the potential therapeutic benefit while minimizing the potential for side effects and safety risks. To~~ mitigate pharmacological risks and potential manufacturing challenges, our approach focuses on designing short, chemically modified oligonucleotides without the need for complex delivery ~~vehicles.~~vehicles or engineered exogenous enzymes.

Our work in developing stereopure oligonucleotides has enabled the continued evolution of PRISM and our drug discovery process of ~~identifying~~selecting genetically defined targets, ~~predicting~~identifying a sequence and applying the therapeutic modality we determine is best suited for the disease biology. We use our PRISM platform engine to screen candidates and optimize the pharmacologic profile based on predefined design ~~principles. PRISM combines our unique ability to construct stereopure oligonucleotides with~~principles, which reflect a deep understanding of how the interplay among oligonucleotide sequence, chemistry and backbone stereochemistry impacts key pharmacological properties. ~~By exploring~~Through continued exploration of these interactions ~~through~~using iterative analysis of in vitroand in vivo outcomes and machine learning-driven predictive modeling, we also continue to refine our design principles that we deploy across subsequent programs. We continue to invest in PRISM to further evolve and apply the expanding capabilities and promise of our unique platform.

In August 2020, we publicly introduced our novel PN backbone chemistry modifications, which ~~were discovered through PRISM and~~ have been shown preclinically to increase potency, ~~tissue exposure~~distribution, and durability of effect across various modalities. PN chemistry has been incorporated into all of our ~~next-generation~~ current clinical, preclinical, and discovery-stage programs.

We have a robust and diverse pipeline of PN-modified, stereopure oligonucleotides, including ~~AIMers. Our lead~~our clinical ~~development programs include both~~ silencing and splicing ~~modalities~~programs, as well as our AIMers. With RNA base editing, our initial focus is on using N-acetyl galactosamine (“GalNAc”)-conjugated AIMers to treat hepatic diseases. Our lead programs are designed to treat genetic diseases within the central nervous system (“CNS”), including amyotrophic lateral sclerosis (“ALS”), frontotemporal dementia (“FTD”), Huntington’s disease (“HD”), ~~and muscular dystrophies, including~~ Duchenne muscular dystrophy (“DMD”), and alpha-1 antitrypsin deficiency (“AATD”). These programs ~~include~~ include:

•

WVE-004 (silencing), our ~~C9orf72 program~~C9orf72-targeted variant selective antisense oligonucleotide for the treatment of C9orf72-associated ALS and FTD,

•

WVE-003 (silencing), our ~~mHTT SNP3 program~~SNP3-targeted antisense oligonucleotide for the treatment of HD, ~~and~~ which is designed to selectively lower mutant HTT protein levels, while leaving wild-type HTT protein levels relatively intact,

•

WVE-N531 (splicing), our exon 53 ~~program~~exon-skipping oligonucleotide for the treatment of ~~DMD. With~~DMD, and

•

WVE-006 (RNA editing), our GalNAc-conjugated SERPINA1 AIMer for the treatment of AATD.

When we built Wave, we recognized the growing momentum in RNA ~~editing, our initial focus is on using GalNAc-conjugated AIMers to treat hepatic diseases~~therapeutics and ~~our lead program is~~

~~designed to treat alpha-1antitrypsin deficiency (“AATD”). We are also advancing AIMers for genetic diseases within neurology. We continue to invest~~anticipated the value in ~~PRISM to further evolve and apply the expanding capabilities and promise of our unique platform. We have also established and continue to enhance our~~having an internal current good manufacturing practices (“cGMP”) manufacturing ~~capabilities to increase~~facility. This capability provides us with increased control and visibility of our drug substance supply chain, ~~while continuing~~thereby accelerating transitions from discovery through clinical development, and the continued ability to innovate in oligonucleotide manufacturing. Our team includes experts in oligonucleotide manufacturing that have successfully delivered clinical supply for six global studies at Wave to date. With our existing manufacturing facility, we are evaluating using our additional capacity to support the clinical supply of innovative oligonucleotides for new partners.

Our Current Programs

Additional details regarding our lead therapeutic programs are set forth below.

~~Neurology~~

~~Amyotrophic lateral sclerosis (“ALS”) and frontotemporal dementia (“FTD”)~~Neurology: ALS is a neurodegenerative disease characterized by the progression and degeneration of motor neurons in the brain and spinal cord. Age of onset is generally in the mid-to-late 50’s, and median survival is three years; however, up to 24% of patients survive for five to ten years. While the majority of ALS cases are sporadic, approximately 10% of cases are found to be familial in nature. Hexanucleotide (“G₄C₂~~”)-repeat expansions found in the~~ ~~C9orf72~~ ~~gene are one of the most common genetic causes of the sporadic and inherited forms of ALS and are present in approximately 40% of familial ALS patients and 8-10% of sporadic ALS patients.~~

FTD is a neurodegenerative disorder of the frontal and anterior temporal lobes of the brain. It is characterized by changes in personality, cognition (e.g., language impairment and executive dysfunction), and behavior (e.g., disinhibition, apathy and compulsivity). Diagnostic criteria categorize FTD into either the behavioral variant (approximately 60% of patients) or speech/language variant (approximately 40% of patients) based on the primary symptom observed at presentation; however, FTD results in dementia in all patients. The majority of FTD associated with the G₄C₂ ~~expansion in the~~ ~~C9orf72~~ gene is categorized as the behavioral variant. FTD frequently has an onset in mid-life, and death typically occurs within three to 14 years of onset. FTD is the second most common form of early-onset dementia in people under the age of 65, after Alzheimer’s disease. G₄C₂~~-repeat expansions found in the~~ ~~C9orf72~~ ~~gene are one of the most common genetic causes of the sporadic and inherited forms of FTD and are present in approximately 38% of familial cases and approximately 6% of sporadic cases.~~

WVE-004: In ALS and FTD, we are advancing WVE-004, which uses our novel PN chemistry and preferentially targets the transcripts containing the G₄C₂hexanucleotide G4C2 expansion in the C9orf72 gene.~~WVE-004 is designed to minimize the impact on C9orf72 protein in patients, thereby reducing potential on-target risk.~~ ~~In vitro, WVE-004 potently and selectively reduced V3 transcripts in iPSC-derived motor neurons, which were derived from a patient carrying a C9orf72-repeat expansion.~~ In C9 BAC transgenic mice, WVE-004 led to substantial reductions in repeat-containing C9orf72 transcripts and dipeptide repeat ~~(DPR)~~(“DPR”) proteins that are sustained for at least six months, without disrupting total C9orf72 protein expression.

~~FOCUS-C9 Phase 1b/2a clinical trial~~: In~~December 2020,~~ 2021, we initiated ~~clinical development of WVE-004 with the submission of a clinical~~our FOCUS-C9 trial, ~~application (“CTA”). The FOCUS-C9 trial~~which is a global, multicenter, randomized, double-blind, placebo-controlled Phase 1b/2a clinical trial to assess the safety and tolerability of intrathecal doses of WVE-004 for patients with C9-ALS and/or C9-FTD. Additional objectives include measurement of polyGP proteins in the cerebrospinal fluid (“CSF”), plasma and CSF pharmacokinetics and exploratory biomarker and clinical endpoints. The FOCUS-C9 trial is designed to be adaptive ~~and includes single- and multiple-ascending dose portions,~~ with dose level and dosing frequency being guided by an independent committee. Preclinical models that have established pharmacologic activity have informed the starting dose for this trial.

In ~~July 2021,~~April 2022, we announced a positive update to the ~~initiation~~ongoing FOCUS-C9 trial that was driven by the observation of ~~dosing~~potent, durable reductions of poly(GP) dipeptide repeat proteins in CSF with low, single doses of WVE-004. Poly(GP) is a key C9-ALS/C9-FTD disease biomarker that, when reduced in CSF, indicates WVE-004’s engagement of target in the brain and spinal cord. Poly(GP) is also a DPR protein translated from both sense and antisense transcripts of the C9orf72 repeat expansions responsible for the pathophysiology of disease.

•

Reductions in poly(GP) were observed across all active treatment groups (10 mg, n=2 patients; 30 mg, n=4 patients; 60 mg, n=3 patients), reaching statistical significance versus placebo (n=3 patients) after single 30 mg doses, with a 34% reduction in poly(GP) at day 85 (p=0.011). At the time of analysis, none of the patients dosed with 60 mg had reached day 85.

•

As the poly(GP) reduction in the 30 mg single dose cohort does not appear to have plateaued, we are extending the observation period from approximately three months (85 days) to approximately six months to identify the maximum reduction of poly(GP) and duration of effect of low single doses. Based on the durability and potency observed in the 30 mg cohort, FOCUS-C9 has been adapted to include additional patients receiving 20 mg and 30 mg single doses of WVE-004.

•

Additional exploratory assessments included monitoring of CSF neurofilament light chain (“NfL”) and clinical outcome measures. CSF NfL elevations were observed in some patients in the 30 mg and 60 mg single dose cohorts with no meaningful changes in clinical outcome measures, although the dataset and duration were not sufficient to assess clinical effects. Exploratory assessments will continue throughout the single and multidose phases of the FOCUS-C9 trial.

•

Adverse events were balanced across treatment groups, including placebo, and were mostly mild to moderate in intensity. Four patients (including one on placebo) experienced severe and/or serious adverse events; three were reported by the investigators to be related to ALS or administration, and one was reported by the investigator to be related to study drug. There were no treatment-associated elevations in CSF white blood cell counts or protein and no other notable laboratory abnormalities were observed.

We expect to share additional single and multidose data from the FOCUS-C9 clinical ~~trial.~~trial in the second half of 2022. We expect to ~~generate~~use these data to optimize dose level and frequency, as well as enable discussions with regulatory authorities regarding the next phase of development later in 2022. Planning is underway for expected initiation of an open-label extension clinical ~~data through 2022 to provide insight into~~trial in the ~~clinical effects~~second half of ~~PN chemistry and enable decision making for WVE-004.~~2022.

~~Huntington’s Disease (“HD”)~~23

: HD is a rare hereditary neurodegenerative disease that results in early death and for which there is no cure. HD is caused by a mutation (i.e., an expanded CAG triplet repeat) in the HTT gene, which results in production of mutant HTT (“mHTT”) protein. In HD patients, there is a progressive loss of neurons in the brain leading to cognitive, psychiatric and motor disabilities. HD patients still possess wild-type (healthy) HTT (“wtHTT”) protein, which is important for neuronal function, and there is increasing evidence that wtHTT may be neuroprotective in an adult brain. Additionally, a dominant gain of function in mHTT protein and a concurrent loss of function of wtHTT protein may be important components of the pathophysiology of HD. Accordingly, suppression of wtHTT may have detrimental long-term consequences. A 2020 ~~Nature~~ ~~publication (Poplawski, G.H.D., et al. Injured adult neurons regress to an embryonic transcriptional growth state.~~ ~~Nature~~ 581, 77–82 (2020)) described results that involved conditional knockout of huntingtin in 4-month old mice (post-neuronal development), which demonstrated that huntingtin is at the center of the regeneration transcriptome and played an essential role in neural plasticity. In October 2019, at our Analyst and Investor Research Day, key opinion leaders in HD research presented data suggesting that wtHTT is neuroprotective in an adult brain; transport of key neurotrophic factors such as brain-derived neurotrophic factor (“BDNF”) are regulated by wtHTT levels; and HD may be caused by a dominant gain of function in mHTT and a loss of function of wtHTT protein. Further, the relative proportion of wtHTT to mHTT is critical based on evidence that suggests increased amount of wtHTT relative to mHTT may result in slower disease progression (measured by age-at-onset). Also, HD patients that lack wtHTT all together have significantly more severe disease, as measured by disease progression after symptom onset.

WVE-003: In HD, we are currently advancing WVE-003, a stereopure antisense oligonucleotide designed to selectively target an undisclosed single nucleotide polymorphism (“SNP”), “mHTT SNP3”, associated with the disease-causing mutant huntingtin (“mHTT”) mRNA transcript within the HTT gene. WVE-003 incorporates our novel PN chemistry, as well as learnings from our first-generation HD programs. ~~Approximately 40% of the HD population carries SNP3.~~ Targeting mRNA with ~~this SNP~~SNP3 allows us to lower expression of transcript from the mutant allele, while leaving the healthy transcript relatively ~~intact. The healthy transcript is required to produce wtHTT~~intact, thereby preserving wild-type (healthy) huntingtin (“wtHTT”) protein, which is important for neuronal function. We commonly refer to this method (or approach) as “allele-selective targeting.” SNPs are naturally occurring variations within a given genetic sequence and in certain instances can be used to distinguish between two related copies of a gene where only one is associated with the expression of a disease-causing protein. Our allele-selective approach may also enable us to address the pre-manifest, or asymptomatic, HD patient population in the future. In preclinical studies, WVE-003 showed dose-dependent and selective reduction of mHTT mRNA in vitro, and potent and durable knockdown of mHTT mRNA and protein in vivo. ~~Based on the modeling of the~~A pharmacokinetic-pharmacodynamic ~~(PK-PD) relationship~~(“PK-PD”) model for WVE-003 ~~the model~~based on preclinical data predicts that WVE-003 ~~will~~may attain sufficient concentrations to engage mHTT transcript in both the cortex and striatum and decrease expression of the mHTT protein.

~~SELECT-HD Phase 1b/2a clinical trial: In December 2020, we initiated clinical development of WVE-003 with the submission of a CTA.~~ The SELECT-HD trial is a multicenter, randomized, double-blind, placebo-controlled Phase 1b/2a clinical trial to assess the safety and tolerability of intrathecally administered WVE-003 for patients with early manifest HD. Additional objectives include measurement of mHTT and wtHTT protein and exploratory pharmacokinetic, pharmacodynamic, clinical and ~~MRI~~magnetic resonance imaging (“MRI”) endpoints. The SELECT-HD trial is designed to be adaptive, with dose level and dosing frequency being guided by an independent committee. Preclinical models that have established pharmacologic activity have informed the starting dose for this trial. In September 2021, we announced the initiation of dosing in the SELECT-HD ~~clinical~~ trial. We expect to ~~generate~~share clinical data ~~through~~in the second half of 2022 to provide further insight into the clinical effects of PN chemistry and enable decision making for WVE-003.

~~SCA3~~WVE-N531: ~~In spinocerebellar ataxia 3 (“SCA3”), we are continuing to advance our program targeting~~ ~~ATXN3. SCA3 is a rare, hereditary (autosomal dominant), progressive, neurodegenerative disorder that is caused by a CAG-repeat expansion in the~~ ~~ATXN3~~ ~~gene~~.

~~Additional CNS Disorders~~: ~~We are also advancing genetically defined targets for the treatment of other CNS disorders informed by the data from our ongoing preclinical and clinical programs.~~

~~Duchenne Muscular Dystrophy (“DMD”)~~: In DMD, we are advancing WVE-N531, which is designed to target exon 53 within the dystrophin gene. WVE-N531 is designed to cause the cellular splicing machinery to skip over this exon during pre-mRNA processing, which restores the dystrophin mRNA reading frame and enables production of truncated, but functional dystrophin protein. Exon-skipping produces dystrophin from the endogenous dystrophin gene (not micro or mini dystrophin expressed from a vector), under the

control of native gene-regulatory elements, resulting in normal temporospatial expression. WVE-N531 is both our first splicing candidate and our first systemically administered candidate incorporating PN chemistry to be assessed in the clinic.

~~WVE-N531 clinical trial~~: ~~In March 2021, we initiated clinical development of WVE-N531 with the submission of a CTA.~~ In September 2021, we announced the initiation of dosing in an open-label clinical trial evaluating WVE-N531 as a treatment for boys with DMD who are amenable to exon 53 skipping. We expect to ~~generate~~share clinical data, ~~through~~including muscle biopsies, in the fourth quarter of 2022 to provide further insight into the clinical effects of PN chemistry and enable decision making for WVE-N531.

~~Ophthalmology~~

~~In ophthalmology, we have generated~~ ~~in vitro, ex vivo~~ ~~and~~ ~~in vivo~~ ~~data in preclinical studies that support the potential of our~~ ~~stereopure oligonucleotides, including AIMers, for the treatment of rare, inherited eye diseases.~~ ~~Our pipeline includes two preclinical~~ ~~programs: Usher syndrome type 2A (“USH2A”) and retinitis pigmentosa due to a P23H mutation in the~~ ~~RHO~~ ~~gene (“RhoP23H”). Further advancement of these programs will be informed by preclinical data.~~Hepatic

~~Hepatic~~

~~RNA~~ ~~editing: Our initial ADAR editing proof-of-concept~~We are initially focused on ~~leveraging GalNAc-conjugation to achieve~~developing AIMers (A-to-I(G) RNA base editing ~~in the liver.In May 2021, at the 24~~^th ~~American Society of Gene and Cell Therapy (“ASGCT”)~~oligonucleotides), ~~we highlighted in an oral presentation~~which use our novel ~~ADAR editing capability,~~PN chemistry, to address genetic hepatic diseases. Our AIMers are relatively short and stable (fully chemically modified), which leverages PN backbone chemistry modifications. This presentation highlighted proof-of-concept data demonstrating potent and durable editing of Beta-actin (“ACTB”) in vivo in the liver of non-human primates (“NHPs”) of upenables us to ~~50% using GalNAc-conjugated AIMers.~~leverage clinically-proven GalNAc-mediated delivery to hepatocytes with subcutaneous dosing.

~~Alpha-1 antitrypsin deficiency (“AATD”)~~WVE-006:~~: We~~ In AATD, we are ~~leveraging~~currently advancing WVE-006, our first AIMer (RNA editing) candidate that uses GalNAc-conjugation and endogenous ADAR ~~editing capability~~enzymes to ~~develop a potentially novel treatment for AATD, which is a rare, inherited genetic disorder that is commonly caused by a G-to-A point~~correct the SERPINA1 Z mutation, ~~in the Z allele of the~~ ~~SERPINA1~~ gene. This mutation leads to misfolding and aggregation of alpha-1 antitrypsin (“AAT”) protein in hepatocytes and a lack of functional AAT in the lungs. People with AATD typically exhibit progressive lung damage, liver damage or both, leading to frequent hospitalizations and potentially terminal lung disease and/or liver disease. While the few approved therapies for AATD modestly increase circulating levels of AAT in those with the lung pathology, there are no approved therapies to address the liver pathology. Approximately 200,000 people in the United States and Europe are homozygous for the Z allele, which is the most common ~~form~~cause of ~~severe disease. In November 2020, we announced that our first ADAR editing program would be for~~ AATD. Our novel RNA editing capability uses endogenous ADAR enzymes of A-to-I (G) base editing oligonucleotides, making this a potentially best-in-class modality for correcting the G-to-A disease-causing mutation in mRNA coded by the ~~SERPINA1~~ ~~Z allele. By correcting the single RNA base mutation,~~ ADAR editing may provide an ideal approach for increasing circulating levels of wild-type AAT protein and reducing aggregation in the liver, thus simultaneously addressing both the lung and liver manifestations of the disease.

~~In a primary hepatocyte~~ ~~SERPINA1~~ Z cell model, we demonstrated that editing the Z allele mRNA back to wild-type prevents protein misfolding and increases secretion of edited AAT protein from hepatocytes. In June 2021, we reported proof-of-concept preclinical ~~in vivo~~ ~~data that demonstrated up to 40% editing of human~~ ~~SERPINA1~~ ~~Z allele mRNA in liver at an initial time point, which resulted in a therapeutically meaningful increase in circulating, functional wild-type AAT protein. This initial~~ ~~in vivo~~ ~~study utilized~~ We selected WVE-006 as our ~~proprietary transgenic mouse model, which has both the human~~ ~~SERPINA1~~ ~~Z-allele, as well as human ADAR that is expressed comparably to human cells. In September 2021, during our Analyst and Investor Research Webcast, we shared new preclinical~~ ~~in vivo~~ data demonstrating durable restoration of M-AAT protein in the liver of transgenic mice. The data demonstrated that, using PRISM chemistry, optimized AIMers can achieve highly specific editing of up to 50% of SERPINA1 mRNA ~~in vivo~~ ~~and restore AAT protein to a level four-fold higher than PBS control (or more than 15 micromolar). We expect to announce an~~ AATD AIMer development candidate, our IND-enabling activities are underway, and we expect to submit clinical trial applications in ~~2022.~~2023.

Continuing Impacts of COVID-19

We continue to closely monitor developments related to COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020. In response to this global pandemic, we have concentrated our efforts on the health and safety of our employees and patients, while maintaining business continuity and honoring our commitment to deliver life-changing treatments for people battling devastating diseases.

Our on-site activities continue with protocols for safely accessing and working within our ~~facilities.~~facilities, including a mandatory COVID-19 vaccination policy that we implemented in October 2021. While we continue to conduct ~~R&D~~research and development activities, including our ongoing clinical trials, the COVID-19 pandemic has impacted, and may continue to impact, certain of our early-stage discovery efforts and clinical trials. We are working with our clinical investigators, ~~R&D~~research and development vendors, and supply chain vendors to continually assess and take steps to mitigate the potential impact of COVID-19 on our manufacturing operations and ~~R&D~~research and development activities.

We will continue to closely monitor the COVID-19 situation as we evolve our business continuity plans. Given the global risks and uncertainties associated with COVID-19, our business, results of operations, and prospects could be materially adversely affected. For additional information, see “Item 1A. Risk Factors” in the 2021 Annual Report on Form 10-K.

2024

~~Recent Developments~~

On October 15, 2021, we and Takeda entered into the Second Amendment (the “Amendment”) to the Takeda Collaboration and License Agreement dated February 19, 2018 (the “Takeda Collaboration Agreement”), which amended the Category 2 component of the two-part collaboration (the “Category 2 Programs”). As previously disclosed, under Category 2 of the Takeda Collaboration Agreement, we had granted Takeda the right to exclusively license multiple preclinical programs for central nervous system (CNS) disorders during a four-year research term. Pursuant to the terms of the Amendment, Wave and Takeda discontinued the Category 2 component of the Takeda Collaboration Agreement and Takeda paid Wave an additional $22.5 million for collaboration-related research and preclinical expenses. As a result of the Amendment, we are free to advance our CNS programs independently or enter partnerships in the CNS field outside of the three specified targets,~~C9orf72, HTT and ATXN3, including WVE-004 and WVE-003, that are part of the ongoing late-stage Category 1 Programs.~~

The Category 1 component of the original Takeda Collaboration Agreement remains in effect and is unchanged by the Amendment. The Category 1 component pertains to Takeda’s option to co-develop and co-commercialize our investigational CNS therapies for three targets: C9orf72, HTT and ATXN3, including WVE-004 and WVE-003. WVE-004 and WVE-003 are currently being investigated in the ongoing Phase 1b/2a FOCUS-C9 clinical trial for the treatment of amyotrophic lateral sclerosis and frontotemporal dementia, and the ongoing Phase 1b/2a SELECT-HD clinical trial for the treatment of Huntington’s disease, respectively. If Takeda opts in on any of these programs, we would receive an opt-in payment and would lead manufacturing and joint clinical co-development activities. Takeda would lead joint co-commercial activities in the United States and all commercial activities outside of the United States. Global costs and potential profits would be shared 50:50 and we would be eligible to receive development and commercial milestone payments.

Financial Operations Overview

We have never been profitable, and since our inception, we have incurred significant operating losses. Our net loss was ~~$87.5~~$41.3 million and ~~$121.1~~$38.8 million infor the ~~nine~~three months ended ~~September~~June 30, 2022 and 2021, respectively. Our net loss was $79.1 million and ~~2020,~~$81.2 million for the six months ended June 30, 2022 and 2021, respectively. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, we had an accumulated deficit of ~~$770.7~~$884.6 million and ~~$683.3~~$805.5 million, respectively. We expect to incur significant expenses and operating losses for the foreseeable future.

Revenue

We have not generated any product revenue since our inception and do not expect to generate any revenue from the sale of products for the foreseeable future. ~~Our~~Under the revenue ~~during~~ ~~the nine months ended September 30, 2021,~~ ~~was earned~~recognition standard, we recognize collaboration revenue under the Takeda ~~Collaboration Agreement. Our revenue during the nine months ended September 30, 2020 was earned under the Takeda Collaboration Agreement, which became effective in April 2018, and the Pfizer~~ Collaboration Agreement (as defined in Note 5 in the notes to the unaudited consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, “Note 5”), which ~~was entered into~~became effective in ~~May 2016 and e~~April 2018.~~nded by its original terms in May 2020~~.

Operating Expenses

Our operating expenses since inception have consisted primarily of research and development ~~costs~~expenses and general and administrative ~~costs.~~expenses.

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our product candidates, which ~~include~~:include:

•

compensation-related expenses, including employee salaries, bonuses, share-based compensation expense and other related benefits expenses for personnel in our research and development organization;

•

expenses incurred under agreements with third parties, including contract research organizations (“CROs”) that conduct research, preclinical and clinical activities on our behalf, as well as contract manufacturing organizations (“CMOs”) that manufacture drug product for use in our preclinical studies and clinical trials;

•

expenses incurred related to our internal manufacturing of drug substance for use in our preclinical studies and clinical trials;

•

expenses related to compliance with regulatory requirements;

•

expenses related to third-party consultants;

•

research and development supplies and services expenses; and

•

facility-related expenses, including rent, maintenance and other general operating expenses.

•

~~compensation-related expenses, including employee salaries, bonuses, share-based compensation expense and other related benefits expenses for personnel in our research and development organization;~~

•

~~expenses incurred related to our internal manufacturing of drug substance for use in our preclinical studies and clinical trials;~~

•

~~expenses related to compliance with regulatory requirements;~~

•

~~expenses related to third-party consultants;~~

•

~~research and development supplies and services expenses; and~~

•

~~facility-related expenses, including rent, maintenance and other general operating expenses.~~

We recognize research and development costs as incurred. We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid or accrued expenses.

Our primary research and development focus since inception has been the development of our proprietary discovery and drug development platform, PRISM. We are using PRISM, which includes our novel PN backbone chemistry modifications, to design, develop and commercialize a broad pipeline of nucleic acid therapeutic candidates that target RNA using silencing, splicing, and ADAR editing.

Our research and development expenses consist primarily of expenses related to our CROs, CMOs, consultants, other external vendors and fees paid to global regulatory agencies to conduct our clinical trials, in addition to compensation-related expenses, internal manufacturing expenses, facility-related expenses and other general operating expenses. These expenses are incurred in connection with research and development efforts and our preclinical studies and clinical trials. We track certain external expenses on a program-by-program basis. However, we do not allocate compensation-related expenses, internal manufacturing expenses, equipment repairs and maintenance expense, facility-related expenses or other operating expenses to specific programs. These expenses, which are not allocated on a program-by-program basis, are included in the “PRISM and other research and development expenses” category along with other external expenses related to our discovery and development programs, as well as platform development and identification of potential drug discovery candidates.

~~The table below summarizes our research and development expenses incurred for the three and nine months ended September 30, 2021 and 2020:~~

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

(in thousands)

(in thousands)

DMD programs

$
536

$
464

$
692

$
6,531

HD programs

4,421

6,262

19,782

21,889

ALS and FTD programs

1,525

2,217

8,346

6,879

PRISM and other research and development
expenses (1)

24,604

19,332

67,294

65,612

Total research and development expenses

$
31,086

$
28,275

$
96,114

$
100,911

~~(1)~~

Includes discovery and development programs, identification of potential drug discovery candidates, compensation-related expenses, internal manufacturing expenses, equipment repairs and maintenance expense, facility-related expenses and other operating expenses, which are not allocated to specific programs.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect to continue to incur significant research and development expenses in the foreseeable future as we continue to manage our existing clinical trials, initiate additional clinical trials for certain product candidates, pursue later stages of clinical development for certain product candidates, maintain our manufacturing capabilities and continue to discover and develop additional product candidates in multiple therapeutic areas.

General and Administrative Expenses

General and administrative expenses consist primarily of compensation-related expenses, including salaries, bonuses, share-based compensation and other related benefits costs for personnel in our executive, finance, corporate, legal and administrative functions, as well as compensation-related expenses for our board of directors. General and administrative expenses also include legal fees; expenses associated with being a public company; professional fees for accounting, auditing, tax and consulting services; insurance costs; travel expenses; other operating costs; and facility-related expenses.

Other Income, Net

Other income, net consists primarily of refundable tax credits from tax ~~authorities and dividend income earned on cash and cash equivalents balances.~~authorities. We recognize refundable tax credits when there is reasonable assurance that we will comply with the requirements of the refundable tax credit and that the refundable tax credit will be received.

Income Taxes

We are a Singapore multi-national company subject to taxation in the United States and various other jurisdictions.

Critical Accounting Policies and Significant Judgments and Estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue, costs and expenses and related disclosures.

Our significant accounting policies, judgments and estimates are described in Note 2 in the notes to the audited consolidated financial statements included in the ~~2020~~2021 Annual Report on Form 10-K, as well as in Note 2 in the notes to the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q. We believe that our revenue recognition policy, particularly (a) assessing the number of performance obligations; (b) determining the transaction price; (c) allocating the transaction price to the performance obligations in the contract; and (d) determining the pattern over which performance obligations are satisfied, including estimates to complete performance obligations, and the assumptions and estimates used in our analysis of contracts with CROs and CMOs to estimate the contract expense, involve a greater degree of judgment, and therefore we consider them to be our critical accounting policies. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions.

Results of Operations

Comparison of the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021


	Three Months Ended September 30,								Three Months Ended June 30,
	2021			2020			Change		2022			2021			Change
	(in thousands)								(in thousands)
Revenue	$	36,423		$	3,450		$	32,973	$	375		$	2,776		$	(2,401	)
Operating expenses:
Research and development		31,086			28,275			2,811		29,733			31,635			(1,902	)
General and administrative		12,944			9,590			3,354		12,806			10,969			1,837
Total operating expenses		44,030			37,865			6,165		42,539			42,604			(65	)
Loss from operations		(7,607	)		(34,415	)		26,808		(42,164	)		(39,828	)		(2,336	)
Total other income, net		1,377			1,315			62		868			1,062			(194	)
Loss before income taxes		(6,230	)		(33,100	)		26,870		(41,296	)		(38,766	)		(2,530	)
Income tax provision		—			—			—		—			—			—
Net loss	$	(6,230	)	$	(33,100	)	$	26,870	$	(41,296	)	$	(38,766	)	$	(2,530	)

Revenue

~~For~~Revenue for the three months ended ~~September~~June 30, 2022 and 2021 was $0.4 million and ~~2020, revenue~~$2.8 million, respectively, and was primarily earned under the Takeda Collaboration ~~Agreement was $36.4 million and approximately $3.4 million, respectively.~~Agreement. The ~~$33.0 million~~decrease in revenue is driven by an increase in ~~revenue year-over-year is primarily driven by~~ the ~~recognition of the previously constrained revenue for~~expected future research and development services ~~and~~under the ~~$22.5 million for research and development services related to the Amendment to our~~ Takeda Collaboration Agreement based on the revenue recognition standard, as ~~described~~well as the discontinuation of the Category 2 component in ~~Note 5.~~the third quarter of 2021.

Research and Development Expenses


	Three Months Ended June 30,
	2022		2021		Change
	(in thousands)
ALS and FTD program	$	3,348	$	3,381	$	(33	)
HD programs		1,253		6,911		(5,658	)
DMD programs		392		356		36
AATD program		1,541		3		1,538
PRISM and other research and development expenses (1)		23,199		20,984		2,215
Total research and development expenses	$	29,733	$	31,635	$	(1,902	)

Three Months Ended September 30,

2021

2020

Change

(in thousands)

DMD programs

$
536

$
464

$
72

HD programs

4,421

6,262

(1,841
)
ALS and FTD programs

1,525

2,217

(692
)
PRISM and other research and development
expenses (1)

24,604

19,332

5,272

Total research and development expenses

$
31,086

$
28,275

$
2,811

(1)

Includes expenses related to discovery and development programs, identification of potential drug discovery candidates, compensation, internal manufacturing, equipment repairs and maintenance, facilities and other operating expenses, which are not allocated to specific programs.

~~(1)~~

Research and development expenses were ~~$31.1~~$29.7 million for the three months ended ~~September~~June 30, ~~2021,~~2022, compared to approximately ~~$28.3~~$31.6 million for the three months ended ~~September~~June 30, ~~2020.~~2021. The ~~increase~~decrease of ~~$2.8~~$1.9 million was due to the following:

•

a decrease of less than $0.1 million in external expenses related to our ALS and FTD program, WVE-004 (PN-modified silencing oligonucleotide);

•

a decrease of $5.7 million in external expenses related to our HD programs, driven by decreased external expenses related to our discontinued WVE-120101 and WVE-120102 programs, partially offset by continuing external expenses for our WVE-003 (PN-modified silencing oligonucleotide) program;

•

an increase of less than $0.1 million in external expenses related to our DMD programs, including WVE-N531 (PN-modified splicing oligonucleotide);

•

an increase of $1.5 million in external expenses related to our AATD program, WVE-006 (PN-modified RNA editing oligonucleotide); and

•

an increase of $2.2 million in internal and external research and development expenses that are not allocated on a program-by-program basis and are related to other discovery and development programs, including PRISM and the identification of potential drug discovery candidates, primarily due to increases in compensation-related expenses,

including the share-based compensation expense related to the achievement of a performance-based RSU milestone, offset by decreases in other external research and development expenses.

•

an increase of $0.1 million in external expenses related to our DMD programs, driven by increased external expenses for our PN chemistry containing WVE-N531 program, partially offset by decreased external expenses related to our discontinued suvodirsen program;

•

a decrease of $1.8 million in external expenses related to our HD programs, driven by decreased external expenses related to our discontinued WVE-120101 and WVE-120102 programs, partially offset by increased external expenses for our PN chemistry containing WVE-003 program;

•

~~a decrease of $0.7 million in external expenses related to our~~ ~~ALS and FTD programs, including our PN chemistry containing WVE-004 program; and~~

•

an increase of $5.3 million in internal and external research and development expenses that are not allocated on a program-by-program basis and are related to other discovery and development programs, including PRISM and the identification of potential drug discovery candidates, primarily due to increases in other external research and development expenses, as well as increases in compensation-related expenses.

General and Administrative Expenses

General and administrative expenses were ~~$12.9~~$12.8 million for the three months ended ~~September~~June 30, ~~2021,~~2022, as compared to ~~$9.6~~$11.0 million for the three months ended ~~September~~June 30, ~~2020.~~2021. The increase of ~~approximately $3.4~~$1.8 million is ~~attributable to~~primarily driven by increases in compensation-related expenses, ~~and increases~~including the share-based compensation expense related to the achievement of a performance-based RSU milestone, offset by decreases in other external general and administrative expenses.

Other Income, Net

Other income, net for the three months ended ~~September~~June 30, 2022 and 2021, ~~and 2020,~~ was ~~$1.4~~$0.9 million and ~~$1.3~~$1.1 million, respectively. Other income, net for both periods primarily consisted of income related to refundable tax credits from tax authorities.

Income Tax Provision

During the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, we recorded no income tax provision. We maintained a full valuation allowance for the three months ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ in all jurisdictions due to uncertainty regarding future taxable ~~income~~income..

Comparison of the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021


	Nine Months Ended September 30,									Six Months Ended June 30,
	2021			2020			Change			2022			2021			Change
	(in thousands)									(in thousands)
Revenue	$	39,199		$	10,638		$	28,561		$	2,125		$	2,776		$	(651	)
Operating expenses:
Research and development		96,114			100,911			(4,797	)		57,203			65,028			(7,825	)
General and administrative		33,991			32,791			1,200			25,180			21,047			4,133
Total operating expenses		130,105			133,702			(3,597	)		82,383			86,075			(3,692	)
Loss from operations		(90,906	)		(123,064	)		32,158			(80,258	)		(83,299	)		3,041
Total other income, net		3,446			1,943			1,503			1,148			2,069			(921	)
Loss before income taxes		(87,460	)		(121,121	)		33,661			(79,110	)		(81,230	)		2,120
Income tax provision		—			—			—			—			—			—
Net loss	$	(87,460	)	$	(121,121	)	$	33,661		$	(79,110	)	$	(81,230	)	$	2,120

~~Revenue~~

Revenue

Revenue ~~of $39.2~~for the six months ended June 30, 2022 and 2021 was $2.1 million and $2.8 million, respectively, and was primarily earned under the Takeda Collaboration Agreement for the nine months ended September 30, 2021. Revenue of $10.6 million was earned under the Takeda Collaboration Agreement and the Pfizer Collaboration Agreement for the nine months ended September 30, 2020.Agreement. The ~~$28.6 million increase~~decrease in revenue ~~year-over-year~~ is ~~primarily~~ driven by the ~~recognition~~discontinuation of the ~~previously constrained revenue for research and development services and~~Category 2 component in the $22.5 million for research and development services related to the Amendment to our Takeda Collaboration Agreement, as described in Note 5, partially offset by the fact that no revenue was earned under the Pfizer Collaboration Agreement in 2021, as it ended by its original terms in May 2020.third quarter of 2021.

2528

Research and Development Expenses


	Six Months Ended June 30,
	2022		2021		Change
	(in thousands)
ALS and FTD program	$	5,087	$	6,821	$	(1,734	)
HD programs		3,446		15,361		(11,915	)
DMD programs		817		156		661
AATD program		1,852		3		1,849
PRISM and other research and development expenses (1)		46,001		42,687		3,314
Total research and development expenses	$	57,203	$	65,028	$	(7,825	)

Nine Months Ended September 30,

2021

2020

Change

(in thousands)

DMD programs

$
692

$
6,531

$
(5,839
)
HD programs

19,782

21,889

(2,107
)
ALS and FTD programs

8,346

6,879

1,467

PRISM and other research and development
expenses (1)

67,294

65,612

1,682

Total research and development expenses

$
96,114

$
100,911

$
(4,797
)
(1)

~~(1)~~

Research and development expenses were ~~$96.1~~$57.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, compared to ~~$100.9~~$65.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The decrease of ~~$4.8~~$7.8 million was due to the following:

•

a decrease of $1.7 million in external expenses related to our ALS and FTD program, WVE-004 (PN-modified silencing oligonucleotide);

•

a decrease of $11.9 million in external expenses related to our HD programs, driven by decreased external expenses related to our discontinued WVE-120101 and WVE-120102 programs, partially offset by continuing external expenses for our WVE-003 (PN-modified silencing oligonucleotide) program;

•

an increase of $0.7 million in external expenses related to our DMD programs, including WVE-N531 (PN-modified splicing oligonucleotide);

•

an increase of $1.8 million in external expenses related to our AATD program, WVE-006 (PN-modified RNA editing oligonucleotide); and

•

an increase of $3.3 million in internal and external research and development expenses that are not allocated on a program-by-program basis and are related to other discovery and development programs, including PRISM and the identification of potential drug discovery candidates, primarily due to increases in compensation-related expenses, including the share-based compensation expense related to the achievement of a performance-based RSU milestone.

•

a decrease of $5.8 million in external expenses related to our DMD programs, driven by decreased external expenses related to our discontinued suvodirsen program, partially offset by increased external expenses for our PN chemistry containing WVE-N531 program;

•

a decrease of $2.1 million in external expenses related to our HD programs, driven by decreased external expenses related to our discontinued WVE-120101 and WVE-120102 programs, partially offset by increased external expenses for our PN chemistry containing WVE-003 program;

•

~~an increase of $1.5 million in external expenses related to our~~ ~~ALS and FTD programs, including our PN chemistry containing WVE-004 program; and~~

•

an increase of $1.7 million in internal and external research and development expenses that are not allocated on a program-by-program basis and are related to other discovery and development programs, including PRISM and the identification of potential drug discovery candidates, primarily due to increases in other external research and development expenses, as well as increases in compensation-related expenses.

General and Administrative Expenses

General and administrative expenses were ~~$34.0~~$25.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, as compared to ~~$32.8~~approximately $21.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. The increase of ~~$1.2~~$4.1 million was primarily due to increases in compensation-related expenses, including the share-based compensation expense related to the achievement of a performance-based RSU milestone, as well as increases in professional services expenses and other ~~external~~ general and administrative operating expenses.

Other Income, Net

Other income, net for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, ~~and 2020~~ was ~~$3.4~~$1.1 million and ~~$1.9~~$2.1 million, ~~respectively~~. ~~The increase of $1.5 million was driven by the $2.0 million increase in other~~respectively. Other income, net for both periods primarily consisted of income related to ~~the increase in estimated~~ refundable tax credits ~~partially offset by a $0.5 million decrease in dividend and interest income, net.~~from tax authorities.

Income Tax Provision

During the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, we recorded no income tax provision. We maintained a full valuation allowance for the ~~nine~~ six months ended ~~September~~June 30, 2022 and 2021 ~~and 2020~~ in all jurisdictions due to uncertainty regarding future taxable ~~income~~income..

2629

Liquidity and Capital Resources

Since our inception, we have not generated any product revenue and have incurred recurring net losses. To date, we have primarily funded our operations through public and other registered offerings of our ordinary shares, collaborations with third parties and private placements of debt and equity ~~securities, public offerings of our ordinary shares and collaborations with third parties.~~securities. Through ~~September~~June 30, ~~2021,~~2022, we have received an aggregate of approximately ~~$829.8~~$1,021.2 million in net proceeds from these ~~transactions. We received~~transactions, consisting of $630.9 million in net proceeds from public and other registered offerings of our ordinary shares, $301.0 million from our collaborations and $89.3 million in net proceeds from private placements of our debt and equity ~~securities, $100.4 million~~securities.

On June 16, 2022, we closed an underwritten offering (the “June 2022 Offering”), in which we issued and sold 25,464,483 ordinary shares and Pre-Funded Warrants to purchase up to 7,093,656 ordinary shares. The net proceeds ~~from our initial public offering, $40.0 million under~~of the Pfizer Agreements (as defined in Note 5), including $10.0 million as an upfront payment under the Pfizer Collaboration Agreement and $30.0 million in the form of an equity investment, $93.5 million in net proceeds from our April 2017 follow-on underwritten public offering, $170.0 million in upfront payments under the Takeda Agreements (as defined in Note 5), including $110.0 million as an upfront payment under the Takeda Collaboration Agreement (as defined in Note 5) and $60.0 million in the form of an equity investment, $161.8 million in net proceeds from our January 2019 follow-on underwritten public offering, $93.7 million in net proceeds from our September 2020 follow-on underwritten public offering and $81.1 million in net proceeds from our at-the-market equity program.June 2022 Offering were approximately $65.5 million.

As of ~~September~~June 30, ~~2021,~~2022, we had cash, ~~and~~ cash equivalents and short-term investments totaling ~~$123.9~~$148.2 million, ~~an accumulated deficit of $770.7 million and~~ restricted cash of $3.7 million for our leased premises in Cambridge, Massachusetts and Lexington, ~~Massachusetts.~~Massachusetts, and an accumulated deficit of $884.6 million. Our operating lease commitments as of ~~September~~June 30, ~~2021~~2022 total ~~$38.8~~approximately $50.6 million, of which ~~$1.3~~$3.6 million is related to payments in ~~2021~~2022 and ~~$37.5~~$47.0 million is related to payments beyond ~~2021.~~2022.

Subsequent to September 30, 2021, we received full payment from Takeda for the $22.5 million of accounts receivable related to the Amendment to the Takeda Collaboration Agreement, as described in Note 5. Additionally, we received $29.6 million in net proceeds from our at-the-market equity program.

We expect that our existing cash, ~~and~~ cash equivalents and short-term investments will be sufficient to fund our operations for at least the next twelve months. We have based this expectation on assumptions that may prove to be incorrect, and we may use our available capital resources sooner than we currently expect. In addition, we may elect to raise additional funds before we need them if the conditions for raising capital are favorable due to market conditions or strategic considerations, even if we expect we have sufficient funds for our current or future operating plans.

Until we can generate significant revenue from product sales, if ever, we expect to continue to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties. In May 2019, we filed a shelf registration statement on Form S-3ASR with the SEC pursuant to which we registered for sale an indeterminate amount of any combination of our ordinary shares, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine. Our shelf registration statement on Form S-3ASR also ~~includes~~included a prospectus covering up to an aggregate of $250.0 million in ordinary shares that we may issue and sell from time to time, through Jefferies LLC (“Jefferies”) acting as our sales agent, pursuant to the open market sales agreement that we entered into with Jefferies ~~LLC~~ in May 2019, as amended in March 2020 and March 2022 (the “Sales Agreement”), for our “at-the-market” equity program. Since we no longer qualified as a “well-known seasoned issuer” at the time of the filing of our Annual Report on Form 10-K for the year ended December 31, 2019, we previously amended the shelf registration statement to register for sale up to $500.0 million of any combination of our ordinary shares, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, including the $250.0 million in ordinary shares that we may issue and sell from time to time pursuant to our “at-the-market” equity program. This registration statement, ~~will remain in effect for up~~which we refer to ~~three years from~~as the ~~date it initially became~~“2019 Form S-3,” remained effective inuntil our 2022 Form S-3 (as defined below) was declared effective on May ~~2019.~~4, 2022, after which time we may no longer offer or sell any securities under the 2019 Form S-3. During the ~~nine~~six months ended ~~September~~June 30, ~~2021~~,2022, the Company sold ~~2,908,805~~458,092 ordinary shares under its at-the-market equity program for aggregate net proceeds of ~~$21.2~~$1.2 million.

On March 3, 2022, we filed a new universal shelf registration on Form S-3 with the SEC, which was declared effective by the SEC on May 4, 2022, pursuant to which we registered for sale up to $500.0 million of any combination of our ordinary shares, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine, which we refer to as the “2022 Form S-3.” The 2022 Form S-3 includes a prospectus covering up to approximately $132.0 million in ordinary shares that have not yet been issued or sold under our Sales Agreement with Jefferies. As of ~~November 9, 2021,~~August 10, 2022, we have ~~approximately $287.4~~$430.0 million in securities available for ~~sale~~issuance under ~~our shelf registration statement,~~the 2022 Form S-3, including approximately ~~$137.4~~$132.0 million in ordinary shares available for ~~sale~~issuance under our at-the-market equity program.

Adequate additional financing may not be available to us on acceptable terms, or at all. Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We will need to generate significant revenue to achieve profitability, and we may never do so.

2730

Cash Flows

The following table summarizes our cash flow activity:


	Nine Months Ended September 30,						Six Months Ended June 30,
	2021			2020			2022			2021
	(in thousands)						(in thousands)
Net cash used in operating activities	$	(81,960	)	$	(84,567	)	$	(68,695	)	$	(53,776	)
Net cash used in investing activities		(545	)		(781	)		(25,594	)		(447	)
Net cash provided by financing activities		22,035			154,519			67,116			13,686
Effect of foreign exchange rates on cash, cash equivalents and restricted cash		(131	)		34			(228	)		(120	)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	(60,601	)	$	69,205
Net decrease in cash, cash equivalents and restricted cash							$	(27,401	)	$	(40,657	)

Operating Activities

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, operating activities used ~~$82.0~~$68.7 million of cash, primarily due to our net loss of ~~$87.5 million.~~$79.1 million, offset by $10.9 million of share-based compensation expense.

During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, operating activities used ~~$84.6~~$53.8 million of cash, primarily due to our net loss of ~~$121.1~~$81.2 million, offset by a ~~$20.0~~$30.0 million decrease in accounts ~~receivable and a $15.1~~receivable.

Investing Activities

During the six months ended June 30, 2022, investing activities used $25.6 million ~~decrease in other assets, primarily~~of cash, of which $50.0 million related to ~~the receipt~~purchases of ~~the refundable tax credits for 2018~~short-term investments, $25.0 million of which was subsequently sold and ~~2019.~~$0.6 million related to purchases and sales of property and equipment.

~~Investing Activities~~

During the ~~nine~~six months ended ~~September~~June 30, 2021, investing activities used ~~$0.5~~$0.4 million of cash, related to purchases of property and equipment.

Financing Activities

During the ~~nine~~six months ended ~~September~~June 30, ~~2020, investing~~2022, net cash provided by financing activities ~~used $0.8~~was $67.1 million, which was primarily due to the net proceeds from the June 2022 Offering, which was comprised of ~~cash, related to purchases~~sales of ~~property~~ordinary shares and ~~equipment.~~Pre-Funded Warrants.

~~Financing Activities~~

During the ~~nine~~six months ended ~~September~~June 30, 2021, net cash provided by financing activities was ~~$22.0~~$13.7 million,, which was primarily due to the net proceeds from sales of ordinary shares under our at-the-market equity program.

During the nine months ended September 30, 2020, net cash provided by financing activities was $154.5 million, primarily due to the $93.7 million in estimated net proceeds from our September 2020 follow-on underwritten public offering and $59.9 million in net proceeds from sales of ordinary shares under our at-the-market equity program.

Funding Requirements

We expect to continue to incur significant expenses in connection with our ongoing research and development activities and our internal cGMP manufacturing activities. Furthermore, we anticipate that our expenses will continue to vary if and as we:

•

continue to conduct our clinical trials evaluating our product candidates in patients;

•

conduct research and preclinical development of discovery targets and advance additional programs into clinical development;

•

file clinical trial applications with global regulatory agencies and conduct clinical trials for our programs;

•

evaluate next steps for our programs in rare, inherited eye diseases;

•

make strategic investments in continuing to innovate our research and development platform, PRISM, and in optimizing our manufacturing processes and formulations;

•

maintain our manufacturing capabilities through our internal facility and our CMOs;

•

maintain our intellectual property portfolio and consider the acquisition of complementary intellectual property;

•

seek and obtain regulatory approvals for our product candidates;

•

respond to the impacts of the COVID-19 global pandemic on our business; and

•

establish and build capabilities to market, distribute and sell our product candidates.

•

~~continue to conduct our clinical trials evaluating our product candidates in patients;~~

•

~~conduct research and preclinical development of discovery targets and advance additional programs into clinical development;~~

•

~~file clinical trial applications with global regulatory agencies and conduct clinical trials for our programs;~~

•

~~evaluate next steps for our programs in rare, inherited eye diseases;~~

•

~~make strategic investments in continuing to innovate our research and development platform, PRISM, and in optimizing our manufacturing processes and formulations;~~

•

~~maintain our manufacturing capabilities through our internal facility and our CMOs;~~

•

~~maintain our intellectual property portfolio and consider the acquisition of complementary intellectual property;~~

•

~~seek and obtain regulatory approvals for our product candidates;~~

•

~~respond to the impacts of the COVID-19 global pandemic on our business; and~~

•

~~establish and build capabilities to market, distribute and sell our product candidates.~~

We may experience delays or encounter issues with any of the above, including but not limited to failed studies, complex results, safety issues or other regulatory challenges.

Because of the numerous risks and uncertainties associated with the development of drug candidates and because the extent to which we may enter into collaborations with third parties for development of product candidates is unknown, we are unable to estimate the amounts of future capital outlays and operating expenses associated with completing the research and development for our therapeutic programs. Our future capital requirements for our therapeutic programs will depend on many factors, including:

•

the progress, results and costs of conducting research and continued preclinical and clinical development for our therapeutic programs and future potential pipeline candidates;

•

the number and characteristics of product candidates and programs that we pursue;

•

the cost of manufacturing clinical supplies of our product candidates;

•

whether and to what extent milestone events are achieved under our collaboration with Takeda or any potential future licensee or collaborator;

•

the costs, timing and outcome of regulatory review of our product candidates;

•

our ability to obtain marketing approval for our product candidates;

•

the impacts of the COVID-19 global pandemic on our business;

•

the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval;

•

market acceptance of our product candidates, to the extent any are approved for commercial sale, and the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;

•

the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;

•

the effect of competing technological and market developments; and

•

the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates.

•

~~the progress, results and costs of conducting research and continued preclinical and clinical development for our therapeutic programs and future potential pipeline candidates;~~

•

~~the number and characteristics of product candidates and programs that we pursue;~~

•

~~the cost of manufacturing clinical supplies of our product candidates;~~

•

~~whether and to what extent milestone events are achieved under our collaboration with Takeda or any potential future licensee or collaborator;~~

•

~~the costs, timing and outcome of regulatory review of our product candidates;~~

•

~~our ability to obtain marketing approval for our product candidates;~~

•

~~the impacts of the COVID-19 global pandemic on our business;~~

•

~~the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval;~~

•

~~the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;~~

•

~~the effect of competing technological and market developments; and~~

•

~~the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates.~~

Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our product revenue, if any, will be derived from sales of products that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.

Adequate additional funds may not be available to us on acceptable terms when we need them, or at all. We do not currently have any committed external source of funds, except for possible future payments from Takeda under the Takeda Collaboration Agreement. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing shareholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our shareholders. Additional debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require the issuance of warrants, which could potentially dilute our shareholders’ ownership interests.

If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

~~Off-Balance Sheet Arrangements~~

We had one off-balance sheet arrangement (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of September 30, 2021, as we exercised our option in December 2020 to lease the remaining office and laboratory space at our Cambridge, Massachusetts facility (the “additional space”). The combined space will constitute the entire building. The lease for the additional space commenced on October 1, 2021 with a term of five years. As the lease term for the additional space had not yet commenced as of the balance sheet date, September 30, 2021, we have not yet recognized rent expense for the additional space. On the commencement date of the lease for the additional space in 2021, we will record a right-of-use asset and corresponding operating lease liability and begin recognizing straight-line rent expense. As of September 30, 2021, we had not made any payments related to the lease of the additional space. We expect future cash commitments related to this lease for the additional space to total $5.4 million, of which $0.3 million is related to payments in 2021 and $5.1 million is related to payments beyond 2021. We have subleased this additional space at our Cambridge facility to the previous tenant for less than a year.

We had no other off-balance sheet arrangements as of September 30, 2021 that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

~~Recently Issued Accounting Pronouncements~~

The recently issued accounting pronouncements described in our audited financial statements as of and for the year ended December 31, 2020, and the notes thereto, which are included in the 2020 Annual Report on Form 10-K, have had no material changes during the nine months ended September 30, 2021, except as described below.

~~Recently Adopted Accounting Pronouncements~~32

~~In December 2019, the Financial Accounting Standards Board finalized Accounting Standards Update No. 2019-12, Income Taxes (Topic 740):~~ ~~Simplifying the Accounting for Income Taxes~~ (“ASU 2019-12”). ASU 2019-12 eliminates certain exceptions in Accounting Standards Codification 740 and generally simplifies existing guidance. The new guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, but may be adopted earlier by entities. We adopted ASU 2019-12 as of January 1, 2021 and it did not have an impact on our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign exchange rates, as well as, to a lesser extent, inflation and capital market risk.

Interest Rate Risk

We are exposed to interest rate risk in the ordinary course of our business. Our cash and cash equivalents are held in readily available checking and money market accounts. Our short-term investments are comprised of term deposits which have fixed interest rates.

Foreign Currency Exchange Rate Risk

Due to our operations outside of the United States, we are exposed to market risk related to changes in foreign currency exchange rates. Historically, we have not hedged our foreign currency exposure. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, changes in foreign currency exchange rates did not have a material impact on our business, financial condition, results of operations or cash flows.

Inflation Risk

We do not believe that inflation had a material effect on our business, financial condition, results of operations or cash flows for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021. If the global inflationary trends continue, we expect appreciable increases in clinical trial, labor, and other operating costs.

Capital Market Risk

We currently have no product revenues and depend on funds raised through other sources. One possible source of funding is through further equity offerings. Our ability to raise funds in this manner depends upon capital market forces affecting our share price, including impacts of the COVID-19 pandemic on the capital ~~markets resulting from the COVID-19 pandemic.~~markets.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~September~~June 30, ~~2021.~~2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934,, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to its management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of ~~September~~June 30, ~~2021,~~2022, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation of such internal control required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended ~~September~~June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any material legal proceedings.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, including the risk factor below, you should carefully consider the factors discussed under the caption “Risk Factors” that appear in Item 1A of our 2021 Annual Report on Form ~~10-K~~10-K.

We issued pre-funded warrants as part of our June 2022 financing, which may cause additional dilution to our shareholders.

In June 2022, we closed an underwritten offering in which we issued and sold 25,464,483 ordinary shares and, to RA Capital Management, L.P. in lieu of additional ordinary shares, pre-funded warrants (“Pre-Funded Warrants”) to purchase up to 7,093,656 ordinary shares at an exercise price of $0.0001 per share. The Pre-Funded Warrants contain a so-called “blocker” provision which provides that they are only exercisable upon receipt of shareholder approval or if such exercise would not cause the aggregate number of ordinary shares or the combined voting power of total securities, in each case, beneficially owned by the holder (together with its affiliates) to exceed 19.99% of the number of ordinary shares or total securities, respectively, outstanding immediately after giving effect to the exercise. To the extent the Pre-Funded Warrants above are exercised, additional ordinary shares will be issued and such issuance would dilute existing shareholders and increase the number of shares eligible for resale in the ~~year ended December 31, 2020, filed with the~~ public market.
~~Securities and Exchange Commission~~ ~~on March 4, 2021, as amended~~.

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

Recent Sales of Unregistered Equity Securities

None.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the three months ended ~~September~~June 30, ~~2021.~~2022.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~None.~~The information set forth in this paragraph is included herein for the purpose of providing the disclosure required under “Item 1.01 - Entry into a Material Definitive Agreement” of Form 8-K. On August 8, 2022, Wave Life Sciences USA, Inc. (the “Subsidiary”), a wholly-owned subsidiary of Wave Life Sciences Ltd. (and together with the Subsidiary, the “Company”), entered into the Second Amendment to its lease with CPI/King 733 Concord Owner, LLC (the “Second Lease Amendment”), which, among other things, extended the term of the lease at 733 Concord Avenue, Cambridge, Massachusetts, which serves as the Company’s U.S. headquarters. The Second Lease Amendment amends the lease agreement dated as of April 6, 2015, between the Subsidiary and King 733 Concord LLC, an affiliate of King Street Properties Investments, LLC (the “Original Lease”), as amended by the First Amendment to the Original Lease dated December 9, 2020. Under the Second Lease Amendment, the lease term with respect to the approximately 30,893 square feet of space leased under the Original Lease (the “Original Premises”) was extended for an additional period of five years commencing on April 1, 2023, and expiring as of March 31, 2028. During the extension period, the Company has agreed to pay an average base rent for the Original Premises of approximately $3.3 million per year, plus certain costs and expenses, including a proportionate share of applicable taxes, operating expenses and utilities. In addition, the Company received a tenant improvement allowance of up to $0.9 million. The foregoing description of the Second Lease Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Second Lease Amendment, a copy of which is attached as an exhibit this Quarterly Report on Form 10-Q.

Item 6. Exhibits


Exhibit Number	Exhibit Description	Filed with this Report	Incorporated by Reference herein from Form or Schedule	Filing Date	SEC File/Reg. Number

~~10.1+~~	~~Non-Employee Director Compensation Policy, effective as of August 16, 2021~~	X

~~10.2+~~4.1	~~Wave Life Sciences Ltd. 2021 Equity Incentive Plan (the “2021 Equity Plan”)~~	X

~~10.3+~~	Form of ~~Non-qualified Share Option Agreement under the 2021 Equity Plan, effective as August 10, 2021~~Pre-Funded Warrant	X	Form 8-K (Exhibit 4.1)	06/14/2022

~~10.4+~~	~~Form of Restricted Share Unit Agreement under the 2021 Equity Plan, effective as of August 10, 2021~~001-37627	X

~~10.5+~~	~~Form of Non-qualified Share Option Agreement for UK Participants under the 2021 Equity Plan, effective as of August 10, 2021~~	X

~~10.6+~~	~~Form of Restricted Share Unit Agreement for UK Participants under the 2021 Equity Plan, effective as of August 10, 2021~~	X

~~10.7+~~
10.1	~~Form~~Second Amendment (to Lease) by and between Wave Life Sciences USA, Inc. and CPI/King 733 Concord Owner, LLC, dated as of ~~Inducement Restricted Share Unit Agreement~~August 8, 2022	X

31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer	X

31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer	X

32*	Section 1350 Certifications of Principal Executive Officer and Principal Financial Officer	X

101.INS	Inline XBRL Instance Document – The instance document does not appear in the interactive data file because its Inline XBRL tags are embedded within the Inline XBRL document.	X

101.SCH	Inline XBRL Taxonomy Extension Schema Document	X

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	X

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	X

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	X

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	X

104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)	X

~~(+)~~

~~Indicates management contract or compensatory plan or arrangement.~~

(*)The certifications attached as Exhibit 32 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Wave Life Sciences Ltd. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of such Form 10-Q), irrespective of any general incorporation language contained in such filing.

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~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	WAVE LIFE SCIENCES LTD.

Date: ~~November 10, 2021~~August 11, 2022	By:	/s/ Paul B. Bolno, M.D., MBA
		Paul B. Bolno, M.D., MBA
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: ~~November 10, 2021~~August 11, 2022	By:	/s/ Kyle Moran
		Kyle Moran
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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