Wave Life Sciences Ltd. (WVE) Earnings Call Transcript

Hi, everyone. Just wanted to come on to welcome everyone to this session of our SMID-cap Executive Insights virtual events. So I'm Jill Hall had a small and mid-cap strategy here at Global Research. So we're very happy to host this event for another year. Great opportunity to hear from corporates across the small and mid-cap space. Our analysts have great coverage in the space, about 1,000 small and mid-cap companies in the U.S. So fortunate to hear from almost 20 of them between today and tomorrow. So feel free to reach out to me or to the Corporate Access team is you need help registering for any other sessions. We can definitely still add people and -- or if you need the schedule as well as if you need help connecting with any of our analysts afterward or getting on to distribution for their research, our small and mid-cap research, we also do a fundamental compilation of small and mid-cap research each day. So with that, I'll pass it over to Alex.

Awesome. Thanks, Jill. So my name is Alec Stranahan. I'm a senior analyst covering biotech here at BofA, Cofor29 companies ranging from $40 billion to $400 million. on the market cap scale. And I'd say Wave is probably 1 of the more interesting stories in my coverage, and it's my pleasure to be joined today by Paul Bolno, who is the President and Chief Executive Officer of Wave Life Sciences. Paul has been with the company since just about the beginning and I know you'll be able to feel his passion about their RNA platform and opportunities in OPC and elsewhere. So Paul, thanks so much for doing this with us.

No, thank you. Excited to be here. .

Yes. Great. Great. So I've got some questions to run through here to sort of lead the discussion. But for those dialed in, if you do have a question, you can utilize the raise hand feature via Zoom or you can e-mail me separately, I've already gotten a couple of questions come in, and I'll be sure to relay those on your behalf. So Paul, maybe just to start, we've has clinical validation for the RNA interference and RNA editing aspects of your technology. But maybe just starting at a high level for those less familiar, with the story and the technology platform, maybe you can run through what Wave was created to do and sort of what's going on in the company currently?

No. It's a wonderful place to start because as you said, when we kind of look at where we are today, it's easy to become fixated on some programs and clinical validation, and we talk about RNAi and as if it's almost commoditized and we talk about RNA editing is this innovation on the platform. But as you pointed out, if I reflect kind of back on now in over a decade investment that we've been making at Wave, it's fundamentally off of chemistry. And at the core essence of Wave has always been about how do we design differentiation on chemistry that can ultimately unlock the potential of RNA medicines. And I say this both on the investment we made in stereochemistry and so making single molecules where we could really understand the fundamental pharmacology of how these medicines work to the ability to extrapolate new modifications that continue to drive potency, durability and differentiation as we see with our obesity program in. And so -- when I step back and say, RNA medicines, we've got a ubiquitous chemistry capability across all RNA therapeutics across the different modalities. And what's really exciting about that, and I think this is the opportunity that sits ahead of us, both with the pipeline that we're currently developing. And as we have R&D data later this year, really extrapolating on where we can take this forward is the convergence between what you can do when you have differentiated chemistry and how that translates to the intersection with novel genetic targets. And that's really enabling us to really approach new areas. So case in point, a novel genetic target an obesity that really addresses what we see as kind of the fundamental future of the next generation of obesity therapeutics. Alpha-1 antitrypsin the first RNA editing program that's an important program for alpha-1 patients but also unlocking the power of RNA editing more broadly with PNPLA3 coming behind it. And again, here's an opportunity where silencing as we predicted a little over a year ago, where we were saying that if you knock down this enzyme, you could make the disease worse. The idea that in editing that could actually treat the underlying disease, we were seeing that play out with some of the recent clinical data updates on RNAi and PNPLA3. And so again, differentiated target, differentiated approach. And I think as we think to the future, the opportunity we have in front of us beyond the existing pipeline to use the platform to unlock differentiated targets that really address new biology is pretty exciting.

Yes. No, definitely a lot going on at the company. And maybe just to level set here in the beginning, what's the benefit of RNA editing versus DNA editing, which I think is maybe a little bit more mainstream for generalist investors. And I mean you're also competing against some DNA editing companies in. So maybe you can just speak at a high level on kind of the benefits of editing the RP.

Yes. I mean, I think when we step forward, we say what is the target product profile for these patients who are living with a disease. In this case, we're talking about alpha-1 antitrypsin deficiency and how do we best address that? And the opportunity we always say is -- we have different modalities and different ways to address diseases. So we don't think that that's the best way to do it. We don't have to be doing it. And so really, RNA editing came about because our view fundamentally is that a redoseable medicine that doesn't permanently mutate DNA and put patients at potential risk for off-target edits and separate when we talk about this space, in particular, alpha-1 antitrypsin deficiency. When we talk about off targets, people tend to immediately go to just, well, is it by standard can you address that through specificity? The real risk to off-target editing that could lead to editing of cancer-associated genes that could take decades to materialize. In addition to what happens when you get that create different proteins. So specificity is important. So can you redose it and get an access to new cell types. Can you get specificity is exquisite, and we've seen that in our preclinical characterization. We see that clinically, which is beautiful crossing of our M protein and Z protein. So we know we're functionally converting that Z misfolded protein to M. And durability, so being able to do so in a way that's not putting a dosing burden on patients -- and then when we think about access and market access to these patients on the other side, how accessible do we make it when you work with payers. And when we think about the idea of -- and I don't think we've ever seen the concept of a true one and on therapy. But if you take durability you need over a decade of durability on a DNA editor with safe, durable like no loss of editing to just break even from a payer on what you would get in terms of treating a patient with an RNA editor. And so when we think about being able to provide that, so potency, safety, durability and access. We see RNA editing is providing those features. And it's not dissimilar to what we're seeing in other therapeutic spaces. I mean, I think TTR has just been another great example of watching where RNA medicines have really unlocked the potential for an indication and maintain a competitive position. So I think we see that same opportunity in front of us for alpha-1 antitrypsin deficiency.

Great. And Wave, I think has a distinct advantage that within RNA, you can silence, you can edit, you could do a splicing. How do you decide which approach is best for a given disease? And I guess, -- where does your proprietary chemistry maybe create the clearest competitive advantage?

So I think the wonderful thing about the chemistry is we can see that advantage whether we're talking about editing or RNAi or splicing. So the opportunity that the chemistry provides gives us, to your point, and I think it's a very good one. that we can think about to hammer everything and now, with the wonderful thing about having optionalities as we think about these tools as we can select to your point, the right tool for the right job. And I think there's no better example of that, frankly, than the program that will be going into the clinic later this year, which is PNPLA3. So there's 9 million patients who have this genetic mutation. You can find it in 23 and me, so it's commercially available and people can find out that they have the PNPLA3 mutation. And those patients are at a substantial higher risk of all toll liver disease mortality. So the ability to actually provide a fix to that is important. I say a fix because for a while, people said, okay, there's this mutation. If you can silence it, you can treat the underlying disease. And as we, as to your point, we can make RNA is and we can make editors. So we do and we shared some of these data last year at R&D Day. When we looked at the comparison between silencing the enzyme versus fixing the enzyme. There were differences in outcome measurements. We saw differences in the sales ability to dispose of the fat that was inside as we think about MASH. We also saw differences, and we'll be sharing more on this on the inflammatory component of the disease. And so when we look back and said, well, do you want to silence or turn off this enzyme, but frankly, you need it, right? This is a disease where a heterozygous phenotype. So 50% correction basically restores functionality. Back to those patients in terms of their survival advantage. The idea that we had was, well, yes, absolutely. Here's a case where actually the correction actually fixes the disease. And I think -- not only do we see that in our preclinical studies, but watching multiple clinical programs start to read out on the silencing front is conferring that same advantage that we've been seeing that there's actually the real advantage in fixing and correcting that underlying mutation back to a normal functioning enzyme as opposed to silencing and then taking that enzymatic function away. And so we're excited as that goes forward to be able to think about this really in redefining liver diseases. Here's a PNPLA3 mutation. We can look at it for these different indications, but really what underlies this is protecting these patients early on from a substantial risk. And 9 million patients is not in significant number of patients that can be addressed.

Right, right. And you've mentioned a few of the internal pipeline assets, and I want to go through them one by one. But I think maybe a good question just to sort of lead into that is I think WVE-007, which is your PC asset, got a lot of attention or a lot of attention to the company when we saw the really encouraging early human data a few months ago. But I guess which program kind of has the best or the greatest potential to change how the market values Wave over the next 12 to 18 months?

Yes. I mean I think over the next year, I think it's the wonderful aspect of these 2 programs, right? I think they have -- if we think about alpha-1 antitrypsin deficiency and we think about each has the ability to be transformative in its own way, right? I think in the case of the next near-term period on I think a lot of the -- what people will say is the initial enthusiasm. I think I still think sustains our enthusiasm in the program. I think the biology is really well understood. We have genetic data. We have human data, and we have the bridging between human genetics of patients. We have the bridging to treated patients, and we have the models in between. And the medicine is doing exactly what it's supposed to be doing in a way that's differentiated as we've watched other silencing programs come forward. That reinforces our differentiated chemistry. And we're still looking at durability as we think about a once to twice a year dosing, we still see the only clinical data set in patients who are otherwise healthy, so Phase I patient population in low fat who sees substantial reductions in visceral fat that are clinically relevant, substantial reductions in total body fat. So we think about what's going to drive ultimately weight loss in general is total body fat and change in water conference, which is actually a measurably meaningful way of looking at the impact of this medicine. And so I think as we think about the early data from the Phase I population. And even that is being compared to Phase II/III. I think we're highly encouraged that with dosing underway in the 2a monotherapy in the patient population that is the intent to treat, right? These are patients with higher BMIs, higher levels of visceral fat, higher levels of total body fat. With and without diabetes, there's 2 other cohorts so that we can really elucidate kind of the broader cardiometabolic areas for treatment, meaning diabetes, MASH and others, it's pretty exciting. And I think we're poised now without running to be able to accelerate and deliver the new data. And then shortly from now initiate the combination study and then where I think there's probably an underappreciated application because everybody is so focused on the front line and how are we going to win a monotherapy, and I think the opportunity is very much there, and I think this is going to be a meaningful medicine combination, do you have to keep pushing in credence in order to get a benefit or the add-on? And I think we're seeing examples of add-on being really great opportunity. But I think the most underappreciated aspect long term for treatment of these patients who are living with obesity have been treated are at steady state on regardless of what therapy they came into treatment on I think the conversation we clinicians and patients and payers for that matter is what does maintenance now start to look like in this population? And to date, maintenance is really like a titrating back on increase levels and how much regain can you stave off in order to kind of keep people in a level. And I think that really fascinating opportunity of maintenance for is actually just shifted of how do you lock in and prevent that regain? That's the challenge, right? If you titrate back your treatment, the weight that comes back is actually fat. And as you come back, you imagine a patient going back to baseline actually has more fat then they actually started their therapy with. So the idea that we could shift to a maintenance therapy that could be once to twice a year, prevent that regain of fat back and really stabilize patients. Now has us not segmenting a mark, but really thinking about how do you take any incrementation and actually think about a forward-looking vision where they don't have to sustain on that and run all of the complicating risks to being on a sustained injectable frankly, oral where we'll see whether or not the oral is in a real-world setting, actually sustain the levels that they're seeing now. But we think maintenance is a really exciting way. And at this moment in time, I don't think it's still getting the attention that we think it should. And I think as we start that clinical study this half, I think that's going to be an exciting news part of the story. So that's kind of how we think about unlocking obesity. And we saw that there is a lot of value there. On the other side, alpha-1 antitrypsin is we're poised to have regulatory feedback on a path to accelerated approval, I think, accelerates a different conversation with Wave, right, which is one of how do we move into a commercial stream for a substantial number of patients, 200,000 patients in U.S. and Europe. Would be the first RNA editing program, we think, as we laid out as your first question in a way that's differentiated, I think, from others and as we test that profile amongst the medical community and payers. We think that's an exciting component in wave that gets unlocked again in the second half as we think about going into next year and having this pathway to potential accelerated approval. And so I really do think we're in a position as we look forward. that the next 12 months is incredibly exciting across both assets. And I think both have the potential to contribute substantially to a higher value than we're seeing today. With then PNPLA3 coming behind that as a supportive asset that will continue to generate data in the next 12 months that unlocks that opportunity and as people will learn at R&D Day. The opportunity we have with bispecifics and other targets that sustainably deliver on that pipeline beyond the existing 007 and 006, I think is a really strong foreseeable future.

Yes. Yes, great. Those tend to be the 2 assets that I get most focused on from investors as well. So maybe we can touch on those, and then I do hope we get time to talk about PPL sorry, PNPLA3 as well at the end because I know that's a large unmet need as well. But maybe starting on 007 in obesity and cardiometabolic disease. And I think you kind of covered a lot of it. But maybe we could just talk a little bit about the lessons learned so far from the Phase I data. I mean you showed reductions in total and visceral fat with muscle prevention, which is kind of the holy grail when you think about maintenance or even an upfront therapy, like A lot of the total weight loss is actually from muscle and not fat. So if you're able to strike that balance with convenient dosing, like it seems like a pretty actionable profile. But I guess how did investors sort of interpret those results through the dose escalation. I think we're going to get a higher dose as well later this year and -- what have you learned about baseline BMI, the relationship between active and knee reduction and clinical benefit that's sort of helping you inform next steps for your clinical program.

Yes. I mean I think 1 from -- and I think this is great from a platform perspective, from preclinical data to human data, I think we're seeing strong correlations and translations of target engagement editing. And as we predict our dose going forward. I mean the fact that we're seeing that once to twice a year sustained at the lowest dose that we're going into, I think, continues to speak to what we expect to see from where we think we would need to be from a dose. And we're seeing 8% to 85% reduction in activity. So we're knowing that we've seen preclinically that once you cross the 70% threshold and sustain it, you start to see that reduction. So we're well in excess of that. I think that's an important nuance too because I think what it also affirms for us is this differentiation on chemistry. So what we have seen in our preclinical data is it's the only preclinical data set that's seen single dose reduction in body weight. Not prevention of weight gain or slowing of fat regain, but true reduction in body weight. And I think that was important because it does demonstrate that with sustained reduction. And it's important to remember that the DIO mouse is an obese mouse model with excess fat. So I think it's affirming for us that where there's fat that can be installed, you'll see that reduction in occur. And I think that's exactly what we saw in the humans. And in fact, to your point on the dose response was really interesting. And we have to go back to these data and remind ourselves because I also think people tend to become, let's say, fixated on BMI and forget you can be a body builder with a higher and you can be overweight or obese with higher BMI. And the main difference there is the amount of fat. And so I think what we've seen, which has been affirming for the mechanism is where there's higher fat, we see higher rates of decline, right? And so that played out actually in the clinic. If we think about the dose response, the update we provided at the 400 was actually probably one of the clearest data sets to prove this principle. Once patients had a higher level of vital total fat, those patients had reductions on par with where we saw the substantial decline in the 240-milligram bill. So I think what's key in this early study, and I think it's hard because obesity is an area. And I do appreciate that those who are evaluating these kind of from the other side are looking at kind of the increasing pathway, right? People come out and they're like, here's our IIa data. Here's how it looks in the IIa population. And if we look at our peers who share data for around us, they're all looking at the 2 way. We never saw the early Phase I data. I think it was compelling as our Phase I data was competitive where we were starting to benchmark our Phase I population with the 28 population. We were like, "Oh, look, we wave of 14-point whatever reduction in visceral fat that looks similar to these other companies. reduction in visceral fat. And a reminder, when we kind of step back is, yes, but if you look at -- because these patients had different starting rates of fat, our patients only had 1 liter of fat to lose, and yet they could lose it remarkably in comparison to a comparator with 5 liters of fact because they were a much larger population, which, again, will speak to what's next and why we have conviction in the program. But I think it really taught us that the medicine is doing exactly what we had modeled to do targets the cells, it's durable. It's potent, it's safe, and I think that's really important as we think about durability and potency in this population. So safety and tolerability looks quiz it. So I think that opportunity on top of that is translating very well. Now the next question that everybody has is what about 600. And I think we've been saying time and time again that, yes, 600 should see -- we're probably at the blunter end of the curve, it will probably be -- I would anticipate more active reduction -- but I wouldn't expect that the baseline characteristics of those patients would be any different. And we know we've already suppressed that. So I think we'll see what we'll continue to see around PK/PD. I think the most exciting and we've been very clear on this, is now seeing what the medicines do in the patient population with higher BMI, higher total fat, higher visceral fat and comorbidities. And that's that comorbidities piece that allows that fab to be larger. And I think if we think about our modeling, and we've shared this with a number of folks, if you look at the believe characteristics, which are pretty much good baseline surrogates for baseline characteristics of patients into a obesity studies, they have much higher total fat, much higher visceral fat. And if you look at where our studies started in relation to those studies, and I should kind of give that, I don't know, it's like. But we started at a composition profile that looked like where those patients end after a year on therapy and still saw that we could continue to bring that down. So -- what's encouraging is, as soon as we go to that population where we get to a higher fat to lose with the comorbidities, we model that we're not in any way kind of going, do we think we're going to see greater than 5% changes in body weight. I think what's most important, and you pointed it out, is being able to see that improvement in body composition. And I think that's an exciting conversation that's also happening this half, where we're going to engage regulators around that more broadly. We know the other obesity patient groups are as well. And I think there's a big conversation to be had really on starting to reframe a focus on body composition that irrespective of the 5%, and we're not trying to change the regulatory paradigm there. But we do think from a label perspective and a forward-looking perspective, that changing the narrative from pounds on the scale, as you point out, you can have up to 40% reduction in your muscle mass in that early time point that's really accounting for weight loss with incretins. That's one benefit. Those patients are losing an organ that has -- plays a big role in insulin sensitivity, further weight loss and muscle mass and stabilization. So the ability to really frame what long term is providing health benefits as we think about improvements in body composition, I think, is going to be an exciting part of the story as we go through this year and into next year.

Yes. And we know that in patients with higher BMI that have been exposed to other inhibiting assets. You do see better activity, which is probably not inherent to that -- those other compounds. It's probably just where you start determines where you can end up. And to your point, Paul, the Phase IIa in LIGHT study, I think that's a BMI of 35 to 50, right, with or without type 2 diabetes. And you're going to be measuring the whole gamut, body weight, body composition, fiscal fab, liver fat, HbA1c, lipids. I guess which of these endpoints kind of matters the most for establishing 007 and which could actually open up expansion opportunities into say, MASH or even diabetes?

I think they're all important in their own way, right? I mean I think in general, looking at that continued shift in body composition, right? Reductions in total body fab reductions in visceral fat are going to be very important. I think Ultimately, that translates to body weight because by stabilizing muscle, you're going to see wait as a function of losing fat, right? And so I think that's going to be a surrogate to looking at what we're going to have in addition to the drivers of what's causing that, which we want to see the weight reduction but coming off of total body fat. Then to add to your point, I think what's really important about this mechanism and frankly, it was also driving, I think, the patient disposition at the beginning of the study is the concept that these patients can have comorbidities, right? And so when you start thinking about prediabetics and diabetics as 2 different cohorts, the ability to look and track hemoglobin A1C and we go back to these humans who are walking around with a protective loss of function, they have improvements in hemoglobin A1c. They have better type 2 diabetes outcomes and cardiovascular outcomes. Why? Well, because of this improvement, they have lower triglycerides, they have higher HDL, right, in addition to these improvements in hemoglobin A1c. So I think we're going to look and be able to elucidate some of those cardiometabolic endpoints as we think about looking at those 2 different cohorts, and we'll have the biomarkers to measure that. And as you point out, by having MRI-PDFF in this study, particularly the diabetic patients that have comorbidities and the higher BMI that likelihood right of having higher levels of liver fat as we've seen in the other studies is quite substantial. And therefore, the improvements that we can see if we look at our peers who have looked at liver MRIs, 44% reduction in liver fat is consequential. I mean that's substantially as large as and if not actually larger than some of the MASH studies. So I think the opportunity we're going to have here is there's the unlocking the obesity perspective and a differentiated program with a differentiated pharmacology and we're going to have the opportunity to open up the broader cardiometabolic endpoints that are all part of the study.

Okay. Great. And with the approval of oral incretins I'd say, the field is moving pretty quickly. although we haven't seen maybe as much progress as the clinical pipeline would have led 1 to believe 2 or 3 years ago. I guess where do you expect 007 to kind of fit into this evolving landscape? Like do patients get an injectable and then oral maintenance or would asset compete against an oral or -- would it be complementary in combination? How are you sort of thinking about these kind of synergizing together ultimately 5,10 years down the road?

Yes. I think if we don't think about the method of delivery, then we know that incretins are compatible and orthogonal to, right? So the same features apply your point of whether it's monotherapy at the front end, in combination with the oral which is an interesting way of thinking about it because the whole goal is to minimize patient number of injections and you could be talking about 1 or 2 a year on that could take down the frequent injection frequency from a weekly injectable down to once or twice a year in combination with an oral. As I start thinking about maintenance and where we are, I think the difference is you talk to patients where you go into your physician's office and you get a shot and then you don't have to think about it for the year without the tolerability challenges and frankly, you don't -- it doesn't negate all of the other safety and tolerability complications on the increases, whether we're talking about oral or injectable the idea that you still go to a once-a-year injectable, we think is highly competitive with that as we talk to, again, physicians, payers and patients. I think what's going to be interesting as the data continues to evolve and looking at some of the orals is what the impact ultimately is, right? I mean here's a medicine that you got to take every day. Some, depending on time, base take whenever you like. But we know from other orals that are required daily. I mean, I think cholesterol and statins are just a great example of what adherence looks like on a medicine that doesn't have the same tolerability challenges causing nausea and vomiting and you start thinking yourself in the real world setting, when somebody is not calling you, you don't have an app, you're not kind of in a trial where you're taking it on this frequent basis. The evolution of what real-world data looks like when people miss a dose or missed 2 doses to start adjusting their doses titratably versus how that looks in a maintenance concept versus you go in, you get your shot. And you know you're covered for the period of time that you're active in eisuppressed. We think that the profile is highly competitive against orals in that mean an setting.