Wave Life Sciences Ltd. (WVE) Earnings Call Transcript & Summary

It's my pleasure to introduce our next guest from Wave Life Sciences, President and Chief Executive Officer, Dr. Paul Bolno; and Senior Vice President, CMC, Dr. Sri Vaddeboina. [Operator Instructions] Paul and Sri, thank you both so much for joining us today. I think to start, Paul, could you please provide a couple of minutes of introductory comments about Wave for investors new to the story?

Yes. No. Thank you, Keay, and we appreciate Chardan for hosting us on today's summit. And it's a great topic talking about manufacturing. When we introduced the company and for the subsequent part of the discussion, just a reminder that we can make a forward-looking statement during the discussion. So I please refer everybody to our SEC filings for an update. But Keay, as you said, beyond manufacturing and stepping back, since our foundation and we've really focused on embracing stereochemistry, to rationally design therapeutic oligonucleotides. And we believe by doing that, we can drive improved potency, durability and hopefully, outcome for patients. We've actually seen more recent examples of this. So referring to our data update that we provided several weeks ago on our C9orf72 program, where preclinically, we had shown data that after 2 doses in a transgenic mouse model, we have seen that translation of potent durable outcome 6-month knockdown of the poly(GP) dipeptide, this is the biomarker that one key measure the impact of taking down the toxic RNA. The clinical update we provided showed that these data that were preclinical, were now translating into the human clinical data sets, where we saw very low doses knockdown of the poly(GP) dipeptide, and we'll be continuing to follow these patients out both in the multi-dose setting as well as extended duration. So we'll be spending that follow-up period of 6 months to look at continued knockdown. What's important is not only with these the first data looking at the impact of target engagement with new chemistry, stereo chemistry. But importantly, we're excited about the potential for that translation to the other programs in our pipeline. So that's referring to our SNP3 program in HD, where we anticipate data from that study in 2022 as well as in our N531 study, which is our DMD exon 53 study, where we're looking not in CNS and intravitreal but are looking at muscle and systemic delivery of our PN chemistry. So a great example of us being able [ now to see ] that translation and be able to look at the impact of chemistry across multiple modalities and tissues. And lastly, in taking a step back in that chemistry, really in the ability for us now to unlock in the RNA editing space, our AIMer guidance. And so with that being in the translation to a candidate for our Alpha-1 antitrypsin program, and we're excited to that that's [ then drawing ] studies in the third quarter and its progress to the clinic. So really holistically stepping back and looking at multiple modalities, multiple tissues and leveraging our insights [ evolving ] with that chemistry. Stepping back from all of that was an investment that we made in manufacturing and a realization that in the oligonucleotide space, there was a rising tide, no pun intended, in oligonucleotides. And when we think about that, what we saw and envisioned when we were back in 2014 and 2015, was that with more modalities, more therapeutics in the RNA space moving forward, that there would be challenges in terms of meeting bandwidth to deliver molecules for clinical translation. So we made it a decisive decision to build GMP manufacturing to support the growth of our pipeline, to be able to sustain that to the therapeutics that we felt were important and meaningful to advance patient. When we think about that investment back then, I think we hadn't anticipated in terms of where we are today that the increased demand hasn't been met. So if we think about this kind of constant improvement in more therapeutics, it wasn't anticipated like we were seeing in the gene therapy space, growth of the CDMO and manufacturers to support those modalities. And what we didn't see was that rising manufacturing capability to meet those demands. So where we find ourselves today is we have a GMP manufacturing facility. We have a world-class oligonucleotide process development team that helps us scale and grow our therapeutics into the clinic, while disappointing and remembering suvodirsen, which was our exon 51 program, we had done a lot in terms of the validation of manufacturing processes in terms of the capacity to meet large demands for oligonucleotide. So recognizing that we have that capability, we are now focused on utilizing this facility to serve not only Wave's pipeline, but really our underlying promise, which was to deliver genetic medications, whether or not we're discovering and developing them or whether or not we're supporting others in their development programs. And so we decided to continue to explore that capability of unlocking that capacity and capability in 2022, delivering therapeutics to patients. So we're excited to participate in this conference, both as a therapeutic drug developer, but also recognizing that we have a substantial unique capability in the oligonucleotides.

Well, great. So with that introduction, can you tell us what capacity you have online at your facility in Lexington, may I ask?

Yes. So we've built Lexington on the manufacturing side to meet demands of really what we saw as where the core bottleneck was. And it's in that translational piece of preclinical in the Phase I/II material. So really, where we think about all meaningful new medicine testing themselves, which is can you generate material to get through your IND-enabling studies and then ultimately run your human proof-of-concept study. As we think about the future of medicine, there's always about building capacity for scale-up and commercialization. But where the real unique necessity was is in the Phase I/II supply. So within Lexington, that is what we have now, which is the capacity to serve both Wave and others' Phase I/II material. We can run multiple runs to increase the amount of material we need and again, how we've supported a number of our programs. But we have ample capacity beyond ours to continue to unlock that capability within the facility. Sri, you want to add to that?

So I think what you -- I absolutely agree with you, Paul. So we have capacity to accommodate various programs within the Lexington facility.

I think stepping back, too, when we talk about programs, it's easy when we talk about what we've been working on, we've got antisense oligonucleotides. We have exon-skipping splice-correcting oligonucleotides. We're bringing a whole new technology forward with our AIMer in terms of RNA editing. And so when we think about that capability, the facility we have, our process development expertise, crosses and spans multiple modalities. That includes not just the uniqueness of our chemistry to find our oligo but the ability to serve more broadly other as it relates to longer oligos for whether it's DNA editing, CRISPR editing and the like. Those all require oligonucleotide synthesis capability. So kind of getting back again when we talk about where the need is in the space for oligos, we oftentimes talk about modalities like CRISPR editing or DNA-based editing. As the biologics, the other side of the house, right, like in terms of how you deliver the impact, oftentimes for getting at the guide strand component that which is capable in the fact that it has the tendency to work in conjunction with the enzyme is an oligonucleotide and requires real process development scalability. And so within our facility, we have the know-how capability and manufacturing expertise to lever that.

Yes. So let's dive into that a little deeper in terms of your capabilities. We followed the company for a while. We've seen the development and maturity of the PRISM design platform. And initially, you focused on synthesizing precisely controlled chirality with your stereo peer at each backbone linkage. And more recently, you introduced the phosphoramidate diester modifications or your PN modifications to the backbone. So I think one can argue that these are more complex oligonucleotides to manufacture. So what kinds of specific challenges with respect to manufacturing did Wave have to address, to bring these compounds, your own proprietary compounds into the clinic?

So we spent a lot of time organizationally and kind of stepping back, and we're excited to have Sri joining Wave. Now it's been over a year, which is exciting as we grow. But kind of stepping back to the original building blocks of Wave, we took on, head on how do we rationally design a single drug. It was a reminder to people that the reason this field had kind of not pushed forward in that space, right, the likes of others studying around the molecule, kind of ignoring that space, was because the thesis was that you had to try to separate out, you had to pull out or extract some component of a mixture. And what we taught people head on and what we develop internally is not that, that's why we're able to get the scale that are commercially no different than a serial random molecule, is that embedded in our chemistry capability of the synthesis, the design of individual building blocks that control the chirality at each base as it's additive. I think that's important for those who are joining who are not as familiar with oligonucleotides synthesis, you have to think of it as kind of the building blocks for synthesis. What we're doing is we're adding on individual basis control position. So in a way if one were, and I know at some point, they're going to offer a visit on site, it's really fascinating for those who aren't familiar to kind of see this in the synthesizers in action because essentially, you're building on a column is the oligonucleotide in its full length. And what we're able to do on each space is control its position through the reagents, design them to link on to the column and then we shut them off the column. So the scalability is there because you're not trying to extract a percentage of a mixture, you're actually embedding and building the molecule base study. So with that know-how, that capability of doing that for Wave with our proprietary chemistry, but just as easily without the proprietary chemistry in other areas, is really a feature that's scalable and portable across a multitude of modality. I do think what's interesting and we'll talk about this, I'm sure, later, is that in building that capability and not just building the manufacturing capability or the process development that goes to the building that goes on onto the columns, there's also the characterization that comes with that. And so the ability for Wave as we think about now defining the oligonucleotide class, one remembers small molecules when they have a chiral center, you can have a left hand and right hand, one causing -- if you think about [ polidomide], is a perfect example of one that's toxic and one that isn't, right, one position that is toxic and one that isn't. That actually required a whole CMC regulatory body to define being able to define each of the parts and then to characterize those parts in terms of what's the opposite. That's really difficult to do in the oligonucleotide space, we have potentially in the [ 20 mir ] or 524,288 different substrates. There is a lot of complexities with this from pharmacology and toxicology. So we're also interested in building foundationally in oligonucleotides for manufacturing is really establishing the process that could be the regulatory CMC process in the future if we establish and characterized individual oligonucleotide as tertiary or single molecule. And so there's building the manufacturing processes and opportunities around that in addition to what we can do beyond that.

Yes. No, I think that's an important point and it does lead me to the next question, and it's been a key topic throughout the conference, and that's on your assays and your analytics. So in your case, if your desired end product was all right-handed isomers, you certainly had to develop the assays in order to qualify that and make those assessments. So specifically, can you talk about some of the assay development you have in-house and you've developed to assess potency, purity and stability of your drugs?

Absolutely. Sri, do you want to...

So let me start, I think, like what Paul mentioned earlier is the differentiator is the know-how of finding solutions to either manufacturing or purely testing. And oligos are different from biologics, especially gene and cell therapies. And there is a lot of precedence of RNA therapeutics in the oligo industry, and there are several standardized test methods primarily focused on identity, strength and purity. The greatest advantage what I see at Wave is there's tons of experience that the scientists develop these methods routinely for all our programs. And we have successfully demonstrated this for more than 6 clinical studies so far, and there are several in pipeline going on. But for each oligo, the standardized methods are modified to accommodate the oligo. So they are different, but it starts to standardize test methodology.

It's interesting to follow up on that. And I think to Sri's point, I mean there is a nice feature on the oligonucleotides. We think about them again as long. Rather than calling them big, I think we'll call them long or small molecules. But the idea of having very standardized processes to establish CMC regulatory processes for validating those packages as they go forward. But to your earlier point, I mean, I think it's also interesting when we talked about kind of the history when we were looking at how do you do QC, yes, they are established processes for stereorandom drugs. But I think the reason we had spent some time early on in manufacturing, really seeing the breakthrough for the industry being entirely controlled medicine is that when we were looking at kind of the first commercial product in the oligonucleotide, mipomersen, we had kind of shared kind of the HPLC's specs for that. So when you looked at it and you said, okay, what is it we see this very large comp, right? And there's just a bunch of different isomers that establishes this wide dynamic range. What's interesting is while you can establish that principle to Sri's point, you can establish a certain characterization with that. What we were interested in is kind of more the isomeric distribution in that. And I think what was really interesting is that distribution could vary from run to run. So as we think about kind of the diversity of different molecules that are in each batch of a CMC run, it really kind of taught us a lot in terms of our thinking about how do we create the discipline around having a single product, right? A single molecule that you can characterize preclinically, characterize it clinically. And so that same batch that you're running safety studies on becomes the same product that you take into patients and potentially commercialize. And so within Wave, building the complexity, not just on the businesses, but really building and establishing first principles of how do you create that standardization from a regulatory CMC perspective, was one of the core sets of activities within our team in establishing release specs for our individual medicine. So as we think about building a pipeline of currently controlled medicines, we've done a lot in terms of manufacturing QC and building new assays. So it's great that again, we focus on that from our internal manufacturing capability. Those processes, those same controls and individuals, right, we're now able to think about how do we do that more broadly. So interesting, and I think this is one field that I keep saying watch this space because I think as we move medicines forward here, we are planning to really try to reestablish a regulatory standard for CMC for entirely control medicines. I mean that is one of the promises of bringing stereo control drugs forward.

And then you touched on this earlier, but tell us how everything you've learned to date evolving PRISM is helping you with the design of the guide RNAs used in your ADAR, AIMer products? Typically, we're thinking of a guide RNA with a hairpin to attract the endogenous ADAR. But's also if you're going to develop a guide RNA for CRISPR, that might look a little different. But talk about how -- what you've learned up to this point is going to help you and translate over to your ability to manufacture guide RNAs?

So I'll focus on us. And when I say us, I'm talking about Wave Therapeutics, right, our ability to develop this design, therapies and treatment. And so one of the benefits of our AIMer design are that they're short chemically-modified oligos that don't necessarily require those long structural components that you're referring to. So we see that as an advantage because they're short, they distribute into -- sell more efficiently, they get taken up more effectively. The [ factorial ] quantity PN chemical modifications, their physicians to help get the traffic appropriately in the right department. And we see that translating obviously, like we showed in our alpha-1 antitrypsin where 2 consequential editing efficiencies of 60%, which is well above 11 micromolar protein. So we see the therapeutic translation of our AIMer design. We got there because by controlling backlog and doing rational science, we can look at the interaction between RNA and protein, and that's really the fundamental feature of what we need by rationally designing oligonucleotide is by controlling SAR and controlling the interaction between the RNA transcript and the protein that it's going to interact with. We've then taken that and brought that experience on to the manufacturing side, where we're saying great, not only could we do that as a scale to develop our SERPINA1 model work that we use in [ proto ] models, but most importantly, are scaling that into getting ready for a GMP runs as we think about [ our RI network ] study and ultimately translating that program to the clinic. So we've seen that translation now as we think about getting our processes established for GMP synthesis across the Street that 6 clinical programs to be and now moving into a whole new modality of editing. So we've got a history of being able to take innovative ideas and translate those into GMP product. I think what's different is what you're alluding to is, well, how do we do that more broadly at scale. And I think that's really where our team has had the expertise, to say, well, we could do it after having controlled stereochemistry and all the features that one needs to scale and do that efficiently, being able to do that in a longer design where we just take an idea where a company might have a really interesting long-run guide strand and they're trying to solve that problem, well how do we take this longer and synthesize it to process development and creating meaningful therapeutic formation. We've got the know-how capability and team that's already spent time thinking about how to improve those processes, how to accelerate that, how to bring a therapeutic forward there. So some of that knowledge is obviously transferable. When I say the team, I think what's great is we've been able to not just recruit what we would say is world-class oligonucleotide process development to Wave to work on our interesting program. But the retention is the idea of having them work on many problems, right? So how to solve and create the solutions from a multitude of modalities. And I think as an industry, in this environment, it's really important for us to holistically be thinking about where is [ the consolidated ] expertise and then rather than dissipating that in some multitude, how we leverage that, how do we take that experience, that network and be able to support multiple therapeutics, whether or not we invoke them or others, how to continue to support that ecosystem. And I think that's really been where we've doubled down that and saying, how do we leverage that team and let them work on solving really challenging problems across a whole bunch of new areas of oligonucleotides therapeutics.

Okay. Great. So Paul, earlier this year, the company did disclose that it would seek to make its excess manufacturing capacity available to third parties. So can you describe some of the parameters around this initiative?

Yes. I mean as we -- I think it's expanding capacity and really thinking about as we've advanced it, how do we -- at that point, I was thinking earlier, how do we -- to that point I was making earlier, how do we lever that experience to accelerate a multitude of therapy. I think the parameters we've put around and to our shareholders, I'd say, it won't impact our pipeline. So we've been very deliberate that we built this capacity to support our therapeutic pipeline. Anything we do in this space, we'll have our -- we have our capacity locked in [ doesn't ] factor our therapeutics. But we do have substantially more capacity. We can run a facility if we were running it as a full manufacturing capability to run that 24 hours a day, 7 days a week. That's more capacity than we would be using. So there's ability really within the same footprint, be able to increase throughput through it. That could continue to double the capacity that we already have in excess. The second piece that's also important is we have scalability of fleet. So we purposefully build Lexington with the ability to expand. So within that footprint, we also have the ability to then double that capacity again within our existing facility. And we did that in a forward-looking way, realizing that if we were to go through the investment of building that facility, let's make sure it's scalable. And so we have done a lot of things that were very purpose built to be able to expand that manufacturing footprint in Lexington and they continue to do that beyond. I think our conversations have been extraordinarily productive starting last year into this year with a multitude of companies who we don't see as competitors. I think we see all of us is working together in a field to advance really challenging medicine to patients who need them. And we're prepared to work with people to solve complicated problems, to bring those medicines forward. And so I think we've purposely built the organization to be able to do that. I'm not sure if Sri have anything you want to add.

No, I think you covered pretty much everything here, Paul.

So Paul, with the current stock market valuations, since the beginning of the year, we've seen a number of pre-commercial stage biotech companies announce strategic initiatives designed to extend their current cash runway and these include virtually headcount reductions and pipeline rationalizations. But as these companies look to conserve cash, you're likely to see less investment in their own manufacturing and seek out third-party services. So are you currently seeing this translate into increased queries in demands for your contract manufacturing services now that it's known that they're available?

We saw before, which was interesting to us just in terms of the investment in manufacturing, so others looking for that experience and that capability. And that was last year before kind of the EQ event. I think what we're seeing now is that get expanded. So not only were the organizations that we're looking to sell a lot of complicating problems and looking for process R&D and expanded manufacturing. I think what we're seeing now, to your point, is even more on kind of leaning into realizing that, that investment we made is going to be valued to an entire ecosystem. And so we're really thinking about Wave now as how do we play a central role within the oligonucleotide ecosystem, not just on the therapeutic pipeline that we're developing, but really looking at our manufacturing capability. And more importantly because I think it's -- we're not making widgets, so I think though, too about manufacturing, not just about equipment, but really talent know-how capability and really leaning on how do we create that hub, how do we create that ecosystem that brings people in creates the opportunity to accelerate and advance meaningful medicines with new areas of biology support that and then increase, again, the totality of medicines around. So I think we're seeing more and more of that. It also enables us to -- by bringing in and working with others there, to continue to invest and then provide investment for that manufacturing capability so that we can sustain it. So not just coming in to Wave, but really thinking about manufacturing as an investable asset that we can continue to grow.

Yes, just to add to what Paul mentioned, I think definitely, everyone is looking the speed of supplies to clinic. So that's where everything pays as an advantage of developing these processes and provides the manufacturing opportunity for them.

Okay. Great. Well, let me squeeze in one last question here. Paul and Sri, as your perspective as management, what do you think the market is missing most about the Wave Life Sciences story? And where is the hidden value?

Well, I mean, I think first and foremost is realization of pipeline value, I mean, hands down. I think the data was really important. We don't minimize the impact of having target engagement and demonstrating that at low doses seeing the durability. So I think one is just execution on delivering on the new pipeline. So starting with C9 for ALS and FTD, our HD program and our DMD program. Secondly, I think it's the advancement of our RNA editing platform led by alpha-1 antitrypsin. So not just talking about RNA editing, but delivering in terms of the first potentially therapeutic program that treats both liver, lung subcutaneously with alpha-1 antitrypsin. And then third, hence why we're discussing today, I think there's really no visibility at all to the realization that we've got an established footprint in GMP manufacturing that's ready now. So not something that can be built out for 2 years from now for validation, but a ready-now facility that's poised to deliver a complex oligonucleotides to patients. So when I think about the totality within Wave in terms of value recognition, it really is a three-part story. And as we've said at the beginning of this year, those are the 3 parts we're going to execute on in 2022.

Well, great. Thank you both for joining us today, and that brings us to the end of our session. But again, thank you for participating.

Thank you for having us.

Thank you, Keay.