Shares of Wave Life Sciences (WVE -0.96%), a clinical-stage biopharmaceutical company, are under pressure after the company priced its latest share offering this morning. The stock has fallen 13% as of 11:20 a.m. EST on Thursday.
As a pre-commercial company without any significant revenues, Wave Life Sciences can't keep developing its stereopure oligonucleotides without tapping investors from time to time. This biotech stock started sliding in after-hours trading following a secondary share offering released after the bell. Today the company announced pricing for the newly minted shares at more than 10% below the stock's 50-day moving average, which didn't help shareholders feel any better.
A share offering right now comes as an unwelcome surprise to investors who remember the guidance Wave provided in November. The company finished September with $210.5 million in cash on its balance sheet, and in November, the company told investors it had enough cash on hand to fund operations through the end of 2020.
The stock is slipping today because Wave included an important caveat to its cash-burn-rate estimate. Management specifically stated that expected cash from collaboration partners plus cash on hand would see the company through 2020. Investors view a lack of confidence about receiving future milestone payments from collaboration partners as a sign that Wave's attempt to create stereopure oligonucleotides isn't going to work as planned.
There may be a less frightening explanation for the sudden need to raise more cash. Earlier this month, the FDA selected Wave's Duchenne muscular dystrophy (DMD) trial for a pilot program that could drive up operating expenses much faster than Wave had expected.
In 2019, Wave will begin a mid-to-late-stage study with its lead DMD candidate, suvodirsen, and this will be the first clinical trial to take part in the FDA's new program to accelerate the drug development process for patients with unmet needs. The Complex Innovative Trial Design program will give Wave a chance to complete development of suvodirsen much more quickly than the traditional route, and perhaps get in front of potential competition for a limited number of DMD patients.
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