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Why Is Wave Life Sciences Stock Surging Despite Q2 Miss?

Story Highlights

Despite its poor Q2 show, shares of Wave Life Sciences surged over 25% in a single day on the back of several important milestones expected to unravel in the coming quarters. 

Shares of Wave Life Sciences (WVE) jumped 16.9% on Thursday and gained another 10% in the pre-market trading session on Friday despite its weaker-than-expected Q2 results. The company’s detailed update on its recent pipeline and upcoming milestones worked as a positive catalyst and strengthened investors’ trust in WVE stock.

Wave Life Sciences is a clinical-stage biotechnology company that engages in the development of genetic medicines and is committed to delivering life-changing treatments for devastating diseases.

A Snapshot of Q2 Results

Wave Life Sciences reported an adjusted loss of $0.62 per share, which was eight cents more than the street’s estimated loss of $0.54 per share. However, it was better than the year-ago loss of $0.78 per share.

Further, revenues declined 86.7% year-over-year to $0.37 million versus $2.8 million in the prior-year period.

At the end of the second quarter, the company reported cash and cash equivalents of $148.2 million, lower than $150.6 million at the end of December 31, 2021.

Upcoming Milestones

The company’s management highlighted that it is actively making strides to treat devastating genetic diseases and has achieved several important milestones.

During Q2, Wave presented positive target engagement data from the company’s ongoing FOCUS-C9 clinical trial of WVE-004 for C9-ALS and C9-FTD conditions.

The company also announced the selection of its first-in-class RNA editing candidate, WVE-006. It is the development candidate for the treatment of alpha-1 antitrypsin deficiency (AATD).

Further, data for its ongoing clinical programs, including WVE-004, WVE-003, and WVE-N531, is expected in the second half of the year.

Importantly, the company secured financing of $70 million, which will fulfill its requirement to meet upcoming key milestones, including its three ongoing clinical trials and the advancement of WVE-006 into clinical development.  

Sharing his views on WVE-006, the CEO of Wave Life Sciences, Paul Bolno, said, “RNA editing is a novel therapeutic modality and Wave is leading this field with our AIMers. These RNA base editing therapeutics are being advanced with and without GalNAc conjugation and avoid the need for large, complex delivery vehicles, such as lipid nanoparticles or viral vectors.”

Is Wave Life Sciences a Buy?

Salim Syed from Mizuho Securities is extremely bullish on the future prospects of the stock. Following the Q2 results, he maintained a Buy rating on the stock with a price target of $13, which represents 336.24% upside potential.  

However, on TipRanks, the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on two Buys and three Holds. Wave Life Sciences’ average price target of $7 implies 134.9% upside potential to current levels.

Final Thoughts

Given the positive developments and upcoming milestones for the company, WVE stock could provide huge upside potential in the future.

The share price gain is not surprising. TipRanks’ Stock Investors tool already hints at strong investors’ interest. According to the tool, investors currently have a Very Positive stance on Wave Life Sciences, with 8.5% of investors increasing their exposure to WVE stock over the past 30 days.

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