Personal Finance

Here's Why Wave Life Sciences Fell as Much as 12.1% This Morning

A man looking at a chart drawn on a chalkboard showing stock losses.

What happened

Shares of pre-clinical biopharma Wave Life Sciences (NASDAQ: WVE) fell nearly 12% in early trading Wednesday after the company announced it will offer 4.2 million shares at $24 apiece. The net proceeds will be approximately $93.4 million and, as is usually the case for share offerings, there's a 30-day option for the underwriters to purchase up to an additional 625,000 shares that could bring in another bounty of $14.1 million in net proceeds.

The offering will pad a strong end-of-2016 cash position of $150 million and greatly aid the effort to advance the first drug candidates from the company's novel technology platform into clinical trials. As of 1:15 p.m. EDT, the stock had settled to a 12.3% loss.

A man looking at a chart drawn on a chalkboard showing stock losses.

Image source: Getty Images.

So what

There are a few reasons for the share offering. First, Wave Life Sciences has no debt on its balance sheet and there's no reason to start now. It's a young company with a relatively low number of shares outstanding and a strong stock price. Selling shares for cash at this point in the biopharma's life is hardly unexpected.

Second, and most importantly, the company is ramping up development of nucleic acid therapeutics targeting a wide range of rare genetic diseases. Despite their promise, nucleic acid therapeutics have struggled to advance in the clinic due to complex synthesis methods -- something Wave Life Sciences claims to have solved with its novel chemistry platform that focuses on rational design. Proof-of-concept studies have demonstrated the approach results in more stable, active, and specific therapeutic candidates than previous synthesis methods.

While the company has yet to enter a single clinical trial, it currently lists 23 specific disease targets of interest in the discovery phase of development and three drug candidates awaiting to be promoted to phase 1 studies. That includes two targeting Huntington's disease one targeting Duchenne muscular dystrophy. Additionally, last summer Wave Life Sciences partnered with Pfizer to advance nucleic acid therapeutics for rare genetic liver diseases. The collaboration also provides the upstart access to technology from the industry leader that can be applied throughout its pipeline.

Now what

Wave Life Sciences is a young, pre-clinical biopharma armed with proof-of-concept data and a story to tell. Wednesday's share offering will help it advance to the next stage of the development life cycle: clinical trials. There's a long and uncertain road ahead that will include additional future financing from share offerings or debt raises, and maybe more collaboration partners, but that's par for the course. Right now investors should be excited that the company is beginning the next part of its journey.

10 stocks we like better than WAVE Life Sciences

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and WAVE Life Sciences wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of April 3, 2017

Maxx Chatsko has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More