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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2021

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                 to                

Commission File Number: 001-39527 

 

 

PRELUDE THERAPEUTICS INCORPORATED

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

81-1384762

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

200 Powder Mill Road

Wilmington, Delaware

19803

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (302) 467-1280

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

 

PRLD

 

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes       No  

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     Yes  ☒    No  

As of November 8, 2021, the registrant had 47,215,352 shares of voting and non-voting common stock, $0.0001 par value per share, outstanding.

 

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements

1

 

Balance Sheets (Unaudited)

1

 

Statements of Operations and Comprehensive Loss (Unaudited)

2

 

Statements of Changes in Convertible Preferred Stock and Stockholder’s Equity (Deficit) (Unaudited)

3

 

Statements of Cash Flows (Unaudited)

5

 

Notes to Unaudited Interim Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

24

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

24

Item 1A.

Risk Factors

25

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

72

Item 3.

Defaults Upon Senior Securities

72

Item 4.

Mine Safety Disclosures

72

Item 5.

Other Information

72

Item 6.

Exhibits

73

Signatures

74

 

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PRELUDE THERAPEUTICS INCORPORATED

BALANCE SHEETS

(UNAUDITED)

 

(in thousands, except share data)

 

September 30,

2021

 

 

December 31,

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

61,424

 

 

$

218,309

 

Marketable securities

 

 

259,441

 

 

 

 

Prepaid expenses and other current assets

 

 

5,032

 

 

 

2,500

 

Total current assets

 

 

325,897

 

 

 

220,809

 

Property and equipment, net

 

 

3,213

 

 

 

2,480

 

Right-of-use asset

 

 

2,107

 

 

 

 

Deferred offering costs

 

 

 

 

 

301

 

Total assets

 

$

331,217

 

 

$

223,590

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

11,062

 

 

$

3,920

 

Accrued expenses and other current liabilities

 

 

6,765

 

 

 

7,455

 

Operating lease liability

 

 

1,836

 

 

 

 

Total current liabilities

 

 

19,663

 

 

 

11,375

 

Other liabilities

 

 

 

 

 

32

 

Operating lease liability

 

 

312

 

 

 

 

Total liabilities

 

 

19,975

 

 

 

11,407

 

Commitments (Note 8)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Voting common stock, $0.0001 par value: 487,149,741 shares authorized; 35,789,759 and 32,595,301 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

 

 

4

 

 

 

3

 

Non-voting common stock, $0.0001 par value; 12,850,259 shares authorized; 11,402,037 and 11,110,371 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

497,691

 

 

 

319,605

 

Accumulated other comprehensive income (loss)

 

 

(176

)

 

 

 

Accumulated deficit

 

 

(186,278

)

 

 

(107,426

)

Total stockholders’ equity

 

 

311,242

 

 

 

212,183

 

Total liabilities and stockholders’ equity

 

$

331,217

 

 

$

223,590

 

 

See accompanying notes to unaudited interim financial statements.

1


PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands, except share and per share data)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

22,721

 

 

$

15,293

 

 

$

61,600

 

 

$

33,605

 

General and administrative

 

 

8,115

 

 

 

2,851

 

 

 

19,125

 

 

 

5,712

 

Total operating expenses

 

 

30,836

 

 

 

18,144

 

 

 

80,725

 

 

 

39,317

 

Loss from operations

 

 

(30,836

)

 

 

(18,144

)

 

 

(80,725

)

 

 

(39,317

)

Other income, net

 

 

149

 

 

 

1,384

 

 

 

1,873

 

 

 

1,638

 

Net loss

 

$

(30,687

)

 

$

(16,760

)

 

$

(78,852

)

 

$

(37,679

)

Per share information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share of common stock, basic and diluted

 

$

(0.66

)

 

$

(5.25

)

 

$

(1.72

)

 

$

(15.83

)

Weighted average common shares outstanding, basic

   and diluted

 

 

46,330,794

 

 

 

3,194,471

 

 

 

45,841,049

 

 

 

2,380,100

 

Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(30,687

)

 

$

(16,760

)

 

$

(78,852

)

 

$

(37,679

)

Unrealized gain (loss) on marketable securities, net of tax

 

 

(176

)

 

 

 

 

 

(176

)

 

 

 

Comprehensive loss

 

$

(30,863

)

 

$

(16,760

)

 

$

(79,028

)

 

$

(37,679

)

 

See accompanying notes to unaudited interim financial statements.

 

 

 

2


 

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

 

 

 

Stockholders’ equity (deficit)

 

 

 

Voting common stock

 

 

Non-voting common

stock

 

 

 

 

 

 

Accumulated Other

 

 

 

 

 

 

 

 

 

(in thousands, except shares)

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

paid-in capital

 

 

Comprehensive

Income (Loss)

 

 

Accumulated

deficit

 

 

Total

 

Balance at January 1, 2021

 

 

32,595,301

 

 

$

3

 

 

 

11,110,371

 

 

$

1

 

 

$

319,605

 

 

$

 

 

$

(107,426

)

 

$

212,183

 

Exercise of stock options

 

 

210,274

 

 

 

 

 

 

 

 

 

 

 

 

386

 

 

 

 

 

 

 

 

 

386

 

Sale of common stock,

   net of offering costs of $739

 

 

2,583,334

 

 

 

1

 

 

 

291,666

 

 

 

 

 

 

161,411

 

 

 

 

 

 

 

 

 

161,412

 

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,886

 

 

 

 

 

 

 

 

 

3,886

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,300

)

 

 

(21,300

)

Balance at March 31,2021

 

 

35,388,909

 

 

$

4

 

 

 

11,402,037

 

 

$

1

 

 

$

485,288

 

 

$

 

 

$

(128,726

)

 

$

356,567

 

Exercise of stock options

 

 

247,786

 

 

 

 

 

 

 

 

 

 

 

 

422

 

 

 

 

 

 

 

 

 

422

 

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,237

 

 

 

 

 

 

 

 

 

4,237

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,865

)

 

 

(26,865

)

Balance at June 30,2021

 

 

35,636,695

 

 

$

4

 

 

 

11,402,037

 

 

$

1

 

 

$

489,947

 

 

$

 

 

$

(155,591

)

 

$

334,361

 

Exercise of stock options

 

 

153,064

 

 

 

 

 

 

 

 

 

 

 

 

711

 

 

 

 

 

 

 

 

 

711

 

Unrealized gain (loss) on

   marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(176

)

 

 

 

 

 

(176

)

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,033

 

 

 

 

 

 

 

 

 

7,033

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,687

)

 

 

(30,687

)

Balance at September 30,2021

 

 

35,789,759

 

 

$

4

 

 

 

11,402,037

 

 

$

1

 

 

$

497,691

 

 

$

(176

)

 

$

(186,278

)

 

$

311,242

 

 

See accompanying notes to unaudited interim financial statements.

 

 

3


 

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

(UNAUDITED)

 

 

 

Convertible preferred stock

 

 

 

Stockholders’ equity (deficit)

 

 

 

Series A

 

 

Series B

 

 

Series C

 

 

 

Voting common stock

 

 

Non-voting common stock

 

 

Additional

paid-in

 

 

Accumulated

 

 

 

 

 

(in thousands, except shares)

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

Total

 

Balance at January 1, 2020

 

 

11,736,119

 

 

$

36,595

 

 

 

7,628,846

 

 

$

29,848

 

 

 

 

 

$

 

 

 

 

3,161,653

 

 

$

 

 

 

 

 

$

 

 

$

1,085

 

 

$

(50,497

)

 

$

(49,412

)

Sale of Series B convertible

   preferred stock, net of

   offering costs of $58

 

 

 

 

 

 

 

 

7,628,846

 

 

 

29,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

   expense, including

   issuance of RSAs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

432,301

 

 

 

 

 

 

 

 

 

 

 

 

362

 

 

 

 

 

 

362

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,511

)

 

 

(9,511

)

Balance at March 31, 2020

 

 

11,736,119

 

 

$

36,595

 

 

 

15,257,692

 

 

$

59,790

 

 

 

 

 

$

 

 

 

 

3,593,954

 

 

$

 

 

 

 

 

$

 

 

$

1,447

 

 

$

(60,008

)

 

$

(58,561

)

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36,745

 

 

 

 

 

 

 

 

 

 

 

 

31

 

 

 

 

 

 

31

 

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

627

 

 

 

 

 

 

627

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,408

)

 

 

(11,408

)

Balance at June 30, 2020

 

 

11,736,119

 

 

$

36,595

 

 

 

15,257,692

 

 

$

59,790

 

 

 

 

 

$

 

 

 

 

3,630,699

 

 

$

 

 

 

 

 

$

 

 

$

2,105

 

 

$

(71,416

)

 

$

(69,311

)

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

61,509

 

 

 

 

 

 

 

 

 

 

 

 

65

 

 

 

 

 

 

65

 

Sale of Series C convertible

   preferred stock, net of

   offering costs of $174

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,443,612

 

 

 

49,826

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of convertible

   preferred stock into

   voting and non-voting

   common stock upon initial

   public offering

 

 

(11,736,119

)

 

 

(36,595

)

 

 

(15,257,692

)

 

 

(59,790

)

 

 

(3,443,612

)

 

 

(49,826

)

 

 

 

19,327,052

 

 

 

2

 

 

 

11,110,371

 

 

 

1

 

 

 

146,208

 

 

 

 

 

 

146,211

 

Sale of common stock in

   initial public offering,

   net of offering costs of

   $2,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,573,750

 

 

 

1

 

 

 

 

 

 

 

 

 

166,629

 

 

 

 

 

 

166,630

 

Stock-based compensation

   expense, including issuance

   of restricted stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,472

 

 

 

 

 

 

1,472

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,760

)

 

 

(16,760

)

Balance at September 30, 2020

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

32,593,010

 

 

$

3

 

 

 

11,110,371

 

 

$

1

 

 

$

316,479

 

 

$

(88,176

)

 

$

228,307

 

 

See accompanying notes to unaudited interim financial statements.

 

4


 

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Nine months ended September 30,

 

(in thousands)

 

2021

 

 

2020

 

Cash flows used in operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(78,852

)

 

$

(37,679

)

Adjustments to reconcile net loss to net cash used in operating activities: