10-Q
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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, 2022

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

As of November 8, 2022, the registrant had 47,859,813 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 Stockholders’ 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

23

Item 4.

Controls and Procedures

23

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

23

Item 1A.

Risk Factors

24

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

73

Item 3.

Defaults Upon Senior Securities

73

Item 4.

Mine Safety Disclosures

73

Item 5.

Other Information

73

Item 6.

Exhibits

74

Signatures

75

 

i


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PRELUDE THERAPEUTICS INCORPORATED

BALANCE SHEETS

(UNAUDITED)

 

(in thousands, except share data)

 

September 30,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

52,022

 

 

$

31,828

 

Marketable securities

 

 

172,021

 

 

 

259,405

 

Prepaid expenses and other current assets

 

 

2,850

 

 

 

3,882

 

Total current assets

 

 

226,893

 

 

 

295,115

 

Restricted cash

 

 

4,044

 

 

 

4,044

 

Property and equipment, net

 

 

5,110

 

 

 

3,929

 

Right-of-use asset

 

 

1,354

 

 

 

1,707

 

Other assets

 

 

4,926

 

 

 

303

 

Total assets

 

$

242,327

 

 

$

305,098

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

10,250

 

 

$

7,840

 

Accrued expenses and other current liabilities

 

 

9,922

 

 

 

9,621

 

Operating lease liability

 

 

1,388

 

 

 

1,740

 

Total current liabilities

 

 

21,560

 

 

 

19,201

 

Other liabilities

 

 

3,360

 

 

 

 

Total liabilities

 

 

24,920

 

 

 

19,201

 

Commitments (Note 8)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Voting common stock, $0.0001 par value: 487,149,741 shares authorized; 36,444,776 and 36,200,299 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

4

 

 

 

4

 

Non-voting common stock, $0.0001 par value; 12,850,259 shares authorized; 11,402,037 and 11,402,037 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

1

 

 

 

1

 

Additional paid-in capital

 

 

525,682

 

 

 

505,723

 

Accumulated other comprehensive income (loss)

 

 

(2,363

)

 

 

(711

)

Accumulated deficit

 

 

(305,917

)

 

 

(219,120

)

Total stockholders’ equity

 

 

217,407

 

 

 

285,897

 

Total liabilities and stockholders’ equity

 

$

242,327

 

 

$

305,098

 

 

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)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

22,889

 

 

$

22,721

 

 

$

67,020

 

 

$

61,600

 

General and administrative

 

 

7,517

 

 

 

8,115

 

 

 

23,135

 

 

 

19,125

 

Total operating expenses

 

 

30,406

 

 

 

30,836

 

 

 

90,155

 

 

 

80,725

 

Loss from operations

 

 

(30,406

)

 

 

(30,836

)

 

 

(90,155

)

 

 

(80,725

)

Other income, net

 

 

448

 

 

 

149

 

 

 

3,358

 

 

 

1,873

 

Net loss

 

$

(29,958

)

 

$

(30,687

)

 

$

(86,797

)

 

$

(78,852

)

Per share information:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share of common stock, basic and diluted

 

$

(0.63

)

 

$

(0.66

)

 

$

(1.84

)

 

$

(1.72

)

Weighted average common shares outstanding, basic
   and diluted

 

 

47,449,811

 

 

 

46,330,794

 

 

 

47,265,712

 

 

 

45,841,049

 

Comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(29,958

)

 

$

(30,687

)

 

$

(86,797

)

 

$

(78,852

)

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

 

 

(69

)

 

 

(176

)

 

 

(1,652

)

 

 

(176

)

Comprehensive loss

 

$

(30,027

)

 

$

(30,863

)

 

$

(88,449

)

 

$

(79,028

)

 

See accompanying notes to unaudited interim financial statements.

2


PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CHANGES IN 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, 2022

 

 

36,200,299

 

 

$

4

 

 

 

11,402,037

 

 

$

1

 

 

$

505,723

 

 

$

(711

)

 

$

(219,120

)

 

$

285,897

 

Issuance of common stock upon exercise of stock options

 

 

93,032

 

 

 

 

 

 

 

 

 

 

 

 

153

 

 

 

 

 

 

 

 

 

153

 

Unrealized gain (loss) on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,602

)

 

 

 

 

 

(1,602

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,829

 

 

 

 

 

 

 

 

 

6,829

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29,465

)

 

 

(29,465

)

Balance at March 31, 2022

 

 

36,293,331

 

 

$

4

 

 

 

11,402,037

 

 

$

1

 

 

$

512,705

 

 

$

(2,313

)

 

$

(248,585

)

 

$

261,812

 

Issuance of common stock upon exercise of stock options

 

 

31,253

 

 

 

 

 

 

 

 

 

 

 

 

59

 

 

 

 

 

 

 

 

 

59

 

Issuance of common stock under ESPP

 

 

68,080

 

 

 

 

 

 

 

 

 

 

 

 

300

 

 

 

 

 

 

 

 

 

300

 

Unrealized gain (loss) on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

19

 

Stock-based compensation expense, net of forfeitures of restricted stock awards

 

 

(23,416

)

 

 

 

 

 

 

 

 

 

 

 

6,028

 

 

 

 

 

 

 

 

 

6,028

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27,374

)

 

 

(27,374

)

Balance at June 30, 2022

 

 

36,369,248

 

 

$

4

 

 

 

11,402,037

 

 

$

1

 

 

$

519,092

 

 

$

(2,294

)

 

$

(275,959

)

 

$

240,844

 

Issuance of common stock upon exercise of stock options

 

 

75,528

 

 

 

 

 

 

 

 

 

 

 

 

148

 

 

 

 

 

 

 

 

 

148

 

Unrealized gain (loss) on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(69

)

 

 

 

 

 

(69

)

Stock-based compensation expense, net of forfeitures of restricted stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,442

 

 

 

 

 

 

 

 

 

6,442

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29,958

)

 

 

(29,958

)

Balance at September 30, 2022

 

 

36,444,776

 

 

$

4

 

 

 

11,402,037

 

 

$

1

 

 

$

525,682

 

 

$

(2,363

)

 

$

(305,917

)

 

$

217,407

 

See accompanying notes to unaudited interim financial statements.

3


PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)

(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

 

Issuance of common stock upon 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

 

Issuance of common stock upon 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

 

Issuance of common stock upon 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.

4


PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Nine months ended September 30,

 

(in thousands)

 

2022

 

 

2021

 

Cash flows used in operating activities: