SEC Filing - Prelude Therapeutics

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10-Q

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, 2023


☐	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.

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 October 27, 2023, the registrant had 54,825,982 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 (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	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27
Signatures		28

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PRELUDE THERAPEUTICS INCORPORATED

BALANCE SHEETS

(UNAUDITED)


(in thousands, except share data)	September 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	15,896		$	30,605
Marketable securities		214,610			171,123
Prepaid expenses and other current assets		4,410			2,652
Total current assets		234,916			204,380
Restricted cash		4,044			4,044
Property and equipment, net		6,618			4,908
Right-of-use asset		464			1,792
Prepaid expenses and other non-current assets		12,469			5,376
Total assets	$	258,511		$	220,500
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	5,170		$	6,777
Accrued expenses and other current liabilities		11,248			13,093
Operating lease liability		475			1,832
Total current liabilities		16,893			21,702
Other liabilities		3,361			3,361
Total liabilities		20,254			25,063
Commitments (Note 8)
Stockholders’ equity:
Voting common stock, $0.0001 par value: 487,149,741 shares authorized; 41,965,472 and 36,496,994 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		4			4
Non-voting common stock, $0.0001 par value: 12,850,259 shares authorized; 12,850,259 and 11,402,037 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		1			1
Additional paid-in capital		662,172			531,682
Accumulated other comprehensive loss		(605	)		(1,692	)
Accumulated deficit		(423,315	)		(334,558	)
Total stockholders’ equity		238,257			195,437
Total liabilities and stockholders’ equity	$	258,511		$	220,500

See accompanying notes to unaudited interim financial statements.

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)	2023			2022			2023			2022
Operating expenses:
Research and development	$	26,261		$	22,889		$	73,061		$	67,020
General and administrative		7,124			7,517			21,837			23,135
Total operating expenses		33,385			30,406			94,898			90,155
Loss from operations		(33,385	)		(30,406	)		(94,898	)		(90,155	)
Other income, net		2,777			448			6,141			3,358
Net loss	$	(30,608	)	$	(29,958	)	$	(88,757	)	$	(86,797	)
Per share information:
Net loss per share of common stock, basic and diluted	$	(0.45	)	$	(0.63	)	$	(1.55	)	$	(1.84	)
Weighted average common shares outstanding, basic and diluted		67,639,993			47,449,811			57,278,795			47,265,712
Comprehensive loss:
Net loss	$	(30,608	)	$	(29,958	)	$	(88,757	)	$	(86,797	)
Unrealized (loss) gain on marketable securities, net of tax		106			(69	)		1,087			(1,652	)
Comprehensive loss	$	(30,502	)	$	(30,027	)	$	(87,670	)	$	(88,449	)

See accompanying notes to unaudited interim financial statements.

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)



	Voting common stock				Non-voting common stock				Additional paid-in			Accumulated other comprehensive			Accumulated
(in thousands, except shares)	Shares		Amount		Shares		Amount		capital			loss			deficit			Total
Balance at January 1, 2023		36,496,994	$	4		11,402,037	$	1	$	531,682		$	(1,692	)	$	(334,558	)	$	195,437
Issuance of common stock upon exercise of stock options & vesting of RSUs		17,224		—		—		—		28			—			—			28
Unrealized gain on marketable securities, net of tax		—		—		—		—		—			1,294			—			1,294
Stock-based compensation expense		—		—		—		—		6,256			—			—			6,256
Net loss		—		—		—		—		—			—			(27,718	)		(27,718	)
Balance at March 31, 2023		36,514,218	$	4		11,402,037	$	1	$	537,966		$	(398	)	$	(362,276	)	$	175,297
Issuance of common stock and prefunded warrants, net of issuance costs of $2.6 million		5,312,978		—		1,448,222		—		110,423			—			—			110,423
Issuance of common stock upon exercise of stock options & vesting of RSU's		40,461		—		—		—		3			—			—			3
Issuance of common stock under ESPP		90,799		—		—		—		348			—			—			348
Unrealized loss on marketable securities, net of tax		—		—		—		—		—			(313	)		—			(313	)
Stock-based compensation expense		—		—		—		—		6,733			—			—			6,733
Net loss		—		—		—		—		—			—			(30,431	)		(30,431	)
Balance at June 30, 2023		41,958,456	$	4		12,850,259	$	1	$	655,473		$	(711	)	$	(392,707	)	$	262,060
Issuance of common stock upon vesting of RSU's, net of 3,609 shares withheld for employee taxes		7,016		—		—		—		(16	)		—			—			(16	)
Unrealized gain (loss) on marketable securities		—		—		—		—		—			106			—			106
Stock-based compensation expense, net of forfeitures of restricted stock awards		—		—		—		—		6,715			—			—			6,715
Net loss		—		—		—		—		—			—			(30,608	)		(30,608	)
Balance at September 30, 2023		41,965,472	$	4		12,850,259	$	1	$	662,172		$	(605	)	$	(423,315	)	$	238,257

See accompanying notes to unaudited interim financial statements.

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)

(UNAUDITED)



	Voting common stock					Non-voting common stock				Additional paid-in		Accumulated other comprehensive			Accumulated
(in thousands, except shares)	Shares			Amount		Shares		Amount		capital		loss			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 loss on marketable securities, net of tax		—			—		—		—		—		(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 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.

PRELUDE THERAPEUTICS INCORPORATED

STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine months ended September 30,
(in thousands)	2023			2022
Cash flows used in operating activities:
Net loss	$	(88,757	)	$	(86,797	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		838			962
Noncash lease expense		1,328			1,281
Stock-based compensation		19,704			19,299
Amortization of premium and discount on marketable securities, net		(2,402	)		2,770
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(2,053	)		(3,591	)
Accounts payable		(1,805	)		2,893
Accrued expenses and other liabilities		(1,873	)		3,661
Long-term prepaid expenses and other long-term assets		(7,108	)		—
Operating lease liabilities		(1,357	)		(1,280	)
Net cash used in operating activities		(83,485	)		(60,802	)
Cash flows (used in) provided by investing activities:
Purchases of marketable securities		(162,248	)		(85,972	)
Proceeds from maturities of marketable securities		122,250			168,934
Purchases of property and equipment		(2,384	)		(2,626	)
Net cash (used in) provided by investing activities		(42,382	)		80,336
Cash flows provided by financing activities:
Proceeds from issuance of common stock and pre-funded warrants, net of offering costs		110,795			—
Proceeds from the issuance of common stock under ESPP		348			300
Proceeds from the issuance of common stock in connection with the exercise of stock options		31			360
Payment of withholding taxes related to stock-based compensation to employees		(16	)		—
Net cash provided by financing activities		111,158			660
Net (decrease) increase in cash, cash equivalents and restricted cash		(14,709	)		20,194
Cash, cash equivalents, and restricted cash at beginning of period		34,649			35,872
Cash, cash equivalents, and restricted cash at end of period	$	19,940		$	56,066
Supplemental disclosures:
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	—