Prelude Therapeutics Inc 10-Q for FY2020 Q3

About this 10-Q

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Prelude Therapeutics Inc (PRLD)

10-Q 2020-11-10 For: 2020-09-30

Added on April 06, 2026

Prelude Therapeutics Inc filed this 10-Q on November 10, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $16.76M; compared with a net loss of $6.73M a year earlier

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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)

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Balance Sheets (Unaudited)	1
	Statements of Operations (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	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 3.	Defaults Upon Senior Securities	67
Item 4.	Mine Safety Disclosures	67
Item 5.	Other Information	67
Item 6.	Exhibits	68
Signatures		69

(in thousands, except share data)	September 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	234,792		$	18,879
Prepaid expenses and other current assets		3,269			1,345
Total current assets		238,061			20,224
Property and equipment, net		1,620			1,647
Total assets	$	239,681		$	21,871
Liabilities, convertible preferred stock and stockholders’ equity (deficit)
Current liabilities:
Capital lease obligation	$	—		$	258
Accounts payable		5,074			1,974
Accrued expenses and other current liabilities		6,285			2,603
Total current liabilities		11,359			4,835
Other liabilities		15			5
Total liabilities		11,374			4,840
Convertible preferred stock, $0.0001 par value:
Series A convertible preferred stock: No shares and 13,574,008 shares authorized at September 30, 2020 and December 31, 2019, respectively; no shares and 11,736,119 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		—			36,595
Series B convertible preferred stock: No shares and 18,500,000 shares authorized at September 30, 2020 and December 31, 2019; No shares and 7,628,846 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		—			29,848
Series C convertible preferred stock: no shares authorized, issued or outstanding at September 30, 2020 and December 31, 2019		—			—
Total convertible preferred stock		—			66,443
Commitments
Stockholders’ equity (deficit):
Voting common stock, $0.0001 par value: 487,149,741 and 42,000,000 shares authorized at September 30, 2020 and December 31, 2019, respectively; 32,593,010 and 3,161,653 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		3			—
Non-voting common stock, $0.0001 par value; 12,850,259 and no shares authorized at September 30, 2020 and December 31, 2019, respectively; 11,110,371 and no shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		1			—
Additional paid-in capital		316,479			1,085
Accumulated deficit		(88,176	)		(50,497	)
Total stockholders’ equity (deficit)		228,307			(49,412	)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$	239,681		$	21,871

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except share and per share data)	2020			2019			2020			2019
Operating expenses:
Research and development	$	15,293		$	5,490		$	33,605		$	15,430
General and administrative		2,851			1,394			5,712			2,584
Total operating expenses		18,144			6,884			39,317			18,014
Loss from operations		(18,144	)		(6,884	)		(39,317	)		(18,014	)
Other income, net		1,384			150			1,638			483
Net loss	$	(16,760	)	$	(6,734	)	$	(37,679	)	$	(17,531	)
Per share information:
Net loss per share of common stock, basic and diluted	$	(5.25	)	$	(3.93	)	$	(15.83	)	$	(10.80	)
Weighted average common shares outstanding, basic and diluted		3,194,471			1,713,371			2,380,100			1,622,546

	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 issuance costs of $58		—			—			7,628,846			29,942			—			—			—		—		—		—		—		—			—
Stock-based compensation expense, including issuance of restricted stock awards		—			—			—			—			—			—			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 issuance 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		—			—			—			—			—			—			—		—		—		—		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

	Convertible preferred stock								Stockholders’ deficit
	Series A				Series B				Common stock				Additional paid-in		Accumulated
(in thousands, except shares)	Shares		Amount		Shares		Amount		Shares		Amount		capital		deficit			Total
Balance at January 1, 2019		11,736,119	$	36,595		—	$	—		2,380,270	$	—	$	234	$	(22,927	)	$	(22,693	)
Stock-based compensation expense		—		—		—		—		—		—		82		—			82
Net loss		—		—		—		—		—		—		—		(5,241	)		(5,241	)
Balance at March 31, 2019		11,736,119		36,595		—		—		2,380,270		—		316		(28,168	)		(27,852	)
Exercise of stock options		—		—		—		—		3,242		—		5		—			5
Sale of Series B convertible preferred stock, net of issuance costs of $152		—		—		7,628,846		29,848		—		—		—		—			—
Stock-based compensation expense, including issuance of restricted stock awards		—		—		—		—		345,840		—		141		—			141
Net loss		—		—		—		—		—		—		—		(5,556	)		(5,556	)
Balance at June 30, 2019		11,736,119		36,595		7,628,846		29,848		2,729,352		—		462		(33,724	)		(33,262	)
Stock-based compensation expense, including issuance of restricted stock awards		—		—		—		—		432,301		—		297		—			297
Net loss		—		—		—		—		—		—		—		(6,734	)		(6,734	)
Balance at September 30, 2019		11,736,119	$	36,595		7,628,846	$	29,848		3,161,653	$	—	$	759	$	(40,458	)	$	(39,699	)

	Nine months ended September 30,
(in thousands)	2020			2019
Cash flows used in operating activities:
Net loss	$	(37,679	)	$	(17,531	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		409			254
Stock-based compensation		2,461			520
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(1,924	)		(344	)
Accounts payable		1,931			(76	)
Accrued expenses and other liabilities		3,472			(19	)
Net cash used in operating activities		(31,330	)		(17,196	)
Cash flows used in investing activities:
Purchases of property and equipment		(292	)		(581	)
Net cash used in investing activities		(292	)		(581	)
Cash flows provided by financing activities:
Proceeds from the issuance of common stock upon initial public offering, net of offering costs		167,929			—
Proceeds from the sale of Series C convertible preferred stock, net of offering costs		49,826			—
Proceeds from the sale of Series B convertible preferred stock, net of offering costs		29,942			29,848
Payment of capital lease obligation		(258	)		(31	)
Proceeds from the exercise of stock options		96			5
Net cash provided by financing activities		247,535			29,822
Net increase in cash and cash equivalents		215,913			12,045
Cash and cash equivalents at beginning of period		18,879			15,595
Cash and cash equivalents at end of period	$	234,792		$	27,640
Supplemental disclosures:
Property and equipment in accounts payable	$	90		$	108
Offering costs in accrued expenses and other current liabilities	$	220		$	—
Offering costs in accounts payable	$	1,079		$	—

	September 30,
	2020		2019
Series A convertible preferred stock		—		11,736,119
Series B convertible preferred stock		—		7,628,846
Unvested restricted stock awards		1,312,024		1,394,056
Stock options		6,649,882		2,189,333
		7,961,906		22,948,354

	Fair value measurement at reporting date using
(in thousands)	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
September 30, 2020:
Assets:
Cash equivalents (Money Market Funds)	$	233,364	$	—	$	—
December 31, 2019:
Assets:
Cash equivalents (Money Market Funds)	$	18,779	$	—	$	—

	Three Months Ended September 30,				Nine Months September 30,
(in thousands)	2020		2019		2020		2019
Research and development	$	630	$	135	$	1,047	$	250
General and administrative		842		162		1,414		270
	$	1,472	$	297	$	2,461	$	520

	Number of shares			Weighted average exercise price per share		Weighted average remaining contractual term (years)
Outstanding at January 1, 2020		2,269,742		$	1.66		9.20
Granted		4,594,130		$	9.38
Exercised		(98,254	)	$	0.98
Forfeited		(115,736	)	$	1.37
Outstanding at September 30, 2020		6,649,882		$	7.00		9.40
Exercisable at September 30, 2020		783,236		$	1.64		8.40

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$0.31 - $1.02		253,931		7.43	$	0.98		162,037	$	0.96
$1.43 - $1.89		3,259,095		9.05		1.85		619,998		1.79
$12.85 - $19.00		3,136,856		9.92		12.86		1,201		12.85
		6,649,882						783,236

	Number of shares			Weighted-average grant date fair value
Unvested balance at January 1, 2020		1,335,349		$	1.42
Granted		432,301		$	3.26
Vested		(455,626	)	$	1.40
Unvested balance at September 30, 2020		1,312,024		$	2.03

	Three months ended September 30,						Change
(in thousands)	2020			2019
Operating expenses:
Research and development	$	15,293		$	5,490		$	9,803
General and administrative		2,851			1,394			1,457
Total operating expenses		18,144			6,884			11,260
Loss from operations		(18,144	)		(6,884	)		(11,260	)
Other income, net		1,384			150			1,234
Net loss	$	(16,760	)	$	(6,734	)	$	(10,026	)

	Nine months ended September 30,
	2020			2019
Expected volatility		115.09	%		91.60	%
Risk-free interest rate		0.42	%		1.88	%
Expected life (in years)		6.25			6.25
Expected dividend yield		—			—

	Three months ended September 30,
(in thousands)	2020		2019
PRT543	$	4,354	$	971
PRT811		1,899		302
PRT1419		2,533		934
Discovery programs		2,823		1,609
Internal costs, including personnel related		3,684		1,674
	$	15,293	$	5,490

	Nine months ended September 30,
(in thousands)	2020		2019
PRT543	$	8,414	$	3,642
PRT811		3,465		2,202
PRT1419		6,540		1,119
Discovery programs		4,793		3,662
Internal costs, including personnel related		10,393		4,805
	$	33,605	$	15,430

Exhibit Number	Description	Form	File No.	Exhibit No.	Exhibit Filing Date	Filed/Furnished Herewith
3.1	Restated Certificate of Incorporation of Prelude Therapeutics Incorporated					X
3.2	Restated Bylaws of Prelude Therapeutics Incorporated					X
4.1	Form of Common Stock Certificate.	S-1/A	333-248628	4.1	09/16/2020
10.1	Form of Indemnification Agreement with directors and officers.	S-1	333-248628	10.1	09/04/2020
10.2	2016 Stock Incentive Plan and forms of award agreements.	S-1	333-248628	10.2	09/04/2020
10.3	2020 Equity Incentive Plan and forms of award agreements.	S-1/A	333-248628	10.3	09/21/2020
10.4	2020 Employee Stock Purchase Plan and forms of award agreements.	S-1/A	333-248628	10.4	09/21/2020
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
101.INS	XBRL Instance Document					X
101.SCH	XBRL Taxonomy Extension Schema Document.					X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.					X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.					X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.					X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.					X

	Company Name

Date: November 10, 2020	By:	/s/ Krishna Vaddi
		Krishna Vaddi, PhD
		Chief Executive Officer

Date: November 10, 2020	By:	/s/ Brian Piper
		Brian Piper, M.B.A.
		Chief Financial Officer

Dated: September 29, 2020	PRELUDE THERAPEUTICS INCORPORATED

	By:	/s/ Krishna Vaddi
	Name:	Krishna Vaddi
	Title:	Chief Executive Officer


Article I: STOCKHOLDERS			1
	Section 1.1:	Annual Meetings	1
	Section 1.2:	Special Meetings	1
	Section 1.3:	Notice of Meetings	1
	Section 1.4:	Adjournments	1
	Section 1.5:	Quorum	2
	Section 1.6:	Organization	2
	Section 1.7:	Voting; Proxies	2
	Section 1.8:	Fixing Date for Determination of Stockholders of Record	3
	Section 1.9:	List of Stockholders Entitled to Vote	3
	Section 1.10:	Inspectors of Elections.	4
	Section 1.11:	Conduct of Meetings	5
	Section 1.12:	Notice of Stockholder Business; Nominations.	5

Article II: BOARD OF DIRECTORS			13
	Section 2.1:	Number; Qualifications	13
	Section 2.2:	Election; Resignation; Removal; Vacancies	13
	Section 2.3:	Regular Meetings	13
	Section 2.4:	Special Meetings	14
	Section 2.5:	Remote Meetings Permitted	14
	Section 2.6:	Quorum; Vote Required for Action	14
	Section 2.7:	Organization	14
	Section 2.8:	Unanimous Action by Directors in Lieu of a Meeting	14
	Section 2.9:	Powers	14
	Section 2.10:	Compensation of Directors	14
	Section 2.11:	Confidentiality	15

Article III: COMMITTEES			15
	Section 3.1:	Committees	15
	Section 3.2:	Committee Rules	15

Article IV: OFFICERS; CHAIRPERSON; LEAD INDEPENDENT DIRECTOR			15
	Section 4.1:	Generally	15
	Section 4.2:	Chief Executive Officer	16
	Section 4.3:	Chairperson of the Board	16
	Section 4.4:	Lead Independent Director	16
	Section 4.5:	President	17
	Section 4.6:	Chief Financial Officer	17
	Section 4.7:	Treasurer	17
	Section 4.8:	Vice President	17

	Section 4.9:	Secretary	17
	Section 4.10:	Delegation of Authority	17
	Section 4.11:	Removal	18

Article V: STOCK			18
	Section 5.1:	Certificates; Uncertificated Shares	18
	Section 5.2:	Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates or Uncertificated Shares	18
	Section 5.3:	Other Regulations	18

Article VI: INDEMNIFICATION			18
	Section 6.1:	Indemnification of Officers and Directors	18
	Section 6.2:	Advancement of Expenses	19
	Section 6.3:	Non-Exclusivity of Rights	19
	Section 6.4:	Indemnification Contracts	19
	Section 6.5:	Right of Indemnitee to Bring Suit	20
	Section 6.6:	Nature of Rights	20
	Section 6.7:	Amendment or Repeal	20
	Section 6.8:	Insurance	20

Article VII: NOTICES			21
	Section 7.1:	Notice.	21
	Section 7.2:	Waiver of Notice	21

Article VIII: INTERESTED DIRECTORS			22
	Section 8.1:	Interested Directors	22
	Section 8.2:	Quorum	22

Article IX: MISCELLANEOUS			22
	Section 9.1:	Fiscal Year	22
	Section 9.2:	Seal	22
	Section 9.3:	Form of Records	22
	Section 9.4:	Reliance Upon Books and Records	22
	Section 9.5:	Certificate of Incorporation Governs	23
	Section 9.6:	Severability	23
	Section 9.7:	Time Periods	23

Article X: AMENDMENT			23

Article XI: EXCLUSIVE FORUM			23